As filed with the Securities and Exchange Commission on April 30, 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. 45 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 24 [x]
SIFE Trust Fund
(Exact Name of Registrant as Specified in Charter)
100 North Wiget Lane (800) 231-0356
Walnut Creek, California 94598 (925) 988-2400
(Address of Principal Executive (Registrant's Telephone Number,
Offices, with Zip Code) including Area Code)
Bruce W. Woods
SIFE Trust Fund
100 North Wiget Lane
Walnut Creek, CA 94598
(Name and address of Agent for Service)
------------------------------
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] 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)
[ ] 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
<PAGE>
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-I Shares, Class A-II Shares, Class B Shares
and Class C Shares of SIFE Trust Fund
> Part B--Statement of Additional Information for Class A-I Shares, Class
A-II Shares, Class B Shares and Class C Shares of SIFE Trust Fund
> Part C--Other Information
> Signature Page
> Exhibits
3
<PAGE>
===================================
Part A--Prospectus
for
Class A-I Shares,
Class A-II Shares,
Class B Shares and
Class C Shares
of
SIFE Trust Fund
===================================
4
<PAGE>
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[SIFE Logo]
SIFE
TRUST FUND
PROSPECTUS
April 30, 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.
================================================================================
<PAGE>
Table of Contents
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The Fund ........................................................ 3
Past Performance ................................................ 4
Fees & Expenses ................................................. 5
Additional Risks ................................................ 7
Management ...................................................... 8
Choosing a Share Class .......................................... 9
How Sales Charges are Calculated ................................ 10
Sales Charge Reductions & Waivers ............................... 12
Opening & Contributing to An Account ............................ 14
Exchanges & Redemptions from Accounts ........................... 16
Changes to Account Status ....................................... 17
Additional Investor Services .................................... 18
Pricing, Distribution & Tax Information ......................... 20
Transaction & Account Policies .................................. 21
Financial Highlights ............................................ 23
<PAGE>
The Fund
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Investment Objective
SIFE Trust Fund (the "Fund") seeks to conserve capital and provide capital
growth consistent with prudent investment management practices by concentrating
not less than 30% of its assets in the stocks of institutions in the financial
industry.
Investment Strategy
The Fund seeks to achieve it's investment objective by investing in financial
institutions (companies which derive a significant portion of their income from
dealing in financial services, credit, loans and insurance) as well as a diverse
portfolio of enterprises regarded by the Fund as having stable earnings growth.
In researching potential investments, SIFE focuses on companies that have
capital growth potential because of favorable overall business prospects, the
development and demand of new products and services, undervalued assets and/or
earnings potential, and favorable operating ratios. With respect to 80% of the
Fund's portfolio, any company that has met the above criteria must also have
been in existence for at least five years, paid dividends in each of the last
five years, and have assets of more than $7,000,000.
Risk Factors
As with any mutual fund, the value of your investment will fluctuate in value
and you may lose money. By investing in stocks, the Fund's share price may be
volatile, particularly due to the decline of a holding's price or a decline in
the overall stock market. Since this Fund concentrates its investments in
financial institutions, its performance is largely dependent on financial
institutions performance. This performance may differ from that of the overall
stock market.
In comparison to the overall stock market, the value of shares of financial
institutions owned by the Fund, and therefore, the Fund's share value is more
likely to be adversely affected by falling interest rates and/or deteriorating
economic conditions. Also, financial institutions are subject to greater
regulation than other industries in the overall stock market. For example,
industries like banking and insurance are subject to special regulatory schemes
not shared by other industries. Additionally, tighter government regulation of
financial institutions in which the Fund invests may adversely affect the Fund
by preventing the Fund's holdings from realizing their growth potential. These
fluctuations in net asset value may make the Fund more suitable for long-term
investors.
The Fund - Pg 3
<PAGE>
Past Performance
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The bar chart and tables below show the risks of investing in the Fund and how
the Fund's total return has varied from year to year. The first table shows the
Fund's best and worst quarters during that time period, while the second table
compares the Fund's 1, 5, and 10 year annual returns with that of the S&P 500
Index, a widely recognized unmanaged index of stock performance.
Please remember that a fund's past performance is not necessarily an indication
of how a fund will perform in the future.
Total Return (per calendar year):
[Graphic Omitted]
The returns shown in the chart above are for Class A-I Shares of the Fund and
calculated without taking into consideration the sales load. If these amounts
were reflected, the returns would be less than those shown. The returns for the
other classes will be lower because of different expenses and sales load
structures.
Highest and Lowest Quarterly Return:
Quarter Ending
Highest 19.60% December 31, 1998
Lowest -22.79% September 30, 1990
Average Annual Total Returns (through December 31, 1998)
1 Year 5 Years 10 Years
Class A-I 5.14% 23.41% 19.17%
Class A-II 4.73% N/A N/A
Class B 4.07% N/A N/A
Class C 3.57% N/A N/A
S&P 500 Index 28.58% 24.06% 19.21%
Pg 4 - Past Performance
<PAGE>
Fees & Expenses
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<TABLE>
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<CAPTION>
Class Class Class Class
Shareholder Fees (fees paid directly from your investment) A-I A-II B C
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases(1) 5.00% 5.00% none 1.00%
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) none none 5.00%(2) 1.00%(3)
(as a percentage of assets)
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends none none none none
Redemption Fee(4) none none none none
(as a percentage of amount redeemed)
Exchange Fee none none none none
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 1.25% 1.25% 1.25% 1.25%
Distribution (12b-1) and Shareholder Servicing Fees none 0.25%(5) 1.00%(6) 1.00%(6)
Total Annual Fund Operating Expenses 1.25% 1.50% 2.25% 2.25%
<FN>
- ---------------------
(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) The CDSC is calculated based on the lesser of (i) the original cost of the
shares being redeemed or (ii) the net asset value of such shares at the time of
redemption.
(3) Only charged on amounts redeemed within one year from purchase and on the
lesser of either the current value or the original investment. Investments
redeemed more than one year after purchase will not be subject to this
redemption fee.
(4) 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.
(5) Class A-II shares of the Fund have a distribution plan which provides for
distribution fees in the amount of .25%.
(6) Class B and Class C shares of the Fund each have a distribution plan which
provides for .75% of distribution fees and .25% of shareholder servicing fees.
</FN>
</TABLE>
Fees & Expenses - Pg 5
<PAGE>
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 would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A-I $ 620 $ 876 $ 1151 $ 1931
Class A-II $ 644 $ 949 $ 1276 $ 2195
Class B(5)
Assuming Redemption $ 727 $ 1001 $ 1401 $ 2214
Assuming No Redemption $ 227 $ 701 $ 1201 $ 2214
Class C
Assuming Redemption $ 425 $ 794 $ 1289 $ 2647
Assuming No Redemption $ 325 $ 794 $ 1289 $ 2647
- ---------------------
(5) This example assumes that Class B shares convert to Class A-II on the sixth
anniversary of purchase, as they normally would.
Pg 6 - Fees & Expenses
<PAGE>
Additional Risks
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Year 2000 Issues
The Fund and its service providers depend on the smooth functioning of their
computer systems. Unfortunately, because of the way dates are encoded and
calculated, many computer systems in use today cannot recognize the year 2000,
but revert to 1900 or another incorrect date. A computer failure due to the year
2000 problem could negatively impact the handling of securities trades, pricing
and account services.
The Fund's software vendors and service providers have provided assurance that
their systems will be adapted in sufficient time to avoid material problems.
There can be no guarantee, however, that all of these computer systems will be
adapted in time. We do not expect year 2000 conversion costs to be substantial
for the Fund, because those costs are borne by the Fund's vendors and service
providers and not directly by the Fund. Furthermore, brokers and other
intermediaries that may hold shareholder accounts may still experience
incompatibility problems. The Fund is in the process of putting in place a
contingency plan to evaluate potential vendors and service providers if the
existing vendors and service providers fail to adequately adapt their systems in
a timely manner. It is also important to keep in mind that year 2000 issues may
negatively impact the companies the Fund invests in and by extension the value
of the shares held in the Fund. Lastly, please note that financial industry
stocks may experience greater year 2000 volatility due to transactions in
anticipation of year 2000 and a greater dependence on technology than the
overall stock market.
Defensive Investments
At the discretion of the portfolio manager, the Fund may invest up to 70% of 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, the Fund may not
achieve its investment objective. For example, should the market advance during
this period, the Fund may not participate as much as it would had it been fully
invested.
Additional Risks - Pg 7
<PAGE>
Management
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SIFE, a California Corporation, is the investment advisor, underwriter, and
distributor for SIFE Trust Fund. SIFE is located at 100 North Wiget Lane, Walnut
Creek, CA 94598. Founded in 1960, SIFE has managed the Fund since 1962 and is
paid a flat fee of 1.25% of average daily assets for investment advice given to
the Fund. For the year ended December 31, 1998, the Fund paid SIFE $14,504,536.
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 composed of Michael J. Stead, Scott L. Edgar, and
Laurie E. Buntain. Michael J. Stead, the Chief Investment Officer, has managed
the Fund since May 1995. Prior to joining SIFE, Mr. Stead was employed by Bank
of America, as the Senior Credit Officer for the Global Markets Division. Scott
L. Edgar, the Director of Research, has been with SIFE since 1993. Previous to
this, Mr. Edgar worked for Santa Barbara Asset Management as the Director of
Research. Laurie E. Buntain, the Head Analyst, has been with SIFE since 1995.
Prior to this, she spent 8 years working as a research analyst for various
securities firms.
Pg 8 - Management
<PAGE>
Choosing a Share Class
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SIFE Trust Fund offers four different classes of shares, Class A-I, Class A-II,
Class B and Class C. Each Class has its own fee structure, as outlined below,
allowing you to choose the one that best meets your requirements. For more
detail please see the section titled "How Sales Charges are Calculated." Also
your financial representative can help you decide which share class is best for
you.
The minimum initial investment in the Fund is $200, and the minimum subsequent
investment is $50. If you buy shares through your broker or investment advisor,
different minimums may apply.
Class A-I
o This class is available for purchase by Fund accounts which were
established prior to April 30, 1996, directors, employees, and
registered representatives of the Fund and SIFE, their immediate family
members, and any employee benefit plan established for such people.
o This class has a front-end sales charge. There are several ways to
reduce this charge, described under "Sales Charge reductions and
waivers" following this section.
o This class has lower annual expenses than the other classes.
Class A-II
o This class is available to all investors.
o This class has a front-end sales charge. There are several ways to
reduce this charge, described under "Sales Charge Reductions and
Waivers" following this section.
o This class is intended for longer term investors and is most
advantageous to those investors qualifying for sales charge reductions
or waivers.
Class B
o This class is available to all investors.
o There is no front-end sales charge; allowing all of your money to work
for you right away.
o Higher annual expenses than Class A-II shares.
o A contingent deferred sales charge that declines from 5% to 0% over six
years.
o Automatic conversion to Class A-II shares on the sixth anniversary of
purchase, reducing annual expenses.
o This class is intended for investors planning to hold their shares for
at least six years.
Class C
o This class is available to all investors.
o Reduced front-end sales charge of 1%.
o Higher annual expenses than Class A-II shares.
o A redemption charge of 1% for shares redeemed less than one year from
purchase.
o This class is intended for investors planning to hold their shares for
a short time.
Choosing a Share Class - Pg 9
<PAGE>
How Sales Charges are Calculated
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Class A-I & Class A-II
Class A-I and Class A-II 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
dividends or reinvestment.
Class A-I & Class A-II 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 none none
Class B
Class B shares are offered at their net asset value per share, without any
initial sales charge. However, you normally will be charged a Contingent
Deferred Sales Charge (CDSC) on shares you sell within six years of purchase.
There is no CDSC on shares acquired through reinvestment of dividends. The CDSC
is based on the lesser of the original purchase cost or the current market value
of the shares being sold and is deducted from the net asset value per share at
the time of redemption. The longer the time between the purchase and sale of
shares, the lower the rate of the CDSC. The following chart sets out how the
CDSC charges apply over time:
Class B Contingent Deferred Sales Charge
(as a percentage of dollar amount)
Years after Purchase CDSC on shares being sold
- -------------------- -------------------------
1st year 5.00%
2nd year 4.00%
3rd and 4th years 3.00%
5th year 2.00%
6th year 1.00%
After 6 years None
On the sixth anniversary after purchase, Class B shares will automatically
convert to class A-II shares. This will result in the annual total fund
operating expenses being reduced from the 2.25% Charged on Class B accounts to
the 1.50% Charged on Class A-II accounts.
To keep your CDSC as low as possible, each time you place a request to sell
shares we will first sell any shares in your account that carry no CDSC. If
there are not enough shares with no CDSC, we will sell those shares that have
the lowest CDSC first.
Pg 10 - How Sales Charges are Calculated
<PAGE>
How Sales Charges are Calculated
- --------------------------------------------------------------------------------
Class C
Class C shares are sold at an offering price equal to their net asset value per
share, plus a 1% sales charge. You normally will also be charged a CDSC of 1% on
shares that you sell within one year of purchase. There is no CDSC on shares
acquired through reinvestment or dividends. The CDSC is based on lesser of the
original purchase cost or the current market value of shares being sold.
To keep your costs as low as possible, each time you place a request to sell
shares we will first sell any shares in your account that carry no CDSC.
Distribution Compensation
Class A-II, Class B, and Class C shares of the Fund have each adopted a plan
under Rule 12b-1 ("12b-1" refers to the federal securities law authorizing this
type of fee) that allows the Fund to pay distribution and other fees for the
distribution of its shares 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 annual 12b-1
fees. Presently SIFE charges 12b-1 fees on Class A-II, Class B, and Class C
shares. These fees and expenses vary by class according to the 12b-1 plans
adopted by the Fund's independent Trustees. The amount of the 12b-1 fees is set
out in the "Fees & Expenses" section on page 5.
How Sales Charges are Calculated - Pg 11
<PAGE>
Sales Charge Reductions & Waivers
- --------------------------------------------------------------------------------
Reducing Your Class A-I & Class A-II Sales Charges
There are two ways that you can combine multiple purchases of Class A-I and/or
Class A-II 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
of 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 a
class 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-I and Class A-II
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-II Purchases
Subject to approval of the Management Company sales charges do not apply to
Class A-II purchases:
1) By a governmental agency or authority prohibited by law from
paying certain front-end sales charges (governmental agencies or
authorities prohibited by law from paying distribution fees are
entitled to purchase Class A-I shares);
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 Management Company,
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 Trust
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";
Pg 12 - Sales Charge Reductions & Waivers
<PAGE>
Sales Charge Reductions & Waivers
- --------------------------------------------------------------------------------
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; or
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.
Waivers for Class B and Class C contingent deferred sales charge
SIFE will waive the CDSC on Class B and Class C shares in the following cases:
i) if the redemption is made within one year of death or disability
of the account holder,
ii) to the extent that the redemption represents a minimum required
distribution from a retirement plan once you have attained the
age of 70 1/2,
iii) if the withdrawal is made under a systematic withdrawal plan,
provided that such a systematic withdrawal is limited to no more
than 12% of the annual beginning account value, or
iv) in the case of tax-exempt employee benefit plans, if the Internal
Revenue Service or the Department of Labor, as the case may be,
determines by rule or regulation that continuation of the
investment in such shares would be improper.
Sales Charge Reductions & Waivers - Pg 13
<PAGE>
Opening & Contributing to an Account
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Steps for opening an account with SIFE Trust Fund:
1) Read this prospectus carefully.
2) Determine the dollar amount and the class of shares you wish to invest in.
The minimum initial investment amount to open an account with the Fund is:
o $200 for a regular account
o $200 for a retirement account
o $50 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 Trust Fund
c/o Boston Financial Data Services
P.O. Box 8244
Boston, MA 02266-8244
Please be aware that purchase and redemption requests received before 1:00 p.m.
Pacific Time will receive the closing net asset value 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 14 - Opening & Contributing to an Account
<PAGE>
<TABLE>
Opening & Contributing to an Account
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Opening an Account Contributing to an Existing Account
By Check
<S> <C>
o Make out a check for the investment amount, o Make out a check for the investment amount,
payable to "SIFE Trust Fund". payable to "SIFE
o Deliver the check and completed application o Fill out the detachable slip from an account
to your financial representative, or mail to statement. If no slip is available, include a
SIFE Trust Fund at the address listed on page note specifying your share class, account
14. Trust Fund". number and the name(s) in which the account
o Please note that SIFE does not accept third is registered.
party checks. o Deliver the check to your financial
representative, or mail to SIFE Trust Fund at
the address listed on page 14.
By Exchange
o Call your financial representative or SIFE's o Call your financial representative or SIFE's
Investor Services at 1-800-231-0356 to Investor Services at 1-800-231-0356 to
request an exchange. request an exchange.
By Wire
o Deliver the check and completed application o Instruct your bank to wire the amount of your
to your financial representative, or mail to investment to:
SIFE Trust Fund at the address listed on page State Street Bank and Trust Company
14. 225 Franklin Street
o Obtain your account number by calling your Boston, MA 02101
financial representative or SIFE's Investor ABA# 011000028
Services. DDA# 99052490
o Instruct your bank to wire the amount of your Specify the share class, name on the account,
investment to: account number and the name(s) in which the
State Street Bank and Trust Company account is registered. Your bank may charge a fee
225 Franklin Street to wire funds.
Boston, MA 02101
ABA# 011000028
DDA# 99052490
Specify the share class, name on the account,
account number and the name(s) in which the
account is registered. Your bank may charge a fee
to wire funds.
By Phone
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 15
<PAGE>
Exchanges & Redemptions from Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
By Letter
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 Funds
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.
By Phone
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.
By Fax
o SIFE does not currently accept fax transactions.
By Exchange
o Exchanges of any type. o Call your financial representative or SIFE's
Investor Services Division to request an
exchange.
</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 16 - Exchanges & Redemptions from Accounts
<PAGE>
<TABLE>
Changes to Account Status
- --------------------------------------------------------------------------------------
<CAPTION>
Requirements for Commonly Requested Account Changes
Type of Change Requirement
<S> <C>
Add or Delete Beneficiary o Complete a Service Option Form.
Add Telephone Redemptions o Complete a Service Option Form.
o Obtain a signature guarantee.
o Enclose a voided check (for wire
transfers).
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.
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.
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.
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.
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.
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 17
</TABLE>
<PAGE>
Additional Investor Services
- --------------------------------------------------------------------------------
Systematic Purchase Plan
The Systematic Purchase Plan allows you make regular investments from your bank
account (minimum of $50) automatically on a monthly or quarterly basis.
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
($50 minimum) made payable to "SIFE Trust 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 Class B and Class C Shares may be eligible for CDSC waivers under this
type of withdrawal plan. Please see the section titled "Sales Charge
Waivers and Reductions" for information on these waivers.
o Purchases on Class A-I and Class A-II 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.
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.
Pg 18 - Additional Investor Services
<PAGE>
Additional Investor Services
- --------------------------------------------------------------------------------
Money Market Fund
SIFE offers the SSgA Money Market Fund for investors wishing to exchange funds
from their Class A-I and Class A-II shares into a money market fund. Money that
is transferred from SIFE shares to the SSgA Money Market Fund may be moved back
into the same class of SIFE shares with no sales charge. Please note that when
moving money into the money market, you must maintain a balance of at least $200
in SIFE shares. Also, exchanges between the fund and the SSgA Money Market Fund
may be taxable events.
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 Trust Fund's characteristics may be affected by the laws of your
jurisdiction. Be aware that Class A-II shares will be issued when the
registration (tax identification number and/or titling) of a Class A-I account
is changed.
Additional Investor Services - Pg 19
<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 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 will be distributed to you on the last
business day of February, May, August, and December. Short-term capital gains
are normally allocated to your account on the last business day of December and
long-term capital gains are normally allocated to your account on the last
business day of November.
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 has qualified as, and intends to continue 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.
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 20 - 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 deferred sales charges or 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 Trust
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 21
<PAGE>
Transaction & Account Policies
- --------------------------------------------------------------------------------
No Sales Charge Repayment Privilege
If you are invested in Class A-I or Class A-II shares, you have the privilege of
repurchasing shares previously redeemed with no sales charge, up to the dollar
amount of shares previously redeemed. Any repurchases made under this privilege
must be noted on the check as a "repayment." Please be aware that not all
brokers recognize this repayment privilege and that SIFE may terminate this
right with respect to new redemptions upon 90 days written notice to
shareholders.
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
$200, 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. You will
not be charged a CDSC if your account is closed for this reason, and your
account will not be closed if its drop in value is due to Fund performance or
the effects of sales charges.
Safe & Maximum Withdrawals
When making large withdrawals from your account, you may be asked if you wish to
make a "Safe Withdrawal" or "Maximum Withdrawal." Both of these withdrawal types
are intended to allow you to pull the most money you can out of your account
(except $200) without closing the account. By not closing your account, you will
preserve your no sales charge repayment privilege.
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 days closing price, while
orders received after that will be processed at the next days closing price) on
any day the NYSE is open. Brokers who perform shareholder servicing for the Fund
may receive fees from the Fund or Management Company for providing these
services.
Pg 22 - Transaction & Account Policies
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five years. Certain information reflects
results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions.) The information for
1996 through 1998 was audited by Deloitte & Touche LLP, whose Independent
Auditors Report along with the Fund's financial statement, is included in the
Annual Report, which is available upon request. Information for 1994 & 1995 was
audited by other independent accountants. Their report is not included here.
<TABLE>
SELECTED PER SHARE DATA
(For one share outstanding during the period):
<CAPTION>
Class A-I Class A-II Class B Class C
------------------------------------------ ------------------------ --------------- ---------------
Years Ended December 31 1998 1997 1996 1995 1994 1998 1997 1996(2) 1998 1997(1) 1998 1997(1)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 6.45 $ 4.86 $ 4.58 $ 3.55 $ 3.83 $ 6.46 $ 4.86 $ 4.73 $ 6.45 $ 5.41 $ 6.46 $ 5.41
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income 0.07 0.08 0.09 0.10 0.09 0.05 0.07 0.07 -- 0.01 -- 0.01
Net realized and
unrealized gain (loss)
on investments 0.24 2.07 1.16 1.68 (0.13) 0.23 2.07 1.01 0.24 1.53 0.21 1.54
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 0.31 2.15 1.25 1.78 (0.04) 0.28 2.14 1.08 0.24 1.54 0.21 1.55
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions to
investors:
Dividends from net
investment income (0.07) (0.08) (0.09) (0.10) (0.09) (0.05) (0.06) (0.07) -- (0.02) -- (0.02)
Distributions from
capital gains (0.43) (0.48) (0.88) (0.65) (0.15) (0.43) (0.48) (0.88) (0.43) (0.48) (0.43) (0.48)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.50) (0.56) (0.97) (0.75) (0.24) (0.48) (0.54) (0.95) (0.43) (0.50) (0.43) (0.50)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $ 6.26 $ 6.45 $ 4.86 $ 4.58 $ 3.55 $ 6.26 $ 6.46 $ 4.86 $ 6.26 $ 6.45 $ 6.24 $ 6.46
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return(3): 5.1% 44.8% 27.4% 49.9% (1.5%) 4.7% 44.6% 22.8% 4.1% 28.9% 3.6% 29.1%
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
RATIOS AND SUPPLEMENTAL DATA:
<CAPTION>
Class A-I Class A-II Class B Class C
-------------------------------------------- ------------------------ --------------- -------------
Years Ended December 31 1998 1997 1996 1995 1994 1998 1997 1996(2) 1998 1997(1) 1998 1997(1)
------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of
period (in millions) $ 1,015 $ 1,049 $ 769 $ 614 $ 410 $ 117 $ 85 $ 18 $ 39 $ 16 $ 4 $ 1
======= ======= ====== ====== ====== ====== ====== ====== ====== ====== ===== =====
Ratios to average
net assets:
Expenses(4) 1.25% 1.25% 1.20% 1.03% 0.94% 1.50% 1.50% 1.48% 2.25% 2.22% 2.25% 2.25%
======= ======= ====== ====== ====== ====== ====== ====== ====== ====== ===== =====
Net investment income 1.04% 1.38% 1.82% 2.25% 2.27% 0.79% 1.11% 1.77% 0.00% 0.30% 0.00% 0.30%
======= ======= ====== ====== ====== ====== ====== ====== ====== ====== ===== =====
Portfolio turnover rate 31.0% 63.0% 140.2% 93.5% 25.2% 31.0% 63.0% 140.2% 31.0% 63.0% 31.0% 63.0%
======= ======= ====== ====== ====== ====== ====== ====== ====== ====== ===== =====
<FN>
- ---------------------
(1) For the period May 1, 1997, (commencement of operations) to December 31,
1997.
(2) For the period May 1, 1996, (commencement of operations) to December 31,
1996.
(3) Sales loads are not reflected in total return.
(4) Subsequent to April 1, 1996, the Fund is responsible for all of the Fund's
operating expenses, without limitation and in exchange, is paid a fee equal to
1.25% of the Fund's average daily net assets, per annum, without further
compensation or reimbursement for any cost or expense attributable to the
operation of the Fund. Prior to April 1, 1996, the Management Company received
an investment advisory fee of 0.60% per annum of the Fund's net assets plus
reimbursement of certain expenses attributable to the operation of the Fund.
</FN>
</TABLE>
Financial Highlights - Pg 23
<PAGE>
For More Information
- --------------------------------------------------------------------------------
Two free documents are available that offer further information about SIFE Trust
Fund:
1) The Annual and Semi-Annual Report to Shareholders
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 all aspects of 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,
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-I Shares,
Class A-II Shares,
Class B Shares and
Class C Shares
of
SIFE Trust Fund
===================================
5
<PAGE>
SIFE TRUST FUND
STATEMENT OF ADDITIONAL INFORMATION
April 30, 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 Trust Fund (the "Fund") is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Fund's
Prospectus, dated April 30, 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. Financial information from SIFE Trust Fund's
Annual Report has been incorporated into this SAI. A free copy of the Annual
Report is available by calling 1-800-231-0356.
TABLE OF CONTENTS
Page
----
General Information & History B-2
Investment Objectives, Policies & Practices B-2
Fundamental Investment Policies B-2
Investment Practices B-3
American Depositary Receipts B-3
Repurchase Agreements B-3
Options Policies B-4
Risk Considerations B-6
Management of the Fund B-7
Compensation of Trustees and Officers B-7
Control Persons and Principal Holders of Securities B-9
Investment Advisory & Other Services B-9
Investment Advisory Services B-9
Management and Administration B-10
Custody Services B-10
Independent Accountants B-10
Brokerage Allocation & Portfolio Turnover Rates B-11
Capital Stock and Other Securities B-11
Calculation of Net Asset Value B-12
Federal Income Tax Information B-12
Underwriting of the Fund's Securities B-14
Underwriting Services B-14
Distribution Plans B-15
Performance Information B-16
Financial Statements B-18
Service Providers B-18
B-1
<PAGE>
GENERAL INFORMATION & HISTORY
SIFE Trust Fund 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 Fund,
through its predecessor, the California Trust, has offered its securities to the
public on a continuous basis, and conducting operations as a mutual fund, since
July 2, 1962. 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") 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 less than 30% of its assets in the
equity securities of "financial institutions" (companies which
derive a significant portion of their income from dealing in
financial services, credit, loans and insurance) and the
remainder in the equity securities (including securities
convertible into common or preferred stocks) of a diverse
portfolio of domestic and certain international service and
industrial enterprises generally regarded by the Management
Company as "stable growth" companies. See "American Depository
Receipts," below.
2. 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. With respect to 80% of the Fund's investment
portfolio, in order for the shares of a company to be eligible
for investment, the company must have been in existence for at
least five years, must have assets of more than $7,000,000 and
must have paid dividends in each of the five years immediately
preceding investment.
3. The Fund may not: (i) borrow money or make loans (provided,
however, that this restriction shall not prevent the Fund from
purchasing certain publicly issued debt securities or
commercial paper or lending its portfolio securities in
accordance with applicable regulatory requirements); (ii)
underwrite the securities of other issuers; (iii) purchase or
sell real estate; (iv) purchase or sell commodities or
commodity contracts; (v) invest in the securities of other
investment companies; (vi) invest in companies for the purpose
of exercising control or management; (vii) issue senior
securities; or (viii) make short sales or purchases on margin.
B-2
<PAGE>
Investment Practices
The following investment practices are described in the prospectus and
include writing covered put and covered call options, lending portfolio
securities and entering 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 maintains cash reserves in order to make such
payments as may be required of it. Pending application or
investment, the Fund's cash reserves are invested in
repurchase agreements and other cash equivalents, such as
securities issued by the United States and state governments
or their agencies, certificates of deposit or other
interest-bearing accounts and high-grade commercial paper. See
"Repurchase Agreements" and "Lending Portfolio Securities,"
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. 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.
American Depositary Receipts
American Depositary Receipts ("ADRs") are created when a foreign
company deposits its securities into a trust account administered by a domestic
financial institution (generally, a large, commercial bank). The trust account
may be located in the United States or at a foreign branch of the receiving
financial institution. The receiving financial institution then issues ADRs,
which represent an undivided fractional interest in the pool of securities so
deposited.
The Management Company believes that certain large, international
non-domestic corporations may represent attractive investment opportunities, as
well as providing a certain degree of economic and geographic diversification.
Historically, the Fund has invested less than 1.0% of its assets in ADRs.
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 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
B-3
<PAGE>
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.
Options Policies
The Fund may write (i.e., sell) "covered" put and call options for
non-speculative purposes. These options are used for purposes of enhancing Fund
returns but are not a principle investment strategy of the Fund. 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, which are generally bought or sold for speculative purposes.
The Fund uses options sales to hedge specific portfolio positions and does not
purchase (or write) "naked" options.
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 of
the underlying security rises above the strike price, the option will expire
unexercised and the
B-4
<PAGE>
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.
The Fund may write call or put options only if the underlying
securities are listed on a national securities exchange or the NASDAQ National
Market System and the options are issued by The Options Clearing Corporation. As
of the date of this SAI, such options are traded on the following exchanges:
Chicago Board Options Exchange, Incorporated, American Stock Exchange, Inc., New
York Stock Exchange, Inc., Philadelphia Stock Exchange, Inc., and The Pacific
Stock Exchange, Inc.
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
B-5
<PAGE>
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.
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
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 common 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.
B-6
<PAGE>
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 April 7,
1999, 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 $35,000 N/A N/A $35,000
Walter S. Newman,
Trustee $35,000 N/A N/A $35,000
Neil L. Diver,
Trustee $35,000 N/A N/A $35,000
John A. Meany,
Trustee $35,000 N/A N/A $35,000
Diane H. Belding,
Trustee* $30,000 N/A N/A $30,000
Charles W. Froehlich, Jr.,
Trustee* $30,000 N/A N/A $30,000
Bruce W. Woods,
Trustee* $30,000 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 1998. In
addition to the compensation stated above, Trustees Mardikian, Newman, Diver,
Meany, Belding, Froehlich and Woods also received additional compensation in the
amount of $15,150, $10,900, $24,700, $13,400, $1,500, $1,500 and $1,500,
respectively, for attending special board meetings and/or for performing
additional Trustee duties.
</FN>
</TABLE>
B-7
<PAGE>
<TABLE>
<CAPTION>
Name, Address, Age and Position Held Principal Occupation During Past Five Years
- ------------------------------------ -------------------------------------------
<S> <C>
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-8
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of April 7, 1999, officers and directors of the Fund in aggregate do
not own more than 1% of the outstanding shares of the Fund. As of the same date,
to the knowledge of the Fund, no shareholder owned of record 5% or more of the
outstanding Class A-I shares of the Fund and the following shareholders owned of
record 5% or more of the outstanding Class A-II, Class B, and Class C shares as
indicated:
CLASS A-II SHARES SHARES PERCENT
- ----------------- ------ -------
Koch Industries Incorporated 1,541,205 7.09%
c/o Wilshire Asset Management
1299 Ocean Avenue, Suite 700
Santa Monica, CA 90401-1036
CLASS B SHARES SHARES PERCENT
- -------------- ------ -------
MLPF&S Inc. 463,240 7.38%
For the Sole Benefit of its Customers
Attn: Service Team
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
CLASS C SHARES SHARES PERCENT
- -------------- ------ -------
MLPF&S Inc. 88,272 14.49%
For the Sole Benefit of its Customers
Attn: Service Team
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
Evangeline C. Winkler Trust 69,987 11.49%
3234 Rossmoor Pkway Apt 1
Walnut Creek, CA 94595
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 April 30, 1997 and amended December 16, 1998 (the
"Investment 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.
B-9
<PAGE>
The Advisory Agreement is for an initial term of one year 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. During the past three years the Management Company
was paid investment advisory fees of, $7,607,105 (1996), $11,960,037 (1997), and
$14,504,536 (1998) respectively.
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
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
Deloitte & Touche LLP, 50 Fremont Street, San Francisco, California
94105, provided auditing services as the Fund's independent certified public
accountants for the 1998 fiscal year.
B-10
<PAGE>
BROKERAGE ALLOCATION & PORTFOLIO TURNOVER RATES
In all purchases and sales of securities for the Funds, 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.
During the 1998 calendar year, the Fund paid brokerage commissions of
$601,341 and total purchases and sales of portfolio securities aggregated
$780,635,406. Portfolio turnover rates for the years 1996, 1997 and 1998 were
140.2%, 63.0%, and 31%, respectively. The portfolio turnover rate in 1996 was
relatively high, due to the extremely active market for financial institutions
stocks specifically and equities in general.
During the last three fiscal years, the Fund has not paid any brokerage
commissions to any broker which is an affiliated person of the Fund or the
Management Company. Listed below is certain information regarding the Fund's
payment of brokerage commissions in portfolio transactions during the last three
years:
Total Securities
Number of Total Amount of Purchased and
Year Brokers Brokerage Paid Sold
---- ------- -------------- -------------
1996 57 $ 1,598,407 $ 1,900,773,494
1997 30 $ 966,121 $ 1,242,328,896
1998 32 $ 601,341 $ 780,635,406
CAPITAL STOCK AND OTHER SECURITIES
SIFE Trust Fund is a Delaware business trust. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, with no par value. The Fund
currently comprises of one single series of shares. The series is further
divided into the following four separate classes of shares: Class A-I, Class
A-II, Class B, Class C. 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.
B-11
<PAGE>
CALCULATION OF NET ASSET VALUE
All funds received by the Fund for investment and all funds reinvested
from net investment income and realized capital gains, if any, are accounted for
in terms of shares, with the per-share value determined daily by dividing (i)
the difference between (a) the total value of the net assets attributable to
each class of the Fund's shares on that day and (b) all charges, such as
distribution fees, shareholder servicing fees and management fees (each of which
is calculated and charged daily), for that class as well as any other
appropriate costs or expenses, by (ii) the total number of shares of that class
then outstanding.
Equity securities held by the Fund are valued at the last sale price on
the exchange or in the over-the-counter market in which such securities are
primarily traded as of the close of business on the day the securities are being
valued. Securities for which a closing sale price is not readily available are
valued at the closing bid price. Short-term debt securities (held for liquidity
purposes) are amortized to maturity based on their cost, and marked-to-market
daily. Option positions are marked-to-market based on their nominal, as quoted
value. See "Calculation of Net Asset Value" in the Prospectus for additional
information concerning the timing and manner of valuation of each class of
shares.
FEDERAL INCOME TAX INFORMATION
The Fund has qualified and elected, and intends to continue 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 Investors 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 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
B-12
<PAGE>
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.
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).
B-13
<PAGE>
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 Investors, 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 one year, 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.
The Underwriting Agreement was last approved by the Board of Trustees, including
a majority of the Trustees who are not "interested persons," as that term is
defined in the 1940 Act, at a meeting on March 4, 1999.
<TABLE>
During the past three years the Management Company has earned sales
commissions for its services as principal underwriter as set forth below.
<CAPTION>
Total Sales Paid to Independent Paid to its Own Net Commissions to the
Year Commissions Agents Salespersons Management Company
---- ----------- ------ ------------ ------------------
<S> <C> <C> <C> <C>
1996 $2,178,040 $538,437 $1,628,368 $11,235
1997 $2,405,671 $969,688 $2,098,423 $(662,440)
1998 $820,213 $1,063,223 $294,000 $(537,010)
</TABLE>
B-14
<PAGE>
The directors of the Management Company, the business addresses for all
of whom c/o SIFE, 100 North Wiget Lane, Walnut Creek, California 94598 are:
Diane H. Belding; Charles W. Froehlich, Jr.; Sam A. Marchese; Michael J. Stead;
Sharon E. Tudisco; Bruce W. Woods; and John W. Woods. The directors have the
following positions with the Management Company: Mr. Bruce W. Woods is Chief
Executive Officer and President; Mr. Stead is Portfolio Manager; and Mr.
Froehlich is Secretary; Mrs. Tudisco and Mr. John W. Woods are retired. Ms.
Belding, Mr. Froehlich and Mr. Bruce W. Woods are also officers and/or Trustees
of the Fund; their other business affiliations are set forth above in "Trustees
and Officers." As of February 18, 1999, Mr. John W. Woods owned 10.98% of the
outstanding shares of the Management Company, Mr. Marchese owned 21.11%, Mrs.
Tudisco owned 10.55%, Mrs. Belding owned 21.11%, Mr. Froehlich owned 14.89%, Mr.
Bruce W. Woods owned 8.26%, the J. Bradley Woods Irrevocable Trust owned 4.05%,
the William B. Woods Irrevocable Trust owned 4.05%, and Mr. Stead owned 5.00% of
the outstanding shares of the Management Company.
<TABLE>
The following table sets forth all commissions and other compensation
received during the Fund's last fiscal year by the Management Company, as
principal underwriter for the Fund's securities.
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
SIFE $104,072 $101,857 -0- -0-
</TABLE>
Distribution Plans
As described in the Prospectus, the Fund has adopted a separate Plan of
Distribution pursuant to Section 12(b) of the 1940 Act and Rule 12b-1 thereunder
(individually, a "Plan") for each of the Class A-II, Class B and Class C shares.
The terms and conditions of each such Plan provide that each such Class is
authorized to spend certain sums (0.25% of average daily net assets in the case
of the Class A-II shares and 0.75% of average daily net assets, in the case each
of the Class B and Class C shares) on activities primarily intended to support
the distribution and sale of such shares. The Class B Plan and Class C Plan also
provide that each such Class is authorized to spend an additional 0.25% of
average daily net assets for services relating to the servicing of shareholders'
accounts.
Under each Plan, the distribution (and, in the case of the Class B and
Class C shares, also the servicing) fees are designed to compensate the
Management Company for expenses incurred, services rendered and facilities
provided in connection with the distribution of shares and in the case of the
Class B and Class C plans the servicing of shareholder accounts. Such expenses
and services include, but are not necessarily limited to, the payment of
commissions and other payments to broker/dealers, financial institutions and
others who sell shares and/or service shareholder accounts. It should be noted
that the distribution and servicing fees are payable to the Management Company
even if the amount paid exceeds the Management Company's actual expenses of
providing such services.
As required by Rule 12b-1, each Plan has been approved by the Board of
Trustees, and separately by a majority of the Trustees who are not "interested
persons" of the Fund and who have no direct or indirect financial interest in
the operation of the Plan, in each case pursuant to a finding that the Plan was
in the best interests of the shareholders of the respective class of shares.
B-15
<PAGE>
The officers and Trustees who are "interested persons" of the Fund may
be considered to have a direct or indirect financial interest in the operation
of the Plans due to present or past affiliations with the Management Company.
Potential benefits of each Plan to the Fund include improved investor services
and benefits to the investment process from growth or stability of assets.
Payments under each Plan are reviewed at least quarterly and each Plan must be
renewed annually by the Board of Trustees.
Each Plan requires that, at least quarterly, the Audit Committee of the
Board of Trustees must review a written report prepared by the Treasurer of the
Fund enumerating the amounts spent by each class pursuant to its Plan and the
purposes therefor. Each Plan further requires that, for so long as each such
Plan is in effect, the nomination and selection of those Trustees who are not
"interested persons" of the Fund is committed to the exclusive discretion of the
other Trustees who are not "interested persons" of the Fund.
For the fiscal year ended December 31, 1998 the Fund paid out
distribution fees of $253,933 for Class A-II, and distribution and services fees
of $303,129 for Class B and $25,743 for Class C shares.
PERFORMANCE INFORMATION(1)
To help investors better evaluate how an investment in the Fund might
satisfy their investment objectives, advertisements and other materials
regarding the Fund may discuss various financial publications. Materials may
also compare performance to performance as reported by other investments,
indices, and averages.
Annual, non-compounded performance information relating to a
hypothetical investment of $10,000 (adjusted for maximum sales charges) in Class
A-I shares for the ten-year period ended December 31, 1998, is set forth below.
Such information assumes that all net investment income and realized capital
gains were reinvested (at no sales charge). No adjustment has been made for
possible tax liabilities. Also shown is comparable performance information for
the unmanaged Standard & Poor's 500 Stock Index (assuming the reinvestment of
all dividends), a widely used indicator of general stock market activity
(source: Standard & Poor's Corporation). The performance of the Fund may also be
compared in publications to 1) the performance of relevant indices for which
reliable performance data is available, and 2) averages, performance rankings,
or other information prepared by recognized mutual fund statistical services.
For the year ended December 31, 1998, a $9,500 net investment in Class
A-I and Class A-II shares of the Fund (calculated based on a $10,000 investment
less the current maximum 5.0% sales charge, assuming re-investment of all
distributions for the entire period of January 1, 1998 through December 31,
1998) would have decreased to $9,988 and $9,949 respectively. For the same year
end date, For the five-year and ten year periods ended on the same date, and
using the same assumptions, a $9,500 net investment in Class A-I shares of the
Fund would have increased to $27,194 and $62,552, respectively. Since Class A-II
shares were first offered May 1, 1996, performance history for Class A-II shares
is not applicable for three, five, and ten year periods.
- ---------------------
(1) Information given for Class A-I and Class A-II shares only. Class A-II
shares are identical in all respects to Class A-I shares except that Class A-II
shares bear a 0.25% 12b-1 distribution fee. Class B and C shares were first
offered for sale on May 1, 1997. Class B and C share sales fees differ from the
Class A-I shares and bear a 0.75% 12b-1 distribution fee and a 0.25% servicing
fee.
B-16
<PAGE>
<TABLE>
Class A-I Shares
<CAPTION>
Average Average
Annual Total Annual Total
Results of Return Return
$10,000 Including Including
Invested with Maximum Minimum Total Return: Total Return:
Investment 5.0% Sales Sales Charge Sales Charge SIFE Trust S&P 500
Term Charge of 5.0% of 0.0% Fund Stock Index
---- ------ ------- ------- ---- -----------
<S> <C> <C> <C> <C> <C>
1 year $ 9,988 -0.12% 5.14% 5.14% 28.58%
3 years $18,419 22.58% 24.69% 93.89% 110.85%
5 years $27,194 22.15% 23.41% 186.25% 193.91%
10 years $54,888 18.56% 19.17% 477.77% 479.63%
Class A-II Shares
Average Average
Annual Total Annual Total
Results of Return Return
$10,000 Including Including
Invested with Maximum Minimum Total Return: Total Return:
Investment 5.0% Sales Sales Charge Sales Charge SIFE Trust S&P 500
Term Charge of 5.0% of 0.0% Fund Stock Index
---- ------ ------- ------- ---- -----------
1 year $ 9,949 -0.51% 4.73% 4.73% 28.58%
</TABLE>
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 data quoted represents past performance. Past performance is no
guarantee of future performance. Effective April 1, 1995, the Fund reduced the
maximum sales charge on Class A-I shares from 6.25% to 5.0% and the minimum
sales charge was reduced from 1.0% (on purchases of $2,000,000 or more) to zero
(on purchases of $1,000,000 or more). The Fund's performance is affected by many
factors including: changes in the levels of equity prices and interest rates
B-17
<PAGE>
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
Audited Financial Statements, including the specimen price-make-up
sheet (following the Statement of Assets and Liabilities), showing how the Fund
calculates its total offering price per unit, for the relevant periods ending
December 31, 1998, for SIFE Trust Fund, as contained in the Annual Report to
shareholders of the Fund for the fiscal year ended December 31, 1998, are
incorporated herein by reference to the report.
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
Deloitte & Touche LLP
50 Fremont Street
San Francisco, CA 94105
----------------
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER LLP
345 California Street, 29th Floor
San Francisco, CA 94104
B-18
<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
(j) Consent of Independent Accountants
(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 certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933,
and 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 29th day of April, 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>
/s/Bruce W. Woods* Trustee; President & Chief Executive Officer April 29, 1999
- ------------------
(Bruce W. Woods)
Gary Isaacson* Treasurer April 29, 1999
- --------------
(Gary Isaacson)
Haig G. Mardikian* Trustee; Chairman of the Board April 29, 1999
- ------------------
(Haig G. Mardikian)
Walter S. Newman* Trustee; Vice-Chairman of the Board April 29, 1999
- -----------------
(Walter S. Newman)
Charles W. Froehlich, Jr.* Trustee; Secretary April 29, 1999
- --------------------------
(Charles W. Froehlich, Jr.)
Neil L. Diver* Trustee April 29, 1999
- --------------
(Neil L. Diver)
Diane Howard Belding* Trustee April 29, 1999
- ---------------------
(Diane Howard Belding)
John A. Meany* Trustee April 29, 1999
- --------------
(John A. Meany)
</TABLE>
*By: /s/Bruce W. Woods Dated: April 29, 1999
--------------------------------------- ---------------------
Bruce W. Woods, Attorney-in-Fact
10
===================================
Item 23(i)
Legal Opinion
===================================
11
<PAGE>
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, CA 94104
Telephone (415) 835-1600
Facsimile (415) 217-5333
Internet: www.phjw.com
April 27, 1999
SIFE Trust Fund
100 North Wiget Lane
Walnut Creek, CA 94598
Re: SIFE Trust Fund
Ladies and Gentlemen:
We have acted as counsel to SIFE Trust Fund, a Delaware business trust
(the "Trust"), in connection with the Trust's Post-Effective Amendment No. 44
and Post-Effective Amendment No. 45 to its Registration Statement on Form N-1A
filed on March 1, 1999, and April 30, 1999, respectively, with the Securities
and Exchange Commission (the "Post-Effective Amendments"), and relating to the
issuance by the Trust of an indefinite number of no-par value shares of
beneficial interest (the "Shares").
In connection with this opinion, we have assumed the authenticity of
all records, documents and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural persons, and
the conformity to the originals of all records, documents, and instruments
submitted to us as copies. We have based our opinion on the following:
(a) The Trust's Agreement and Declaration of Trust dated February
28, 1997 (the "Declaration of Trust"); and the Trust's
Certificate of Trust dated February 28, 1997 (as filed with
the Delaware Secretary of State on February 28, 1997), as
certified to us by an officer of the Trust as being true and
complete and in effect on the date hereof;
(b) The Bylaws of the Trust dated April 4, 1997, certified to us
by an officer of the Trust as being true and complete and in
effect on the date hereof;
1
<PAGE>
(c) The Post-Effective Amendments;
(d) A certificate of an officer of the Trust as to certain factual
matters relevant to this opinion; and
(e) The validity of the following prior legal opinions issued to
the Trust by Robert Linderman, General Counsel to the Trust:
legal opinion dated May 14, 1997 (filed as an exhibit to
Post-Effective Amendment No. 42 to the Registration Statement
on Form N-1A); legal opinion dated April 24, 1997 (filed as an
exhibit to Post-Effective Amendment No. 41 to the Registration
Statement on Form N-1A); and legal opinion dated April 19,
1996 (filed as an exhibit to Post-Effective Amendment No. 39
to the Registration Statement on Form N-1A); which prior
opinions opine that all shares issued by the Trust in
connection with such Post-Effective Amendments were legally
issued, fully paid and nonassessable.
Our opinion below is limited to the federal law of the United States of
America and the business trust law of the State of Delaware. We are not licensed
to practice law in the State of Delaware, and we have based our opinion below
solely on our review of Chapter 38 of Title 12 of the Delaware Code and the case
law interpreting that Chapter as reported in Delaware Laws Annotated (Aspen Law
& Business, supp. 1998) as updated on Lexis through April 29, 1999. We have not
undertaken a review of other Delaware law or of any administrative or court
decisions in connection with rendering this opinion. We disclaim any opinion as
to any law other than that of the United States of America and the business
trust law of the State of Delaware as described above, and we disclaim any
opinion as to any statute, rule, regulation, ordinance, order or other
promulgation of any regional or local governmental authority.
Based on the foregoing and our examination of such questions of law as
we have deemed necessary and appropriate for the purpose of this opinion, and
assuming that (i) all Shares will be issued and sold for cash at the per-share
public offering price on the date of their issuance in accordance with
statements in the Trust's Prospectus included in the Post-Effective Amendments,
and in accordance with the Declaration of Trust, (ii) all consideration for the
Shares will be actually received by the Trust, and (iii) all applicable
securities laws will be complied with, it is our opinion that, when issued and
sold by the Trust, the Shares will be legally issued, fully paid and
nonassessable.
This opinion is rendered to you in connection with the Post-Effective
Amendments and is solely for your benefit. This opinion may not be relied upon
by you for any other purpose or relied upon by any other person, firm,
corporation or other entity for any purpose, without our prior written consent.
We disclaim any obligation to advise
2
<PAGE>
you of any developments in areas covered by this opinion that occur after the
date of this opinion.
We hereby consent to (i) the reference to our firm as Legal Counsel in
the Prospectus and Statement of Additional Information included in the
Post-Effective Amendments, and (ii) the filing of this opinion as an exhibit to
Post-Effective Amendment No. 45.
Sincerely yours,
/s/ Paul, Hastings, Janofsky & Walker LLP
3
===================================
Item 23(j)
Consent of Accountants
===================================
12
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to (a) the incorporation by reference in this Post-Effective
Amendment No. 45 to Registration Statement No. 2-17277 of SIFE Trust Fund on
Form N-1A of our report dated January 29, 1999, incorporated by reference in the
Statement of Additional Information which is part of this Registration
Statement, and (b) the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
/s/ Deloitte & Touche LLP
San Francisco, California
April 26, 1999
