As filed with the Securities and Exchange Commission on October 15, 1999
File Nos. 2-17277
811-987
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 46 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25 [X]
SIFE Trust Fund
(Exact Name of Registrant as Specified in Charter)
100 North Wiget Lane
Walnut Creek, California 94598
(Address of Principal Executive Offices, with Zip Code)
(800) 231-0356
(925) 988-2400
(Registrant's Telephone Number, including Area Code)
Bruce W. Woods
SIFE Trust Fund
100 North Wiget Lane
Walnut Creek, CA 94598
(Name and address of Agent for Service)
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It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on April 30, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on April 30, 1999 pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Please Send Copy of Communications to:
Mitchell E. Nichter, Esq.
Kelvin K. Leung, Esq.
Paul, Hastings, Janofsky Walker LLP
345 California Street, San Francisco, California 94104
(415) 835-1600
2
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SIFE Trust Fund
Contents of Post-Effective Amendment
This post-effective amendment to the registration statement of the Registrant
contains the following documents:
> Facing Sheet
> Contents of Post-Effective Amendment
> Part A--Prospectus for Class A Shares of SIFE Global Financial Services
Fund
> Part B--Statement of Additional Information for Class A Shares of SIFE
Global Financial Services Fund
> Part C--Other Information
> Signature Page
> Exhibits
3
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Part A--Prospectus
for
Class A Shares
of
SIFE Global Financial Services Fund
===================================
4
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[SIFE LOGO]
SIFE GLOBAL FINANCIAL
SERVICES FUND
PROSPECTUS
December __, 1999
Like all mutual fund shares, these securities have not been approved or
disapproved by the Securities and Exchange Commission or any state securities
commission, nor has the Commission or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
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Table of Contents
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The Fund .................................................................. 3
Past Performance .......................................................... 6
Fees & Expenses ........................................................... 7
Additional Risks .......................................................... 8
Management ................................................................ 9
Choosing a Share Class .................................................... 10
Sales Charge Reductions & Waivers ......................................... 11
Opening & Contributing to An Account ...................................... 13
Exchanges & Redemptions from Accounts ..................................... 15
Changes to Account Status ................................................. 16
Additional Investor Services .............................................. 17
Pricing, Distribution & Tax Information ................................... 19
Transaction & Account Policies ............................................ 20
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The Fund
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Investment Objective
The SIFE Global Financial Services Fund (the "Fund") seeks to provide long-term
capital appreciation.
Investment Strategy
The Fund seeks to meet this objective by primarily investing in domestic and
foreign equity and derivative securities of financial service companies.
Financial services companies are companies, which, in the view of SIFE, a
California Corporation (the "manager" or "SIFE"), derive at least 50% of their
revenues, or devote at least 50% of their assets from dealing in financial
services, credit, loans, and/or insurance. Examples of such companies include
but are not limited to, securities brokerages, banks, insurance companies,
savings and loans, and investment banks.
Normally, the Fund will invest at least 65% of its assets in the stocks of
financial service companies located in at least three different countries
worldwide. For this purpose, a company is considered to be located in a country
if either (1) its stocks are traded on the stock exchange of that country, (2)
its principal place of business is in that country, or (3) it derives a
substantial portion of its business in that country. The Fund may invest its
remaining assets in cash, cash equivilants, domestic and foreign government debt
securities, and the rated debt securities, equities, options, and/or warrants of
domestic and foreign companies. However, the Fund will invest no more than 40%
of its total assets in the securities of issuers in any one country, other than
the United States. The manager may also choose to take advantage of its stock
picking capabilities to invest the Fund in a limited number of companies (as few
as 30), and/or companies in emerging markets that the manger believes may
provide above average appreciation over time.
To hedge (protect) against currency exchange rate fluctuations, the fund may
enter into forward foreign currency exchange contracts to the extent that
hedging is available and, in the manager's opinion it is economical to do so. A
forward currency exchange contract is an agreement to buy or sell a specific
currency on a future date at a predetermined price. Forward foreign currency
exchange contracts may reduce the risk of loss from a change in the value of a
currency, but they also limit any potential gains and do not protect against
fluctuations in the value of the underlying position.
The portfolio manager allocates the Fund's assets among securities of countries
and in currency denominations that are expected to provide the best
opportunities for meeting the Fund's investment objective. In analyzing specific
companies for possible investment, or existing holdings for possible sale, the
manager ordinarily seeks to pursue or retain the securities of companies with
several of the following characteristics: above-average per share earnings
growth; a healthy balance sheet; sound financial and accounting policies;
overall financial strength; strong competitive advantages; strong management;
and general operating characteristics that generally will enable the companies
to compete successfully in their respective markets. The manager considers
whether to sell a particular security for cash management purposes, to meet
redemptions requests, or to provide funds to invest in securities that the
portfolio manager believes are more promising.
Risk Factors
As with any mutual fund, the value of your investment in the Fund will fluctuate
in response to changes in the value of the Fund's holdings and you may lose
money. The prices of equity securities change in response to many factors
including the historical and prospective earnings of the issuer, the value of
its assets, general economic conditions, interest rates, investor perceptions
and market liquidity.
The Fund - Pg 3
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The Fund
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The value of the Fund's shares is particularly vulnerable to factors affecting
the financial services industry, such as government regulation, rapid business
changes, significant competition, and value fluctuations, because the Fund
intends to concentrate its investments in that industry. Such factors may limit
the financial commitments that financial services companies can make, including
the amount an type of loans, and interest rates they can charge. Because the
Fund focuses its investment in the financial services industries, the value of
Fund shares may rise and fall more than the value of shares of a fund that
invests more broadly.
Furthermore, since the Fund may focus it's portfolio in a limited number of
companies, the Fund's net asset value may be more volatile than the value of a
more diversified fund.
The value of the Fund's shares may also be adversely affected by the Funds
investment in the securities of smaller companies. Historically, the prices of
smaller companies securities have been more volatile than the prices of larger
company securities, even while offering greater opportunities for capital growth
than larger, more established companies.
The Fund may borrow money from banks and engage in reverse repurchase
transactions for temporary or emergency purposes.
Forward foreign currency exchange contracts are considered derivative
investments, since their value depends on the value of an underlying asset. The
Fund can incur a loss in these transactions due to the imposition of controls by
a foreign or the U.S. government on the exchange of foreign currencies or the
inability to deliver or receive foreign currency. The success of forward foreign
currency exchange contracts depends on the manager's ability to predict market
movements. Losses resulting from use of forward foreign currency exchange
contracts can reduce the Fund's share price, and possibly income, and such loses
can be greater than if the contract had not been entered into by the Fund.
Furthermore, even though the Fund may use currency hedging techniques to try to
minimize the risks, such efforts may not always be successful. In addition, the
Fund may decide not to engage in currency hedging activities when in retrospect
hedging would have been advantageous.
The prices of foreign securities and especially emerging market securities may
be further significantly and adversely affected by other factors, including:
o Currency exchange Rates - The dollar value of the Fund's foreign
investments will be affected by changes in the exchange rates of the
dollar and the currency in which those investments are traded.
o Political and economic conditions - The value of the Fund's foreign
investments may be adversely affected by political and social
instability, as well as changes in economic or taxation policies by
those countries.
o Regulations - Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available
information about foreign companies than about U.S. companies.
o Markets - The securities markets of other countries are smaller than
U.S. securities markets. As a result, many foreign securities may be
less liquid and more volatile than U.S. securities.
The Fund - Pg 4
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The Fund
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An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Defensive Investments
At the discretion of the manager, the Fund may invest its assets in cash and
short term securities for temporary defensive purposes. Such a stance may help
the Fund to minimize or avoid losses during adverse market, economic, or
political conditions. During such a period, however, the Fund may not achieve
its investment objective. For example, if the market advances during this
period, the value of the Fund's shares may not rise in such gains as much as it
would have if the Fund had been fully invested.
Pg 3
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Past Performance
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Total Return and Average Annual Return information is not available for the SIFE
Global Financial Services Fund because it has been in operation for less than
one full calender year.
Pg 6 - Past Performance
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Fees & Expenses
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This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class
Shareholder Fees (fees paid directly from your investment) A
Maximum Sales Charge (Load) Imposed on Purchases(1) 5.00%
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) none
(as a percentage of assets)
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends none
Redemption Fee(2) none
(as a percentage of amount redeemed)
Exchange Fee none
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees & Other Expenses 1.25%
Distribution (12b-1) and Shareholder Servicing Fees 0.50%
Total Annual Fund Operating Expenses 1.75%
Short-Term Redemption Fees
Upon a redemption of shares held six months or less, a fee of 2% of the then
current net asset value of the shares being redeemed will be assessed and
retained by the Fund for the benefit of the remaining shareholders. This fee is
intended to encourage long-term investment in the Fund, to avoid transaction and
other expenses caused by early redemptions, and to facilitate portfolio
management. This fee is not a deferred sales charge and, is not a commission
paid to SIFE. The fee applies to redemptions from the Fund and exchanges into
any other mutual fund also advised by SIFE. The Fund will use the "first-in,
first out" method to determine the holding period.
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(1) Sales charges vary, depending on the dollar amount invested. Please see the
section "How Sales Charges are Calculated" for an explanation of reduced sales
charges.
(2) (As described in the section "Short-Term Redemption Fees," there is a 2%
redemption fee imposed upon a redemption of shares held six months or less.)
SIFE does not presently charge a fee for redemptions sent by wire transfer, but
reserves the right to impose such a fee in the future. Please be aware that your
bank may charge you a fee for wire services.
Fees & Expenses - Pg 7
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Fees & Expenses
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Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs and returns would be:
1 Year 3 Years
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Class A $ 668 $1,023
Pg 8 - Fees & Expenses
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Management
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SIFE, a California Corporation, is the investment advisor, underwriter, and
distributor for SIFE Funds. SIFE is located at 100 North Wiget Lane, Walnut
Creek, CA 94598. Founded in 1960, SIFE has managed the SIFE Global Financial
Services Fund since 1999 and is paid a flat fee of 1.25% of the Fund's average
daily assets for investment advice provided to the Fund.
SIFE's asset management philosophy is based on the belief that discipline and
consistency are important to investment success. SIFE seeks to establish clear
guidelines for portfolio management and to be systematic in making decisions.
This approach is designed to provide the Fund with a stable identity.
SIFE's portfolio team is currently composed of Michael J. Stead, Lincoln S.
Edgar, and Laurie E. Buntain. Michael J. Stead, Chief Investment Officer, has
managed the SIFE Trust Fund since May 1995 and the SIFE Global Financial
Services Fund since its inception. Prior to joining SIFE, Mr. Stead was employed
by Bank of America, as the Senior Credit Officer for the Global Markets
Division. Mr. Stead earned both his bachelors and masters degrees from
Fachoberschule Aachen, in Germany. Lincoln S. Edgar, Director of Research of
SIFE, has been with SIFE since 1993. Prior to that, Mr. Edgar worked for Santa
Barbara Asset Management as the Director of Research for 6 years. Mr. Edgar
earned his bachelors and MBA degrees from Saint Mary's College of California,
located in Moraga, California. Laurie E. Buntain, Head Analyst, has been with
SIFE since 1995. Prior to that, she spent 8 years working as a research analyst
for various securities firms. Ms. Buntain earned her bachelors degree from
Tulane University, located in New Orleans, Louisiana.
Pg 9 - Management
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Choosing a Share Class & Sales Charges
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The minimum initial investment in the Fund is $2500 for ordinary accounts and
$500 for retirement accounts. Subsequent investments may be made in amounts of
$100 or greater. If you buy shares through your broker or investment advisor,
different minimums may apply.
Currently the SIFE Global Financial Services Fund only offers Class A shares
which have a front end sales charge. There are several ways to reduce this
charge, described under "Sales Charge Reductions and Waivers" following this
section.
Class A
Class A shares are sold at an offering price equal to the net asset value per
share plus any initial sales charge as set out in the table below. It should be
noted that there is no sales charge on shares acquired from dividend
reinvestment.
Class A Sales Charges
As a % of As a % of
Your Investment offering price your investment
Up to $99,999 5.00% 5.26%
$100,000 - $249,999 4.00% 4.17%
$250,000 - $499,999 3.00% 3.09%
$500,000 - $999,999 2.50% 2.56%
$1,000,000 and over(1) none none
Distribution Compensation
The Fund has adopted a plan under Rule 12b-1 ("12b-1" refers to the federal
securities law authorizing this type of fee) for its Class A shares that allows
the Fund to pay distribution and other fees for the distribution of thoseshares
and for services provided to shareholders. Because these fees are paid out of
the Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.
Compensation payments originate from two sources, sales charges and 12b-1 fees.
Presently the Fund charges 12b-1 fees on Class A shares. The amount of the 12b-1
fees is set out in the "Fees & Expenses" section on page 6.
Choosing a Share Class - Pg 10
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Sales Charge Reductions & Waivers
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Reducing Your Class A Sales Charges
There are two ways that you can combine multiple purchases of Class A shares to
take advantage of the breakpoints in the sales charge schedule. These two ways
can be combined in any manner.
o Accumulation Privilege - This allows you to add the value of any Class
A shares that you already own to the amount of your next purchase of
the same class for the purpose of calculating the sales charge.
o Letters of Intention (LOI) - This allows you to purchase shares in
Class A of the Fund over a thirteen month period and receive the same
sales charge as if all the shares had been purchased at the same time.
An LOI may include purchases made up to 90 days before entering into
the LOI.
o Combination Privilege - Both the Accumulation Privilege and the LOI may
be combined to minimize the sales charge on Class A purchases. Accounts
that may be combined for this purpose include all accounts that are:
1) identified by the same Social Security or Tax Identification
number,
2) owned by the Investor's spouse, minor children, or any company
100% owned by the investors; or
3) fiduciary accounts, such as IRA or employee benefit accounts
controlled by the Investor.
Sales Charge Waivers for Class A Purchases
Subject to approval of the manager sales charges do not apply to Class A
purchases:
1) by a governmental agency or authority prohibited by law from
paying front-end sales charges;
2) for accounts which a bank, investment advisor or broker-dealer
charges an advisory, account management or administration fee;
3) by registered representatives, bank trust officers, and other
employees (and their immediate families) of investment
professionals having agreements with the manager, provided shares
are not resold;
4) by not for profit organizations, as defined by Section 501(c)(3)
of the Internal Revenue Code, investing $50,000 or more;
5) by an insurance company separate account used to fund annuity
contracts purchased by employee benefit plans which have more than
25 participants or $1,000,000 or more invested in the Fund;
6) by retirement and deferred compensation plans, including but not
limited to, those defined in section 401(a), 403(b), or 457 of the
Internal Revenue Code and "rabbi trusts", investing at least
$100,000;
Pg 11 - Sales Charge Reductions & Waivers
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Sales Charge Reductions & Waivers
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7) by a trust institution (including bank trust departments)
investing $250,000 or more on their own behalf or on the behalf of
others;
8) through a "wrap account" or other similar fee-based program;
9) by directors, employees, and registered representatives of the
Fund and SIFE, their immediate family members, and any employee
benefit plan established for such persons.
10) by shareholders exchanging from other mutual funds advised by SIFE
into the SIFE Global Finanical Services Fund; or
11) The Fund will waive the normal sales charge for the first $50
million or 6 months that fund is open, whichever comes first.
Sales Charge Reductions & Waivers - Pg 12
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Opening & Contributing to an Account
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Steps for opening an account with the SIFE Global Financial Services Fund:
1) Read this prospectus carefully.
2) Determine the dollar amount and the class of shares you wish to
invest in (currently the Fund only offers Class A shares). The
minimum initial investment amount to open an account with the Fund
is:
o $2500 for a regular account
o $500 for a retirement account
o $100 for an account opened with a systematic purchase plan
(see the section titled "Additional Investor Services")
3) Complete the appropriate parts of the account application,
carefully following the instructions. If you have any questions,
please contact your financial representative or call SIFE's
Investor Services Division at 1-800-231-0356.
4) Complete the appropriate part of the account privileges section of
the application. By applying for privileges now, you can avoid the
delay and inconvenience of having to file a "Service Option
Agreement and Account Update" form if you want to add privileges
later.
5) Make your initial investment by following the instructions on the
next page. You and/or your financial representative may initiate
any purchase.
6) Mail your completed application to:
SIFE Global Financial Services Fund
c/o Boston Financial Data Services
P.O. Box 8244
Boston, MA 02266-8244
Please be aware that completed purchase and redemption requests
received before 1:00 p.m. Pacific Time will receive the closing net
asset value as of that date. Purchase and redemption requests received
after 1:00 p.m. Pacific Time will receive the following day's net asset
value.
Pg 13 - Opening & Contributing to an Account
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<TABLE>
Opening & Contributing to an Account
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<CAPTION>
Opening an Account Contributing to an Existing Account
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<S> <C>
o Make out a check for the investment amount, payable to o Make out a check for the investment amount, payable to
the "SIFE Global Financial Services Fund". the "SIFE Global Financial Services Fund".
o Deliver the check and completed application to your o Fill out the detachable slip from an account statement.
financial representative, or mail to the SIFE Global If no slip is available, include a note specifying your
Financial Services Fund at the address "SIFE Global share class, account number and the name(s) in which
Financial Services listed on page 14. the account is registered.
o Please note that SIFE does not accept third party o Deliver the check to your financial representative, or
checks. mail to the SIFE Global Financial Services Fund at the
address listed on page 14.
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o Call your financial representative or SIFE's Investor o Call your financial representative or SIFE's Investor
Services at 1-800-231-0356 to request an exchange. Services at 1-800-231-0356 to request an exchange.
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o Deliver the check and completed application to your o Instruct your bank to wire the listed on page 14.
financial representative, or mail to the SIFE Global amount of your investment to:
Financial Services Fund at the address State Street Bank and Trust Company
225 Franklin Street
o Obtain your account number by calling your financial Boston, MA 02101
representative or SIFE's Investor Services. ABA# 011000028
DDA# 99052490
o Instruct your bank to wire the amount of your Specify the share class, name on the account, account
investment to: 225 Franklin Street number and the name(s) in which the account is
State Street Bank and Trust Company registered. Your bank may charge a fee to wire funds.
225 Franklin Street
Boston, MA 02101
ABA# 011000028
DDA# 99052490
Specify the share class, name on the account, account
number and name(s) in which the account is registered.
Your bank may charge a fee to wire funds.
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o See "By Wire" and "By Exchange". o Verify that your bank or credit union is a member of
the Automated Clearing House (ACH) system.
o Complete the "Invest by Phone" and "Bank Information"
sections on your account application or Service Option
Form.
o Call SIFE's Investor Services to verify that these
features are in place on your account.
o Tell the Investor Services representative the share
class, account number, and name(s) in which the account
is registered and the amount you wish to add to your
investment.
Opening & Contributing to an Account - Pg 14
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Exchanges & Redemptions from Accounts
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o For sales and exchanges of any amount. o Write a letter of instruction indicating the share
class, account number, and the name(s) in which the
account is registered and the dollar value or number of
shares you wish to sell or exchange.
o Sign the letter of instruction and include a signature
guarantee if required. (Please see below requirements
for signature guarantees).
o Mail the materials to
SIFE Global Financial Services Fund
c/o Boston Financial Data Services
P.O. Box 8244
Boston, MA 02266-8244
o If you are redeeming funds, a check will be mailed to
the name(s) and address in which the account is
registered, or otherwise according to your letter of
instruction.
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o Sales and exchanges of up to $100,000. o Call your registered representative or SIFE's Investor
Services between 7:30 a.m. and 5:00 p.m. Pacific Time
on most business days. Please see page 21 for further
information on telephone transactions.
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o SIFE does not currently accept fax transactions.
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o Exchanges of any type. o Call your financial representative or SIFE's Investor
Services Division to request an exchange.
o Exchanges between SIFE Funds are allowed only between
the same classes of shares.
</TABLE>
Signature Guarantee Requirements
A signature guarantee is required for the following types of written requests
for redemption:
o amounts of $100,000 or more,
o checks made payable to someone other than the account holder(s),
o to initiate or change bank information,
o checks mailed to an address different than the address of record for
the account, or
o if the account registration has changed within the past 30 days.
A signature guarantee may be obtained from most commercial banks, trust
companies, savings and loan associations, federal savings banks, broker/dealers
or other eligible financial institutions. Please note that a notary public may
not provide a signature guarantee. Additional documentation may be required for
redemptions made by corporations, executors, administrators, trustees, guardians
and qualified plan administrators.
Pg 15 - Exchanges & Redemptions from Accounts
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<TABLE>
Changes to Account Status
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Requirements for Commonly Requested Account Changes
<CAPTION>
Type of Change Requirement
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<S> <C>
Add or Delete Beneficiary o Complete a Service Option Form.
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Add Telephone Redemptions o Complete a Service Option Form.
o Obtain a signature guarantee.
o Enclose a voided check (for wire transfers).
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Change Bank Information o Complete a Service Option Form or write a letter of
instruction requesting the bank information be changed.
o Obtain a signature guarantee.
o Enclose a voided check.
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Transfer out of UGMA/UTMA* o Complete a new application.
o Write a letter of instruction requesting the funds be
transferred out of the account.
o Obtain a signature guarantee.
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Postmortem Transfer to Beneficiary* o Complete a new application.
o Provide a certified death certificate.
o Obtain a signature guarantee.
o Provide proof of beneficiary status if no beneficiary
previously listed.
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Postmortem Transfer to Joint Tenant* o Complete a new application.
o Provide a certified death certificate.
o Write a letter of instruction requesting the account be
retitled to the surviving joint tenant.
o Obtain a signature guarantee.
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Postmortem Transfers of IRA Accounts* o Complete a new application.
o Provide a certified death certificate.
o Write a letter of instruction requesting the account be
retitled to the beneficiary.
o Obtain a signature guarantee.
o Provide proof of beneficiary status if no beneficiary
previously listed.
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Change Address Information o Complete a Service Option Form.
<FN>
*Please contact SIFE's Investor Service Division for further information before submitting any materials.
</FN>
Changes to Account Status - Pg 16
</TABLE>
<PAGE>
Additional Investor Services
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Systematic Purchase Plan
The Systematic Purchase Plan allows you make regular investments from your bank
account (minimum of $100) automatically on a monthly. Systematic Purchase Plans
will take effect ten business days following the receipt of the application to
participate in the plan. To establish a Systematic Purchase Plan:
o Complete the appropriate section of your account application.
o If you are using this Plan to open an account, please attach a check
($100 minimum) made payable to "SIFE Global Financial Services Fund."
This check will be used to open your account with SIFE.
o You may terminate your participation in the Plan at any time by calling
or writing SIFE.
Systematic Withdrawal Plan
The Fund offers a Systematic Withdrawal Plan which permits you to receive
(either by check or by electronic funds transfer) periodic payments of $100 or
more from your account on a recurring basis varying from monthly to annually.
o To establish a Systematic Withdrawal Plan for a new account, please
fill out the relevant portion of the application.
o To establish a plan for an existing account, call SIFE's Investor
Service Division and you will be sent a Service Option Form to
complete.
o Purchases on Class A shares may be disadvantageous for you during a
period of systematic withdrawal because sales charges may be charged on
new purchases.
Retirement Plans
In addition to retirement accounts, SIFE offers a range or retirement plans,
including Traditional and Roth IRAs, Simple IRAs, Education IRAs, SEPs, and
403(b) plans. Please contact SIFE's Customer Service Division or your financial
representative for further information on opening one of these accounts.
Investor Information Meetings
SIFE periodically holds information meetings for investors. During these
meetings we attempt to explain recent market performance, our investment
philosophy and planning, and to answer questions that investors may have. Please
call your financial representative or SIFE's Investor Services to find out when
these meetings will occur. SIFE's website (www.sife.com) also provides
information on when these meetings will occur.
Pg 17 - Additional Investor Services
<PAGE>
Additional Investor Services
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Walk-in Transactions
If you wish, you may purchase shares or redeem part of your SIFE account in
person at SIFE's offices in Walnut Creek, California. In order to receive that
day's closing price for a redemption or purchase, you must complete your
redemption request at SIFE by 1:00 p.m. Pacific Time. We encourage you to call
ahead for an appointment to avoid waiting.
Additional Information Regarding the Fund
When opening your account, you may specify a beneficiary potentially providing
for postmortem transfers outside of the probate process. You should be aware
that probate processes and beneficiary designations vary by jurisdiction which
may affect the characteristics of the treatment of the distributions or
transfers. Please consult a qualified estate planning professional for advice on
how the Fund's characteristics may be affected by the laws of your jurisdiction.
Additional Investor Services - Pg 18
<PAGE>
Pricing, Distribution & Tax Information
- --------------------------------------------------------------------------------
Calculation of Net Asset Value
The net asset value ("NAV") per share of the Fund is normally computed at the
close of trading (typically 1:00 p.m. Pacific Time) of each day that the New
York Stock Exchange is open. This value is determined for each class by dividing
that class's net assets by the number of shares outstanding. The value of assets
is based on the closing price on the exchange on which they are primarily
traded, or the last available sale price. If either of these prices are
unavailable the closing bid price is used for valuation.
Please be aware that completed purchase and redemption requests received before
1:00 p.m. Pacific Time will receive that day's closing NAV. Purchase and
redemption requests received after 1:00 p.m. Pacific Time will receive the
following day's NAV.
Distributions Of Income And Capital Gains
Normally any net investment income and allocated to you on the last business day
of June and December. Short and long term capital gains, if any, are normally
allocated to your account on the last business day of December.
Please be aware that unless SIFE receives instructions otherwise, all dividends
will be automatically reinvested in additional shares of the same class. Also,
as explained in the section "How Sales Charges are Calculated," there is no
sales charge on reinvested dividends.
Tax Matters
Taxation of Dividends
The Fund intends to elect and to qualify as, a regulated investment company
under the Internal Revenue Code. This means that the Fund does not pay any
federal income tax on earnings which are distributed to you. As a consequence,
earnings you receive from the Fund, whether they are reinvested or received as
cash, are generally considered taxable to you. Earnings from income and
short-term capital gains are generally taxable to you as ordinary income, while
earnings from long-term capital gains are taxable as capital gains (which may be
taxable at different rates depending on the length of time the Fund holds its
assets).
A Form 1099-DIV is mailed to you every January that details your short and
long-term capital gains for the previous year and their federal tax category.
You should verify this form with your tax professional to see how these earnings
apply to your specific tax situation.
Taxation of Sales and Exchanges
Any time that you sell or exchange shares in the Fund, it is considered a
taxable event. Depending on the purchase price, earnings while you own the
shares, and the price of the shares when you sell or exchange them, you may have
either a gain or a loss from the transaction. You are responsible for any tax
liabilities that occur as a result of your transactions.
Due to the complexity of determining any gains or losses that result from
selling or exchanging shares in the fund, SIFE strongly recommends that you
consult a tax professional to help you determine potential tax liabilities that
may result.
Pg 19 - Pricing, Distribution & Tax Information
<PAGE>
Transaction & Account Policies
- --------------------------------------------------------------------------------
Purchase and Sell Prices
When you purchase shares of the Fund, you pay the NAV plus any applicable sales
charges, as described earlier. When you sell shares, you receive the NAV minus
any applicable redemption fees. Please be aware the certain broker dealers may
charge transaction fees in addition to the fees listed in this Prospectus.
Execution of Requests
SIFE is open, from 7:30 a.m. to 5:00 p.m. Pacific Time, each day that the New
York Stock Exchange is open. Buy and sell requests received before 1:00 p.m.
Pacific Time will normally be processed at that day's closing price. Requests
received after 1:00 p.m. Pacific Time will normally be processed at the
following day's closing price.
In unusual circumstances, the Fund may temporarily suspend the processing of
sell requests, or postpone payments of proceeds for up to seven days, as
permitted by federal securities laws.
Redemption proceeds are normally sent no later than the next business day
following the redemption request. However, in certain circumstances, proceeds
may take up to seven days to be sent.
Receipt of Proceeds by Wire Transfer
If you wish, redemptions in amounts greater than $5,000 may be sent by wire
transfer to any bank previously designated by you on your account application or
Service Option Form. In order to complete a wire transfer, SIFE must have your
bank account information as well as a completed Service Option Form authorizing
the transfer. To obtain a Service Option Form, please contact SIFE's Investor
Services Division or your financial representative.
Wire transfers normally will be sent the next business day following the
processing of a redemption, however, in certain circumstances they may take up
to five days to be sent. SIFE does not presently charge a fee for redemptions
sent by wire transfer, but reserves the right to impose such a fee in the
future. Please be aware that your bank may charge you a fee for wire services.
Telephone Transactions
Telephone redemption and exchange privileges are automatically provided to you
and your registered representative when you open your account unless you
indicate otherwise on your application. If you later wish to change these
privileges please complete a Service Option Form and return it to SIFE Global
Financial Services Fund at the address listed on page 14.
For your protection, telephone requests may be recorded in order to verify their
accuracy. In addition, SIFE will take measures to verify the identity of the
caller, by asking for information as may be reasonable or necessary to verify
identity. However, SIFE may still refuse a telephone redemption if SIFE feels it
is appropriate to do so.
If reasonable measures have been taken, SIFE is not responsible for any losses
that may occur to any account due to an unauthorized telephone call. Also for
your protection, telephone transactions are not permitted on accounts whose name
or address information has changed within the past 30 days.
Proceeds from telephone transactions will only be mailed to the address of
record. SIFE reserves the right to change these policies after 30 days written
notice.
Transaction & Account Policies - Pg 20
<PAGE>
Transaction & Account Policies
- --------------------------------------------------------------------------------
Sales in Advance of Purchase Payments
When you place a request to sell shares for which the purchase money has not yet
been collected, SIFE will execute the request, but will not release the proceeds
of the sale until the purchase payment clears. This process may take up to
fifteen days after the purchase date.
Small Accounts
If you draw down a non-retirement account so that its total value is less than
$2500, you may be asked to purchase more shares within 30 days. If you do not
take action, your account may be closed and the proceeds sent to you. Your
account will not be closed if its drop in value is due to Fund performance or
the effects of sales charges.
Buying and Selling Shares Through a Securities Broker
You may purchase and sell shares through a securities broker or their subagents.
You should contact them directly for information regarding how to invest or
redeem through them. They may also charge you service or transaction fees. If
you purchase or redeem shares through them, you will receive the next NAV
calculated after receipt of the order by them (generally, orders received before
1:00 p.m. Pacific Time will be processed at that day's closing price, while
orders received after that time will be processed at the next day's closing
price) on any day the NYSE is open. Brokers who perform shareholder servicing
for the Fund may receive fees from the Fund or SIFE for providing these
services.
Exchange Privilege
You may exchange shares between different SIFE Funds within the same class,
generally without paying a sales charge. For holders of Class A-I or Class A-II
shares of the SIFE Trust Fund, any exchange from the SIFE Trust Fund to another
SIFE Fund will be to the the Class A of the new Fund. However, exchanges from
another SIFE Fund Class A Shares to the SIFE Trust Fund may only be made to
Class A-II Shares. If you exchange shares from a money fund to a SIFE Fund, a
sales charge may apply no matter how long you have held the shares.
Additional Policies
Please note that the fund maintains additional policies and reserves certain
rights, including:
o The Fund may refuse any order to buy shares, including any purchase
under the exchange privilege.
o At any time, the Funds may change its investment minimums or waive or
lower its minimums for certain purchases.
o You may only buy shares of the fund eligible for sale in your state or
jurisdiction.
o In unusual circumstances, the Fund may temporarily suspend redemptions,
or postpone the payment of proceeds as allowed by federal securities
laws.
o For redemptions over a certain amount, the Fund reserves the right to
make payments in securities or other assets of the Fund, in the case of
an emergency or if the payment would be harmful to existing investors.
Pg 21 - Transaction & Account Policies
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For More Information
- --------------------------------------------------------------------------------
Two free documents are available that offer further information about SIFE
Global Financial Services Fund:
1) The Annual and Semi-Annual Report to Shareholders (when available)
In the Annual Report you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's
performance during the last year.
2) Statement of Additional Information (the "SAI")
The SAI contains more detailed information on the Fund.
A current copy of the SAI has been filed with the Securities and Exchange
Commission and is incorporated by reference (it is legally part of this
prospectus). Reports and other information about the Fund is available on
the Commission's Internet site at www.sec.gov and copies of this
information may be obtained upon payment of a duplicating fee, by writing
the Public Reference Section of the Commission, Washington, D.C.
20549-6009. Information about the Fund (including its SAI) can also be
reviewed and copied at the Commission's Public Reference Room in Washington
D.C. To obtain information about the operation of the public reference
room, please contact the Commission at 1-800-SEC-0330.
To Contact SIFE
To request a free copy of the current Annual/Semi-Annual Report (when
available), Prospectus, SAI, or to ask any questions, please call or write
to SIFE at:
100 North Wiget Lane
Walnut Creek, CA 94598
(800) 231-0356
(925) 988-2400
www.sife.com
SEC File No. 811-987
<PAGE>
===============================================
Part B--Statement of Additional Information
for
Class A Shares
of
SIFE Global Financial Services Fund
===============================================
5
<PAGE>
SIFE GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF ADDITIONAL INFORMATION
Dated December __, 1999
------------------------------
Managed by SIFE (A California Corporation)
100 North Wiget Lane
Walnut Creek, California 94598
Telephone: (800) 231-0356 / (925) 988-2400
Internet: www.sife.com
------------------------------------------
This Statement of Additional Information, which may be amended from time to
time, concerning SIFE Global Financial Services (the "Fund") is not a prospectus
and is only authorized for distribution when preceded or accompanied by the
Fund's Prospectus, dated December 31,1999, as may be amended from time to time
(the "Prospectus"). This Statement of Additional Information (the "SAI")
contains additional and, in some cases, more detailed information than in the
Prospectus and should be read in conjunction with the Prospectus. Additional
copies of the Prospectus may be obtained without charge by writing or calling
your investment adviser, broker/dealer or financial planner, or the Fund at the
address and telephone number set forth above.
TABLE OF CONTENTS
Page
----
General Information & History B-
Investment Objectives, Policies & Practices B-
Fundamental Investment Policies B-
Investment Practices B-
American Depositary Receipts B-
Repurchase Agreements B-
Options Policies B-
Risk Considerations B-
Management of the Fund B-
Compensation of Trustees and Officers B-
Control Persons and Principal Holders of Securities B-
Investment Advisory & Other Services B-
Investment Advisory Services B-
Management and Administration B-
Custody Services B-
Independent Accountants B-
Brokerage Allocation & Portfolio Turnover Rates B-
Capital Stock and Other Securities B-
Calculation of Net Asset Value B-
Federal Income Tax Information B-
Underwriting of the Fund's Securities B-
Underwriting Services B-
Distribution Plans B-
Performance Information B-
Financial Statements B-
Service Providers B-
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<PAGE>
GENERAL INFORMATION & HISTORY
SIFE Trust Fund (the "Trust") was organized as a Delaware business trust on
February 28, 1997, and is the successor-in-interest to SIFE Trust Fund, a
California trust organized on September 26, 1960 (the "California Trust"). The
Trust consists of two series, the Fund another series "SIFE Trust Fund". The
Fund commenced operations on _______________. The Fund is registered with the
Securities and Exchange Commission as an open-end diversified management
investment company. All information, including, but not limited to, historical
business and financial information, presented in this Statement of Additional
Information and/or the Prospectus relates to the California Trust as its
business has been continued by the Fund. SIFE, a California corporation, (the
"Management Company" or the "Manager") is the Fund's investment advisor, and
also functions as the principal underwriter of the Fund's securities.
INVESTMENT POLICIES & PRACTICES
The Fund's investment objectives and policies are described in the
Prospectus, which should be read in conjunction with the additional information
provided below, which describes in further details the Fund's investment
policies.
Fundamental Investment Policies
The Fund has identified the policies described below as "fundamental
investment policies." Such policies may not be changed without a vote of a
majority in interest of the holders of the Fund's shares.
1. The Fund may not invest 25% or more of its assets in any one industry
other than financial institutions. With respect to 75% of the Fund's
portfolio, the Fund may not invest more than 5% of its assets in any
one issuer. The Fund also may not acquire more than 10% of the
outstanding voting securities of any issuer.
2. The fund may not borrow money (except for temporary or emergency
purposes from a bank). Transactions that are fully collateralized in a
manner that does not involve the prohibited issuance of a "senior
security" within the meaning of Section 18(f) of the Investment
Company Act shall not be regarded as borrowings for the purposes of
this restriction.
3. The Fund may not: (i) underwrite the securities of other issuers; (ii)
purchase or sell real estate; (iii) purchase or sell commodities or
commodity contracts; (iv) invest in the securities of other investment
companies; (v) invest in companies for the purpose of exercising
control or management; or (vi) issue senior securities.
Investment Practices
The Fund may write covered put and covered call options, and enter into
repurchase agreements. These practices are not fundamental and may be changed
from time to time by the Fund's Board of Trustees without shareholder approval.
1. The Fund's cash reserves may be invested in repurchase agreements and
other cash equivalents, such as securities issued by the United States
and state governments or
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their agencies, certificates of deposit or other interest-bearing
accounts and high-grade commercial paper. See "Repurchase Agreements"
below.
2. The Fund may write covered call options with respect to its portfolio
securities, may write covered put options with respect to securities
and may enter into closing purchase transactions with respect to such
options in accordance with applicable regulatory requirements. The
fund may also purchase call and put options. So long as the Fund
remains obligated as a writer of an option, it must (i) in the case of
a put option, designate cash, U.S. Treasury securities or high-grade,
short-term debt securities in an amount equal to or greater than the
nominal value of the option, and (ii) in the case of a call option,
collateralize the option with actual securities held in the Fund's
investment portfolio. The Fund does not write "naked" or "uncovered"
options. See "Options Policies," below.
Depositary Receipts, Convertible Securities and Securities Warrants
The Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depository Receipts ("GDRs"), and other similar global instruments available in
emerging markets, or other securities convertible into securities of eligible
issuers. These securities may not necessarily be denominated in the same
currency as the securities for which they may be exchanged. Generally, ADRs in
registered form are designed for use in U.S. securities markets, and EDRs and
other similar global instruments in bearer form are designed for use in European
securities markets. For purposes of the Fund's investment policies, the Fund's
investments in ADRs, EDRs and similar instruments will be deemed to be
investments in the equity securities representing the securities of foreign
issuers into which they may be converted. The Fund may also invest in
convertible securities and securities warrants.
Debt Securities
The Fund may purchase debt securities that complement its objective of
capital appreciation through anticipated favorable changes in relative foreign
exchange rates, in relative interest rate levels or in the creditworthiness of
issuers. Debt securities normally may constitute up to 35% of the Fund's total
assets. In selecting debt securities, the Manager seeks out good credits and
analyzes interest rate trends and specific developments that may affect
individual issuers. As an operating policy, which may be changed by the Board,
the Fund will not invest in debt securities rated lower than investment grade.
After its purchase by a Fund, a debt security may cease to be rated or its
rating may be reduced below that required for purchase by the Fund. A security
downgraded below the minimum level may be retained if determined by the Manager
and the Board to be in the best interests of the Fund.
Repurchase Agreements
The Fund may enter into repurchase agreements with banks and member firms
of the New York Stock Exchange determined by the Management Company to present
minimal credit risk. A repurchase agreement is a contract under which one party
acquires certain securities held by another party pursuant to an agreement
whereby the selling party agrees to repurchase from the acquiring party the
subject securities at a fixed time and price. Repurchase agreements are
generally short-term (usually not more than one week) with the acquiring party
profiting to the
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<PAGE>
extent that the repurchase obligation exceeds the acquiring party's cost. Under
the terms of a typical repurchase agreement, the Fund acquires United States
Government securities for a relatively short period of time, subject to the
seller's obligation to repurchase and the Fund's obligation to resell the
securities. The Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Fund is delayed or
prevented from exercising its rights to dispose of the subject securities,
including the risk that the market value of the subject securities might decline
prior to the Fund being able to dispose of them. The Management Company reviews,
on an ongoing basis to evaluate potential risks, the creditworthiness of the
counterparties as well as the market values of collateral securities.
Under the relevant terms of the Investment Company Act of 1940, as amended
(the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the underlying securities.
Hedging and Risk Management Practices
The Fund typically will not hedge against the foreign currency exchange
risks associated with its investments in foreign securities. Consequently, the
Fund will be very sensitive to any changes in exchange rates for the currencies
in which its foreign investments are denominated or linked. The Fund may enter
into forward foreign currency exchange contracts ("forward contracts") and
foreign currency futures contracts, as well as purchase put or call options on
foreign currencies, as described below, in connection with making an investment
or, on rare occasions, to hedge against expected adverse currency exchange rate
changes. Despite their very limited use, the Fund may enter into hedging
transactions when, in fact, it is inopportune to do so and, conversely, when it
is more opportune to enter into hedging transactions the Fund might not enter
into such transactions. Such inopportune timing of utilization of hedging
practices could result in substantial losses to the Fund.
The Fund also may conduct their foreign currency exchange transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market.
Forward Contracts
A forward contract, which is individually negotiated and privately traded
by currency traders and their customers, involves an obligation to purchase or
sell a specific currency for an agreed-upon price at a future date.
The Fund may enter into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security denominated in a foreign
currency or is expecting a dividend or interest payment in order to "lock in"
the U.S. dollar price of a security, dividend or interest payment. When the Fund
believes that a foreign currency may suffer a substantial decline against the
U.S. dollar, it may enter into a forward contract to sell an amount of that
foreign currency approximating the value of some or all of the Fund's portfolio
securities denominated in such currency, or when the Fund believes that the U.S.
dollar may suffer a substantial decline against a foreign currency, it may enter
into a forward contract to buy that currency for a fixed dollar amount.
In connection with the Fund's forward contract transactions, an amount of
the Fund's assets equal to the amount of its commitments will be held aside or
segregated to be used to pay for
B-4
<PAGE>
the commitments. Accordingly, a Fund always will have cash, cash equivalents or
liquid equity or debt securities denominated in the appropriate currency
available in an amount sufficient to cover any commitments under these
contracts. Segregated assets used to cover forward contracts will be marked to
market on a daily basis. While these contracts are not presently regulated by
the Commodity Futures Trading Commission ("CFTC"), the CFTC may in the future
regulate them, and the ability of a Fund to utilize forward contracts may be
restricted. Forward contracts may limit potential gain from a positive change in
the relationship between the U.S. dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance by the Fund
than if it had not entered into such contracts. The Fund generally will not
enter into a forward foreign currency exchange contract with a term greater than
one year.
Options Policies
The Fund may write (i.e., sell) "covered" put and call options for
non-speculative purposes, and purchase put and call options. These options are
used for purposes of enhancing Fund returns. In a "covered" option position the
Fund holds the underlying securities (in the case of call options) or cash (in
the case of put options), as distinct from "naked" or unsecured options. The
Fund uses options sales to hedge specific portfolio positions.
Covered "put" options are defined as contracts entered into between the
Fund, as seller, and the Options Clearing Corporation, as agent for unaffiliated
third parties, as purchaser, whereby the Fund grants to the purchaser the right,
for a defined period of time and at a set price, to sell specific securities to
the Fund. Similarly, covered "call" options written by the Fund enable the
purchaser of the option to obligate the Fund, for a defined period of time and
at a set price, to sell specific securities held in the Fund's investment
portfolio. It should be noted that, so long as its obligation as a call option
writer continues the Fund in return for the premium, has given up the
opportunity to profit from a price increase in the underlying security above the
exercise price and has retained the risk of loss should the price of the
security decline. As a call option writer, the Fund has no control over when it
may be required to sell the underlying securities.
It is an investment policy of the Fund that, so long as the Fund remains
obligated as a writer of a put option, it will designate cash, U.S. Treasury
securities, or high-grade short term debt securities in an amount equal to or
greater than the nominal value of the option (call options are backed by actual
securities held in the Fund's investment portfolio). The Fund does not write
"naked" or uncovered options and designates all funds used to cover options.
Also, it is an investment policy that the Fund will not write options if (i) the
aggregate value of the purchase obligations underlying all unexpired put options
written by the Fund (which positions are marked-to-market daily) exceeds 10% of
the net asset value of the Fund, and (ii) the nominal value of the Fund's
unexpired call options exceeds 25% of the net assets value of the Fund, provided
that the total amount of such positions at no time may exceed 35% of the Fund's
net asset value.
When the Fund writes a put option, the Fund assumes for a defined period of
time an obligation to purchase the underlying security at a set price from the
purchaser of the option and receives as consideration for its undertaking the
option obligation an option premium equal to the difference between the market
price of the underlying security at the time the option is written. The
exercise, or "strike," price is adjusted for certain economic factors
reflecting, among other things, the relationship of the exercise price to the
market price, the volatility of the underlying security, the remaining term of
the option, supply, demand and interest rates. If the market price
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<PAGE>
of the underlying security rises above the strike price, the option will expire
unexercised and the Fund will profit to the full extent of the premium. However,
if the market price falls below the strike price and the option is exercised,
the Fund will be forced to acquire securities at an above-market price and may
suffer a loss (however, the amount of any loss is reduced by the premium
received). All put options written by the Fund are covered with cash, United
States Treasury securities or other, high-grade short-term debt securities in an
amount equal to or greater than the nominal value of the option (i.e., the
amount which the Fund would have to pay in order to close out the option
position).
When the Fund writes a call option, it assumes for a defined period of time
an obligation to sell the underlying security at a set price to the purchaser of
the option. The option premium is equal to the difference between the market
price of the underlying security at the time the option is written and the
exercise, or "strike," price, adjusted for the market factors described above.
If the market price of the underlying security falls below the strike price, the
option will expire unexercised and the Fund will profit to the full extent of
the premium. However, if the market price rises above the strike price and the
option is exercised, the Fund will be forced to deliver securities which it may
not wish to sell. All call options written by the Fund are covered with
securities held in the Fund's investment portfolio.
If an option expires unexercised, the Fund realizes a gain in the amount of
the premium. However, such a gain, in the case of a call option may be offset by
a decline in the market value of the underlying security during the option
period. In the case of a put option, the gain in the amount of the premium may
be offset by the additional amount of income, if any, that would have been
generated had the funds used to cover the potential exercise of the put option
not been maintained in the form of cash or cash-equivalents.
If a call option is exercised, the transaction may result in a loss to the
Fund equal to the difference between the market price of the underlying security
at exercise and the sum of the exercise price of the call plus the premium
received from the sale of the call. If a put option is exercised, there may be a
loss to the Fund equal to the difference between (i) the exercise price of the
put less the premium received from the sale of the put, and (ii) the market
price of the underlying security at exercise.
If the Fund has written a call or put option and wishes to terminate its
obligation, it may effect a "closing purchase transaction" by buying an option
of the same series as the option previously written. The effect of this purchase
is that the Fund's position as a writer of that option will be canceled by The
Options Clearing Corporation. However, the Fund may not effect a closing
purchase transaction on a particular option after it has been notified of the
exercise of that option. If the Fund wishes to sell a security on which a call
has been written, it may effect a closing purchase transaction simultaneously
with or before selling the security.
A closing purchase transaction is effected on an exchange which provides a
secondary market for an option of the same series. If the Fund is unable to
effect a closing purchase transaction with respect to a call option it has
written, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise. Accordingly, the
Fund may run the risk of either foregoing the opportunity to sell the underlying
security at a profit or being unable to sell the underlying security as its
price declines. If the Fund is unable to effect a closing purchase transaction
with respect to a put option it has written, it will not be permitted to
undesignate those funds which are being held to cover the potential exercise of
the put option.
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<PAGE>
If a closing purchase transaction is effected, a profit or loss may be
realized depending on whether the cost of making the closing purchase
transaction is less or greater than the premium received upon writing the
original option. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from a closing purchase transaction will often be offset in whole
or in part by appreciation of the underlying security owned by the Fund. If a
closing purchase transaction results in a gain, that gain may be partially or
entirely offset by depreciation of the underlying security.
RISK CONSIDERATIONS
Concentration in Financial Services Sector
Financial services are subject to greater governmental regulation than many
other industries, as well as capital risk (i.e., the risk that, in periods of
tight money or high inflation, the cost to attract deposits will rise
substantially), term and rate risk (i.e., the risks attendant to lending money
for long periods of time at fixed or only partially adjustable interest rates
against the security of assets, the valuations of which may fluctuate with
economic conditions) and credit risk (i.e., the risk of lending money to
borrowers who may or may not be able to pay), all of which may, from time to
time, require substantial reserves against actual or anticipated losses.
Further, industry consolidation and the erosion of the distinctions between
banks and other less traditional financial institutions has resulted in
increased competition. Increased competition, with attendant pressure on
financial institution profitability, may also result from legislative
initiatives which would reduce the separation between the commercial and
investment banking business and which, if enacted, could significantly impact
the industry and the Fund. In addition, institutions such as insurance companies
that hold large portions of their capital in marketable securities are subject
to the risks of the securities market.
Since the Fund's assets consist primarily of stocks, it must be emphasized
that the value of an investment in the Fund will fluctuate as the market value
of such stocks rises or falls. Accordingly, in a declining market, the net asset
value of the Fund's shares will decline just as, in a rising market, the net
asset value of the Fund's shares will rise. These fluctuations in the net asset
value of each class of shares may make the Fund more suitable for long-term
investors who can bear the risk of such short-term fluctuations.
Foreign Securities
The Fund may purchase securities in foreign countries. Accordingly,
shareholders should consider carefully the substantial risks involved in
investing in securities issued by companies and governments of foreign nations,
which are in addition to the usual risks inherent in domestic investments.
Foreign investments involve the possibility of expropriation, nationalization or
confiscatory taxation; taxation of income earned in foreign nations (including,
for example, withholding taxes on interest and dividends) or other taxes imposed
with respect to investments in foreign nations; foreign exchange controls (which
may include suspension of the ability to transfer currency from a given country
and repatriation of investments); default in foreign government securities, and
political or social instability or diplomatic developments that could adversely
affect investments. In addition, there is often less publicly available
information about foreign issuers than those in the United States. Foreign
companies are often not subject to uniform accounting, auditing and financial
reporting standards. Further, the
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Fund may encounter difficulties in pursuing legal remedies or in obtaining
judgments in foreign courts.
Brokerage commissions, fees for custodial services and other costs relating
to investments by the Fund in other countries are generally greater than in the
United States. Foreign markets have different clearance and settlement
procedures from those in the United States, and certain markets have experienced
times when settlements did not keep pace with the volume of securities
transactions which resulted in settlement difficulty. The inability of the Fund
to make intended security purchases due to settlement difficulties could cause
it to miss attractive investment opportunities. Inability to sell a portfolio
security due to settlement problems could result in loss to the Fund if the
value of the portfolio security declined, or result in claims against the Fund
if it had entered into a contract to sell the security. In certain countries
there is less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in the United
States. The securities markets of many of the countries in which the Fund may
invest may also be smaller, less liquid and subject to greater price volatility
than those in the United States.
Because certain securities may be denominated in foreign currencies, the
value of such securities will be affected by changes in currency exchange rates
and in exchange control regulations, and costs will be incurred in connection
with conversions between currencies. A change in the value of a foreign currency
against the U.S. dollar results in a corresponding change in the U.S. dollar
value of the Fund's securities denominated in the currency. Such changes also
affect the Fund's income and distributions to shareholders. The Fund may be
affected either favorably or unfavorably by changes in the relative rates of
exchange among the currencies of different nations, and the Fund may therefore
engage in foreign currency hedging strategies. Such strategies, however, involve
certain transaction costs and investment risks, including dependence upon the
Manager's ability to predict movements in exchange rates.
Some countries in which the Fund may invest may also have fixed or managed
currencies that are not freely convertible at market rates into the U.S. dollar.
Certain currencies may not be internationally traded. A number of these
currencies have experienced steady devaluation relative to the U.S. dollar, and
such devaluations in the currencies may have a detrimental impact on the Fund.
Many countries in which the Fund may invest have experienced substantial, and in
some periods extremely high, rates of inflation for many years.
Inflation and rapid fluctuation in inflation rates may have negative
effects on certain economies and securities markets. Moreover, the economies of
some countries may differ favorably or unfavorably from the U.S. economy in such
respects as the rate of growth of gross domestic product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments. Certain
countries also limit the amount of foreign capital that can be invested in their
markets and local companies, creating a "foreign premium" on capital investments
available to foreign investors such as the Fund. The Fund may pay a "foreign
premium" to establish an investment position which it cannot later recoup
because of changes in that country's foreign investment laws.
Emerging Market Countries
The Fund may invest in securities of companies domiciled in, and in markets
of, so-called "emerging market countries." These investments may be subject to
potentially higher risks than investments in developed countries. These risks
include (i) volatile social, political and
B-8
<PAGE>
economic conditions; (ii) the small current size of the markets for such
securities and the currently low or nonexistent volume of trading, which result
in a lack of liquidity and in greater price volatility; (iii) the existence of
national policies which may restrict the Fund's investment opportunities,
including restrictions on investment in issuers or industries deemed sensitive
to national interests; (iv) foreign taxation; (v) the absence of developed
structures governing private or foreign investment or allowing for judicial
redress for injury to private property; (vi) the absence, until recently in
certain emerging market countries, of a capital market structure or
market-oriented economy; and (vii) the possibility that recent favorable
economic developments in certain emerging market countries may be slowed or
reversed by unanticipated political or social events in such countries.
Exchange Rates and Policies
The Fund endeavors to buy and sell foreign currencies on favorable terms.
Some price spreads on currency exchange (to cover service charges) may be
incurred, particularly when the Fund changes investments from one country to
another or when proceeds from the sale of shares in U.S. dollars are used for
the purchase of securities in foreign countries. Also, some countries may adopt
policies which would prevent the Fund from repatriating invested capital and
dividends, withhold portions of interest and dividends at the source, or impose
other taxes, with respect to the Fund's investments in securities of issuers of
that country. There also is the possibility of expropriation, nationalization,
confiscatory or other taxation, foreign exchange controls (which may include
suspension of the ability to transfer currency from a given country), default in
foreign government securities, political or social instability, or diplomatic
developments that could adversely affect investments in securities of issuers in
those nations.
The Fund may be affected either favorably or unfavorably by fluctuations in
the relative rates of exchange between the currencies of different nations,
exchange control regulations and indigenous economic and political developments.
The Manager considers at least annually the likelihood of the imposition by
any foreign government of exchange control restrictions that would affect the
liquidity of the Fund's assets maintained with custodians in foreign countries,
as well as the degree of risk from political acts of foreign governments to
which such assets may be exposed. The Manager also considers the degree of risk
attendant to holding portfolio securities in domestic and foreign securities
depositories.
B-9
<PAGE>
Interest Rates
The market value of debt securities that are interest rate sensitive is
inversely related to changes in interest rates. That is, an interest rate
decline produces an increase in a security's market value and an interest rate
increase produces a decrease in value. The longer the remaining maturity of a
security, the greater the effect of interest rate changes. Changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of its creditworthiness also affect the market value of that
issuer's debt securities.
Concentration of Investments
The Fund may choose to concentrate its investments in a small number of
companies. Consequently, the Fund's share value may be more volatile than that
of mutual funds having this concentration.
MANAGEMENT OF THE FUND
The business affairs of the Fund are overseen by a Board of Trustees
currently composed of seven members, four of who are not "interested persons" as
that term is defined in Section 2(a)(19) of the 1940 Act.
Compensation of Trustees and Officers
<TABLE>
Like all other expenses of the Fund, Trustee fees are paid by the
Management Company as part of the comprehensive fee structure. As of the date of
this Statement of Additional Information, the officers and Trustees of the Fund,
as a group, owned beneficially or of record less than 1% of the outstanding
shares. The following tables sets forth the names, ages and business backgrounds
of each officer and Trustee of the Fund. The address of each Trustee is c/o SIFE
Trust Fund, 100 North Wiget Lane, Walnut Creek, California 94598. Trustees who
are "interested persons" of the Fund are identified by an asterisk following
their names.
=============================================================================================================
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits Estimated Annual From Fund and Fund
Name of Person, Compensation Accrued As Part of Benefits Upon Complex Paid to
Position From Fund+ Fund Expenses Retirement Trustees+
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Haig G. Mardikian, Trustee $0 N/A N/A $35,000
Walter S. Newman, Trustee $0 N/A N/A $35,000
Neil L. Diver,
Trustee $0 N/A N/A $35,000
John A. Meany,
Trustee $0 N/A N/A $35,000
Diane H. Belding,
Trustee* $0 N/A N/A $30,000
Charles W. Froehlich, Jr.,
Trustee* $0 N/A N/A $30,000
Bruce W. Woods,
Trustee* $0 N/A N/A $30,000
=============================================================================================================
<FN>
+The total compensation listed reflects all compensation paid to the Trustees
for attending regular board and audit committee meetings during 1999.
</FN>
</TABLE>
B-10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Name, Address, Age and Position Held Principal Occupation During Past Five Years
- ------------------------------------ -------------------------------------------
Haig G. Mardikian (51) General Partner, George M. Mardikian Enterprises (real estate
Trustee; Chairman of the Board investments); Managing Director, The United Broadcasting
Member, Audit Committee Corporation (radio broadcasting).
Walter S. Newman (77) Owner, WSN Enterprises (real estate consultants); Retired
Trustee; Vice-Chairman of the Board President, San Francisco Planning Commission; Retired
Chairman, Audit Committee President, San Francisco Redevelopment Agency; Chairman of the
Board, National Brain Tumor Foundation.
Diane Howard Belding (42)* Management Company employee, 1992-1998; General Partner,
Trustee Howard & Howard Ranch (avocado and lemon ranch), 1983-present;
Director, Management Company (1982-present).
Neil L. Diver (61) Principal, The Development Group (financial consulting),
Trustee 1995-present; Chairman, Systems Integrators, Inc. (software
Member, Audit Committee development), 1995-1996; Chairman, Ameriwood Industries
International Corporation, (furniture manufacturing),
1990-1998; Chairman/ President & Co-Founder, Cryopharm
Corporation, (Biochemical Research) 1987-1996.
Charles W. Froehlich, Jr. (70) * Retired Appellate Court Judge; retired Superior Court Judge;
Trustee; Secretary formerly Of Counsel to Peterson, Thelan & Price; principal,
Froehlich & Peterson Dispute Resolution.
John A. Meany (58) President, John's Valley Foods, Inc.; President, John's Town &
Trustee Country Markets, Inc.; Director, Northern California Grocers
Member, Audit Committee Association.
Bruce W. Woods (46)* President & Chief Executive Officer and Director of Management
Trustee; President & Chief Executive Officer Company & Trustee of Fund, July 1996-present; Management
Company employee, June 1986-present.
Gary A. Isaacson (39) Chief Financial Officer of the Management Company, November
Treasurer 97-present; Controller of Hal Porter Homes, 1989-1997.
</TABLE>
B-11
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of December 31, 1999, SIFE, as principal underwriter of the Fund, holds all
the outstanding shares of the Fund.
INVESTMENT ADVISORY & OTHER SERVICES
Investment Advisory Services
The Management Company acts as the investment adviser to the Fund, subject
to policies established by the Board of Trustees. As investment adviser to the
Fund, the Management Company is responsible for the management of the Fund's
investment portfolio, as well as the administration of its operations. Basic
policy is set and determined by the Board of Trustees of the Fund and carried
out by the Management Company pursuant to an Investment Advisory Agreement dated
as of the "Advisory Agreement"). The Advisory Agreement was last approved by the
Board of Trustees, including a majority of the Trustees who are not "interested
persons" of the Fund or the Management Company, as that term is defined in the
1940 Act, at a meeting on March 4, 1999. The Management Company does not act in
a similar capacity for any other person or entity.
The Advisory Agreement is for an initial term of two years and may be
renewed from year to year provided that any such renewal has been approved
annually by (i) the majority of the outstanding voting securities of the Fund,
or (ii) a majority of the Trustees and separately a majority of those who are
neither parties to the Advisory Agreement, nor "interested persons" with respect
to the Management Company at a meeting called for the purpose of voting on such
matter. The Advisory Agreement also provides that either party has the right to
terminate the Advisory Agreement without penalty upon 60 days written notice to
the other party, and that the Advisory Agreement automatically terminates in the
event of its assignment.
Under the advisory agreement, the Management Company receives 1.25% of
average net assets, per annum, without any additional reimbursement of expenses.
Investment advisory fees are accrued daily and computed and paid monthly on the
last business day of each month at the rate of 1/12th of 1.25% of the average
net assets of the Fund. This fee is deducted from the Fund on the first business
day of the following month.
Management and Administration
The Management Company manages the Fund's operations, and is solely
responsible for all of the costs and expenses of the Fund's operation,
including, without limitation, all fees for custodial and transfer agency
services, Trustees' fees, legal and auditing fees, tax matters, dividend
disbursements, bookkeeping, maintenance of office and equipment, brokerage,
expenses of preparing, printing and mailing prospectuses to Investors and all
expenses in connection with reporting to Investors and compliance with
governmental agencies. The Management Company has contracted with Boston
Financial Data Services for the performance of certain shareholder accounting
and transfer agency functions, and is solely responsible for all fees, costs and
expenses associated with the performance by Boston Financial Data Services of
such functions.
Custody Services
B-12
<PAGE>
State Street Bank & Trust Company, 225 Franklin Street, Boston, MA 02110
("State Street Bank") acts as the custodian for the assets of the Fund. As such,
State Street Bank holds all Fund securities in safekeeping, receives and pays
for portfolio securities purchased, delivers and receives payment for portfolio
securities sold, and collects all Fund income.
Independent Accountants
_________________, 50 Fremont Street, San Francisco, California 94105, provided
auditing services as the Fund's independent certified public accountants.
BROKERAGE ALLOCATION & PORTFOLIO TURNOVER RATES
In all purchases and sales of securities for the Fund, the primary
consideration is to obtain the most favorable price and execution available. The
Management Company determines which securities are to be purchased and sold by
the Fund and which broker-dealers are eligible to execute the Fund's portfolio
transactions.
In placing portfolio transactions, the Management Company will use its best
efforts to choose a broker-dealer capable of providing the services necessary
generally to obtain the most favorable price and execution available. The full
range and quality of services available will be considered in making these
determinations, such as the firm's ability to execute trades in a specific
market required by the Fund, the size of the order, the difficulty of execution,
the operational facilities of the firm involved, the firm's risk in positioning
a block of securities, and other factors.
Purchases of portfolio securities for the Fund also may be made directly
from underwriters, who usually act as principals for their own account.
Purchases from underwriters will include a concession paid by the issuer to the
underwriter.
The Fund contemplates purchasing equity securities directly in the
securities markets located in emerging or developing countries or in the
over-the-counter markets. When purchasing ADRs and EDRs, the Fund may purchase
those listed on stock exchanges, or traded in the over-the-counter markets in
the U.S. or Europe, as the case may be. ADRs, like other securities traded in
the U.S., will be subject to negotiated commission rates. The foreign and
domestic debt securities and money market instruments in which the Fund may
invest may be traded in the over-the-counter markets.
Investment decisions for the Fund are made independently from those of
other client accounts of the Manager or its affiliates, and suitability is
always a paramount consideration. Nevertheless, it is possible that at times the
same securities will be acceptable for one or more Funds and for one or more of
such client accounts. The Manager and its personnel may have interests in one or
more of those client accounts, either through direct investment or because of
management fees based on gains in the account. The Manager has adopted
allocation procedures to ensure the fair allocation of securities and prices
between the Funds and the Manager's various other accounts. These procedures
emphasize the desirability of bunching trades and price averaging (see below) to
achieve objective fairness among clients advised by the same portfolio manager
or portfolio team. Where trades cannot be bunched, the procedures specify
alternatives designed to ensure that buy and sell opportunities are allocated
fairly and that, over time, all clients are treated equitably. The Manager's
trade allocation
B-13
<PAGE>
procedures also seek to ensure reasonable efficiency in client transactions, and
they provide portfolio managers with reasonable flexibility to use allocation
methodologies that are appropriate to their investment discipline on client
accounts.
To the extent any of the Manager's client accounts and a Fund seek to acquire
the same security at the same general time (especially if that security is
thinly traded or is a small-cap stock), that Fund may not be able to acquire as
large a portion of such security as it desires, or it may have to pay a higher
price or obtain a lower yield for such security. Similarly, a Fund may not be
able to obtain as high a price for, or as large an execution of, an order to
sell any particular security at the same time. If one or more of such client
accounts simultaneously purchases or sells the same security that a Fund is
purchasing or selling, each day's transactions in such security generally will
be allocated between that Fund and all such client accounts in a manner deemed
equitable by the Manager, taking into account the respective sizes of the
accounts, the amount being purchased or sold and other factors deemed relevant
by the Manager. In many cases, a Fund's transactions are bunched with the
transactions for other client accounts. It is recognized that in some cases this
system could have a detrimental effect on the price or value of the security
insofar as that Fund is concerned. In other cases, however, it is believed that
the ability of the Fund to participate in volume transactions may produce better
executions for that Fund.
CAPITAL STOCK AND OTHER SECURITIES
SIFE Trust Fund is a Delaware business trust. The Fund is a series of the Trust
and is authorized to issue an unlimited number of shares of beneficial interest,
with no par value. The Fund currently comprises two series of shares. The SIFE
Global Financial Fund series currently only has one class of shares: Class A
shares. Shareholders are entitled to one full or fractional vote for each full
or fractional share and may vote for the election of Trustees, and on such other
matters as may be submitted to meetings of shareholders or as required by the
Investment Company Act of 1940, as amended. Shareholders shall have no
preemptive rights.
The Fund reserves the right, if conditions exist that make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
(a redemption-in-kind). These securities shall be valued for redemption-in-kind
purposes in the same manner they are valued for purposes of calculating the
Fund's net asset value. If the Fund elects to make payments in securities, a
shareholder may incur transaction expenses in converting these securities to
cash. However, because SIFE Trust Fund has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940, as amended, the Fund is obligated to
redeem your shares, during any ninety-day period, solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
the period. The Fund may, at its option, seek an order from the Securities and
Exchange Commission to withdraw its election to be governed by Rule 18f-1.
CALCULATION OF NET ASSET VALUE
The net asset value per share of a Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets,
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of that Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
B-14
<PAGE>
The net asset value of shares of the Fund generally will be determined at
least once daily on each day the NYSE is open for trading. It is expected that
the NYSE will be closed on Saturdays and Sundays and for New Year's Day, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas.
Generally, trading in and valuation of foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. In addition, trading in and valuation of foreign securities may not take
place on every day in which the NYSE is open for trading. Furthermore, trading
takes place in various foreign markets on days in which the NYSE is not open for
trading and on which the Fund's net asset values are not calculated.
Occasionally, events affecting the values of such securities in U.S. dollars on
a day on which a Fund calculates its net asset value may occur between the times
when such securities are valued and the close of the NYSE that will not be
reflected in the computation of the Fund's net asset value unless the Board or
its delegates deem that such events would materially affect the net asset value,
in which case an adjustment would be made.
Generally, the Fund's investments are valued at market value or, in the
absence of a market value, at fair value as determined in good faith by the
Manager and the Trust's Pricing Committee pursuant to procedures approved by or
under the direction of the Board.
The Fund's equity securities, including ADRs, EDRs and GDRs, which are
traded on securities exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any reported sales, at the mean between
the last available bid and asked price. Equity securities that are traded on
more than one exchange are valued on the exchange determined by the Manager to
be the primary market. Securities traded in the over-the-counter market are
valued at the mean between the last available bid and asked price prior to the
time of valuation. Securities and assets for which market quotations are not
readily available (including restricted securities which are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by or under the direction of the Boards.
Short-term debt obligations with remaining maturities in excess of 60
days are valued at current market prices, as discussed above. Short-term
securities with 60 days or less remaining to maturity are, unless conditions
indicate otherwise, amortized to maturity based on their cost to the Fund if
acquired within 60 days of maturity or, if already held by the Fund on the 60th
day, based on the value determined on the 61st day.
Corporate debt securities and U.S. government securities held by the
Fund are valued on the basis of valuations provided by dealers in those
instruments, by an independent pricing service, or at fair value as determined
in good faith by procedures approved by the Board of Trustees. Any such pricing
service, in determining value, will use information with respect to transactions
in the securities being valued, quotations from dealers, market transactions in
comparable securities, analyses and evaluations of various relationships between
securities and yield-to-maturity information.
An option that is written by the Fund is generally valued at the last
sale price or, in the absence of the last sale price, the last offer price. An
option that is purchased by the Fund is generally valued at the last sale price
or, in the absence of the last sale price, the last bid price.
B-15
<PAGE>
If any securities held by the Fund are restricted as to resale or do
not have readily available market quotations, the Manager and the Trust's
Pricing Committees determine their fair value, following procedures approved by
the Board of Trustees. The Trustees periodically review such valuations and
valuation procedures. The fair value of such securities is generally determined
as the amount which the Fund could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary from case to
case. However, consideration is generally given to the financial position of the
issuer and other fundamental analytical data relating to the investment and to
the nature of the restrictions on disposition of the securities (including any
registration expenses that might be borne by the Fund in connection with such
disposition). In addition, specific factors are also generally considered, such
as the cost of the investment, the market value of any unrestricted securities
of the same class (both at the time of purchase and at the time of valuation),
the size of the holding, the prices of any recent transactions or offers with
respect to such securities and any available analysts' reports regarding the
issuer.
Any assets or liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the official exchange rate or,
alternatively, at the mean of the current bid and asked prices of such
currencies against the U.S. dollar last quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks. If
neither of these alternatives is available or both are deemed not to provide a
suitable methodology for converting a foreign currency into U.S. dollars, the
Board in good faith will establish a conversion rate for such currency.
All other assets of the Fund are valued in such manner as the Board in
good faith deems appropriate to reflect their fair value.
FEDERAL INCOME TAX INFORMATION
The Fund intends to elect and to qualify, to be treated as a regulated
investment company (a "RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), for each taxable year by complying with all
applicable requirements regarding the source of its income, the diversification
of its assets and the timing of its distributions. The Fund's policy is to
distribute to its shareholders all of its investment company taxable income and
any net realized capital gains for each year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income or excise taxes based on net income. However, the Board of
Trustees may elect to pay such excise taxes if it determines that payment is,
under the circumstances, in the best interests of the Fund.
To qualify as a RIC, the Fund must among other things, (a) derive at least
90% of its gross income each year from dividends, interest, payments with
respect to loans of stock and securities, gains from the sale or other
disposition of stock or securities or foreign currency gains related to
investments in stock or securities, or other income (generally including gains
from options) derived with respect to the business of investing in stock,
securities or currency, and (b) diversify its holdings so that, at the end of
each fiscal quarter, (i) at least 50% of the market value of its assets is
represented by cash, cash items, U.S. Government securities, securities of other
RICs and other securities limited, for purposes of this calculation, in the case
of other securities of any one issuer to an amount not greater than 5% of the
Fund's assets or 10% of the voting securities of the issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities of any one
issuer (other
B-16
<PAGE>
than U.S. Government securities or securities of other RICs), 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. By complying with the
applicable provisions of the Code, the Fund will not be subject to federal
income tax on taxable income (including realized capital gains) that is
distributed to shareholders in accordance with the timing requirements of the
Code. If the Fund is unable to meet certain requirements of the Code, it may be
subject to taxation as a corporation.
Distributions of net investment income and net realized capital gains by
the Fund will be taxable to Investors whether made in cash or reinvested by the
Fund in shares. In determining amounts of net realized capital gains to be
distributed, any available capital loss carryovers from prior years will be
applied against capital gains. Investors receiving distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share of the Fund on the
reinvestment date. Fund distributions also will be included in individual and
corporate shareholders' income on which the alternative minimum tax may be
imposed.
The Fund or the securities dealer effecting a redemption of the Fund's
shares by an Investor generally will be required to file information reports
with the Internal Revenue Service (the "IRS") with respect to distributions and
payments made to the Investor. In addition, the Fund will be required to
withhold federal income tax at the rate of 31% on taxable dividends, redemptions
and other payments made to accounts of individual or other non-exempt Investors
who have not furnished their correct taxpayer identification numbers and certain
required certifications on the Account Application Form or with respect to which
the Fund or the securities dealer has been notified by the IRS that the number
furnished is incorrect or that the account is otherwise subject to withholding.
The Fund intends to declare and pay dividends and other distributions, as
stated in the Prospectus. In order to avoid the payment of a 4% nondeductible
federal excise tax based on net income, the Fund must declare on or before
December 31 of each year and pay on or before January 31 of the following year,
distributions at least equal to 98% of its ordinary income for that calendar
year and at least 98% of the excess of any capital gains over any capital losses
realized in the one-year period ending October 31 of that year, together with
any undistributed amounts of ordinary income and capital gains (in excess of
capital losses) from previous calendar years.
The Fund will receive dividend distributions from U.S. corporations. To the
extent that the Fund receives such dividends and distributes them to Investors
and meets certain other requirements of the Code, corporate Investors in the
Fund may be entitled to the "dividends received" deduction. Availability of the
deduction is subject to certain holding period and debt-financing limitations.
The Fund may be subject to foreign withholding taxes on dividends and
interest earned with respect to securities of foreign corporations. Foreign
corporations in which the Fund invests may be treated as "passive foreign
investment companies" ("PFICs") under the Code. Part of the income and gains
that the Fund derives from PFIC stock may be subject to a non-deductible federal
income tax at the Fund level. In some cases, the Fund may be able to avoid this
tax by electing to be taxed currently on its share of the PFIC's income, whether
or not such income is actually distributed by the PFIC. The Fund will endeavor
to limit its exposure to the PFIC tax by investing in PFICs only where the
election to be taxed currently will be made. Because it is not always possible
to identify a foreign issuer as a PFIC in advance of making the investment, the
Fund may incur the PFIC tax in some instances.
B-17
<PAGE>
Investing in options contracts involves complex rules that will determine
the character and timing of recognition of the income received in connection
therewith by the Fund. Income from transactions in options derived by the Fund
with respect to its business of investing in securities will qualify as
permissible income under Subchapter M of the Code. Any security, option or other
position entered into or held by the Fund that substantially diminishes the
Fund's risk of loss from any other position held by the Fund may constitute a
"straddle" for federal income tax purposes. In general, straddles are subject to
certain rules that may affect the amount, character and timing of the Fund's
gains and losses with respect to straddle positions (including rules that may
result in gain being treated as short-term capital gain rather than long-term
capital gain).
Redemptions and exchanges of shares of the Fund will result in gains or
losses for tax purposes to the extent of the difference between the proceeds and
the Investor's adjusted tax basis for the shares. Any loss realized upon the
redemption or exchange of shares within six months from their date of purchase
will be treated as a long-term capital loss to the extent of distributions of
long-term capital gain dividends during such six-month period. All or a portion
of a loss realized upon the redemption of shares may be disallowed to the extent
shares are purchased (including shares acquired by means of reinvested
dividends) within 30 days before or after such redemption. In addition, the
sales charge savings that may be available for reinvesting amounts from previous
redemptions will, in certain circumstances, increase the amount of the gain (or
reduce the amount of the loss) from those redemptions. Distributions and
redemptions may be subject to state and local income taxes, and the treatment
thereof may differ from the federal income tax treatment. Nonresident aliens and
foreign persons are subject to different tax rules and may be subject to
withholding of up to 30% on certain payments received from the Fund.
The foregoing and the related discussion in the Prospectus are only a
summary of some of the important federal income tax considerations generally
affecting the Fund and its Investors and is only accurate as of the date of this
Statement of Additional Information. The law firm of Paul, Hastings, Janofsky &
Walker LLP has expressed no opinion in respect thereof. No attempt is made to
present a detailed explanation of the federal income tax treatment of the Fund
or its shareholders, and this discussion is not intended as a substitute for
careful tax planning. Accordingly, potential investors in the Fund are urged to
consult their tax advisers concerning the application of foreign, federal, state
and local taxes to an investment in the Fund , and with specific reference to
their own tax situation.
UNDERWRITING OF THE FUND'S SECURITIES
Underwriting Services
The Management Company acts as principal underwriter for the Fund pursuant
to an Underwriting Agreement. The Underwriting Agreement is for an initial term
of two years, and may be renewed from year to year provided that any such
renewal has been approved annually by (i) the majority of the outstanding voting
securities of the Fund, or (ii) a majority of the trustees and separately by a
majority of those who are neither parties to the Underwriting Agreement or
"interested persons" with respect to the Management Company at a meeting called
for the purpose of voting on such matter. The Underwriting Agreement also
provides that either party has the right to terminate the Underwriting Agreement
without penalty upon 60 days written notice to the other party and that the
Underwriting Agreement automatically terminates in the event of its assignment.
B-18
<PAGE>
PERFORMANCE INFORMATION
Since the Fund has been in existence for less than one year no performance
information is available.
The Fund calculates average annual total return according to the following
formula, as required by the Securities and Exchange Commission:
"P(1+T)n = ERV", where the average annual total return ("T") is computed by
using the value at the end of the period ("ERV") of a hypothetical initial
investment of $10,000 ("P") over a period of years ("n"). Accordingly, to
calculate total return, an initial investment is divided by the per-unit
offering price (which includes the sales charge) as of the first day of the
period in order to determine the initial number of units purchased.
Subsequent dividends and capital gain distributions are then reinvested at
net asset value on the reinvestment date determined by the Board of
Trustees. The sum of the initial shares purchased and additional shares
acquired through reinvestment is then multiplied by the net asset value per
share as of the end of the period in order to determine ending value. The
difference between the ending value and the initial investment, divided by
the initial investment and converted to a percentage, equals total return.
The resulting percentage indicates the positive or negative investment
results that an investor would have experienced from reinvested dividends
and capital gain distributions and changes in unit price during the period.
Total return may be calculated for one year, five years, ten years and for
other periods. The average annual total return over periods greater than
one year also may be computed by utilizing ending values as determined
above.
The Fund's performance is affected by many factors including: changes in
the levels of equity prices and interest rates generally, the Fund's selection
of specific securities for the portfolio, the Fund's expense ratio, and other
factors. The investment return and principal value of the investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
FINANCIAL STATEMENTS
The Fund has recently commenced operation and, therefore, has not yet
prepared Financial statements for public distribution.
B-19
<PAGE>
SERVICE PROVIDERS
-----------------
Investment Adviser, Underwriter and Distributor
SIFE
100 North Wiget Lane
Walnut Creek, CA 94598
-----------------
Custodian
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, Massachusetts 02110
-----------------
Transfer Agent
BOSTON FINANCIAL DATA SERVICES
P.O. Box 8244
Boston, MA 02266-8244
----------------
Independent Auditors
50 Fremont Street
San Francisco, CA 94105
----------------
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER LLP
345 California Street, 29th Floor
San Francisco, CA 94104
B-20
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Exhibits filed in Part C of the Registration Statement:
Exhibit
Number
(a) Copy of Registrant's Trust Agreement as currently in effect:
1. Copy of Trust Agreement recompiled as of May 1,
1976(1)
2. Copy of Appointment of Successor Trustee(2)
3. Copy of Certificate of Successor Trustee(2)
4. Copy of Restated Trust Agreement recompiled as of May
2, 1986(4)
5. Copy of Amendment to Restated Trust Agreement dated
April 1, 1987(4)
6. Copy of Amendment to Restated Trust Agreement dated
April 2, 1990(5)
7. Copy of Amendment to Restated Trust Agreement dated
April 1, 1991(6)
8. Copy of Amendment to Restated Trust Agreement dated
February 24, 1993(7)
9. Copy of Amendment to Restated Trust Agreement dated
April 1, 1993(7)
10. Copy of Amendment to Restated Trust Agreement dated
April 4, 1994(8)
11. Copy of Amendment to Restated Trust Agreement dated
April 3, 1995(9)
12. Copy of Amendment to Restated Trust Agreement dated
April 1, 1996(10)
13. Copy of Agreement between SIFE, Inc. and State Street
Bank and Trust Company re: appointment of successor
trustee (11)
14. Copy of Agreement and Declaration of Trust, dated
February 28, 1997(14)
15. Copy of Certificate of Trust(14)
(b) By-laws of SIFE Trust Fund, a Delaware Business Trust(14)
(c) Instruments defining rights of securities holders--Not
Applicable
(d) Copy of Investment Advisory Agreement dated April 3, 1972(1)
1. Copy of Amendment to Investment Advisory Agreement
dated April 3, 1995(9)
2. Copy of Amendment to Investment Advisory Agreement
dated April 1, 1996(10)
3. Copy of Investment Advisory Agreement, dated as of
April 30, 1997
(e) Copy of Underwriting Agreement dated April 3, 1972(1)
1. Copy of Amendment to Underwriting Agreement dated
April 1, 1974(1)
2. Copy of Amendment to Underwriting Agreement dated
April 1, 1976(1)
3. Copy of Amendment to Underwriting Agreement dated
April 1, 1985(3)
4. Copy of Amendment to Underwriting Agreement dated
April 2, 1990(5)
5. Copy of Amendment to Underwriting Agreement dated
February 24, 1993(7)
6. Copy of Amendment to Underwriting Agreement dated
April 1, 1993(7)
7. Copy of Amendment to Underwriting Agreement dated
April 4, 1994(8)
8. Copy of Amendment to Underwriting Agreement dated as
of February 1, 1995, effective April 1, 1995(9)
9. Copy of Amendment to Underwriting Agreement dated
April 1, 1996(10)
10. Copy of Underwriting Agreement, dated as of April 30,
1997(14)
(f) Bonus or Profit Sharing Contracts--Not Applicable
(g) 1. Custodian Contract between SIFE Trust Fund and State
Street Bank & Trust Co. (11)
2. Retirement Plans Service Contract among SIFE, Inc.,
SIFE Trust Fund and State Street Bank & Trust Co.
(11)
3. Assignment & Assumption Agreement(14)
(h) Other Material Contracts--Not Applicable
(i) Legal Opinion--To be filed by Post Effective Amendment
(j) Consent of Independent Accountants--Not Applicable
(k) Omitted Financial Statements--Not Applicable
(l) Initial Capital Agreements--Not Applicable
(m) Copies of Rule 12b-1 Plans
6
<PAGE>
1. Rule 12b-1 Plan of Distribution and Rule 12b-1
Agreement for Class A-II Shares (10)
2. Rule 12b-1 Plan of Distribution and Rule 12b-1
Agreement for Class B Shares(14)
3. Rule 12b-1 Plan of Distribution and Rule 12b-1
Agreement for Class C Shares(14)
(n) Financial Data Schedules(12)
(o) Rule 18f-3 Plan:
1. Rule 18f-3 Plan (11)
2. Restated Rule 18f-3 Plan(14)
- ------------------------------
(1) Filed March 31, 1980, as an exhibit to Form N-1 Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 23 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 2, File No. 2-17277, and incorporated herein by reference.
(2) Filed April 27, 1981, as an exhibit to Form N-1 Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 24 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 3, File No. 2-17277, and incorporated herein by reference.
(3) Filed February 28, 1986, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 29 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 8, File No. 2-17277, and incorporated herein by reference.
(4) Filed April 17, 1987, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 30 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 9, File No. 2-17277, and incorporated herein by reference.
(5) Filed February 26, 1990, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 33 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 12, File No. 2-17277, and incorporated herein by reference.
(6) Filed February 26, 1991, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 34 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 13, File No. 2-17277, and incorporated herein by reference.
(7) Filed February 26, 1993, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 36 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 15, File No. 2-17277, and incorporated herein by reference.
(8) Filed February 25, 1994, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 37 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 16, File No. 2-17277, and incorporated herein by reference.
(9) Filed February 24, 1995, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 38 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 17, File No. 2-17277, and incorporated herein by reference.
(10) Filed February 23, 1996, as an exhibit to Registrant's Definitive Proxy
Statement under Section 14(a) of the Securities Exchange Act of 1934, as
amended, and incorporated herein by reference.
(11) Filed April 19, 1996, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 39 and
Registration Statement under Investment Company Act of 1940 Post-Effective
Amendment No. 18, File No. 2-17277, and incorporated herein by reference.
(12) Filed April 30, 1997, as an exhibit to Registrant's Form NSAR for the
period ended December 31, 1996, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and incorporated herein by
reference.
(13) Filed February 28, 1997, as Exhibit A to Registrant's Definitive Proxy
Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934,
as amended, and incorporated herein by reference.
(14) Filed April 17, 1997, as an exhibit to Form N-1A Registration Statement
under the Securities Act of 1933 Post-Effective Amendment No. 41 and
Registration Statement under Investment Company Act of 1940 Post Effective
Amendment No. 20, File No. 2-17277, and incorporated here in by reference.
Item 24. Persons Controlled by or Under Common Control with Registrant
No person is directly or indirectly controlling, controlled by, or
under common control with the Registrant.
7
<PAGE>
Item 25. Indemnification
Reference is made to Article VI, Section 5 of Registrant's Trust Agreement, as
amended, filed as Exhibit 1 under Part C, Item 24(b) (the "Trust Agreement"),
which generally provides that no director or officer shall be liable to the
Registrant or to its Investors or to any other person for any action which such
director or officer may in good faith take or refrain from taking as a director
or officer; provided, however, that no officer or director of the Registrant
shall be protected against any liability to the Registrant or its Investors
caused by such officer's or director's willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office, nor shall anything in Section 5 protect any officer or director
against any liability arising under any provision of the Securities Act of 1933
(the "Securities Act").
Reference is also made to Article VI, Section 6 of Registrant's Trust Agreement,
which generally provides that an officer or director shall be indemnified by the
Registrant to the maximum extent permitted by applicable law against all
expenses, judgments, fines, settlements and other amounts reasonably incurred or
suffered by such person in connection with any threatened, pending or completed
legal proceeding brought by a third party in which he or she is involved by
reason of his or her relationship to the Registrant. No indemnification shall be
provided, however, with respect to any liability arising by reason of the
"Disabling Conduct" of the person seeking indemnity. "Disabling Conduct"
generally means willful misfeasance, bad faith, gross negligence, reckless
disregard of duties, or any conduct that amounts to a violation of the
Securities Act.
Any officer or director who is a party to an action which is brought by the
Registrant shall also be indemnified, provided that if such person is adjudged
by a court to be liable to the Registrant in the performance of his or her duty,
indemnification shall be made only to the extent a court determines that there
has been no Disabling Conduct and that such person is fairly and reasonably
entitled to indemnity.
Expenses incurred in connection with a legal proceeding shall be advanced by the
Registrant to an officer or director prior to the proceeding's final
disposition, provided such officer or director agrees to repay all advanced
amounts unless it is ultimately determined that he or she is entitled to
indemnification, and such officer or director meets certain other conditions to
the advance.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant,
the Registrant understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities 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 Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling 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 whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser
Registrant's response to Part B, Item 14 contained in "Management of the Trust
Fund," is hereby incorporated herein by reference.
Item 27. Principal Underwriter
a. The underwriter of the Registrant is SIFE. SIFE acts as
underwriter and investment adviser only for the Registrant.
b. Registrant's response to Part B, Item 14, contained in
"Management of the Trust Fund," is hereby incorporated herein
by reference.
8
<PAGE>
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 are kept at the offices of SIFE, 100
North Wiget Lane, Walnut Creek, CA 94598.
Item 29. Management Services
Inapplicable.
Item 30. Undertakings
Inapplicable.
9
<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
Post-Effective Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereto duly authorized, in this City of Walnut Creek and State
of California, on the 15th day of October, 1999.
SIFE Trust Fund
By: /s/ Bruce W. Woods
-----------------------------------
Bruce W. Woods
President & Chief Executive Officer
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Bruce W. Woods* Trustee; President & Chief Executive Officer October 14, 1999
- ---------------
(Bruce W. Woods)
Gary Isaacson* Treasurer October 14, 1999
- ----------------
(Gary Isaacson)
Haig G. Mardikian* Trustee; Chairman of the Board October 14, 1999
- ------------------
(Haig G. Mardikian)
Walter S. Newman* Trustee; Vice-Chairman of the Board October 14, 1999
- -----------------
(Walter S. Newman)
Charles W. Froehlich, Jr.* Trustee; Secretary October 14, 1999
- --------------------------
(Charles W. Froehlich, Jr.)
Neil L. Diver* Trustee October 14, 1999
- ---------------
(Neil L. Diver)
Diane Howard Belding* Trustee October 14, 1999
- ----------------------
(Diane Howard Belding)
John A. Meany* Trustee October 14, 1999
- ----------------
(John A. Meany)
<FN>
*By: /s/ Bruce W. Woods Dated: October 14, 1999
--------------------------------- ----------------------
Bruce W. Woods, Attorney-in-Fact
</FN>
</TABLE>
10
