<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SIFE TRUST FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
SIFE TRUST FUND
490 N. Wiget Lane
Walnut Creek, California 94598
(800) 231-0356
http://www.SIFE.com
February 14, 1997
To Our Investors:
You are cordially invited to attend the 1997 Annual Meeting of Investors of
SIFE Trust Fund (the "Trust Fund") to be held at 10:00 a.m. (Pacific time) on
Friday, April 4, 1997, at the San Ramon Marriott Hotel, 2600 Bishop Drive, San
Ramon, California (see inside front cover for directions). The attached Notice
of Annual Meeting of Investors and Proxy Statement discuss the business to be
conducted at the meeting. A copy of the Trust Fund's Annual Report has been
sent to you previously, under separate cover.
I encourage you to attend the meeting in person. Whether or not you plan
to attend, however, please read the enclosed Proxy Statement and then complete,
sign and date the enclosed proxy card and promptly return it in the accompanying
self-addressed postage-paid envelope. This will ensure that your interests are
represented at the meeting.
Thank you for your attention to this important matter.
Sincerely yours,
HAIG G. MARDIKIAN
CHAIRMAN OF THE BOARD
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO COMPLETE, SIGN AND DATE AND PROMPTLY RETURN YOUR PROXY CARD IN
THE ACCOMPANYING SELF-ADDRESSED POSTAGE-PAID ENVELOPE REGARDLESS OF WHETHER YOU
PLAN TO ATTEND THE MEETING.
<PAGE>
SIFE TRUST FUND
___________
NOTICE OF ANNUAL MEETING OF INVESTORS
TO BE HELD APRIL 4, 1997
NOTICE IS HEREBY GIVEN of the annual meeting of the investors (the
"Investors") in SIFE Trust Fund (the "Trust Fund"), in accordance with the
provisions of the Restated Trust Agreement. The annual meeting (the "Meeting")
will be held at the San Ramon Marriott Hotel, 2600 Bishop Drive, San Ramon,
California (see inside front cover for directions) on Friday, April 4, 1997,
at 10:00 a.m., Pacific Standard Time, to consider and act upon the following
matters:
1. Election of seven (7) directors of the Trust Fund for succeeding one-
year terms, or until their successors are elected and have been
qualified;
2. Ratification of the selection by a majority of the independent members
of the Board of Directors of the Trust Fund of the firm of Deloitte &
Touche LLP, as independent auditors for the Trust Fund for the
calendar year 1997;
3. Approval of the continuation of the current Investment Advisory
Agreement. The Board of Directors has determined that it is in the
best interests of the Trust Fund and the Investors to continue the
Investment Advisory Agreement with the Management Company;
4. Approval of the reorganization of the Trust Fund's place and form of
organization, from a California trust to a Delaware Business Trust;
and
5. Any other matters which may properly come before the meeting or any
adjournment thereof.
This notice is given pursuant to the direction of the Board of Directors of
the Trust Fund. Only Investors of record at the close of business on
February 14, 1997, are entitled to notice of, and to vote at, the Meeting and at
any adjournment thereof.
<PAGE>
Investors who do not expect to attend the Meeting are requested to indicate
voting instructions on the enclosed Proxy, date and sign it, and return it in
the accompanying envelope. In order to avoid unnecessary expense, we ask your
cooperation in mailing in your Proxy promptly, no matter how large or how small
your holdings may be and regardless of whether you plan to attend the meeting.
The return of a Proxy will not restrict or impair the right of any Investor to
revoke his or her proxy, or to attend and vote personally at the meeting.
Dated: February 24, 1997
Walnut Creek, California
By order of the Board of Directors of
SIFE Trust Fund
Charles W. Froehlich, Jr.
SECRETARY
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY.
YOUR VOTE IS IMPORTANT
<PAGE>
SIFE TRUST FUND
___________
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of SIFE Trust Fund (the "Trust Fund") for
use at its 1997 annual meeting of investors in the Trust Fund (the "Investors")
to be held at 10:00 A.M. on April 4, 1997, at the San Ramon Marriott Hotel,
2600 Bishop Drive, San Ramon, California, or at any adjournment or postponement
thereof (the "Meeting"). This Proxy Statement and accompanying Notice of
Meeting and Proxy are first being mailed to holders of the Trust Fund's
Participating Agreements on or about February 24, 1997.
VOTING RIGHTS, SOLICITATION AND REVOCABILITY OF PROXIES
As of the close of business on February 14, 1997, there were issued and
outstanding Participating Agreements in aggregate amount of $-----------------,
representing an aggregate equity in the Trust Fund of ----------- investment
units. A majority in interest of all investment units, present in person or
represented by proxy (including for this limited purpose abstentions and broker
non-votes) and entitled to vote, shall constitute a quorum for purposes of the
Meeting.
Investors of record as of February 14, 1997 will be entitled to one vote
for each Class I or Class II investment unit owned, EXCEPT THAT with respect to
the election of Directors, an Investor may cumulate his or her votes. This
means that each Investor is permitted to cast a number of votes equal to the
number of Directors proposed for election (seven), multiplied by the number of
investment units held, and may cumulate such votes for a single nominee or
distribute such votes among as many director nominees as he or she deems
appropriate. Discretionary authority of the Proxy Holders to cumulate votes is
solicited by the Board of Directors. Such discretionary authority may be
withheld by checking the box marked "WITHHOLD ALL." If this alternative is
selected by an Investor, none of the Investor's investment units will be voted
(cumulatively or otherwise) for any of the nominees unless such Investor appears
and votes in person at the Meeting.
All investment units represented at the Meeting by properly executed
proxies received prior to or at the Meeting will be voted in accordance with the
instructions thereon. If no instructions are indicated, properly executed
proxies will be voted "FOR" each of the nominees and "FOR" adoption of each of
the proposals set forth herein. With respect to the election of directors, the
seven nominees receiving the highest total number of votes at the Meeting shall
be elected as directors. In all other matters (other than the ratification of
the selection of auditors, for which a majority of votes cast by the Investors
at the Meeting is required), the Investor vote required for approval is the vote
of a majority in interest of all investment units, which is defined as the
lesser of (i) 67% or more in interest of the investment units represented at
such a meeting at which more than 50% of all outstanding investment units are
represented, either in person or by Proxy, or (ii) more than 50% in interest of
all Investors. Abstentions are treated as votes against a proposal, and broker
non-votes have no effect on the vote. A "broker non-vote" occurs when a nominee
holding investment units on behalf of a beneficial owner votes on one proposal
but does not vote on another proposal because the nominee does not have
discretionary voting power and has not received specific instructions from the
beneficial owner.
<PAGE>
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by filing with the Trust Fund (at
the corporate offices of SIFE, Inc. [the "Management Company"], at the address
given below) an instrument of revocation or a duly executed proxy bearing a
later date. A proxy may also be revoked by attending the Meeting and voting in
person (although attendance at the Meeting will not by itself constitute
revocation of a proxy). Any written notice revoking a proxy should be delivered
to Bruce W. Woods, President & Chief Executive Officer, SIFE Trust Fund, 490
North Wiget Lane, Walnut Creek, California 94598.
The Trust Fund does not know of any matters, other than as described in the
Notice of Meeting, that are to come before the Meeting. If any other matters
are properly presented at the Meeting for action, the persons named in the
enclosed form of proxy and acting thereunder will have the discretion to vote on
such matters in accordance with their best judgment.
In addition to the use of the mail, solicitation of proxies may be made in
person or by telephone or otherwise by Directors and Officers of the Trust Fund
and the Management Company. No compensation will be paid to any person for any
proxy solicitation, however the cost of all proxy solicitation, including
reimbursement of expenses incurred by banks, brokerage firms, custodians,
nominees and fiduciaries for their reasonable expenses in forwarding proxy
materials to Investors, will be borne by the Management Company.
In the event that sufficient votes in favor of any of the proposals set
forth in the Notice of Annual Meeting of Investors are not received by the date
of the Meeting, the proxy holders may propose one or more adjournments of the
Meeting for a period or periods of not more than 30 days in the aggregate to
permit further solicitation of proxies, even though a quorum may be present.
Any such adjournment will require the affirmative vote of a majority of the
votes cast on the questions, in person or by proxy, at the session of the
meeting to be adjourned. The costs of any such additional solicitation and of
any adjourned session will be borne by the Trust Fund.
___________
PROPOSAL ONE
ELECTION OF DIRECTORS
The Restated Trust Agreement, dated as of May 2, 1986 and as amended
(collectively the "Restated Trust Agreement") provides that the Board of
Directors of the Trust Fund shall consist of seven members, to be elected
annually by the Investors. The proxy holders will vote for the election of each
of the seven nominees unless otherwise instructed on the proxy. If any nominee
is unable to serve, the investment units represented by such proxies will be
voted for the election of such substitute as the Board of Directors may
recommend. At this time the Board of Directors knows of no reason why any of
the nominees might be unable to serve, if elected. Each nominee has consented
to be named and has indicated his or her intent to serve, if elected. The Board
of Directors, including those directors who are not "interested persons" of the
Trust Fund (as such term is defined in the Investment Company Act of 1940, as
amended, hereinafter the "1940 Act") (the "non-interested" directors),
unanimously recommends a vote "FOR" the election of each of the persons named
herein.
Set forth in the following table is information about each person who is
being nominated for election as a Director for a term which will expire on
April 1, 1998, or at such time thereafter as his or her successor is elected and
qualified.
2
<PAGE>
<TABLE>
<CAPTION>
Position Held in Length of Business Experience
Name Age Trust Fund Service During Past Five Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Haig G. Mardikian (1)(2) 50 Director; Continuous since General Partner, George M. Mardikian Enterprises
Chairman of the January 1978 (real estate investments); Managing Director,
Board The United Broadcasting Corporation (radio
broadcasting)
Walter S. Newman (1)(2) 75 Director; Continuous since Owner, WSN Enterprises (real estate consultants);
Vice Chairman of January 1991 Retired President, San Francisco Planning
the Board Commission; Retired President, San Francisco
Redevelopment Agency; Retired President, San
Francisco Fine Arts Museums; Chairman of the Board,
National Brain Tumor Foundation
Diane Howard Belding (3) 40 Director Continuous since Management Company employee, 1992-present;
April 1996 General Partner, Howard & Howard Ranch (avocado
ranch, Ventura County, CA), 1983present; Director,
Management Company (1982 present)
Neil L. Diver (1)(2) Director Continuous since
August 1996
Charles W. Froehlich, Jr. (3) 68 Director & Continuous since Retired Appellate Court Judge; retired Superior
Secretary March 1995 Court Judge; formerly Of Counsel to Peterson, Thelan
& Price; principal, Froehlich & Peterson Dispute
Resolution
John A. Meany (1) 56 Director Continuous since President, John's Valley Foods, Inc.; President,
October 1992 John's Town & Country Markets, Inc.; Director,
Northern California Grocers Assn.; Advisory Council,
Fleming Foods
Bruce W. Woods (3)(4) 43 Director; Continuous since
President of the July 1996
Trust Fund
</TABLE>
3
<PAGE>
- ---------------
(1) Member of the Audit Committee.
(2) On July 14, 1996, Mr. David M. Sacks, Chairman of the Board of Directors of
the Trust Fund, died. On August 16, 1996, acting pursuant to Article VI,
Section 2, of the Restated Trust Agreement, the remaining Directors
appointed Mr. Diver to fill the remainder of Mr. Sacks' term as a Director,
and elected Mr. Mardikian, then Vice Chairman, and Mr. Newman to fill the
remainder of Mr. Sacks' term as Chairman and the remainder of Mr.
Mardikian's term as Vice Chairman, respectively.
(3) Messrs. Froehlich and Woods, and Ms. Belding, are "interested persons," as
that term is defined in Section 2(a)(19) of the 1940 Act by virtue of their
positions as directors and/or officers of the Trust Fund and as directors,
officers and/or shareholders of the Management Company.
(4) On July 26, 1996, Mr. Sam A. Marchese, then a Director and President and
Chief Executive Officer of the Trust Fund, and a Director and President and
Chief Executive Officer of the Management Company, retired and, in
connection therewith, resigned from the Trust Fund and its Board of
Directors. On July 26, 1996, the Board of Directors of the Management
Company appointed Mr. Woods President and Chief Executive Officer of the
Management Company, and the Directors of the Trust Fund, acting pursuant to
Article VI, Section 2, of the Restated Trust Agreement, appointed Mr. Woods
President and a Director of the Trust Fund to fill the remainder of Mr.
Marchese's term, and appointed Mr. Marchese to the newly created office of
Director Emeritus. As a Director Emeritus, Mr. Marchese is entitled to all
of the benefits of a regular Director, except that Mr. Marchese is not
entitled to vote on matters coming before the Board.
BOARD OF DIRECTORS MEETINGS, COMPENSATION AND COMMITTEES
Regular meetings of the Board of Directors are held bi-monthly or at such
time as the Board may determine. During 1996 the Board of Directors held six
regular, and two special, meetings; in addition, from time to time the "non-
interested" directors meet with officers of the Trust Fund and/or the Management
Company to discuss various matters relating to the administration of the Trust
Fund. No director attended fewer than 75% of the total number of meetings of
the Board of Directors and the total number of meetings of all committees on
which any such director served during 1996. Each director is paid by the Trust
Fund an attendance fee of $5,000 for each Board meeting attended plus $250 per
hour (subject to a per-meeting maximum of $1,000) consultation fee for business
advisory services other than Board meetings.
The Board of Directors has an Audit Committee, which is responsible for (i)
the selection and review of the independent auditors of the Trust Fund and (ii)
oversight of the current operating procedures of the Trust Fund. The members of
the Audit Committee are Messrs. Newman (Chair), Diver, Mardikian and Meany.
During 1996 the Audit Committee held four meetings. The Board of Directors has
no nominating or compensation committee.
OWNERSHIP OF PARTICIPATING AGREEMENTS
As of January 31, 1997, no person (including any "group," as that term is
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
was known by the Trust Fund to be the beneficial holder of more than 5% of the
outstanding number of investment units of the Trust Fund. The beneficial
holdings of investment units, represented by Participating Agreements in the
Trust Fund, of the Trust Fund's directors, nominees for director and executive
officers, as of January 31, 1997, are as follows:
4
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership (1) Percent of Class
Name of Beneficial Owner Title of Class (investment units) (2)
------------------------ -------------- ------------------------ ----------------
<S> <C> <C> <C>
Haig G. Mardikian Participating Agreements ----- -----
Diane Howard Belding (3) Participating Agreements ----- -----
Neil L. Diver Participating Agreements
Charles W. Froehlich, Jr. (3) Participating Agreements ----- -----
John A. Meany Participating Agreements ----- -----
Walter S. Newman Participating Agreements ----- -----
Bruce W. Woods (3) Participating Agreements ----- -----
All Directors and Executive Participating Agreements ----- -----
Officers as a Group (seven
persons) (3)
</TABLE>
- ---------------
* Less than 0.01%.
(1) Each person listed above has sole voting power and sole investment power
with respect to all investment units beneficially owned by him or her (or
shares such powers with his or her spouse). None of the above persons has
any right to acquire beneficial ownership of Participating Agreements as
specified in Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.
All investment units shown as owned in this table are Class I investment
units. On January 31, 1997, each Class I investment unit was valued at
$-----.
(2) Based on an aggregate of ----------- investment units outstanding on
January 31, 1997.
(3) In addition to the investment units beneficially owned by Messrs. Froehlich
and Woods and Ms. Belding, each of such persons, by reason of his or her
ownership of shares in the Management Company, may also be deemed to be the
beneficial owner of ------- investment units owned on January 31, 1997 by
the Management Company (see "Information About the Management Company,"
page 7.)
5
<PAGE>
MANAGEMENT COMPENSATION
The following table sets forth certain information regarding all
compensation paid or accrued for services rendered in all capacities to the
Trust Fund for the year ended December 31, 1996 to each of the three most highly
compensated executive officers and each of the directors of the Trust Fund:
Aggregate Compensation
Name of Person and Position from the Trust Fund (1)
--------------------------- -----------------------
Haig G. Mardikian; Director & Chairman of the Board $-----
Diane H. Belding; Director $-----
Neil L. Diver; Director (2) $-----
Charles W. Froehlich, Jr.; Director & Secretary $-----
Sam A. Marchese; Director, President, $-----
Chief Executive Officer and Treasurer (3)
John A. Meany; Director $-----
Walter S. Newman; Director & Vice Chairman of the Board $-----
David M. Sacks; Director & Chairman of the Board (2) $-----
Bruce W. Woods; Director, President, $-----
Chief Executive Officer (3)
- ---------------
(1) No remuneration was paid directly by the Trust Fund to its officers and
directors. Prior to April 1, 1996, the Trust Fund reimbursed the
Management Company for its pro rata share of certain office and other
expenses, including salaries, bonuses, commissions, Directors' fees and
certain other costs and expenses. After that date, however, all expenses
of the Trust Fund, without exception, have been borne by the Management
Company pursuant to the current Investment Advisory Agreement between the
Trust Fund and the Management Company.
(2) Mr. Sacks died on July 14, 1996. Mr. Diver was appointed a Director to
fill Mr. Sacks' remaining term on August 16, 1996.
(3) Mr. Marchese resigned as an officer and Director of the Trust Fund on July
26, 1996, and Mr. Woods was appointed on that date to fill Mr. Marchese's
remaining term.
Class I investment units are sold without sales charge to directors,
officers and bona fide full-time employees and sales representatives of the
Trust Fund and the Management Company, to pension and profit sharing plans
established for the benefit of such persons, and to members of such persons'
immediate families. The amount set forth in the above table under the caption
"Aggregate Compensation from the Trust Fund" includes the spread between the
acquisition price paid by or for the benefit of the directors and officers for
investment units purchased during 1996 and the price that would have been
payable at the usual sales charge. The amount of this spread on purchases made
by ------------ was $--- and by --------- was $---. The Trust Fund has no
pension or retirement plan and pays no pension or retirement benefits to its
officers or directors.
6
<PAGE>
INFORMATION ABOUT THE MANAGEMENT COMPANY
The names, addresses and principal occupations of each of the executive
officers and directors of SIFE, Inc. (the "Management Company"), and of each
shareholder owning beneficially or of record 10% or more of the outstanding
voting securities of the Management Company, are as follows:
<TABLE>
<CAPTION>
Percentage
Ownership of
Management
Company as of
December 31,
Name and Address Principal Occupation 1996 (1)
---------------- -------------------- -------------
<S> <C> <C>
Diane Howard Belding Director, Management Company _____%
490 North Wiget Lane Director, Trust Fund
Walnut Creek, CA 94598
Charles W. Froehlich, Jr. (1) Director & Secretary, Management Company _____%
1444 Windsong Lane Director & Secretary, Trust Fund
Escondito, CA 92026 Retired Appellate Court Judge; retired Superior
Court Judge; formerly Of Counsel to Peterson,
Thelan & Price; principal, Froehlich & Peterson
Dispute Resolution
Sam A. Marchese Retired; formerly Director, President & Chief _____%
490 North Wiget Lane Executive Officer, Management Company, and
Walnut Creek, CA 94598 Director, President, Chief Executive Officer &
Treasurer, Trust Fund
Michael J. Stead (2) Director & Chief Investment Officer, Management -0-
490 North Wiget Lane Company
Walnut Creek, CA 94598 Chief Investment Officer, Trust Fund
Sharon E. Tudisco Director, Management Company _____%
490 North Wiget Lane Retired; formerly Vice President & Executive
Walnut Creek, CA 94598 Secretary - Management Company and Trust Fund
Bruce W. Woods Director, President & Chief Executive Officer, _____%
490 North Wiget Lane Management Company
Walnut Creek, CA 94598 Director, President & Chief Executive Officer,
Trust Fund
John W. Woods Director, Management Company _____%
Box 885 Retired; formerly Senior Vice President -
Sparks, NV 89432 Management Company
</TABLE>
__________________________
(1) As of November 30, 1996, the Management Company re-purchased 500 shares
(10.0%) of Management Company stock from Shirley A. Beaton. The shares
purchased from Ms. Beaton were retired.
(2) Appointed December 15, 1996.
7
<PAGE>
ALLOCATION OF PORTFOLIO BROKERAGE AND PORTFOLIO TURNOVER RATES
In executing portfolio transactions for securities traded on national
securities exchanges or in the over-the-counter market, the Trust Fund endeavors
always to obtain the most favorable terms and conditions, taking into account
the price of the security and any commissions or discounts applicable to the
transaction. The Management Company is responsible for carrying out this policy
in its placement of the Trust Fund's investments. Neither the Trust Fund nor
the Management Company is currently a party to any "soft dollar" arrangements.
During the last calendar year, the Trust Fund paid brokerage commissions of
$------- and total purchases and sales of portfolio securities aggregated $-----
- ------. Portfolio turnover rates for the years 1994, 1995 and 1996 were 25.2%,
93.5% and ----%, respectively. The portfolio turnover rate in 1996 was
relatively high, due to the extremely active market for the stocks of financial
institutions, specifically, and equities, generally.
___________
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee (which consists exclusively of directors who are not
interested persons with respect to the Trust Fund) has recommended that the
accounting firm of Deloitte & Touche LLP ("Deloitte & Touche") be engaged as
independent accountants for the year ending December 31, 1997. This
recommendation has been approved by the full Board of Directors of the Trust
Fund. Deloitte & Touche has advised the Trust Fund that it is independent with
respect to the Trust Fund in accordance with the applicable requirements of the
American Institute of Certified Public Accountants and the Securities and
Exchange Commission. Representatives of Deloitte & Touche are not expected to
be present at the Meeting.
The Board of Directors unanimously recommends a vote "FOR" the
ratification of the selection of Deloitte & Touche as independent accountants
of the Trust Fund for the year ending December 31, 1996.
___________
PROPOSAL THREE
PROPOSAL TO CONTINUE THE INVESTMENT ADVISORY AGREEMENT
The Management Company has served as the investment advisor to the Trust
Fund since the Trust Fund's inception in November 1962. In addition to
providing investment advice and portfolio management to the Trust Fund, the
Management Company performs a broad range of administrative, regulatory,
transfer agency, fund accounting and other services for the Trust Fund and the
Investors. Since April 1, 1996, the Management Company has received 1.25% of
the Trust Fund's average net assets, per annum, in exchange for its investment
management services.
At its meeting on February 14, 1997, the Board of Directors considered the
nature, scope and quality of the services currently provided by the Management
Company to the Trust Fund, and the enhanced levels of services and products
made, and projected by the Management Company to be made, available to the
Investors in 1996 and 1997. The Board of Directors also considered the
Management Company's actual costs and cost projections for making available
additional services and fund
8
<PAGE>
opportunities, including the substantial ongoing investments required to upgrade
the Management Company's information systems, the need for additional
professional and non-professional management personnel and the implementation of
an enhanced marketing effort. The compensation paid to investment advisors of
mutual funds with similar investment objectives, policies and asset sizes, as
well as comparative expense and performance information, both actual and pro
forma, was also considered. The directors who are not interested persons, by
vote at their meeting on February 14, 1997, have unanimously concluded that the
proposed terms of the Investment Advisory Agreement are fair and equitable, and
that the fees and expenses provided therein provide fair and reasonable
compensation for services to be rendered to the Investors and the Trust Fund.
Continuation of the Investment Advisory Agreement requires the annual
approval of a majority of the Directors of the Trust Fund who are neither
parties to the Investment Advisory Agreement nor "interested persons" of any
such party, and (2) the approval of either (a) the full Board of Directors of
the Trust Fund, or (b) the vote of a majority in interest of the Investors at
their annual meeting, which is defined as the lesser of (i) 67% or more in
interest of the Investors represented at such a meeting at which more than 50%
in interest of the Investors are represented, either in person or by proxy, or
(ii) more than 50% in interest of all Investors. On February 14, 1997, the
Board of Directors of the Trust Fund unanimously approved the continuation of
the current Investment Advisory Agreement. Although such Board approval
satisfies the previously described approval requirement, the Board of Directors
has elected to submit the continuation of the Investment Advisory Agreement to
the Investors for their approval at the Meeting. The Board of Directors
believes that continuation of the current Investment Advisory Agreement is in
the best interests of the Investors and the Trust Fund, and unanimously
recommends a vote "FOR" the continuation of the Investment Advisory Agreement.
___________
PROPOSAL FOUR
APPROVAL OF A CHANGE IN THE PLACE AND FORM OF THE TRUST FUND
FROM A CALIFORNIA TRUST TO A DELAWARE BUSINESS TRUST
By unanimous written consent, dated as of January 17, 1997, and at its
meeting on February 14, 1997, the Board of Directors considered and unanimously
voted to approve an Agreement and Plan of Reorganization (the "Plan of
Reorganization"), in the form attached to this Proxy Statement as Exhibit A.
The Plan of Reorganization provides for a change in the place and form of
organization of the Trust Fund from a California trust to a Delaware
business trust, to be operated under the name "SIFE Trust Fund." The proposed
changes will be referred to collectively in this Proxy Statement as the
"Reorganization." Subsequent to the Reorganization, SIFE Trust Fund, a
California trust, will be terminated and the business of the Trust Fund - that
of being an open-end management investment company - will be carried on by the
new Delaware business trust (the "New Fund"). THE INVESTMENT OBJECTIVES,
POLICIES AND RESTRICTIONS OF THE TRUST FUND WILL NOT CHANGE AS A RESULT OF THE
REORGANIZATION.
The Management Company will continue to serve as investment advisor to the
New Fund, subject to the continuing oversight of the Board of Directors (which,
following the Reorganization, will be renamed the "Board of Trustees") pursuant
to a new Investment Advisory Agreement, the terms and conditions of which will
be substantially the same as those currently in effect. There will be no change
in investment advisory fees as a result of the Reorganization.
9
<PAGE>
With respect to the distribution of the securities of the New Fund, such
securities will continue to be underwritten by the Management Company, in its
capacity as "principal underwriter" of the New Fund, pursuant to a new
Underwriting and Distribution Agreement, the terms and conditions of which will
be substantially the same as those currently in effect. The New Fund will issue
one initial series of shares, Class A-I Shares and Class A-II Shares, the terms
and conditions of which will be identical to those of Class I and Class II
Investment Units, respectively. Class A-II Shares will be subject a new Rule
12b-1 Distribution Plan, the terms and conditions of which will be identical to
those of the current Rule 12b-1 Distribution Plan in effect for Class II
investment units.
SUMMARY OF THE PROPOSAL
- WHAT WILL THE REORGANIZATION MEAN FOR THE TRUST FUND AND ITS
INVESTORS?
The Reorganization will continue the business of the Trust Fund in the
form of a new Delaware business trust, named "SIFE Trust Fund," which
is referred to in this Proxy Statement as the "Delaware Trust." The
Delaware Trust will issue one initial series of shares, divided into
two classes, which will be identical to the Trust Fund's current
makeup. The portfolio securities of the Trust Fund will be
transferred to the New Fund, and the investment interests of the Trust
Fund's Investors will be converted into a number of shares equal in
value and number to their interests in the Trust Fund on the effective
date of the Reorganization. The officers and directors of the Trust
Fund will be the officers and Trustees of the New Fund, and will
operate the New Fund in the same manner as they previously operated
the Trust Fund. In essence, your investment in the Trust Fund will
simply continue as an investment in the New Fund.
- WHAT WILL THE NEW FUND'S INVESTMENT POLICIES BE?
The New Fund will have the same investment objectives, investment
policies and investment limitations as does the Trust Fund.
- WHY ARE THE DIRECTORS RECOMMENDING THAT I APPROVE THE REORGANIZATION?
The Directors believe that mutual funds organized as Delaware business
trusts have significant advantages over a fund organized as a
California trust. Delaware law permits a less complicated
structure and allows greater flexibility in a fund's business
operations, without sacrificing the federal or state tax advantages of
a mutual fund format. Delaware law contains provisions specifically
designed for mutual funds, which take into account their unique
structure and operations. For example, Delaware business trusts may
establish multiple series of shares, each of which may invest in a
separate portfolio of securities, without first having to obtain the
approval of shareholders. Delaware business trusts also offer a
greater degree of legal certainty with respect to the potential
liability of investors, as well as directors, with respect to the
obligations of the fund.
- WHAT WILL THE REORGANIZATION INVOLVE?
The Reorganization is a series of legal transactions, whereby the New
Fund will be created and will then acquire all of the assets, and
assume all of the liabilities, of the Trust Fund in a tax-free
transaction of reorganization. The New Fund, as successor, will then
carry on the business of the Trust Fund for the benefit of the New
Fund's shareholders. As described more fully in the Agreement and
Plan of Reorganization, a copy of which is attached to this Proxy
Statement as Exhibit A, in exchange for the assets and liabilities of
the Trust Fund, the New Fund will create an account for each Investor,
identical to that Investor's current account with the Trust Fund, and,
on the Closing, will credit a number of shares equal in number and
value to the Class I and Class II investment units outstanding
immediately prior to the Closing. Thereafter, the Trust Fund will be
dissolved and liquidated.
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- WHAT IS THE EFFECT OF MY "YES" VOTE?
If the Investors approve the Reorganization, you will be agreeing to
become a shareholder of a mutual fund organized as a series of a newly
created Delaware business trust. The New Fund will become your mutual
fund, and you will own exactly the same interest in the New Fund that
you owned in the Trust Fund prior to the Reorganization.
- ARE THERE ANY TAX CONSEQUENCES?
The Reorganization has been designed to be tax-free for federal income
tax purposes, so that Investors will not experience a taxable gain or
loss when the Reorganization is completed.
REASONS FOR THE REORGANIZATION
The Board of Directors believes that operating under the Delaware business
trust form is preferable to continuing to operate as a California trust. In
general, Delaware trust law will provide much greater flexibility to the Trust
Fund than California law, both in terms of structuring the Trust Fund's
operations and the oversight role which the Board of Directors believes is
proper for the protection of Investors. The Reorganization will eliminate the
need to obtain Investor approval for certain routine or non-material actions, as
well as the expense and delay involved in doing so. For example, under the
current Restated Trust Agreement, routine or non-material changes to the Trust
Agreement, such as those with respect to regulatory developments, would
typically require Investor approval; Delaware law permits such changes to the
trust instrument of a Delaware trust to be made without first seeking Investor
approval. In addition, unlike California common law, which carries uncertainty
with respect to the potential personal liability of Investors for the
obligations of the Trust Fund, Delaware law protects the Investors from the
liabilities of the Delaware business trust. Finally, subject to applicable
Federal laws and regulations, Delaware law permits the board of trustees to
adapt a Delaware trust to future contingencies (subject to the restriction that
the interests of the Investors not be adversely affected, in any material
respect, absent prior Investor approval). The operations of the New Fund,
like those of the Trust Fund today, will be subject to the Federal securities
laws, generally, and the provisions of the 1940 Act, specifically, as well as
the rules and regulations of the Securities and Exchange Commission and
applicable state securities laws.
The Board of Directors and the Management Company believe that reorganizing
the Trust Fund into the Delaware business trust format will better serve and
protect the investment needs and goals of the Investors, while having no
material impact upon their current economic interests: the interest of an
Investor, whether in Class I or Class II units, in the New Fund will be
virtually identical to the Investor's current interest in the Trust Fund.
The investment objectives and policies of the Trust Fund which are
fundamental will remain fundamental for the New Fund and will not be subject to
change other than by Investor vote.
SUMMARY OF THE PLAN OF REORGANIZATION
The following discussion summarizes the important terms of the Plan of
Reorganization. This summary is qualified by reference to the Plan of
Reorganization itself, which is attached to this Proxy Statement as Exhibit A.
In order to accomplish the Reorganization, the New Fund has been formed
under the name "SIFE Trust Fund" pursuant to an agreement and declaration of
trust dated February --, 1997. On
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the closing date of the Reorganization (the "Closing Date"), the Trust Fund will
transfer all of its assets to the New Fund in exchange for the assumption by the
New Fund of all of the liabilities of the Trust Fund and the issuance of new
investment units representing shares of beneficial interest in the New Fund (the
"New Shares"). At that time, the New Fund will create an account for each
Investor in the Trust Fund, and will credit to that account a number of New
Shares equal in number and value to the Class I and/or Class II investment units
in the Trust Fund such Investor had in his or her account with the Trust Fund
immediately prior to the closing of the Reorganization. All evidence of
ownership of New Shares will be maintained on the books and records of the New
Fund; no certificates evidencing the New Shares will be issued, nor will the New
Fund issue any certificate or other document evidencing the ownership of
"Participating Agreements," as that term is defined in the Restated Trust
Agreement.
The New Shares issued in connection with the Reorganization will be
issued in a single series, representing the current investment portfolio of
the Trust Fund, and will be represented by two classes of shares (Class A-I
and Class A-II). The New Shares to be issued on the Closing Date will have
an aggregate net asset value equal to the aggregate net asset value of the
Trust Fund's investment units as of the close of business on the business day
immediately preceding the Closing Date, and will be registered in the name of
each Investor in proportion to such Investor's interest in the Trust Fund
immediately prior to completion of the Reorganization. Upon completion of
the Reorganization, each Investor will be the owner of full and fractional
New Shares equal in number and aggregate net asset value to the Investor's
current interest in the Trust Fund. As soon as practicable following the
distribution of the New Shares, as described above, the Trust Fund will be
liquidated and terminated, and its business, to be conducted under the name
"SIFE Trust Fund," will be carried out without interruption by the New Fund.
Upon approval of the Reorganization, the Trust Fund will notify the
Securities and Exchange Commission and each state in which the Trust Fund is
registered or qualified that the New Fund will adopt the Trust Fund's existing
registration statement under the Securities Act of 1933 with respect to offer
and sale of the Trust Fund's securities.
An investment company registered under the 1940 Act is required to (1)
submit the selection of the company's independent accountants to the
shareholders for their ratification; (2) provide for the election of the
company's directors (or trustees) by the shareholders; (3) submit the
investment management agreement relating to any series of the investment
company to the shareholders of the particular series for approval; and (4)
submit any plan of distribution adopted pursuant to Rule 12b-1 under the 1940
Act with respect to any class or series of such company to the shareholders
of the particular class or series for approval. The Directors of the Trust
Fund believe that it is in the best interests of the Trust Fund's Investors
(who will become the New Fund's shareholders if the Reorganization is
approved) to avoid the considerable expense of calling a shareholders'
meeting shortly after the effective date of the Reorganization to obtain the
approvals described above. The Directors also believe that it is not in the
best interests of the Investors to carry out the Reorganization if the New
Fund would not have independent accountants, a board of trustees, a
management agreement or a distribution plan which have been duly approved by
the shareholders, and therefore, which comply with the 1940 Act. The
Directors will, therefore, consider that approval of the Reorganization by
the requisite vote of the shareholders will also constitute, for the purposes
of the 1940 Act: (1) ratification of the selection of Deloitte & Touche LLP,
previously selected as the Trust Fund's independent accountants; (2) election
of the Directors of the Trust Fund who are in office at the time of the
Reorganization as Trustees of the New Fund; (3) approval of a new investment
management agreement between the Trust Fund on behalf of the New Fund and the
Management Company, which is substantially similar to the agreement currently
in place between the
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<PAGE>
Trust Fund and the Management Company; and (4) approval of a separate
distribution plan adopted under Rule 12b-1 for the Class A-II shares of the New
Fund, which is substantially similar to the Rule 12b-1 distribution plan
currently in place for the Class II investment units of the Trust Fund.
In the Reorganization, the New Fund will issue a single share of each of
its Class A-I and Class A-II shares to the Trust Fund, and, assuming Investor
approval of the Reorganization, will cause the Trust Fund, as the sole
shareholder of the New Fund, to vote such shares "FOR" the matters specified in
the above paragraph. The Trust Fund will then consider the shareholder approval
requirements of the 1940 Act to have been satisfied.
The obligations of the Trust Fund and the New Fund under the Plan of
Reorganization are subject to various customary conditions as stated therein.
In order to protect against unforeseen events, the Plan of Reorganization may be
terminated or amended at any time prior to the Reorganization by action of the
Board of Directors, notwithstanding the approval of the Plan of Reorganization
by the Investors, if it reasonably appears that either the Trust Fund or the New
Fund cannot meet a regulatory or other condition of the Plan of Reorganization,
or the Board of Directors determines that proceeding with the Plan of
Reorganization is not in the best interests of the Investors or the Trust Fund.
The Trust Fund and the New Fund may at any time waive compliance with any term
or condition of the Plan of Reorganization, provided that such a waiver does not
materially affect, in any adverse manner, the interests of the Investors or the
Trust Fund.
Assuming that the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective at the close of
business on April 30, 1997. However, the Reorganization may become effective on
a later date, if circumstances warrant.
FUND AGREEMENTS
Each of the Investment Advisory Agreement and the Underwriting Agreement
with the Management Company to be entered into by the New Fund will continue in
force from year to year with respect to the New Fund and any successor fund so
long as its continuance is approved at least annually by the vote of a majority
of the Trustees who are not parties to any such agreement, or "interested
persons" of any such party, cast in person at a meeting called for the purpose
of voting on such approval. Such agreements will continue to be terminable
without penalty on sixty days' written notice by either party, and will
terminate automatically in the event of its assignment.
INVESTOR ACCOUNTS AND RETIREMENT PLANS
In connection with the Reorganization, the Management Company, as Transfer
Agent, will establish an account for each Investor, which account will contain
the appropriate number of Class A-I or Class A-II investment units to be
received by that Investor under the Plan of Reorganization. These accounts will
be the same in all material respects to the accounts currently maintained by the
Management Company for the benefit of the Investors. No further action will be
necessary in order to continue any retirement plan currently maintained by an
Investor in the Trust Fund.
TAX CONSEQUENCES OF THE REORGANIZATION; EXPENSES
The Trust Fund and the New Fund will receive an opinion from their counsel,
Heller, Ehrman, White & McAuliffe, to the effect that, on the basis of existing
provisions of the Internal Revenue Code of 1986, as amended, current
administrative rules and court decisions, for Federal income tax purposes (a) no
gain or loss will be recognized by the Trust Fund or the New Fund as a
consequence of the
13
<PAGE>
Reorganization; (b) the tax basis of the New Shares received by each Investor in
the Reorganization will be the same as the tax basis of each Investor's
investment units held immediately prior to the Reorganization; and (c) assuming
that the investment units held immediately prior to the Reorganization were held
as capital assets, the holding period of the New Shares received by each
Investor in the Reorganization will include the holding period of the investment
units exchanged therefor. The Trust Fund will be responsible for all of the
expenses incurred and to be incurred in connection with the Reorganization.
TRUSTEES AND OFFICERS OF THE NEW FUND
Subject to the provisions of the trust instrument, By-laws and applicable
Delaware law, the business of the New Fund will be supervised by the Board of
Trustees, who will have all powers necessary or appropriate to carry out their
responsibilities. The responsibilities, powers and fiduciary duties of the
Trustees of the New Fund are substantially the same as those of the Directors of
the Trust Fund. The Trustees of the New Fund will be the current Directors of
the Trust Fund.
If the Reorganization is approved by the Investors, the Trustees of the New
Fund shall hold office for successive one-year terms, except that (1) any
Trustee may resign, (2) any Trustee may be removed for cause by written
instrument signed by a majority of Trustees then in office, and (3) any Trustee
may be removed for any reason or no reason at any meeting of the Investors by a
vote of two-thirds of the Voting Interests of the New Fund. A meeting of the
Investors for the purpose of electing or removing Trustees may be called by the
Board of Trustees or upon the demand of Investors owning 10.0% or more of such
Voting Interests.
In the event of any vacancy, the remaining Trustees may appoint another
Trustee so long as, immediately after such appointment, at least two-thirds of
the Trustees then in office have been elected by the Investors. If, at any
time, less than a majority of the Trustees holding office have been elected by
the Investors, the Trustees then in office will promptly call an Investors'
meeting for the purpose of electing Trustees; otherwise, meetings for the
purpose of electing Trustees will be called at the discretion of the Trustees
then in office.
It is anticipated that the Trustees of the New Fund will continue the
appointment of the present officers of the Trust Fund, and that those persons
will continue to perform the same functions on behalf of the New Fund that they
now perform on behalf of the Trust Fund.
CREATION OF DIFFERENT SERIES AND/OR CLASSES OF INVESTMENT UNITS
The trust instrument governing the operations of the Delaware business
trust will permit the Trustees to create one or more additional series (or
investment portfolios) of the New Fund, and to further divide any series into
two or more separate classes and, with respect to each series, to issue an
unlimited number of full or fractional investment units of that series or of one
or more of that series' classes. The New Fund will initially have only one
series corresponding to the Trust Fund; however, additional series may be
created at any time. Each investment unit in each series of the New Fund, like
each Class I or Class II unit of the Trust Fund, will represent an equal
proportionate interest with each other investment unit in that series, with none
having any priority over another.
LIABILITY OF THE INVESTORS
California has no statute or substantial body of case law recognizing the
viability of the business trust form of organization; the Trust Fund, as a
California trust, is therefore governed by the California
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<PAGE>
common law of trusts, rather than by any established legal principles governing
the rights, responsibilities and obligations of business trusts or their
directors, officers or investors.
Under certain circumstances, Investors in a California trust could be held
personally liable for the obligations of the trust. The activities of the Trust
Fund as an investment company, as distinguished from those of an operating
company, are unlikely to give rise to any material liabilities, let alone
liabilities in excess of the Trust Fund's assets, therefore the risk of any
Investor incurring any loss in excess of his or her investment due to personal
liability should not be significant. Nevertheless, because the Restated Trust
Agreement does not provide for either exoneration for, nor indemnification of,
any Investor for the obligations of the Trust Fund, if the Trust Fund were
unable to meet its obligations, it is possible that individual Investors could
be held personally liable for the obligations of the Trust Fund.
Under Delaware law, Investors in a Delaware business trust are not
personally liable for the obligations of the Delaware business trust. Rather,
the Delaware Business Trust Act provides that an investor in a Delaware business
trust is entitled to the same limitation of liability that is extended to
shareholders of private, for-profit Delaware corporations. To guard further
against this risk, the trust instrument governing the New Fund contains an
express disclaimer of Investor liability for acts or obligations of the New
Fund, and, in addition, provides for indemnification out of the trust's assets
for any Investor held personally liable for the obligations of the Delaware
business trust.
LIABILITY OF THE TRUSTEES
As described above, with respect to the Investors, California law does not
provide any specific protection from liability for the Directors of the Trust
Fund. The trust instrument governing the New Fund provides that the Trustees
shall not be liable to any person other than the New Fund, and that a Trustee
would not be liable for any act or omission as Trustee, but nothing in the trust
instrument would protect a Trustee against any liability to which he or she
might otherwise be subject by reason of willful malfeasance, bad faith, gross
negligence or reckless disregard of his or her duties as a Trustee. The trust
instrument generally entitles the Trustees to indemnification against all
liabilities, including expenses, under certain circumstances and subject to the
public policy provisions of Federal and state law.
INVESTOR VOTING RIGHTS
The New Fund, like the Trust Fund, will operate as an open-end management
investment company registered with the Securities and Exchange Commission under
the 1940 Act. Investors, therefore, will have the power to vote at any Investor
meeting with respect to any changes in fundamental investment policies and
restrictions of the New Fund, approval of material changes to the Investment
Advisory Agreement and such other matters as might be required by the provisions
of the 1940 Act, or as the Trustees may determine.
The trust instrument provides that the Investors in the New Fund will have
the power to vote only with respect to the election (or removal) of Trustees and
such additional matters as may be required by law or that the Trustees might
consider desirable. The trust instrument also permits the Trustees to amend the
trust instrument, except that the Investors will have the right to vote upon any
amendment which affects, in any material, adverse manner, any right previously
granted or reserved to the Investors.
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<PAGE>
REQUIRED VOTE & RECOMMENDATION OF THE BOARD OF DIRECTORS
Adoption of the Plan of Reorganization requires the affirmative vote of a
majority in interest of the Investors at the Meeting, which is defined as the
lesser of (i) 67% or more in interest of the Investors represented at such a
meeting at which more than 50% in interest of the Investors are represented,
either in person or by proxy, or (ii) more than 50% in interest of all
Investors. If the proposal is approved, the Reorganization will take effect as
soon as practicable following the Meeting. The Board of Directors
unanimously recommends a vote "FOR" the Reorganization, as described above.
___________
GENERAL INFORMATION
The Board of Directors of the Trust Fund knows of no other matters which
may come before the meeting. However, if any matters other than those referred
to above shall properly come before the meeting, it is the intention of the
persons named in the enclosed Proxy to vote the Proxy in accordance with their
judgment. Investors' proposals intended to be presented in next year's Proxy
Statement must be received by the Trust Fund by October 31, 1997 to be eligible
for inclusion in the Trust Fund's proxy materials relating to such meeting.
Submission of a proposal does not guarantee its inclusion in a proxy statement
or its presentation at an Investor's meeting. A copy of the annual report for
the fiscal year ended December 31, 1996 has been sent under separate cover to
each Investor of record as of February 14, 1997. The annual report, and the
most recent semi-annual report, of the Trust Fund will also be furnished without
charge to any Investor upon request by calling the Management Company at
1-800-231-0356.
By order of the Board of Directors of
SIFE Trust Fund
Charles W. Froehlich, Jr.
SECRETARY
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SAN RAMON MARRIOTT
2600 BISHOP DRIVE
SAN RAMON, CA 94583
FROM THE SOUTH
Take I-680 NORTH
Take Bollinger Canyon Road EAST exit
Go RIGHT on Bollinger Canyon Road
Go LEFT on Sunset Drive
Go LEFT on Bishop Drive
San Ramon Marriott is on the LEFT
FROM THE NORTH
Take I-680 SOUTH
Take Bollinger Canyon Road EAST exit
Go LEFT on Bollinger Canyon Road
Go LEFT on Sunset Drive
Go LEFT on Bishop Drive
San Ramon Marriott is on the LEFT
FROM THE EAST
Take I-580 WEST to I-680 NORTH
Take Bollinger Canyon Road EAST exit
Go RIGHT on Bollinger Canyon Road
Go LEFT on Sunset Drive
Go LEFT on Bishop Drive
San Ramon Marriott is on the LEFT
17
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of February --, 1997 (the
"Agreement"), is entered into between SIFE Trust Fund, a California trust (the
"Trust Fund") and SIFE Trust Fund, a business trust formed under the laws of the
State of Delaware for the purpose of carrying on the business of the Trust Fund
(SIFE Trust Fund, a Delaware business trust, is hereinafter referred to as the
"Successor Fund").
WHEREAS, this Agreement is intended to effect the reorganization of the
Trust Fund into a Delaware business trust by the transfer of all of the assets
of the Trust Fund to of the Successor Fund, solely in exchange for the
assumption by the Successor Fund of all of the liabilities of the Trust Fund and
the registration on the books of the Successor Fund, upon instruction of the
Trust Fund, of shares of beneficial interest in the Successor Fund (hereinafter
the "New Shares"), corresponding to the registration list, maintained on the
transfer records of the Trust Fund, of all holders of Class I and Class II
investment units of the Trust Fund as of the close of business on the business
day immediately preceding the closing of the transactions described herein (the
"Closing Date"), followed by the liquidation and termination of the Trust Fund
(collectively, the "Reorganization"), all upon the terms and conditions set
forth herein,
NOW, THEREFORE, in consideration of the promises, covenants and agreements
set forth herein, the parties agree as follows:
1. REORGANIZATION
1.1 Subject to the terms and conditions set forth herein, and on the basis
of the representations and warranties contained in this Agreement, the Trust
Fund agrees to transfer all of its assets to the Successor Fund on the Closing
Date. The Successor Fund agrees in exchange therefore (a) that the Successor
Fund shall assume and pay all of the Trust Fund's liabilities, whether absolute,
accrued, contingent or otherwise, and whether known or unknown, existing as of
and after the Closing Date, including without limitation all costs and expenses
of legal advice, accounting, printing, mailing, proxy solicitation and transfer
taxes, if any, associated with the Reorganization, as required to be paid by the
Trust Fund pursuant to Section 8.3, below, and (b) that, on the Closing Date,
the Successor Fund shall deliver to the Trust Fund evidence of the registration,
on the transfer books of the Successor Fund, of full and fractional New Shares,
equal in net asset value and number to the Class I and Class II investment units
of the Trust Fund reflected on the books and records of the Trust Fund as of the
close of business on the business day preceding the Closing Date, registered in
the names reflected in the transfer records of the Trust Fund as of such close
of business.
1.2 The Successor Fund shall effect the delivery described in the
preceding paragraph by establishing an open account for each investor of the
Trust Fund
<PAGE>
(individually an "Investor," and collectively the "Investors"), and by crediting
to such account the exact number of full and fractional shares of the
appropriate class of the Successor Fund as were held by such Investor in the
corresponding class of the Trust Fund on the Closing Date. Fractional shares of
the Successor Fund shall be carried to the second decimal place. On the Closing
Date, the net asset value per share of each class of the Successor Fund shall be
deemed to be the same as the net asset value per investment unit of the
corresponding class of the Trust Fund. On such date, each participating
agreement certificate representing investment units of a class of the Trust Fund
will represent the same number of shares of the corresponding class of the
Successor Fund.
1.2 The transactions contemplated in this Agreement are intended to
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and this Agreement shall
constitute a "plan of reorganization" within the meaning of Treasury Regulations
Section 1.368-1(c).
1.3 The assets of the Trust Fund transferred to the Successor Fund shall
include, without limitation, all cash, cash equivalents, securities, receivables
(including interest and dividend receivables), claims or rights of action or
rights to register shares under applicable securities laws, all deferred or
prepaid expenses shown as assets on the books and records of the Trust Fund, all
books and records of the Trust Fund and all other property or assets, of
whatever character, owned directly or beneficially by the Trust Fund on the
Closing Date.
1.4 As soon as practicable after notification to the directors of the
Trust Fund that the registration of the New Shares on the books of the Successor
Fund has been accomplished, as contemplated in Section 1.1, above, the
directors, as trustees of the Successor Fund, shall take such actions, including
but not limited to those described in Section 6.2, below, as may be necessary or
appropriate to effect the Reorganization.
1.5 As soon as practicable after the Closing Date, the Successor Fund will
notify each Investor of the closing of the transactions contemplated herein, and
advise each Investor of his or her interest in the Successor Fund, in full
liquidation and redemption of such Investor's interest in the Trust Fund. The
Successor Fund will not be required to issue certificates evidencing ownership
of any Investor's interest in the Successor Fund; rather, ownership of the New
Shares by any Investor shall be reflected on the books and records of the
Successor Fund, as maintained by the Successor Fund's transfer agent.
Simultaneously with the crediting of the shares of the Successor Fund to the
Investors of record of the Trust Fund, the shares of the Trust Fund held by such
Investors shall be canceled.
1.6 As soon as practicable after the Closing Date, the Trust Fund shall
take all necessary actions under California law to liquidate, terminate and
dissolve. Any reporting responsibilities of the Trust Fund are and shall remain
the responsibility of the Trust Fund, up to and including the later of the
Closing Date or the date on which the Trust Fund is liquidated, terminated and
dissolved.
<PAGE>
2. CLOSING AND CLOSING DATE
2.1 The Closing Date shall occur on such date as the parties may mutually
agree. The transfer of substantially all of the assets of the Trust Fund in
exchange for the assumption by the Successor Fund of all of the liabilities of
the Trust Fund and the issuance of the New Shares, as described above, together
with all related acts necessary to consummate the transactions contemplated
herein (the "Closing") shall occur on the Closing Date at the offices of SIFE,
Inc., manager of the Trust Fund (the "Management Company"), at 490 N. Wiget
Lane, Walnut Creek, California, or at such other place as the parties may agree.
All acts taking place at the Closing shall be deemed to take place
simultaneously, and shall be effective, as of the last daily determination of
the Trust Fund's net asset value on the Closing Date.
2.2 In the event that, on the last business day preceding the Closing
Date, (a) the New York Stock Exchange is closed to trading or trading thereupon
is restricted, or (b) trading or reporting of trading on said exchange or in any
market in which portfolio securities of the Trust Fund are traded is disrupted
so that accurate appraisal of the value of the total net assets of the Trust
Fund is impractical, the Closing shall be postponed until the first business day
upon which trading shall have been fully resumed and reporting shall have been
restored.
2.3 The Trust Fund shall deliver to the Successor Fund at the Closing a
certificate of an authorized officer of the Trust Fund stating that it has duly
instructed the Trustee of the Trust Fund to transfer the assets of the Trust
Fund to the Successor Fund, and a confirmation from the Trustee that (a) it has
so transferred the assets of the Trust Fund to the Successor Fund, and (b) it
holds such assets, as custodian for the Successor Fund.
2.4 The Management Company, acting as transfer agent for the Trust Fund,
shall deliver to the Successor Fund at the Closing a certificate confirming the
transfer on the books and records maintained for the benefit of the Trust Fund
and the Investors of each current Investor's Trust Fund account to an account of
a holder of New Shares of the Successor Fund. At the Closing, the Successor
Fund shall issue and deliver a confirmation to the Trust Fund of the number of
New Shares credited to the account of each Investor on the Closing Date.
3. VALUATION
3.1 The value of the Trust Fund's net assets to be acquired by the
Successor Fund shall be the net asset value computed as of the close of business
on the last business day preceding the Closing Date, using the valuation
procedures set forth in the Trust Fund's then-current prospectus or statement of
additional information (collectively the "Prospectus").
<PAGE>
3.2 The number and value of full and fractional New Shares to be issued in
exchange for the Trust Fund's net assets shall be equal in number and value to
the full and fractional Class I and Class II investment units outstanding as of
the close of business on the last business day immediately preceding the Closing
Date.
4. COVENANTS OF THE TRUST FUND
4.1 The Trust Fund will advise the Securities and Exchange Commission (the
"SEC") that the Successor Fund will adopt the Trust Fund's existing registration
statement on Form N-1A (the "Registration Statement") under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended (the
"1940 Act") with respect to the investment units currently offered by the Trust
Fund.
4.2 The Trust Fund shall take no action (including the filing of any tax
return) which is inconsistent with the treatment of the Reorganization as a
reorganization within the meaning of Section 368(a) of the Code.
5. REPRESENTATIONS AND COVENANTS OF THE SUCCESSOR FUND
5.1 The Successor Fund intends to qualify as a "fund" as defined in
Section 851(h)(2) of the Code, and will seek to meet all of the requirements to
qualify, and, if necessary, to elect to be treated, as a "regulated investment
company" ("RIC") pursuant to the provisions of Subchapter M of the Code for each
of the Successor Fund's taxable years ending after the Closing Date of the
Reorganization.
5.2 The Successor Fund has no plan or intention to issue additional New
Shares following the Reorganization, except for units of beneficial interest in
the Successor Fund to be issued in the ordinary course of the Successor Fund's
business as an open-end management investment company. The Successor Fund does
not have any plan or intention to redeem or otherwise reacquire any New Shares
issued to any Investor pursuant to the Reorganization, other than through
redemptions arising in the ordinary course of business as an open-end management
investment company. The Successor Fund currently intends actively to continue
the Trust Fund's business in the same manner as the Trust Fund conducted it
prior to the Reorganization, and has no plan or intention to sell or otherwise
dispose of any of the assets to be acquired by the Successor Fund in the
Reorganization, except for dispositions made in the ordinary course of its
business and dispositions necessary to maintain the Successor Fund's status as a
RIC under Subchapter M of the Code. The Successor Fund shall take no action
(including the filing of any tax return) which is inconsistent with the
treatment of the Reorganization as a reorganization within the meaning of
Section 368(a) of the Code.
6. CONDITIONS TO THE OBLIGATIONS OF THE SUCCESSOR FUND
6.1 REGULATORY APPROVAL Such authority and orders from the SEC and state
securities commissions as may be necessary to permit the parties to carry out
<PAGE>
the transactions contemplated by this Agreement shall have been received. One
or more post-effective amendments to the Registration Statement containing (a)
such amendments to the Registration Statement as are determined by the Trust
Fund to be necessary or appropriate as a result of this Agreement, and (b) the
adoption by the Successor Fund as its own of the Registration Statement, as so
amended, shall have been filed with the SEC and such post-effective amendment or
amendments to the Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the SEC (other than any stop order, proceeding or threatened
proceeding which shall have been withdrawn or terminated). Confirmation shall
have been received from the SEC or the staff thereof that the Successor Fund
shall, effective upon or before the Closing Date, be duly registered as an open-
end management investment company under the 1940 Act. Shares of the Successor
Fund shall have been duly qualified for offering to the public and all states of
the United States and the District of Columbia so as to permit the transfers
contemplated by this Agreement to be consummated.
6.2 APPROVAL BY INVESTORS AND BOARD ACTIONS
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the affirmative vote of the outstanding investment units of the
Trust Fund entitled to vote upon the matter required for such approval under the
Trust Fund's Restated Trust Agreement, dated May 2, 1986, as amended, and
applicable law. The Investors shall have voted to direct the Trust Fund to
vote, and the Trust Fund shall have voted, as sole shareholder of each class of
the Successor Fund, to: (i) elect as Trustees of the Successor Fund (the
"Trustees") the individuals who, at the time of such meeting, are directors of
the Trust Fund; (ii) appoint Deloitte & Touche LLP as the independent auditors
for the Successor Fund for the fiscal year ending December 31, 1997; (iii)
approve a new investment management agreement between the Successor Fund and the
Management Company, which is substantially similar to the current investment
management agreement between the Trust Fund and the Management Company; (iv)
approve a new underwriting agreement between the Successor Fund and the
Management Company which is substantially identical to the current underwriting
agreement between the Trust Fund and the Management Company; and (v) approve a
distribution plan for the Class A-II shares of the Successor Fund, as adopted
pursuant to Rule 12b-1 under the 1940 Act, which is substantially identical to
the current Rule 12b-1 distribution plan for the Class II investment units of
the Trust Fund.
(b) The Board of Trustees of the Successor Fund shall have taken the
following actions at a meeting duly called for such purpose: (i) approval of the
Successor Fund's custodian and third-party service agreements; (ii) selection of
Deloitte & Touche LLP as the Successor Fund's independent auditors for the
fiscal year ending December 31, 1997; (iii) approval of an investment management
agreement between the Successor Fund and the Management Company which is
substantially similar to the current investment management agreement between the
Trust Fund and the Management
<PAGE>
Company; (iv) approval of a new underwriting agreement between the Successor
Fund and the Management Company which is substantially identical to the current
underwriting agreement between the Trust Fund and the Management Company; (v)
authorization of the issuance by the Successor Fund, prior to the Closing Date,
of one share of each class of the Successor Fund to the Trust Fund, in
consideration for the payment of its then current public offering price per
share for the purpose of enabling the Trust Fund to vote on the matters referred
to in Paragraphs (i) - (v) of the preceding paragraph; (vi) submission of the
matters referred to in Paragraphs (i) - (v) of the preceding paragraph to the
Trust Fund as the sole shareholder of the Successor Fund; and (vii)
authorization of the issuance by the Successor Fund of the shares contemplated
by this Section 6.2 on the Closing Date, in exchange for the net assets of the
Trust Fund pursuant to the terms of this Agreement.
6.3 COVENANTS The Trust Fund shall have complied with each of its
covenants contained herein, and the Successor Fund shall have received a
certificate of the President of the Trust Fund, satisfactory in form and
substance, so stating.
6.4 TAX OPINION Each of the Trust Fund and the Successor Fund shall have
received an opinion of Heller, Ehrman, White & McAuliffe, dated on the Closing
Date and addressed to each of them, to the effect that, on the basis of existing
provisions of the Code, current administrative rules and court decisions, for
federal income tax purposes: (a) no gain or loss will be recognized by the Trust
Fund or the Successor Fund as a consequence of the Reorganization; (b) the tax
basis of the New Shares received by each Investor in the Reorganization will be
the same as the tax basis of each Investor's investment units held immediately
prior to the Reorganization; and (c) assuming that the investment units held
immediately prior to the Reorganization were held as capital assets, the holding
period of the New Shares received by each Investor in the Reorganization will
include the holding period of the investment units exchanged therefor. For
purposes of rendering their opinion, such counsel may rely exclusively, and
without independent verification as to factual matters, upon the statements made
in this Agreement, upon the proxy statement distributed to the Investors in
connection with the Reorganization, and upon such other written representations
as the Successor Fund and the Trust Fund will have made as of the Closing Date,
or as such counsel may specifically require.
6.5 OPINION OF COUNSEL Each of the Trust Fund and the Successor Fund
shall have received an opinion of Heller, Ehrman, White & McAuliffe, dated on
the Closing Date and addressed to each of them, substantially to the effect
that: (a) the Successor Trust is a Delaware business trust, duly organized and
validly existing under the laws of the State of Delaware; (b) the execution of
this Agreement and the consummation of the Reorganization provided for herein
have been duly authorized and approved by all requisite action of the directors
and Investors, in the case of the Trust Fund, and the Trustees and shareholders,
in the case of the Successor Fund, and this Agreement has been duly executed and
delivered by the Trust Fund and the Successor Fund; and (c) the
<PAGE>
New Shares of the Successor Fund to be issued in the Reorganization have been
duly authorized and, upon issuance thereof in accordance with the terms of this
Agreement will be validly issued, fully paid and non-assessable.
7. CONDITIONS TO PERFORMANCE
7.1 COVENANTS The Successor Fund shall have complied with each of its
covenants contained herein, and each of the representations contained herein
shall be true in all material respects at and as of the Closing Date.
7.2 REGULATORY APPROVAL The conditions set forth in Sections 6.1 and 6.2
shall have been satisfied.
7.3 OPINIONS OF COUNSEL The Trust Fund and the Successor Fund each shall
have received the opinions of counsel referred to in Sections 6.4 and 6.5 of
this Agreement.
8. MISCELLANEOUS
8.1 WAIVERS At any time prior to the Closing Date, either of the parties
may waive compliance by the other party of any of the convenants or conditions
made herein for its benefit.
8.2 TERMINATION This Agreement may be terminated at any time prior to the
Closing Date without liability on the part of either party, or its respective
Trustees, Directors, officers or Investors, by any party upon the delivery of
written notice to the other party, notwithstanding approval thereof by the
Investors if, in the judgment of the Board of Directors or Board of Trustees, as
the case may be, of such party, the facts and circumstances make proceeding with
this Agreement inadvisable.
8.3 EXPENSES The expenses associated with this Agreement and the
Reorganization shall be borne by the Trust Fund.
8.4 INTEGRATION This Agreement supersedes all prior agreements between
the parties (written or oral), is intended as a complete and exclusive statement
of the terms and conditions of the Agreement between the parties, and may not be
changed or terminated orally.
8.5 NO THIRD PARTY BENEFICIARIES Nothing in this Agreement, expressed or
implied, is intended to confer upon any other person any rights or remedies
under or by reason of this Agreement.
8.6 FURTHER ASSURANCES Each party shall take such further action as may
be necessary or appropriate to effect the consummation of the transactions
contemplated by
<PAGE>
this Agreement. At or prior to the Closing, each party shall deliver to the
other such assignments, certificates and other documents as the other party may
reasonably request to effect the Reorganization.
8.7 GOVERNING LAW This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
SIFE TRUST FUND Attest:
A California Trust
By: By:
-------------------------------- --------------------------------
Haig G. Mardikian Charles W. Froehlich, Jr.
Chairman of the Board of Directors Secretary
SIFE TRUST FUND Attest:
A Delaware Business Trust
By: By:
-------------------------------- --------------------------------
Haig G. Mardikian Charles W. Froehlich, Jr.
Chairman of the Board of Trustees Secretary
COPIES OF THE SUCCESSOR TRUST'S CERTIFICATE OF TRUST AND TRUST INSTRUMENT ARE ON
FILE WITH THE SECRETARY OF THE SUCCESSOR FUND, AND NOTICE IS HEREBY GIVEN THAT
THIS AGREEMENT AND PLAN OF REORGANIZATION IS EXECUTED ON BEHALF OF THE TRUST
FUND AND THE SUCCESSOR FUND BY OFFICERS OF THE TRUST FUND AND THE SUCCESSOR FUND
AS OFFICERS, AND NOT INDIVIDUALLY, AND THAT THE SUCCESSOR FUND'S OBLIGATIONS
ARISING OUT OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE DIRECTORS,
TRUSTEES, OFFICERS, INVESTORS, SHAREHOLDERS, EMPLOYEES OR AGENTS OF THE TRUST
FUND OR THE SUCCESSOR FUND, INDIVIDUALLY, AS THE CASE MAY BE, BUT ARE BINDING
ONLY UPON THE ASSETS AND PROPERTY OF THE TRUST FUND OR THE SUCCESSOR FUND.
<PAGE>
SIFE TRUST FUND
PROXY FOR ANNUAL MEETING OF INVESTORS TO BE HELD
APRIL 4, 1997
The undersigned hereby acknowledges receipt of
the Proxy Statement and appoints Bruce W. Woods
and Charles W. Froehlich, Jr. and each of them
his or her proxies, with power of substitution,
to vote that number of votes (based on units of
investment held) which the undersigned is
entitled to vote pursuant to all Participating
SIFE TRUST FUND Agreements owned by the undersigned at the
ANNUAL MEETING INVESTORS OF SIFE TRUST FUND to
be held April 4, 1997, and at any adjournments
or postponements thereof, on any business that
may properly come before the meeting, including
but not limited to the items shown below which
are referred to by the same Item No. in the
Notice of Annual Meeting set forth in the Proxy
Statement.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE TRUST FUND.
UNLESS OTHERWISE SPECIFIED BELOW, THE UNITS OF
INVESTMENT REPRESENTED BY THIS PROXY SHALL BE
VOTED FOR ITEMS 1, 2, 3 AND 4.
This Proxy will cover all investment units
attributable to All Participating Agreements
owned by the undersigned. Joint owners must each
sign. Please sign the Proxy exactly as name
appears. Executors, Administrators, Trustees,
Attorneys, etc. should so indicate, when signing.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS /X/
SIFE KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
SIFE TRUST FUND
FOR WITHHOLD FOR ALL 1. Election of Directors: 01) Haig G. Mardikian,
ALL ALL EXCEPT 02) Diane H. Belding, 03) Neil L. Diver,
/ / / / / / 04) Charles W. Froehlich, Jr., 05) John A.
Meany, 06) Walter S. Newman, 07) Bruce W. Woods
TO WITHHOLD AUTHORITY TO VOTE FOR ANY
NOMINEE(S), WRITE THE NUMBER(S) ON THE LINE
PROVIDED BELOW
________________________________________________
FOR AGAINST ABSTAIN 2. Ratification of the selection of Deloitte &
/ / / / / / Touche LLP as independent accountants for the
Trust Fund for the year ending December 31, 1997.
FOR AGAINST ABSTAIN
/ / / / / / 3. Approval of the continuation of the current
Investment Advisory Agreement.
FOR AGAINST ABSTAIN
/ / / / / / 4. Approval of the reorganization of the Trust
Fund's place and form of organization, from a
California trust to a Delaware business trust.
- ---------------------- ------------------------------- -----------
SIGNATURE SIGNATURE (JOINT OWNER) DATE
