As filed with the Securities and Exchange Commission on December 5,
1997
Registration No. 33-67652
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 6 x
Post-Effective Amendment No. ____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 x
(Check appropriate box or boxes.)
THE SBI FUND, INC.
(Exact Name of Registrant as Specified in Charter)
One SBI Plaza, School of Business & Industry
Florida A&M University, Tallahassee, Florida 32307
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (904) 561-2661
Darrell R. Williams copy to:
SBI Capital Management and
Research Corporation Eric S. Robinson, Esq.
One SBI Plaza Wachtell, Lipton, Rosen & Katz
School of Business & Industry 51 West 52nd Street
Florida A&M University New York, New York 10019
Tallahassee, Florida 32307
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement is declared effective.
Registrant is registering an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET
Part A of
Form N-1A Caption Page
Item 1 Cover Page Cover
Item 2 Synopsis 4
Item 3 Condensed Financial Information NA
Item 4 General Description of Registrant 5
Item 5 Management of the Fund 11
Item 5A Management's Discussion of Fund
Performance NA
Item 6 Capital Stock and Other Securities 14
Item 7 Purchase of Securities Being Offered 17
Item 8 Redemption or Repurchase 18
Item 9 Pending Legal Proceedings NA
Part B of
Form N-1A Caption Page
Item 10 Cover Page B-1
Item 11 Table of Contents B-1
Item 12 General Information and History B-2
Item 13 Investment Objectives and Policies B-2
Item 14 Management of the Fund B-4
Item 15 Control Persons and Principal
Holders of Securities B-6
Item 16 Investment Advisory and Other Services B-7
Item 17 Brokerage Allocation and Other Practices B-9
Item 18 Capital Stock and Other Securities B-9
Item 19 Purchase, Redemption and Pricing of
Securities Being Offered B-10
Item 20 Tax Status B-11
Item 21 Underwriters B-13
Item 22 Calculation of Performance Data B-13
Item 23 Financial Statements NA
Part C of
Form N-1A Caption Page
Item 24 Financial Statements and Exhibits C-1
Item 25 Persons Controlled by or Under
Common Control with Registrant C-1
Item 26 Number of Holders of Securities C-2
Item 27 Indemnification C-2
Item 28 Business and Other Connections
of Investment Advisor C-3
Item 29 Principal Underwriters C-3
Item 30 Location of Accounts and Records C-4
Item 31 Management Services C-4
Item 32 Undertakings C-4<PAGE>
SUBJECT TO COMPLETION DATED DECEMBER 5, 1997
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior
to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be un-
lawful prior to registration or qualification under the securities
laws of any such state.
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PROSPECTUS DECEMBER , 1997
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THE SBI FUND, INC.
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The SBI Fund, Inc. (the "Fund") consists of two series, Pool
A and Pool B. The investment objective of Pool A is to realize
capital gains and income for its shareholders by seeking to
replicate the performance of the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500 Index"). The investment objective
of Pool B is to achieve long-term capital appreciation by investing
in a diversified portfolio of stocks of companies expected to
achieve above average earnings growth. Realization of current
income is an incidental consideration.
In addition to its investment objectives on behalf of its
shareholders, the Fund was established to provide students of the
School of Business and Industry ("SBI") of the Florida Agricultural
and Mechanical University with the opportunity to participate in the
operation of a registered investment company under the management
and supervision of investment professionals and SBI faculty, in a
manner tailored to meet the long-term performance objectives of
institutional investors while linking the students' finance and
investment education with "real world" investment applications.
SBI Capital Management and Research Corporation, a Florida
not-for-profit corporation (the "Investment Advisor"), is the
investment advisor to the Fund. State Street Bank and Trust Company
will serve as the Fund's transfer agent and custodian and will
provide administrative services to the Fund.
Payments for investment in Pool A will not be accepted until
subscriptions are received aggregating at least $20 million.
Payments for investment in Pool B will not be accepted until sub-
scriptions are received aggregating at least $1 million. See
"DESCRIPTION OF THE FUND -- Structure of the Fund" below.
----------------
This Prospectus sets forth concisely the information about
the Fund that you should know before investing. It should be read
and retained for future reference.
Part B (also known as the Statement of Additional
Information), dated December __, 1997, which may be revised from
time to time, provides a further discussion of certain areas in this
Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange
Commission (the "Commission") and is incorporated herein by
reference. For a free copy, contact Lamaute Capital Inc., 8383
Wilshire Boulevard, Suite 840, Beverly Hills, California 90211,
(213) 655-5013.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.<PAGE>
TABLE OF CONTENTS
HIGHLIGHTS 1
FEE TABLES 4
DESCRIPTION OF THE FUND 5
MANAGEMENT OF THE FUND 11
SHARES OF THE FUND 14
PURCHASE OF FUND SHARES 17
REDEMPTION OF FUND SHARES 18
PERFORMANCE INFORMATION 19
-i-<PAGE>
HIGHLIGHTS
INVESTMENT
OBJECTIVES
AND POLICIES: The SBI Fund, Inc. (the "Fund") is an
open-end management company which
consists of two series, each of which is
diversified: Pool A, which will attempt
to replicate the performance of the
Standard & Poor's 500 Composite Stock
Price Index, an index emphasizing large-
capitalization stocks; and Pool B, which
will attempt to achieve long-term capital
appreciation by investing in a diversi-
fied portfolio of stocks of companies ex-
pected to achieve above average earnings
growth. Companies invested in by Pool B
will generally have a market
capitalization of at least $100 million
and must have an active trading market.
There can be no assurance that the Fund
will, in fact, achieve any of these
objectives.
Pool A may purchase S&P 500 Index futures
contracts for temporary investment of
funds pending investment of such funds in
stocks comprising the Index. Each Pool
may borrow money and may invest a portion
of its assets in cash, cash equivalents
or money market instruments on a
temporary basis. Pool B may invest in
high grade preferred stocks and foreign
stocks.
Pages 5-10
INVESTMENT
ADVISOR: SBI Capital Management and Research
Corporation (the "Investment Advisor"), a
not-for-profit Florida corporation
established by The School of Business and
Industry ("SBI") of Florida Agricultural
and Mechanical University ("Florida
A&M"), is the Fund's investment advisor.
Pages 11-13
EDUCATIONAL
OBJECTIVES: The educational objectives of the Fund
are to provide students at SBI with the
opportunity to participate in the opera-
tion of a registered investment company.
Students will assist in a variety of
capacities in the operations of the In-
vestment Advisor, from clerical
assignments through supporting research
and strategy analysis.
Pages 5-6, 12-13
CERTAIN
CONSIDERATIONS: Neither the Fund nor the Investment
Advisor has any operating history or
record of performance that might assist
investors in their evaluation of the
Fund. The Investment Advisor has no
prior experience in advising a mutual
fund or in using futures.<PAGE>
As mutual funds investing primarily in
common stocks, both Pool A and Pool B are
subject to market risk, including the
possibility that common stock prices will
decline, sometimes substantially, over
short or extended periods. The purchase
of S&P 500 Index futures by Pool A and
the authority of Pool B to purchase
foreign stocks involves certain
additional risks.
Pages 9-10
FEES AND
EXPENSES: The Fund will pay the Investment Advisor
a fee of 0.10% per annum of the average
net assets of Pool A and a fee of 0.50%
per annum of the average net assets of
Pool B. In addition, the Fund will bear
its operating expenses, including
brokerage and other costs incurred in
connection with portfolio transactions,
and 12b-1 fees will be charged.
Pages 4, 13-14
DIVIDEND POLICY: All dividend income and capital gains
generated by each Pool are distributed
each year to respective shareholders of
such Pool. Dividends and distributions
will be paid in additional shares of each
respective Pool unless the stockholder
elects in writing not less than five
business days prior to the payment date
to receive such dividends and
distributions in cash.
Page 15
TAXES: Net income and gains distributed to
shareholders in the form of additional
shares of common stock of the Fund will
be taxable income or capital gains to the
same extent as if such distributions had
been made in cash. Shareholders will be
liable for taxes on their proportionate
share of actually and deemed distributed
income and gains of the Fund, except for
shareholders that are not otherwise
subject to tax on their income.
Pages 15-16
PURCHASING
SHARES: Shares of the Fund will be offered for
sale on a continuous basis through
Lamaute Capital Inc. Shares may be pur-
chased by mail or wire. The minimum
initial investment is $250,000; the
minimum for subsequent investments is
$50,000. No sales commissions will be
charged.
Payments for investment in Pool A will
not be accepted and will be returned to
the subscriber until subscriptions
aggregating at least $20 million are
received. Payments for investment in
Pool B will not be accepted and will be
returned to the subscriber until
subscriptions aggregating at least $1
million are received. Subscriptions to
either Pool may be withdrawn, revoked or
cancelled by written request at any time
prior to the time that such Pool reaches
the minimum levels as set forth herein.
-2-<PAGE>
Share certificates will not be issued.
State Street Bank and Trust Company, the
Fund's transfer agent, will maintain a
record of ownership by shareholders and
will send transaction confirmations and
account statements to each shareholder.
Pages 11, 17-18
REDEEMING
SHARES: Shares may be redeemed at any time by
submitting a written redemption request
to the Transfer Agent. The share price
of each Pool is expected to fluctuate and
may at redemption be more or less than at
the time of initial purchase, resulting
in a gain or loss.
Pages 18-19
-3-<PAGE>
FEE TABLES
POOL A
Shareholder Transaction Expenses (sales
load, redemption fees, exchange fees)
None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees
0.10%
12b-1 Fees
0.05%
Other Expenses 0.15%
Total Fund Operating Expenses
0.30%
Example:
1 Year 3 Years
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period: $3.15 $9.90
POOL B
Shareholder Transaction Expenses (sales
load, redemption fees, exchange fees)
None
Annual Fund Operating Expenses (as a
percentage of average net assets)
Management Fees
0.50%
12b-1 Fees
0.05%
Other Expenses 0.30%
Total Fund Operating Expenses
0.85%
Example:
1 Year 3 Years
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period:
$8.93 $27.89
THE AMOUNTS LISTED IN THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN. WHILE THE EXAMPLE AS-
SUMES A 5% ANNUAL RATE OF RETURN, THE FUND'S ACTUAL PERFOR-
MANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN OF GREATER
OR LESS THAN 5%.
The purpose of the Tables is to help you to understand the
various costs and expenses that investors in the Fund will
bear, directly or indirectly, which will reduce the return
generated by the Fund on an annual basis. The expenses
listed in the Tables as "Other Expenses" are based on esti-
mates for the current fiscal year. See "MANAGEMENT OF THE
FUND -- Expenses" below.
-4-<PAGE>
DESCRIPTION OF THE FUND
The SBI Fund, Inc. (the "Fund") is a diversified,
open-end management company, incorporated in 1993 under the
laws of the State of Maryland. The Fund consists of two se-
ries, each of which is diversified: Pool A, which will at-
tempt to replicate the performance of the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500 Index"); and
Pool B, which will use more active investment portfolio
strategies, subject to investment guidelines and certain
restrictions and limitations. See "-- Investment Policies"
and "-- Certain Fundamental Policies."
INVESTMENT OBJECTIVES AND STRATEGIES
The investment objective of Pool A is to realize
capital gains and income for its shareholders by seeking to
replicate the performance of the S&P 500 Index. The invest-
ment objective of Pool B is to achieve long-term capital ap-
preciation by investing in a diversified portfolio of stocks
of companies expected to achieve above average earnings
growth. Realization of current income is an incidental
consideration. There can be no assurance that the Fund will,
in fact, achieve any of these objectives.
Pool A will seek to replicate the performance of
the S&P 500 Index and thus will generally purchase and sell
only common stocks included in the S&P 500 Index and only in
connection with the addition or withdrawal of capital to or
from Pool A or for purposes of maintaining the portfolio com-
position of the index. On a temporary basis, Pool A may
invest in cash, cash equivalents or money market instruments
and may purchase futures on the S&P 500 Index. See "-- In-
vestment Policies." The Fund is neither sponsored by nor af-
filiated with Standard & Poor's Corporation.
Pool B will be managed on an active basis by the
Investment Advisor, and will invest in common stocks and
preferred stocks. See "MANAGEMENT OF THE FUND -- The In-
vestment Advisor." The investment strategy used in Pool B
will generally focus on long-term capital appreciation with
current income as an incidental consideration. Companies and
industries will be evaluated for investment based on revenue
and earnings growth, balance sheet quality, new and
innovative products, improved efficiencies, changes in tech-
nology and competitive conditions. All companies invested in
by Pool B will generally have a minimum aggregate market
value of at least $100 million and must have an active trad-
ing market. Foreign stocks may be purchased if they are
traded in U.S. markets. Pool B will be prohibited from
purchasing securities of any issuer of which any officer or
director of the Fund or of the Investment Advisor is an
officer or a director. As of the date of this Prospectus,
this policy prohibits investment by Pool B in any security
issued by: Anheuser Busch Companies, Inc.; Champion
International Corp. and Hewlett-Packard Co. Pool B will seek
to maintain liquidity, quality and broad diversification, and
its performance will be evaluated on a continuous basis using
the S&P 500 Index as a benchmark.
EDUCATIONAL OBJECTIVES
The educational objectives of the Fund are to pro-
vide students at SBI with the opportunity to participate in
the operation of a registered investment company. As part of
its curriculum and educational philosophy, SBI has developed
several companies, supervised by SBI faculty and staffed by
SBI students, in a variety of fields to expose SBI students
to the practical implications of classroom knowledge and to
enhance their interpersonal, managerial, organizational and
technical skills outside of the traditional learning environ-
ment. SBI Investments, Inc. ("SBI Investments"), one of
these SBI companies, will further the educational objectives
of SBI by permitting students to assist
-5-<PAGE>
in a variety of capacities in the operations of the
Investment Advisor, from clerical assignments through sup-
porting research and strategy analysis.
The educational objectives of the Fund include:
(a) inspiring students to pursue professional careers in in-
vestment management; (b) developing SBI students' technical
and non-technical competencies, creating a competitive edge
leading to employment in investment management firms; (c)
achieving a stream of competent, experienced graduates who
are able to excel in an investment management environment;
and (d) providing needed financial support to the educational
programs of SBI.
S&P 500 INDEX
Pool A of the Fund will seek to replicate the per-
formance results of the S&P 500 Index by investing in all 500
stocks that comprise the S&P 500 Index in approximately the
same proportions as they are represented in the S&P 500 In-
dex.
The S&P 500 Index is composed of 500 common stocks,
most of which are listed on the New York Stock Exchange, cho-
sen on a statistical basis by Standard & Poor's Corporation
based on the issuer's dominance in its industry group. The
inclusion of a stock in the S&P 500 Index is not based upon a
judgement as to the investment merit of the stock. The 500
securities represent approximately two-thirds of the market
value of all U.S. common stocks.
The weightings of stocks in the S&P 500 Index are
based on each stock's relative total market value; that is,
its market price per share multiplied by the number of shares
outstanding. Due to the market-value weighting, the 50
largest companies in the S&P 500 Index account for
approximately 50% of the Index.
No attempt will be made to manage Pool A's port-
folio in the traditional sense using economic, financial and
market analysis. Pool A will be managed using a computer
program to determine which stocks are to be purchased or sold
to replicate the S&P 500 Index to the extent feasible. Over
time, the correlation between the performance of the S&P 500
Index and Pool A is expected to be at least 0.95. A correla-
tion of 1.00 would indicate perfect correlation, which would
be achieved when the net asset value of Pool A, including the
value of its dividend and capital gains distributions, in-
creases or decreases in exact proportion to changes in the
S&P 500 Index. In an effort to maintain the highest possible
correlation between Pool A and the S&P 500 Index the Invest-
ment Advisor will monitor the tracking accuracy of Pool A on
at least a monthly basis. See "-- Investment
Considerations."
INVESTMENT POLICIES
The Fund may only invest, as described below, in
common and preferred stocks, certain related derivative
securities and temporarily in cash, cash equivalents or money
market instruments.
Neither Pool A nor Pool B may purchase or hold
securities which are illiquid except up to 15% of the net
assets of the Fund.
Common and Preferred Stocks. The stocks eligible
for purchase by the Fund consist exclusively of common and
preferred stocks that are listed on a national securities
exchange or are included in The Nasdaq Stock Market
("Nasdaq").
-6-<PAGE>
Pool A may not invest in any stocks other than
common stocks included in the S&P 500 Index. Pool B may
invest in common stocks and may invest up to 10% of its net
assets in preferred stocks that are rated within the three
highest generic rating categories by a nationally recognized
statistical rating organization ("high grade"). If the
rating of a preferred stock held by Pool B falls below "high
grade," it is the intention of the Fund to dispose of such
security.
Index Futures. The derivative securities eligible
for purchase by Pool A consist exclusively of futures on the
S&P 500 Index which are traded on a national exchange or
board of trade. Pool B will not buy, sell, write, or engage
in any activities involving options, futures or other de-
rivative securities.
Futures on the S&P 500 Index are contracts that ob-
ligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the
difference between the value of the S&P 500 Index at the
close of the last trading day of the contract and the price
at which the agreement is made. No physical delivery of the
underlying stocks in the index is made.
S&P 500 Index futures may be purchased by Pool A
only to invest inflows of cash into Pool A on a temporary
basis, until investment of such funds may be made in the
common stocks comprising the S&P 500 Index. Pool A may not
purchase futures contracts for which aggregate initial margin
deposits exceed 5% of the fair market value of Pool A's
assets. Pool A's policy will be to deposit cash or cash
equivalents equal to the underlying value of any futures
contract being purchased with the futures commission merchant
or in a segregated account with the Fund's Custodian or with
a designated subcustodian at the time of purchase so that the
Pool's investment in futures will not be leveraged. Not more
than 20% of the net assets of Pool A will be invested in
futures at any time. Pool A may elect to close some or all
of its futures positions at any time prior to their
expiration. Futures may be sold by Pool A only to close out
futures positions.
Foreign Securities. The portfolios of Pool A or
Pool B may contain common stocks of foreign issuers, but only
to the extent that such foreign stocks are traded in the
United States markets on a national securities exchange or
are included in Nasdaq. Stocks of foreign issuers may be
purchased directly or through American Depositary Receipts
("ADRs"). ADRs are dollar-denominated receipts issued
generally by domestic banks and representing the deposit with
the bank of a security of a foreign issuer, which are pub-
licly traded in the United States on securities exchanges or
in the over-the-counter market. In the case of Pool A,
common stocks of foreign issuers will be purchased only if
and to the extent that such stocks are included in the S&P
500 Index. As of the date of this Prospectus, there are
thirteen stocks in the S&P 500 Index which are foreign
companies. Common stocks of foreign issuers (not including
ADRs) purchased by Pool B will be limited to 20% of the net
assets of Pool B at the time of purchase. See "-- Investment
Considerations".
Short Sales Against the Box. Pool A may not sell
securities short. Pool B may sell securities short only in
transactions referred to as "short sales against-the-box." A
"short sale" is a sale of a security not owned by the seller
that must be borrowed to make delivery. This technique is
typically used (1) to take advantage of an anticipated
decline in the price or (2) to protect a profit in a long
position. At the time of a short sale the seller borrows
stock for delivery to the purchaser; if the seller can
subsequently buy stock to replace the borrowed stock to the
lender at a lower price, a profit results; however, if the
price rises a loss results. "Selling short against the box"
is selling short stock actually owned by the seller but held
in safekeeping. In short sales
-7-<PAGE>
against the box, while the short position is open Pool B must
own an equal amount of such securities, or by virtue of own-
ership of securities have the right, without payment of
further consideration, to obtain an equal amount of the
securities sold short. No more than 15 percent of Pool B's
net assets will be held as collateral for such short sales at
any one time. See "-- Investment Considerations".
Money Market Instruments on a Temporary Basis.
From time to time, 5 percent or less of the net assets of
Pool A, and 25 percent or less of the net assets of Pool B,
may be invested in cash, cash equivalents or money market
instruments on a temporary basis, pending the investment of
such capital in stocks, pending the distribution of such
capital in connection with the Fund's regular distributions
or the redemption of shares, or for corporate purposes
relating to the operation of the Fund. Cash equivalents and
money market instruments include obligations of the U.S.
government or its agencies; obligations of banks and savings
and loan associations insured by the FDIC or the FSLIC, such
as banker's acceptances and certificates of deposit;
commercial paper; and repurchase agreements with recognized
securities dealers and banks with respect to any of the
foregoing. Such obligations will generally be rated in the
two highest rankings by two rating organizations (or one
rating organization if only one organization has rated the
security). Upon receipt of subscriptions for the initial
minimum investments in Pool A and Pool B and commencement of
operations of such Pools, respectively, the Fund may invest
100 percent of the net assets of the Fund in such cash
equivalents or money market instruments on a temporary basis
pending the investment of such capital in stocks. The Fund
will become invested in accordance with its investment ob-
jectives and policies within six months of starting
operations.
In addition, Pool B may temporarily invest in cash,
cash equivalents or money market instruments (as described
above), without limit in amount, when the Investment Advisor
determines that significant adverse market, economic,
political, or other circumstances require immediate action to
avoid losses. To the extent that Pool B will engage in such
temporary defensive measures, Pool B will not be pursuing its
investment objectives. Pool A seeks to remain substantially
fully invested in a pool of securities which will duplicate
the investment characteristics of the S&P 500 Index and will
not reduce its investment in such securities to protect
against potential stock market declines.
CERTAIN FUNDAMENTAL POLICIES
Neither Pool A nor Pool B may: (i) borrow money
other than from banks for temporary or emergency purposes in
an amount not more than 5 percent of the market value of its
total assets (not including the amount borrowed); (ii) invest
25 percent or more of its total assets in a single industry;
(iii) invest more than 10 percent of its total assets in a
single issuer; (iv) pledge its assets, other than in an
amount up to 10 percent of the market value of its total as-
sets to secure permitted borrowings for temporary or emer-
gency purposes; or (v) invest more than 10 percent of the
market value of its total assets in securities of companies
that (including predecessors or controlling persons) have not
been in operation for at least three consecutive years.
The foregoing describes certain fundamental
policies of Pool A and Pool B that cannot be changed without
approval by the holders of a majority (as defined in the In-
vestment Company Act of 1940, as amended (the "1940 Act")) of
the outstanding voting shares of Class A Common Stock or
Class B Common Stock, respectively. See "INVESTMENT OBJEC-
TIVES AND POLICIES -- Investment Restrictions" in the State-
ment of Additional Information.
-8-<PAGE>
INVESTMENT CONSIDERATIONS
Neither the Fund nor the Investment Advisor has any
operating history or record of performance that might assist
investors in their evaluation of the Fund. The Investment
Advisor has no prior experience in advising a mutual fund or
in using futures.
The Fund has been structured with a view toward en-
suring professional responsibility and prudent investment de-
cisions in accordance with the investment objectives de-
scribed under "Investment Objectives and Strategies." Inves-
tors should recognize, however, that the Fund is designed
also as an educational opportunity for students at SBI.
Investors should be aware of the role students of SBI will
have, through the Investment Advisor, in assisting in its
operations. In particular, students at SBI who are involved
in the Fund will conduct research, analysis and evaluations
of companies. The professional staff of the Investment
Advisor will review such research, analyses and evaluations
in making investment decisions for the Fund. Investment
strategies and investment decisions formulated by the Chief
Investment Officer will be reviewed by the Advisory Board of
the Investment Advisor, which is comprised of investment
professionals. See "MANAGEMENT OF THE FUND -- The Investment
Advisor."
The Chief Investment Officer of the Investment Ad-
visor will devote his full time to the operations of the Fund
(except to the extent that his oversight responsibilities
over the activities of the SBI students involved in the op-
eration of the Fund constitute educational activities). The
other officers of the Fund and of the Investment Advisor are
faculty members and administrators of SBI and will not devote
their full time to the business and operations of the Fund or
of the Investment Advisor, although they will devote as much
of their time to such activities as is reasonably required to
fulfill the duties of their offices. Members of the Advisory
Board of the Investment Advisor are investment professionals
involved in many activities other than the Fund and will not
devote their full time to Fund activities. See "MANAGEMENT
OF THE FUND -- The Investment Advisor." Except for reim-
bursement of expenses of persons not affiliated with SBI,
none of the officers or directors of the Fund or of the
Investment Advisor, or members of the Advisory Board of the
Investment Advisor, will be compensated for their services to
the Fund and/or the Investment Advisor other than the Chief
Investment Officer.
Due to the fact that the officers and directors of
the Investment Advisor and the officers and a majority of the
directors of the Fund are members of the faculty and adminis-
tration of SBI, among other factors, SBI may be deemed to
control the Investment Advisor and the Fund. SBI is a part
of the Florida Agricultural and Mechanical University which
is an educational institution governed by the Board of Educa-
tion of the State of Florida. SBI has established the Fund
as part of its educational curriculum and neither Florida
Agricultural and Mechanical University nor the Board of
Education of the State of Florida has passed upon the terms
of the Fund or this prospectus.
As mutual funds investing primarily in common
stocks, both Pool A and Pool B are subject to market risk,
including the possibility that common stock prices may de-
cline over short periods and possibly over extended periods.
While Pool A will attempt to reflect the perfor-
mance of the S&P 500 Index, the relationship between the per-
formance of Pool A and the performance of the
-9-<PAGE>
S&P 500 Index may be imperfect. In addition to the expenses
of the Fund (see "MANAGEMENT OF THE FUND -- Expenses"), there
may be other factors leading to a discrepancy between the
performance of Pool A and the performance of the S&P 500 In-
dex. Such factors include, among others, risks such as il-
liquidity, imperfect correlation with the index and the be-
havior of speculative investors. Performance of Pool A in
relation to the S&P 500 Index will also depend on the size of
the Pool A portfolio and the size and timing of cash flows
into and out of Pool A.
Using futures involves certain risks. Although
Pool A intends to purchase futures contracts only if there is
an active market for such contracts, no assurance can be
given that a liquid market will exist when Pool A seeks to
close out a futures position. Because of the possibility of
price distortions in the futures market and the imperfect
correlation between movements in the S&P 500 Index and
movements in the price of futures on the S&P 500 Index,
investments in futures on the S&P 500 Index may not have the
same investment results as the S&P 500 Index itself. Since
not more than 20% of the net assets of Pool A may be invested
in futures at any time, Pool A's exposure with respect to
futures will be limited to 20% of its net assets.
The portfolios of Pool A or Pool B may contain
common stocks of foreign issuers. Additional investment
risks of investing in securities of foreign issuers beyond
those typically associated with investing in U.S. companies
include: future political and economic developments, the pos-
sible imposition of withholding taxes on interest income pay-
able on the securities, the possible establishment of ex-
change controls or the adoption of other foreign governmental
restrictions which might adversely affect an investment in
these securities and the possible seizure or nationalization
of foreign deposits. In addition, foreign issuers are sub-
ject to different accounting, auditing, and financial report-
ing standards.
If a short sale against the box is effected, the
appreciation potential of the securities sold short is lost.
The need to maintain the underlying security while a short
position is open or to otherwise cover or maintain segregated
securities in connection with a hedging transaction may
result in the possible inability of the Fund to purchase or
sell a portfolio security at a time that otherwise would be
favorable for it to do so, or the possible need for the Fund
to sell a portfolio security at a disadvantageous time.
While shares of the Fund are freely transferable
upon written notice to the Fund, it is not expected that
shares of the Fund will be listed on any securities exchange
or otherwise easily transferable through an organized market.
Consequently, shareholders may have to request redemption of
their shares by the Fund to liquidate their holdings. See
"SHARES OF THE FUND -- Description of Shares" and "REDEMPTION
OF FUND SHARES."
Pool B investment strategies may result in a rela-
tively high portfolio turnover. Higher turnover rates are
likely to result in comparatively greater brokerage expenses.
See "INVESTMENT OBJECTIVES AND POLICIES -- Portfolio
Turnover" and "BROKERAGE ALLOCATION AND OTHER PRACTICES" in
the Statement of Additional Information.
STRUCTURE OF THE FUND
The Fund is comprised of two series: Pool A, rep-
resented by Class A Common Stock of the Fund, par value $.001
per share (the "Class A Common Stock"), and Pool B, repre-
sented by Class B Common Stock of the Fund, par value $.001
per share (the "Class B Common Stock").
-10-<PAGE>
The capital generated from the sale of Class A Com-
mon Stock will be invested in Pool A and the capital gener-
ated from the sale of Class B Common Stock will be invested
in Pool B.
To ensure that expenses are not excessive in rela-
tion to the size of the Fund, Pool A will not commence opera-
tions until the capital invested in Pool A equals at least
$20 million and Pool B will not commence operations until the
capital invested in Pool B equals at least $1 million. Until
subscriptions are received aggregating at least such minimum
amounts, respectively, no payments for investment will be
accepted and any purchase checks will be returned to the
subscriber. Subscriptions to either Pool may be withdrawn,
revoked or cancelled by written request at any time prior to
the time that such Pool reaches the minimum level to begin
operations. If, however, the net assets of either of the
Pools at any time after commencement of operations falls
below the minimum amounts required for commencement, the
Pools will continue to operate at the lower asset levels. If
commitments are not received to reach the minimum with
respect to each Pool, respectively, within 180 days of
commencing the offering of shares, such offering will be
cancelled. Neither the commencement of operations of Pool A
nor the cancellation of the offering of shares of Class A
Common Stock as a result of failure to reach the minimum
commitment level will affect the commencement of operations
of Pool B or the offering of shares of Class B Common Stock
and vice versa.
Shares of Class A Common Stock and Class B Common
Stock may each be redeemed, as set forth below. See "REDEMP-
TION OF FUND SHARES."
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS OF THE FUND
The Board of Directors of the Fund is responsible
for the general policies of the Fund and for monitoring and
overseeing the activities of the Fund's officers and the ac-
tivities of the Investment Advisor pursuant to its investment
advisory agreement with the Fund.
The members of the Board of Directors consist of
administrators and faculty members of SBI, each of whom is a
director and officer of the Investment Advisor, and outside
individuals not affiliated with the Investment Advisor or
with SBI. The officers of the Fund are comprised of faculty
members and administrative personnel of SBI.
Certain matters, such as approval of the advisory
contract between the Fund and the Investment Advisor,
approval of the Fund's Rule 12b-1 Plan and approval of the
distribution agreement between the Fund and the Distributor,
are required by the 1940 Act to be approved by a majority of
the Fund's disinterested directors.
THE INVESTMENT ADVISOR
SBI Capital Management and Research Corporation, a
not-for-profit Florida corporation established by SBI, is the
Fund's investment advisor. The Investment Advisor is respon-
sible for determining investment strategies and managing the
investments of the Fund. The directors of the Investment Ad-
visor are comprised of the members of the SBI Executive Com-
mittee, ex officio, and the Chief Investment Officer,
-11-<PAGE>
each of whom is also an officer of the Investment Advisor.
The offices of the Investment Advisor are located at One SBI
Plaza, School of Business & Industry, Florida A&M University,
Tallahassee, Florida 32307.
The Chief Investment Officer of the Investment Ad-
visor has the primary responsibility for managing the invest-
ment portfolios of the Fund. As of the date of this
Prospectus, Darrell R. Williams serves as the Chief Invest-
ment Officer and Chief Operating Officer and a director of
the Investment Advisor and serves as the President, Chief
Investment Officer and Treasurer and a director of the Fund.
Prior to joining the Investment Advisor in 1992, Mr. Williams
was a Vice President for two years at Precision Asset
Management, Inc., a registered investment advisor which
managed institutional portfolios. For the two years prior
thereto, he was a Financial Consultant at Shearson Lehman
Hutton, Inc. Presently, Mr. Williams serves as Chairman of
the Leon County Investment Oversight Committee of Leon
County, Florida. Mr. Williams has been a member of such
Committee since 1994. See "MANAGEMENT OF THE FUND" in the
Statement of Additional Information.
Members of the Advisory Board of the Investment Ad-
visor (the "Advisory Board") are appointed by the Board of
Directors of the Investment Advisor. The Advisory Board is
comprised of outside executive investment management offi-
cials with expertise in the areas of finance and investments
and the Chairman of the Investment Advisor. As of the date
of this Prospectus, the Advisory Board consists of Messrs.
Leon G. Cooperman, Dale F. Frey, Robert M. Gardiner, Robert
G. Kirby and Dean Sybil C. Mobley. The Advisory Board
reviews and advises on the investment strategies utilized in
investing the assets of the Fund, the universe of companies
eligible for investment by Pool B and the parameters within
which such investments may be made; and reviews the
implementation of such strategies on an ongoing basis. The
Advisory Board meets quarterly.
The activities of the Investment Advisor are the
principal mechanism by which the educational objectives of
the Fund are pursued, through the participation of the SBI
student company, SBI Investments, Inc. Undergraduate
students at SBI will perform mostly clerical work for SBI
Investments, such as accumulating information and maintaining
files on companies for possible investment, which will help
them learn about the process of making investment decisions
and provide the information necessary to allow research and
analysis to be conducted by graduate-level MBA candidates at
SBI. Through a graduate-level course at SBI, MBA students
will conduct research and perform analyses -- from broad
market research to industry group and individual company
analysis -- to assist in the formulation of investment recom-
mendations for the Fund. All student activity will be under
the direction and supervision of the Chief Investment Officer
of the Investment Advisor and SBI faculty members.
SBI students who participate in the operations of
SBI Investments will be selected by the Chief Investment Of-
ficer of the Investment Advisor and SBI faculty members based
on their academic qualifications, previous experience in the
SBI Professional Development Program and internships, and
faculty recommendations. Student involvement in the opera-
tions of SBI Investments will depend on individual educa-
tional level and experience. Because many SBI students at-
tend school in the summer, student participation in SBI In-
vestments will occur all year-round.
Student involvement in the Fund through SBI
Investments will be a part of the curriculum of SBI; thus,
students will not be compensated by the Investment Advisor or
the Fund for work performed for the Investment Advisor or the
Fund. While student involvement in the operations of the
Fund and the Investment Advisor is the mechanism
-12-<PAGE>
for achieving the educational objectives of the Fund, all
investment policies, guidelines and strategies and decisions
will be determined by the professional staff of the Invest-
ment Advisor.
Pursuant to the Investment Advisory Agreement be-
tween the Fund and the Investment Advisor, the Fund has
agreed to pay the Investment Advisor a fee of 0.10% per annum
of the average net assets of Pool A and a fee of 0.50% per
annum of the average net assets of Pool B, in each case pay-
able by the Fund quarterly in arrears. The fees payable to
the Investment Advisor accrue on a daily basis and, to the
extent unpaid, will be deducted from the net asset value of
the applicable Pool for purposes of determining the purchase
price and the redemption price for shares.
Income earned by the Investment Advisor will be
used to fund its operations. Excess net income retained by
the Investment Advisor will be distributed to SBI from time
to time to further its scholastic and educational programs.
The Investment Advisor has received from the Internal Revenue
Service recognition of its tax-exempt status as an
organization described in Section 501(c)(3) of the Internal
Revenue Code.
ADMINISTRATIVE, TRANSFER AGENT AND CUSTODIAL SERVICES
State Street Bank and Trust Company ("State Street
Bank"), P.O. Box 1978, Boston, MA 02105-1978, with offices at
1 Heritage Drive, North Quincy, Massachusetts 02171, will
provide administrative services to the Fund and will act as
its custodian and transfer agent. The administrative
services provided by State Street Bank include bookkeeping
services and production of various reports, and calculation
of net asset value of each of Pool A and Pool B daily.
Annual fees for such services will be billed and payable
monthly based on average monthly net assets and reimbursement
for out-of-pocket expenses. Total compensation during the
first year of operation of the Fund for all services provided
by State Street Bank will not exceed .10% of the average net
assets of the Fund.
EXPENSES
In addition to the fees payable to the Investment
Advisor and to State Street Bank for the various services
provided to the Fund, the Fund will incur a variety of ex-
penses that will be paid out of the assets of the Fund. Such
expenses may include brokerage fees, fees payable to the
Fund's auditors, legal fees, postage and printing expenses,
taxes, if any, and other administrative expenses. The mem-
bers of the Board of Directors of the Fund who are unaffili-
ated with SBI may be reimbursed by the Fund for any out-of-
pocket expenses incurred by them in connection with the per-
formance of their duties but will not otherwise be compen-
sated by the Fund.
In addition, the Fund has adopted a Rule 12b-1 Plan
which provides for the payment by the Fund of an amount equal
to .05% of the average net assets of Pool A and Pool B in
each year to the distributor of the shares of the Fund, out
of which the distributor will pay certain expenses incurred
in connection with the distribution of the Fund's shares.
Distribution expenses paid pursuant to the Rule 12b-1 Plan
will be allocated between Pool A and Pool B based on the
relative average net asset size of each of the Pools and
therefore Rule 12b-1 fees paid by Pool A may be used to
finance the distribution of shares of Pool B or vice versa.
To the extent that particular expenses incurred by
the Fund relate specifically to activities of Pool A or Pool
B, such expenses are allocated to, and deducted from
-13-<PAGE>
the assets of, such Pool. Those expenses which cannot be so
allocated are allocated between Pool A and Pool B in pro-
portion to the relative average net assets of Pool A and Pool
B during the period in which the expenses are incurred or
pursuant to such other allocation determined by the Board of
Directors to be fair and equitable. Each Pool of the Fund
may create reserves for its anticipated expenses, which will
reduce the net asset value of shares of that Pool when such
reserves are created.
The expenses relating to the educational objectives
of the Fund, including the costs associated with the educa-
tion of the students of SBI and their participation in the
operations of the Fund through SBI Investments, will be borne
by SBI and will not constitute expenses of the Fund or the
Investment Advisor. SBI has paid the Fund's initial
organizational expenses, including the initial registration
fee with the Securities and Exchange Commission. Members of
the faculty and administration of SBI will not be compensated
by the Fund for their activities in connection with the Fund
or the Investment Advisor. In particular, the salary of the
Chief Investment Officer of the Investment Advisor is not an
expense of the Fund.
SHARES OF THE FUND
DESCRIPTION OF SHARES
The Class A Common Stock and Class B Common Stock
together constitute the common stock of the Fund and are the
only authorized capital stock of the Fund. Each share is en-
titled to one vote. Generally, including for such matters as
the election of directors of the Fund and the approval of the
Fund's independent public accountants, the holders of Class A
Common Stock and of Class B Common Stock will vote together
as one class, with each share having the same voting power,
regardless of the respective net asset values represented by
such shares. When required by law that a class vote sep-
arately, including for such matters as the approval or
termination of the advisory contract between the Fund and the
Investment Advisor, the holders of shares of each of the
Class A Common Stock and Class B Common Stock will vote as
two separate classes. In any instance in which either class
would not be affected by a matter requiring a shareholder
vote, the vote of the shareholders of such class will not be
required.
There normally will be no annual meetings of
shareholders for the purpose of electing directors unless and
until such time as less than a majority of the directors
holding office have been elected by the shareholders of the
Fund, nor for the purpose of taking other action unless and
until such action is required by the 1940 Act or state law.
Shareholders may remove a director with or without cause by
the affirmative vote of a majority of the outstanding shares
of common stock of the Fund, voting together as a single
class.
The Class A Common Stock is entitled to a prefer-
ence over the Class B Common Stock with respect to the assets
of Pool A, and the Class B Common Stock is entitled to a
preference over the Class A Common Stock with respect to the
assets of Pool B. Notwithstanding these preferences, the to-
tal assets of the Fund are available to satisfy the claims of
any creditors of the Fund, regardless of whether such claims
arise in connection with activities relating to Pool A or
Pool B.
Shareholders of the Fund may freely transfer their
shares, upon written notice to the Fund. It is not expected,
however, that shares of the Fund will be listed on any secu-
rities exchange or otherwise easily transferable through an
organized market. Consequently, shareholders may have to re-
quest redemption of their shares by the Fund
-14-<PAGE>
to liquidate their holdings. See "REDEMPTION OF FUND
SHARES." Shareholders are entitled to redeem shares of Class
A Common Stock in exchange for shares of Class B Common
Stock, and vice versa, at prices based upon the relative net
asset value per share of Pool A and Pool B, respectively.
DISTRIBUTIONS AND DIVIDENDS
All dividend income and capital gains payable in
respect of Class A Common Stock (i.e., dividend income and
capital gains generated by Pool A) are distributed each year
to shareholders of Class A Common Stock. Similarly, all
dividend income and capital gains payable in respect of Class
B Common Stock (i.e., dividend income and capital gains gen-
erated by Pool B) are distributed each year to shareholders
of Class B Common Stock.
Dividends and distributions will be paid in ad-
ditional shares of Class A Common Stock or Class B Common
Stock, as the case may be, based on the net asset value on
the payment date, or such other date as the Fund may deter-
mine, unless the stockholder elects in writing not less than
five business days prior to the payment date to receive such
dividends and distributions in cash. Such election should be
submitted to the Transfer Agent. For federal and state in-
come tax purposes, however, distributions of additional
shares of the Fund made to shareholders in respect of divi-
dend income and capital gains will constitute taxable income
to the shareholders of the Fund to the same extent as if such
distributions were made in cash. See "-- Certain Tax Conse-
quences" and "DESCRIPTION OF THE FUND -- Investment
Considerations."
CERTAIN TAX CONSEQUENCES
The following is only a general summary of certain
tax considerations affecting each series of the Fund and its
shareholders. No attempt is made to present a detailed ex-
planation of the tax treatment of the series or of their
shareholders, and the discussion here is not intended as a
substitute for careful tax planning. The Fund is not managed
with respect to tax outcomes for its shareholders.
The Fund intends to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986,
as amended (the "Code"). Under the Code, each series is
treated as a separate entity for tax purposes. Each series
intends to qualify as a regulated investment company under
Subchapter M of the Code. If a series so qualifies, that
series will not be subject to federal income taxes on its net
investment income and capital gains, if any, which such
series distributes to its shareholders, provided that at
least 90 percent of such series' "investment company taxable
income" (generally, net investment income and the excess of
net short-term capital gain over net long-term capital loss)
for the taxable year is distributed, and provided that such
series meets certain other requirements imposed by the Code.
THE FUND WILL DISTRIBUTE ALL OF ITS NET INCOME AND
GAINS TO SHAREHOLDERS IN THE FORM OF ADDITIONAL SHARES OF
COMMON STOCK OF THE FUND OR IN CASH, AT THE ELECTION OF THE
SHAREHOLDER, AND SUCH DISTRIBUTIONS WILL BE TAXABLE INCOME OR
CAPITAL GAINS TO THE SAME EXTENT AS IF SUCH DISTRIBUTIONS HAD
BEEN MADE IN CASH, REGARDLESS OF THE MANNER IN WHICH THEY ARE
MADE. SHAREHOLDERS WILL BE LIABLE FOR TAXES ON THEIR
PROPORTIONATE SHARE OF ACTUALLY AND DEEMED DISTRIBUTED INCOME
AND GAINS OF THE FUND, EXCEPT FOR SHAREHOLDERS THAT ARE NOT
OTHERWISE SUBJECT TO TAX ON THEIR INCOME.
-15-<PAGE>
All dividends paid or distributed, or deemed to be
paid or distributed (in the form of additional shares of com-
mon stock of the Fund), out of investment company taxable in-
come will be taxable as ordinary income to the shareholders.
Any "net capital gain" (the excess of net long-term capital
gain over net short-term capital loss) actually distributed
to a shareholder in cash or deemed distributed to a share-
holder in the form of additional shares of common stock of
the Fund is taxable as long-term capital gain to such share-
holder, regardless of the length of time such shareholder has
owned the shares. Generally, such dividends and distribu-
tions are taxable in the year in which received, but divi-
dends and distributions declared in October, November or De-
cember of any year to shareholders of record on a date in
such month are treated as paid on December 31 of such year if
they are paid during January of the following calendar year.
With respect to shareholders who are individuals,
trusts or estates, the Taxpayer Relief Act of 1997 (the
"Taxpayer Relief Act") reduces the maximum tax rate on net
capital gains derived from securities held for more than 18
months to 20% and provides a maximum tax rate on net capital
gains derived from securities held for more than one year and
for not more than 18 months ("mid-term gains") of 28%. A
maximum 18% rate will ultimately be available to individuals,
trusts and estates for net gain on the disposition of certain
securities held more than 5 years upon their disposition.
The Treasury Department is authorized to issue regulations
for application of the reduced rates to pass-through
entities, including regulated investment companies.
Shareholders who are individuals, trusts or estates may
therefore qualify for the reduced rate of tax on capital gain
distributions paid by the Fund.
A four percent nondeductible federal excise tax is
imposed on a regulated investment company that fails to dis-
tribute substantially all of its ordinary income and capital
gain net income for each calendar year. Currently, both Pool
A and Pool B intend to make sufficient distributions of their
ordinary income and capital gain net income to avoid
liability for this excise tax.
Future legislative changes may materially affect
the tax consequences of investing in the Fund. Shareholders
are urged to consult their tax advisors for the application
of these rules (and other potentially relevant rules) to
their particular circumstances. Shareholders are also urged
to consult their tax advisors concerning the application of
state and local income taxes and of foreign taxes to invest-
ments in the Fund, which may differ from the United States
federal income tax consequences described above.
OTHER INFORMATION
The Fund may be deemed to be controlled by SBI or
the Investment Advisor may be deemed to control the Fund as a
result of its influence over the management and operations of
the Fund.
As of November 30, 1997, the Investment Advisor is
the sole shareholder of the Fund and holds 100 shares of
Class A Common Stock and 100 shares of Class B Common Stock.
Shareholder inquiries regarding the Fund should be
made in writing to the offices of the Investment Advisor, SBI
Capital Management and Research Corporation, at One SBI
Plaza, School of Business & Industry, Florida A&M University,
Tallahassee, Florida 32307, or by telephone during regular
business hours at (904) 561-2661.
-16-<PAGE>
PURCHASE OF FUND SHARES
Shares of Class A Common Stock and of Class B Com-
mon Stock are offered for sale by Lamaute Capital Inc., 8383
Wilshire Boulevard, Suite 840, Beverly Hills, California
90211 (the "Distributor") on a continuous basis.
Initial purchases of shares of the Fund must be ac-
companied by an SBI Fund Account Application and any required
legal documentation. Copies of SBI Fund Account Applications
are available from the Distributor. Payments for shares of
the Fund may be made by check or by wire transfer. Investors
should mail a completed SBI Fund Account Application and any
required legal documentation and accompanying payment by
check, payable to The SBI Fund, to: The SBI Fund, c/o State
Street Bank and Trust Company, P.O. Box 1978, Boston, MA
02105-1978. Hand-delivered SBI Fund Applications and pay-
ments by check will be accepted at State Street Bank and
Trust Company, 1 Heritage Drive, North Quincy, MA 02171,
during normal business hours. If payments will be made by
wire transfer, send the completed SBI Fund Account
Application and any required legal documentation to The SBI
Fund c/o State Street Bank and Trust Company at the address
above and wire funds as follows:
Receiving Bank
Information: State Street Bank and Trust
Company
225 Franklin Street
Boston, Massachusetts 02110
ABA No.: 011000028
For subscriptions in Pool A:
For Account of: BNF=AC-59845909
Mutual Funds F/B/O
The SBI Fund, Inc. - Pool A
For Subaccount of: OBI=The SBI Fund, Inc. - Pool A
Shareholder Name/Account Number
For subscription in Pool B:
For Account of: BNF=AC-59845917
Mutual Funds F/B/O
The SBI Fund, Inc. - Pool B
For Subaccount of: OBI=The SBI Fund, Inc. - Pool B
Shareholder Name/Account Number
Before wiring any funds, please contact the Fund at
(904) 561-2661.
Federal regulations require that you provide a cer-
tified taxpayer identification number upon opening your ac-
count. See the SBI Fund Account Application for further in-
formation.
Shareholders who already own shares of the Fund may
purchase additional shares by sending a completed SBI Fund
Additional Investment Application and check, or wire
transfer, to The SBI Fund, c/o State Street Bank and Trust
Company, as described above.
-17-<PAGE>
The minimum initial investment in either Pool A or
Pool B is $250,000, and incremental investments in Pool A or
Pool B must be at least $50,000. The Fund reserves the
right, in its sole discretion, to waive the minimum
investment of certain investors without limitation.
The Fund reserves the right to reject any applica-
tion for a purchase of shares of the Fund.
Share certificates will not be issued. State
Street Bank and Trust Company, the Fund's transfer agent,
will maintain a record of ownership by shareholders and will
send transaction confirmations and account statements to each
shareholder.
The share price for Class A Common Stock and Class
B Common Stock will equal the per share net asset value of
Pool A and Pool B, respectively, next determined after a
subscription is received which is complete, is accompanied by
any required legal documentation and includes payment, and
will therefore fluctuate over time. The Fund does not charge
any "load" or sales commission.
The net asset value of Pool A and Pool B is deter-
mined once daily as of the close of every day that the New
York Stock Exchange is open for trading. Net asset value of
a Pool is determined by subtracting the liabilities of such
Pool from the value of the total assets of such Pool and
dividing the resulting amount by the number of shares and
fractional shares outstanding which constitute an interest in
such Pool. In determining net asset value, the Fund values
its securities daily on the basis of the closing sales price
or, if no sale occurred, at the last price traded on the New
York Stock Exchange, other national securities exchange or
the over-the-counter market. See the section entitled
"PURCHASE, REDEMPTION AND PRICING OF SECURITIES -- Pricing"
in the Statement of Additional Information for further
information.
The Fund will pay expenses incurred in connection
with the distribution of the shares of the Fund pursuant to a
Rule 12b-1 Plan. See "MANAGEMENT OF THE FUND -- Expenses."
The Board of Directors of the Fund may, in its dis-
cretion, suspend the sale of additional shares in the Fund,
at any time or from time to time, if it determines that such
a suspension would be in the best interests of the Fund and
its shareholders.
REDEMPTION OF FUND SHARES
A shareholder may request redemption of its shares
of Class A Common Stock or Class B Common Stock at any time.
Redemption requests should be made by written request refer-
encing the Fund and transmitted to the Transfer Agent, State
Street Bank and Trust Company, at P.O. Box 1978, Boston, MA
02105-1978. When a request to redeem shares of the Fund is
received by the Transfer Agent in proper form, the Fund will
redeem the shares at their net asset value at the close of
business on the day such request is received (or, if such no-
tice is received after the close of business on any day, at
their net asset value at the close of business on the day
following the day such notice is received). The Fund ordi-
narily will make payment for all redeemed shares within seven
days after receipt by the Transfer Agent of a redemption re-
quest, except as provided by applicable securities laws,
rules and regulations.
Shareholders may redeem shares of Class A Common
Stock or Class B Common Stock in exchange for shares of Class
B Common Stock or Class A Common
-18-<PAGE>
Stock, respectively, instead of for cash. Any such
redemption and exchange must meet the applicable minimum
initial investment level or minimum incremental investment
level described above, provided, however, that the Fund may,
in its sole discretion, waive the minimum investment of
certain investors without limitation. Any shareholder re-
questing to redeem shares of one class of common stock of the
Fund in exchange for shares of the other class should specify
this clearly in the redemption request. If a redemption re-
quest does not specify the manner of redemption, or if it re-
quests an exchange transaction but fails to meet the ap-
plicable minimum investment levels described above, it will
be treated as a request to redeem the shares for cash. While
the Fund is authorized to pay certain redemptions in assets
of the Fund other than cash, the Fund, in the case of a re-
demption and exchange, will not use such assets as payment
(in whole or in part) for such redemption.
The Fund will not mail redemption checks (or other-
wise deliver payment for such redemption) to shareholders who
redeem shares that were recently purchased by check until the
clearance of such check and the receipt by the Fund of the
funds represented thereby. The redemption proceeds, in such
cases, may be delayed up to 15 calendar days from the
purchase date.
SHARES OF CLASS A COMMON STOCK AND SHARES OF CLASS
B COMMON STOCK ARE SEPARATELY REDEEMABLE. THEREFORE, ANY RE-
DEMPTION REQUEST SHOULD SPECIFY CLEARLY THE NUMBER OF SHARES
AND THE CLASS OF SHARES OF COMMON STOCK FOR WHICH REDEMPTION
IS BEING REQUESTED.
Redemption requests may be made by mail or deliv-
ered by hand. A request to redeem shares must be signed by
each holder of such shares, including each owner of a joint
account. Each signature must be guaranteed by a commercial
bank or trust company located or having a correspondent in
New York City or by a member firm of a national securities
exchange. If a shareholder wants redemption proceeds to be
wired, the redemption request must so state and must include
wiring instructions.
PERFORMANCE INFORMATION
For the purpose of advertising, performance will be
calculated on the basis of average annual total return. Ad-
vertisements also may include performance calculated on the
basis of total return.
Average annual total return is calculated pursuant
to a standardized formula which assumes that an investment in
the Fund was purchased with an initial payment of $1,000 and
that the investment was redeemed at the end of a stated
period of time, after giving effect to the reinvestment of
dividends and distributions during the period. The return is
expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value
of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average an-
nual total return for one, five and ten year periods, or for
shorter time periods depending upon the length of time during
which the Fund has operated. Computations of average annual
total return for periods of less than one year represent an
annualization of the actual total return for the applicable
period.
Total return is computed on a per share basis and
assumes the reinvestment of dividends and distributions.
Total return generally is expressed as a percentage rate
which is calculated by combining the income and principal
changes for a specified
-19-<PAGE>
period and dividing by the net asset value per share at the
beginning of the period. Advertisements may include the
percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which
assumes the application of the percentage rate of total
return.
Performance will vary from time to time and past
results are not necessarily representative of future results.
Performance information, such as that described above, may
not provide a basis for comparison with other investments or
other investment companies using a different method of
calculating performance.
Comparative performance information may be used
from time to time in advertising the Fund's shares, including
data from Standard & Poor's 400 MidCap Index, Standard &
Poor's 500 Composite Stock Price Index, Lipper Analytical
Services, Inc., and other industry publications. The Fund
may cite in its advertisements or in reports or other
communications to shareholders, historical performance of
unmanaged indexes as reported in Ibbotson, Roger G. and Rex
A. Sinquefield, Stocks, Bonds, Bills and Inflation (SBBI),
1982, updated annually in the SBBI Yearbook, Ibbotson
Associates, Chicago. In its advertisements, the Fund also
may cite the aggregate amount of assets committed to index
investing by pension funds and/or other institutional inves-
tors and may refer to or discuss then current or past
economic or financial conditions, developments or events.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CON-
TAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING OF
THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMA-
TION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CON-
STITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO
WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
-20-<PAGE>
SUBJECT TO COMPLETION DATED DECEMBER 5, 1997
Information contained herein is subject to completion or
amendment. A registration statement relating to these secu-
rities has been filed with the Securities and Exchange Com-
mission. These securities may not be sold nor may any offers
to buy be accepted prior to the time the registration state-
ment becomes effective. This Statement of Additional Infor-
mation does not constitute a prospectus.
------------------------------------------------------------
THE SBI FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER __, 1997
-------------------------------------------------------------
This Statement of Additional Information, which is
not a prospectus, supplements and should be read in conjunc-
tion with the current Prospectus of The SBI Fund, Inc. (the
"Fund"), dated December __, 1997, as it may be revised from
time to time. To obtain a copy of the Fund's Prospectus,
please contact Lamaute Capital Inc., 8383 Wilshire Boulevard,
Suite 840, Beverly Hills, California 90211, (213) 655-5013.
Capitalized terms used herein without definition
have the same meanings as in the Fund's Prospectus.
TABLE OF CONTENTS
General Information and History......................... B-2
Investment Objectives and Policies...................... B-2
Management of the Fund.................................. B-4
Control Persons and Principal Holders of Securities..... B-6
Investment Advisory and Other Services.................. B-7
Brokerage Allocation and Other Practices................ B-9
Capital Stock........................................... B-9
Purchase, Redemption and Pricing of Securities.......... B-10
Tax Status.............................................. B-11
Distributor............................................. B-13
Performance Data........................................ B-13
B-1<PAGE>
GENERAL INFORMATION AND HISTORY
The SBI Fund, Inc. (the "Fund") is a diversified,
open-end management company, incorporated in 1993 under the
laws of the State of Maryland. The Fund consists of two se-
ries, each of which is diversified: Pool A, which will
attempt to replicate the performance of the S&P 500 Index;
and Pool B, which will involve more active investment
portfolio strategies, subject to a number of restrictions and
limitations. See "DESCRIPTION OF THE FUND -- Investment
Policies" and "-- Certain Fundamental Policies" in the Fund's
Prospectus. Neither the Fund nor the Investment Advisor has
any operating history or record of performance that might
assist investors in their evaluation of the Fund.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "DESCRIPTION OF THE FUND."
INVESTMENT RESTRICTIONS
(1) The Fund has adopted the following investment
restrictions as fundamental policies for each of its series.
If a fundamental policy affects Pool A or Pool B, it may not
be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of the holders of the Fund's Class A Common
Stock, par value $.001 per share (the "Class A Common
Stock"), or the holders of the Fund's Class B Common Stock,
par value $.001 per share (the "Class B Common Stock"), re-
spectively. Neither Pool A nor Pool B may:
(a) Purchase securities in an amount or a manner
that would cause such series not to be a "diversified,"
"non-concentrated" fund under the 1940 Act or would
cause such series not to be a "regulated investment com-
pany" under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), or change the subclas-
sification of such series from "diversified" to "non-
diversified."
(b) Invest 25 percent or more of such series' to-
tal assets in any single industry, or 10 percent or more
of such series' total assets in any single issuer.
(c) Borrow money, except from banks for temporary
or emergency purposes in an amount not in excess of 5
percent of the market value of its total assets (not in-
cluding the amount borrowed).
(d) Pledge any of its assets, except that up to 10
percent of the market value of its total assets may be
pledged in connection with borrowings permitted by
clause (c) above.
(e) Purchase securities on margin, except such
short-term credits as are necessary for the clearance of
transactions.
(f) Effect a short sale of any security other than
a short sale "against the box" or otherwise write put or
call options.
B-2<PAGE>
(g) Lend any of its assets other than (i) through
the purchase of a portion of publicly distributed notes,
bonds, negotiable certificates of deposit or other debt
securities for purposes of temporary cash investments,
or (ii) loans of securities held by such series to bro-
kers, dealers and other financial institutions, provided
that such loans are collateralized in accordance with
applicable regulatory requirements.
(h) Underwrite or participate in any underwriting
of securities, except to the extent that, in connection
with the disposition of portfolio investments, such se-
ries may be deemed to be an underwriter under the fed-
eral securities law.
(i) Buy securities of any company that (including
its predecessors or controlling persons) has not been in
business at least three continuous years if such invest-
ment at the time of purchase would cause more than 10
percent of the total assets of such series (at market
value) to be invested in securities of such companies.
(j) Buy or hold securities of any issuer if, to
the knowledge of the Fund, any officer or director of
the Fund's investment advisor owns individually 0.5 per-
cent or more of a class of securities of such issuer.
(k) Purchase securities of any other investment
company registered under the 1940 Act or exempt from
registration under the 1940 Act other than money market
funds subject to restrictions under the 1940 Act, except
as part of a merger, consolidation or other
reorganization.
(l) Participate on a joint or joint and several
basis in any trading account in securities.
(m) Buy or sell any real estate or real estate
mortgage, commodities or commodity contracts (other than
futures on the S&P 500 Index to the extent permitted be-
low), except indirectly through investment in publicly
traded equity securities of real estate investment
trusts or similar entities.
(n) Issue senior securities (other than to the
extent that borrowings permitted by clause (c) above
result in the issuance of senior securities).
(o) Invest in securities the disposition of which
would be subject to legal restriction.
(p) Engage in arbitrage or trade for the control
or management of another company.
(q) Purchase securities (including derivative se-
curities) that are not listed or admitted to trading on
a nationally recognized securities exchange in the Unit-
ed States or included in Nasdaq.
(r) Purchase debt securities or securities other
than equity securities, except for (i) debt securities
that are purchased in connection with temporary
investments in cash equivalents or money market
instruments and (ii) futures on the S&P 500 Index.
(s) Purchase securities of any company in which
the Board of Directors has expressly prohibited invest-
ment by such series.
B-3<PAGE>
(2) The following are significant investment
policies of the Registrant which are not deemed fundamental
and which may be changed without shareholder approval:
(a) The Fund is permitted to lend its portfolio
securities provided that (i) the Fund receives at least
100 percent cash collateral from the borrower; (ii) the
borrower adds to such collateral whenever the price of
the securities rises (i.e., marked-to-market on a daily
basis); (iii) the Fund may terminate the loan at any
time; (iv) the Fund receives reasonable interest on such
loan and any dividends, interest or other distributions
on the loaned securities, and any increase in the market
value of the loaned securities; (v) the Fund is not re-
quired to pay any service, placement or other fees in
connection with such loan; and (vi) while voting rights
on the loaned securities may pass to the borrower, the
Fund will terminate the loan and regain the right to
vote the securities if a material event adversely
affecting the investment occurs. Up to 30% of the
assets of the Fund may be loaned; however, due to the
size of the Fund, the Fund has no intention of engaging
in securities loans in the foreseeable future.
(b) Although the Fund is permitted to invest its
assets in shares of money market funds, the Fund has no
intention of purchasing shares of money market funds in
the foreseeable future.
PORTFOLIO TURNOVER
The investment strategy of Pool A is not expected
to exceed an annual portfolio turnover rate of 10 percent.
Pool B will employ multiple investment strategies, some of
which may involve high portfolio turnover. Consequently, the
portfolio turnover of Pool B is expected to be higher than
that of Pool A but is not expected to exceed 100 percent an-
nually. See "BROKERAGE ALLOCATION AND OTHER PRACTICES."
MANAGEMENT OF THE FUND
Initial members of the Board of Directors of the
Fund and officers of the Fund, together with information as
to their principal occupations during at least the last five
years, are shown below.
_____________________________________________________________
(1) (2) (3)
Principal
Name, Address Positions Held Occupation(s)
and Age with the Fund During Past 5 Years
Amos Bradford (51)* Director Program Director,
Professor and Member
of Executive
Committee, SBI from
before 1992 to
present; Director of
Investment Advisor
since 1989; and
President and
Treasurer of
Investment Advisor
since July, 1993.
B-4<PAGE>
Vivian Carpenter (45)* Director Assistant Dean, SBI
from August, 1995 to
present; Professor
and Member of
Executive Committee,
SBI from August, 1992
to present; Director
of Academic Programs,
SBI from August, 1992
to August, 1995;
Manager, Atwater
Entertainment
Associates, L.L.C.,
from 1995 to present;
Director of
Investment Advisor
since August, 1992;
and Executive Vice
President and Sec-
retary of Investment
Advisor since July,
1993.
Marx Cazenave (57) Director President and Chief
Executive Officer,
Progress Investment
Management Co. (a
registered investment
advisor), 1990 to
present; President,
Cazenave & Company (a
registered broker-
dealer), 1986 to
present.
Lucille Dabney (43) Director Director, The
Cultural Arts Council
of Houston, from Sep-
tember, 1992 to
present.
Sybil Mobley (72)* Director Dean of SBI from
before 1992 to the
present; Director of
Investment Advisor
since February, 1989;
Chairman of Invest-
ment Advisor since
July, 1993; Director
of Anheuser Busch
Companies, Inc. and
Champion Interna-
tional Corp.
Craig Washington (37) Director Controller and U.S.
Field Procurement
Manager, Hewlett-
Packard Co., from
before 1992 to the
present; Partner,
Ledger Plus
(accounting services)
from October, 1994 to
the present.
Darrell Williams (40)* Director, Chief Operating
President, Officer and Chief
Chief Investment Officer of
Investment Investment
Officer Advisor since July,
and 1993; Director of
Treasurer Investment Advisor
since September,
1992; currently
Chairman of the Leon
County Investment
Oversight
Committee and a
member of such
Committee from 1994
to present.
In May, 1992, Mr.
Williams consented,
for purposes of such
proceeding only,
without admitting or
denying any
allegations, to a
violation of the NASD
Rules of Fair
Practice relating to
his failure to pay an
arbitration award of
$4,000 which resulted
from a dispute
between Mr. Williams
B-5<PAGE>
and a brokerage firm
at which he was
employed. The NASD
fined Mr. Williams
and prohibited Mr.
Williams from asso-
ciation with any
member firm; pro-
vided, however, that
the NASD provided
that the prohibition
would be lifted upon
Mr. Williams
satisfying such
arbitration award.
Mr. Williams is
presently paying the
arbitration award.
Marion Sillah (52) Vice Assistant Professor
President of Business
and Administration, SBI,
Secretary from August,
1994 to present;
Associate Professor
of Business
Administration,
Morehouse College,
Department of
Economics and
Business, from before
1992 to August, 1994.
* indicates a director who is an "interested person" of the
Fund, as defined in the 1940 Act.
The address of all Fund officers and directors is
c/o One SBI Plaza, School of Business and Industry, Florida
A&M University, Tallahassee, Florida 32307. Directors and
officers of the Fund do not own any shares of common stock of
the Fund as of November 30, 1997. Neither officers nor di-
rectors of the Fund will be compensated for their service in
such capacities; however, directors who are not affiliated
with SBI may be reimbursed for their out-of-pocket expenses.
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "MANAGEMENT OF THE FUND."
There normally will be no meetings of shareholders
for the purpose of electing directors unless and until such
time as less than a majority of the directors holding office
have been elected by the shareholders of the Fund. Share-
holders may remove a director by the affirmative vote of a
majority of the outstanding shares of common stock of the
Fund, voting together as a single class. In addition, the
Board of Directors is required to call a meeting of share-
holders for the purpose of voting upon the question of re-
moval of any director when requested in writing to do so by
the shareholders of record of not less than 10 percent of the
Fund's outstanding voting securities.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
SBI or the Investment Advisor (SBI Capital Manage-
ment and Research Corporation, a Florida not-for-profit cor-
poration) may be deemed to control the Fund as a result of
its influence over the management and operations of the Fund.
SBI and the Investment Advisor are located at One SBI Plaza,
School of Business and Industry, Florida A&M University, Tal-
lahassee, Florida 32307. See "INVESTMENT ADVISORY AND OTHER
SERVICES -- Investment Advisor." As of November 30, 1997,
the Investment Advisor is the sole shareholder of the Fund
and holds 100 shares of Class A Common Stock and 100 shares
of Class B Common Stock of the Fund.
B-6<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The following information supplements and should be
read in conjunction with the sections in the Fund's Prospec-
tus entitled "MANAGEMENT OF THE FUND -- The Investment Advi-
sor," "--Administrative, Transfer Agent and Custodial
Services" and "--Expenses."
INVESTMENT ADVISOR
SBI Capital Management and Research Corporation, a
Florida not-for-profit corporation, acts as the Fund's
Investment Advisor. The following persons control or may be
deemed to control the Investment Advisor:
SBI, through the ex officio memberships on the
Board of the Investment Advisor of the members of
the Executive Committee of SBI and other relation-
ships, may be deemed to control the Investment Ad-
visor; Amos Bradford, Vivian Carpenter, Sybil
Mobley and Darrell Williams, each as a director of
the Investment Advisor may be deemed to control the
Investment Advisor.
The following persons are directors of both the
Fund and of the Investment Advisor: Amos Bradford, Vivian
Carpenter, Sybil Mobley and Darrell Williams. In addition,
Darrell Williams, Chief Investment Officer and Chief
Operating Officer of the Investment Advisor, is the
President, Chief Investment Officer and Treasurer of the
Fund.
The advisory fees payable by the Fund to the In-
vestment Advisor are 0.10% per annum of the average net as-
sets of Pool A (to be paid out of the total assets in Pool A)
and 0.50% per annum of the average net assets of Pool B (to
be paid out of the total assets in Pool B), in each case pay-
able by the Fund quarterly in arrears. The fees payable to
the Investment Advisor accrue on a daily basis and, to the
extent unpaid, will be deducted from the net asset value of
the applicable Pool for purposes of determining the purchase
price and the redemption price for shares.
The fees payable to the Investment Advisor by the
Fund will be applied to meeting the operating expenses of the
Investment Advisor, and any profits realized by the Invest-
ment Advisor will be distributed to SBI at least annually to
further its scholastic and educational programs.
The Investment Advisor performs the following ser-
vices for the Fund in accordance with its investment advisory
contract: investment advice, research, office facilities
(which may be in the Investment Advisor's own offices) and
supplies, and certain internal executive and administrative
services; compilation and maintenance of such records with
respect to its operations as may reasonably be required; and
general assistance in all aspects of the Fund's operations.
Under the investment advisory contract, the Investment Advi-
sor bears all expenses in connection with the performance of
its services in return for its advisory fees.
SBI has borne the organizational costs of the Fund
and fees and expenses incident to the filing of the initial
registration statement under federal law covering the shares
of the Fund for public sale. All other expenses of the Fund
will be borne by the Fund.
B-7<PAGE>
The Advisory Board of the Investment Advisor re-
views and advises on the investment strategies utilized in
investing the assets of the Fund, the universe of companies
eligible for investment by Pool B and the parameters within
which such investments may be made prior to their implementa-
tion; and reviews the implementation of such strategies on an
ongoing basis. As of the date of this Statement of
Additional Information, the Advisory Board consists of
Messrs. Leon G. Cooperman, Dale F. Frey, Robert M. Gardiner,
Robert G. Kirby and Dean Sybil C. Mobley.
Members of the Advisory Board are appointed by the
Board of Directors of the Investment Advisor. No member of
the Advisory Board is compensated for serving in such capac-
ity; however, such members of the Advisory Board who are not
affiliated with SBI may be reimbursed for their out-of-pocket
expenses.
ADMINISTRATIVE, TRANSFER AGENT AND CUSTODIAL AND OTHER
SERVICES
State Street Bank and Trust Company ("State Street
Bank") acts as the Fund's transfer agent and custodian, in
which capacities it holds the Fund's common stock on deposit
for shareholders of the Fund, acts as the Fund's agent for
the redemption of shares, holds the securities purchased by
the Fund and the cash, cash equivalents or money market
instruments of the Fund in safekeeping, performs securities
clearance services and other administrative services on be-
half of the Fund and will send each shareholder of the Fund
confirmations and statements with respect to such
shareholder's investment in the Fund. State Street Bank will
prepare and maintain certain books and records on behalf of
the Fund, including ledgers and capital stock accounts, trial
balances, ledger reports, portfolio transaction, position and
income reports, and calculation of net asset values daily.
State Street Bank receives annual compensation for its
services pursuant to its agreement with the Fund which is
billed and payable monthly based upon average monthly net
assets of each of Pool A and Pool B, plus reimbursement for
out-of-pocket expenses. State Street Bank has agreed that
its total compensation for the first year of operation of the
Fund will not exceed .10% of average net assets.
The Fund has selected McQuay and Company, certified
public accountants of Tampa, Florida, as the Fund's indepen-
dent auditors.
The salaries of the administrative personnel of the
Fund, as well as the expenses of the faculty and other indi-
viduals related to the educational objectives of the Fund,
will not be expenses of the Fund.
RULE 12b-1 PLAN
The Fund has adopted a Rule 12b-1 Plan which
provides for the payment of distribution expenses by the
Fund. The Plan authorizes the Fund to make quarterly
payments to the distributor of shares of the Fund, not
exceeding in the aggregate a maximum annual amount equal to
0.05% of the average daily net asset value of Pool A and of
Pool B during each fiscal year of the Fund, as agreed to
pursuant to the terms of the Distribution Agreement entered
into between the Fund and the distributor of its shares, for
distribution services rendered by the distributor to the
Fund. Out of such amount, the distributor will pay costs
incurred by it in connection with the distribution of shares
of the Fund, including but not limited to, advertising,
printing and mailing promotional literature, telephone calls
and lines, computer terminals and personnel. Pursuant to the
terms of the Plan, the distributor may compensate other
qualified recipients (as described in the Plan) for providing
distribution assistance with respect to shares of the Fund.
B-8<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Investment Advisor has general responsibility
for placing orders on behalf of the Fund for the purchase or
sale of portfolio securities. Allocation of brokerage trans-
actions, including their frequency, is made in the best judg-
ment of the Investment Advisor and in a manner deemed to ob-
tain, at reasonable expense, the best execution of the Fund's
portfolio transactions. The primary consideration is the
prompt execution of orders at the most favorable net price.
However, brokers may also be selected because of their abil-
ity to provide investment information or research that will
be of assistance to the performance by the Investment Advisor
of its investment management services to the Fund. The types
of research received from brokers will include company and
industry reports, earnings estimates and revisions, and
performance ratings of companies. The research and other
investment information received from brokers (other than
information with respect to changes in the S&P Index) will be
used only by the Investment Advisor in making investment
decisions for Pool B, although transactions for both Pools
may be effected through brokers providing such research.
The overall reasonableness of brokerage commissions
paid is evaluated by the Investment Advisor on the basis of
all relevant factors and considerations, including, insofar
as feasible, the execution capabilities required by the
transaction, the ability and willingness of the broker to
facilitate the Fund's portfolio transactions by participating
therein for its own account, the importance to the Fund of
speed, efficiency or confidentiality, the broker's apparent
familiarity with sources from or to whom particular securi-
ties might be purchased or sold, the provision of investment
information or research and other relevant matters.
Accordingly, the Investment Advisor is not obligated to
obtain the lowest brokerage commission rates available or to
combine or arrange orders to obtain the lowest brokerage
commission rates available on transactions.
Portfolio turnover rates may vary from year to
year, as well as within a year and, based on the contemplated
investment strategies, the turnover rate of Pool B is ex-
pected to be higher than that of Pool A. Higher turnover
rates are likely to result in comparatively greater brokerage
expenses.
CAPITAL STOCK
The Fund's only securities are the Class A Common
Stock and the Class B Common Stock. Neither class of common
stock has any preemptive rights. For a full discussion of
the characteristics of each class of common stock, including
dividend rights, voting rights, liquidation rights, conver-
sion rights and redemption provisions, see the section en-
titled "SHARES OF THE FUND" in the Fund's Prospectus.
B-9<PAGE>
PURCHASE, REDEMPTION AND PRICING OF SECURITIES
The following information supplements and should be
read in conjunction with the sections in the Fund's Prospec-
tus entitled "SHARES OF THE FUND," "PURCHASE OF FUND SHARES"
and "REDEMPTION OF FUND SHARES."
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and offering
price per share ($1,000/100 shares
issued and outstanding) $10.00
Class B Shares
Net asset value and offering
price per share ($1,000/100 shares
issued and outstanding) $10.00
REDEMPTION
A shareholder's right to redeem its shares may be
suspended or the date of payment postponed (a) during any pe-
riod when the New York Stock Exchange is closed, (b) when
trading in the markets the Fund normally utilizes is re-
stricted, or when an emergency exists as determined by the
Securities and Exchange Commission (the "Commission") so that
disposal of the Fund's investments or determination of net
asset value is not reasonably practicable or (c) for such pe-
riods as the Commission by order may permit to protect the
Fund's shareholders.
Redemption in Kind. If the Board of Directors de-
termines that it would be detrimental to the best interests
of the remaining shareholders of the Fund to make payment
wholly or partly in cash, the Fund may pay the redemption
price in whole or in part by a distribution in kind of secu-
rities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Commission. The
Fund, however, has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the Fund is obligated to re-
deem shares solely in cash up to the lesser of $250,000 or
one percent of the net asset value of the Fund during any 90-
day period for any one shareholder. Should redemptions by
any shareholder exceed such limitation, the Fund will have
the option of redeeming the excess in cash or in kind. If
shares are redeemed in kind, the redeeming shareholder might
incur brokerage costs in converting the assets into cash.
PRICING
Net asset value of a Pool is determined by sub-
tracting the liabilities of such Pool (including reserves for
anticipated expenses) from the value of the total assets of
such Pool and dividing the resulting amount by the number of
shares and fractional shares outstanding which constitute an
interest in such Pool. In determining net asset value, secu-
rities for which current market quotations are readily avail-
able are valued, as of the close of each day of trading on
the New York Stock Exchange, in the following manner: secu-
rities traded on national exchanges are valued at the closing
sales price or, if no sale occurred, at the last price
traded. Over-the-counter securities for which no sales are
reported on a particular day are valued at the last closing
price or, if unavailable, at the average of the bid and the
ask prices. In the unlikely event that no market
B-10<PAGE>
quotations are available for a security held by the Fund,
such security shall be valued according to the good faith
judgment of the Fund's Board of Directors. Net asset value
will be calculated once daily at the close of regular trading
on the NYSE (generally at 4:00 p.m. Eastern Standard Time)
except on the following holidays: New Year's Day, Martin
Luther King's Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
TAX STATUS
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "SHARES OF THE FUND -- Certain Tax Consequences."
The following is only a summary of certain addi-
tional tax considerations generally affecting the Fund and
its shareholders that are not fully described in the Fund's
Prospectus. No attempt is made to present a detailed expla-
nation of the tax treatment of the Fund or its shareholders,
and the discussion here and in the Fund's Prospectus is not
intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
As a regulated investment company under Subchapter
M of the Code, each series of the Fund is exempt from federal
income tax on its net investment income and capital gains
which it distributes to shareholders, provided that it dis-
tributes at least 90 percent of (i) its investment company
taxable income (generally, net investment income and the
excess of net short-term capital gain over net long-term
capital loss) for the year (the "Distribution Requirement"),
and (ii) the excess of its tax-exempt interest income over
certain deductions with respect to such income, and satisfies
certain other requirements of the Code that are described
below. Distributions of investment company taxable income
made during the taxable year or, under specified cir-
cumstances, within twelve months after the close of the tax-
able year, including distributions made in the form of ad-
ditional shares of common stock of the Fund, will satisfy the
Distribution Requirement.
In addition to satisfaction of the Distribution Re-
quirement, each series of the Fund must derive at least 90
percent of its annual gross income from dividends, interest
and gains from the sale or other disposition of stocks,
securities or foreign currencies (to the extent such foreign
currency gains are directly related to the series' principal
business of investing in stock or securities), or from other
income derived with respect to its business of investing in
such stock, securities or currencies. Moreover, at the close
of each quarter of its taxable year, at least 50 percent of
the value of a series' assets must consist of cash and cash
items, government securities, securities of other regulated
investment companies, and securities of other issuers (as to
which such series has not invested more than 5 percent of the
value of its total assets in any one issuer and as to which
such series does not hold more than 10 percent of the
outstanding voting securities of any one issuer), and no more
than 25 percent of the value of its total assets may be
invested in the securities of any one issuer (other than
government securities and securities of other regulated
investment companies), or in two or more issuers which the
Fund controls and which are engaged in the same or similar
trades or businesses or related trades or businesses.
B-11<PAGE>
Generally, the Fund is required for federal income
tax purposes to recognize as income for each taxable year its
net unrealized gains and losses on futures contracts as of
the end of the year as well as those actually realized during
the year. Gain or loss recognized with respect to a futures
contract will generally be 60 percent long-term capital gain
or loss and 40 percent short-term capital gain or loss, with-
out regard to the holding period of the contract.
The foregoing requirements of the Code may inhibit
Pool A and Pool B in their efforts to achieve their invest-
ment objectives.
FUND DISTRIBUTIONS
Investors should be careful to consider the tax im-
plications of buying shares of a series of the Fund just
prior to the record date of a deemed ordinary income dividend
or capital gain distribution. The price of shares purchased
at that time may reflect the amount of the forthcoming deemed
ordinary income dividend or capital gain distribution. Those
purchasing just prior to a deemed ordinary income dividend or
capital gain distribution will nevertheless be taxed on the
entire amount of the distribution deemed received.
The Code allows a 70 percent dividends-received de-
duction (the "Deduction") to corporate shareholders of any
series of the Fund. Special provisions are contained in the
Code as to the eligibility of payments to such shareholders
for the Deduction. The extent to which the deemed ordinary
income dividends paid by a series of the Fund are eligible
for the Deduction is determined by the ratio of the aggregate
dividends received by such series from domestic corporations
in any fiscal year to the deemed ordinary income dividends
paid by such series for that year. For purposes of determin-
ing the Deduction, a series of the Fund may not take into ac-
count any amount received as a dividend with respect to any
security unless such series has held the security with re-
spect to which the dividend has been paid for a minimum pe-
riod, generally 46 days. Moreover, corporate taxpayers will
have to take into account the entire amount of any deemed
dividend received from a series of the Fund for purposes of
the alternative minimum tax. Deemed capital gains distribu-
tions are not eligible for the Deduction.
Under the Code, distribution of net investment
income by the Fund to a nonresident alien individual, foreign
trust (i.e., a trust which a U.S. court is able to exercise
primary supervision over administration of and one or more
U.S. persons have authority to control substantial decisions
of), foreign estate (i.e., the income of which is not subject
to U.S. tax, regardless of source), foreign corporation, or
foreign partnership (a "foreign shareholder") will be subject
to U.S. withholding tax (at a rate of 30% or a lower treaty
rate). Withholding will not apply if a dividend paid by the
Fund to a foreign shareholder is "effectively connected" with
a U.S. trade or business, in which case the reporting and
withholding requirements applicable to U.S. citizens, U.S.
residents or domestic corporations will apply. Furthermore,
distributions of net long-term capital gains generally are
not subject to tax withholding. Such tax withheld is
generally not refundable.
The Fund may be required to withhold, subject to
certain exemptions, at a rate of 31% ("backup withholding")
on dividends, capital gain distributions, and redemption
proceeds (including redemptions in kind and proceeds from
exchanges) paid or credited to an individual Fund
shareholder, unless a shareholder certifies that the Taxpayer
Identification Number ("TIN") provided is correct and that
the shareholder is not subject to backup withholding, or the
IRS notifies the Fund that the shareholder's TIN is incorrect
or the shareholder is subject to backup withholding. Such
tax withheld
B-12<PAGE>
does not constitute any additional tax imposed on the
shareholder, and may be claimed as a tax payment on the
shareholder's federal income tax return. An investor must
provide a valid TIN upon opening or reopening an account.
Failure to furnish a valid TIN to the Fund could subject the
investor to penalties imposed by the IRS.
OTHER CONSIDERATIONS
A four percent nondeductible excise tax is imposed
on regulated investment companies that fail to distribute in
each calendar year an amount equal to 98 percent of their or-
dinary income for the calendar year and 98 percent of their
"capital gain net income" (excess of capital gains over capi-
tal losses) for the one-year period ending on October 31 of
such calendar year, even if they satisfy the Distribution Re-
quirement. The balance of such income must be distributed
during the next calendar year. Both Pool A and Pool B cur-
rently intend to make sufficient deemed distributions of
their ordinary income and capital gain net income with
respect to each calendar year to avoid liability for this ex-
cise tax.
THE FOREGOING DISCUSSION AND THE DISCUSSION IN THE
PROSPECTUS APPLICABLE TO EACH SHAREHOLDER ADDRESS ONLY SOME
OF THE FEDERAL TAX CONSIDERATIONS GENERALLY AFFECTING
INVESTMENTS IN THE FUND. RULES OF STATE AND LOCAL TAXATION
OF ORDINARY INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
FROM REGULATED INVESTMENT COMPANIES OFTEN DIFFER FROM THE
RULES FOR FEDERAL INCOME TAXATION DESCRIBED ABOVE. SHARE-
HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS FOR THE
APPLICATION OF THE FEDERAL RULES OUTLINED ABOVE TO THEIR
PARTICULAR CIRCUMSTANCES AND FOR THE APPLICATION OF STATE AND
LOCAL TAX RULES AFFECTING INVESTMENT IN THE FUND. FOREIGN
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE APPLICABILITY OF THE UNITED STATES WITHHOLDING
TAX.
DISTRIBUTOR
Shares of Pool A and Pool B will be distributed on
a continuous basis by Lamaute Capital Inc. (the
"Distributor"). The Distributor will act as agent for the
distribution of such shares and will transmit promptly any
orders received for purchase of shares to the Transfer Agent
and Custodian.
PERFORMANCE DATA
The following information supplements and should be
read in conjunction with the section in the Fund's Prospectus
entitled "PERFORMANCE INFORMATION."
Average annual total return is calculated by deter-
mining the ending redeemable value of an investment purchased
with a hypothetical $1,000 payment made at the beginning of
the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n"
is the number of years in the period) and subtracting 1 from
the result.
Total return is calculated by subtracting the
amount of the Fund's net asset value per share at the
beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the
period), and dividing the result by the net asset value per
share at the beginning of the period.
B-13<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements:
None.
(b) Exhibits:
(1.1) Articles of Incorporation*
(1.2) Articles of Amendment dated February 17, 1997*
(2) Bylaws*
(5) Form of Investment Advisory Agreement*
(6) Form of Distribution Agreement*
(8) Form of Custody Agreement*
(9) Form of Administration Agreement*
(10) Opinion and Consent of Ober, Kaler, Grimes &
Shriver*
(13) Form of Agreement with Initial Investor*
(15) Form of Rule 12b-1 Plan*
* Previously filed.
ITEM 25. PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
State of % of Voting
Name Organization Securities
SBI Capital Management
and Research Corporation Florida 100%
Due to the fact that the officers and directors of
the Investment Advisor and the officers and a majority of the
directors of the Fund are members of the faculty and adminis-
tration of SBI, among other factors, SBI may be deemed to
control the Investment Advisor and the Fund. SBI is a part
of the Florida Agricultural and Mechanical University, which
is an educational institution governed by the Board of Educa-
tion of the State of Florida. SBI has established the Fund
as part of its educational curriculum and neither Florida A&M
C-1<PAGE>
University nor the Board of Education of the State of Florida
has passed upon the terms of the Fund or the prospectus
relating to the Fund. SBI does not own any voting securities
of the Fund.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of Record
Holders as of
Title of Class November 30, 1997
Class A Common Stock,
par value $.001 per share 1
Class B Common Stock,
par value $.001 per share 1
ITEM 27. INDEMNIFICATION
The following is a summary of various provisions
included in the Fund's Articles of Incorporation and By-laws,
and is qualified in its entirety by reference to such documents
in the respective forms filed as exhibits hereto.
Reference is made to Section 2-418 of the Maryland
General Corporation Law (the "MGCL"), which provisions autho-
rize a corporation subject to the MGCL to indemnify directors,
officers, employees, and agents. In addition, reference is
made to Article EIGHTH of the Registrant's Articles of Incor-
poration filed as Exhibit 1 hereto, which provisions include,
among others, the following: (i) no director or officer of the
Registrant shall have any liability to the Fund or its stock-
holders for damages; (ii) the Fund shall indemnify its direc-
tors, officers, employees and agents to the extent provided in
the by-laws of the Fund; (iii) the provisions of Article EIGHTH
shall not apply to any liability of an officer or director by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office; (iv) all references to the MGCL are to the law as from
time to time amended. Article VIII of the Registrant's By-Laws
filed as Exhibit 2 hereto provides that (i) the Fund shall in-
demnify and advance expenses to its currently acting and former
officers and directors to the fullest extent that indemnifica-
tion is permitted by law; and (ii) employees and agents of the
Fund who are not officers or directors may be indemnified and
expenses may be advanced as may be provided by action of the
Board of Directors or by contract, subject to any limitations
imposed by the Investment Company Act of 1940.
The application of these provisions is subject to (i)
Article VIII of the Registrant's By-Laws filed as Exhibit 2
hereto, which provides for the procedures to be followed by any
person requesting indemnification from the Fund and by the
C-2<PAGE>
Board of Directors, and by (ii) the following undertaking set
forth in the rules promulgated by the Securities and Exchange
Commission:
Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted to di-
rectors, officers and controlling persons of the Regis-
trant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Regis-
trant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or con-
trolling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question as to whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS
OF INVESTMENT ADVISOR
SBI Capital Management and Research Corporation, the
investment advisor of the Registrant, has had no other business
in the past two fiscal years.
The following individuals serve as directors and
officers of SBI Capital Management and Research Corporation:
Amos Bradford - President and Treasurer and a Director; Vivian
Carpenter - Executive Vice President, Secretary and a Director;
Sybil Mobley - Chairman of the Board and a Director; and
Darrell Williams - Chief Operating Officer and Chief Investment
Officer and a Director. For information about each of these
individuals and their principal occupations in the past two
fiscal years, see the section entitled "MANAGEMENT OF THE FUND"
in the Statement of Additional Information. In addition, Sybil
Mobley is a director of Anheuser Busch Companies Inc. and
Champion International Corp. and the not-for-profit
organizations One to One, the Points of Light Foundation and
the International Association of Black Business Educators.
ITEM 29. PRINCIPAL UNDERWRITERS
Lamaute Capital Inc. does not act as principal under-
writer, depositor or investment advisor for any other regis-
tered investment companies.
C-3<PAGE>
The following information is provided with respect to
each director and officer of Lamaute Capital Inc.:
Positions and Offices
Name with Lamaute Capital Inc.
Daniel Lamaute Chairman and Chief Executive Officer
Denise Lamaute President
The business address of each such director and officer is:
8383 Wilshire Boulevard, Suite 840, Beverly Hills, California
90211. None of such persons holds any position or office with
the Fund.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
SBI Capital Management and Research Corporation, One
SBI Plaza, School of Business & Industry, Florida A&M Univer-
sity, Tallahassee, Florida 32307, and the offices of the cus-
todian and transfer agent of the Fund, State Street Bank and
Trust Company, 175 Newport Avenue, North Quincy, MA 02171.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes:
(a)(1) to file an amendment to this registration statement
with certified financial statements showing the
initial capital received before accepting subscrip-
tions from any persons in excess of twenty-five;
(b)(1) to file a post-effective amendment, using financial
statements which need not be certified, within four
to six months from the effective date of Regis-
trant's 1933 Act Registration Statement;
(c)(1) to provide assistance to the shareholders concern-
ing the removal of any Director of the Fund in
accordance with the provisions of Section 16(c) of
the 1940 Act as though that Section applied to the
Registrant.
C-4<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has
duly caused this amendment to registration statement to be
signed on its behalf by the undersigned, thereto duly
authorized, in the City of Tallahassee, and State of Florida
on the 5th day of December, 1997.
THE SBI FUND, INC.
By /s/Darrell Williams
Darrell Williams,
President
Pursuant to the requirements of the Securities Act of 1933,
this amendment to registration statement has been signed
below by the following persons in the capacities and on the
5th day of December, 1997.
*
_______________________________
Sybil Mobley, Director
*
_______________________________
Amos Bradford, Director
*
_______________________________
Vivian Carpenter, Director
*
_______________________________
Marx Cazenave, Director
*
_______________________________
Lucille Dabney, Director
*
_______________________________
Craig Washington, Director
/s/Darrell Williams
Darrell Williams, Director
/s/Darrell Williams
Darrell Williams, as attorney-
in-fact for the above directors
marked by an asterisk
