GRAPHIC OMITTED
SIFE
TWO THOUSAND
SEMI-ANNUAL
2000
REPORT
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
Letter to Investors
August 1, 2000
photo of John P. King omitted
John P. King
President &
Chief Executive Officer
of SIFE*
Dear Fellow SIFE Trust Fund Investors:
While the stock market during the past two years has challenged our collective
patience, I sincerely believe that you're about to see your faith restored in
the financial services sector. Here's why:
Earnings per share (EPS) growth, is re-emerging as a dominant market theme. The
media-hyped "new economy" story is waning. The fact is many "new economy"
companies have yet to show any positive earnings at all, let alone EPS growth.
In April's investor newsletter, I echoed many professionals who were predicting
an imminent high tech shakeout. In May, the shakeout began; volatility in the
"new economy stocks stormed to unprecedented levels, and investors began seeking
the calmer harbors of so-called "old economy" stocks.
At the same time, investment professionals in the trade and consumer media began
using words like "undervalued" and "attractive" in describing the financial
services sector. "Earnings" and "sustainable growth" also re-entered their
vocabularies. Investment focus began shifting from "new" to "old" economy
companies. Standing tall among these old economy companies are the financial
service firms, many of which are currently trading at modest P/E's of 10-14
times earnings.
As a result, we have begun to see net flows for financial services funds improve
as investors have sought the safety of well-established companies. Also it
appears that we are at or near a peak of higher interest rates, which in the
past has often signaled a subsequent financial sector rally.
Meanwhile at SIFE, we haven't sat idly by but have been pro-active. New
operational efficiencies allow us to meet the most demanding expectations of our
investors and ourselves (as you know, SIFE's management are investors in the
Fund). New interactive additions to SIFE's web site are underway and new
portfolio analyses and modeling software is providing improved performance
capabilities under various economic scenarios. We are also hard at work
implementing some exciting future plans.
Lastly and more important, we are confident that the financial services and
other companies that we hold are among the strongest, most competitive, and most
forward-looking in their groups.
With your continued support, we will maintain our focus of investing for the
long-term in well-managed, solid companies, remembering that we are all invested
in SIFE together.
Sincerely,
/s/ John P. King
John P. King
President & Chief Executive Officer of SIFE*
*SIFE is the management company for SIFE Trust Fund.
1 See Notes To Financial Statements
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SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
Chief Investment Officer's Discussion of Fund Performance
August 1, 2000
photo of Mike Stead Omitted
Mike Stead
Portfolio Manager
and Chief Investment
Officer of SIFE*
Over the past several months the portfolio team has been steadily increasing the
Fund's allocation in brokerage firms, processing banks, and other financial
institutions that derive proportionately higher earnings from fee income, We
have also continued to focus on those companies that provide customers with
diversified, broad-based financial services including insurance, asset
management, brokerage, cash management, foreign exchange, and credit products.
Our primary strategic reasons for owning these financial institutions are:
o They are expected to signficantly outperform the overall financial
services sector because they are relatively immune to potential credit
problems.
o They are expected to grow earnings per share (EPS) as a result of the
efficiencies of achieving a greater per-customer market share, as they are
able to cross-sell multiple financial service products through a
multi-channel approach.
o They are expected to acquire financial institutions with desirable branch
networks thereby increasing their customer base in profitable, fast-growing
geographic areas that will accelerate cross-selling opportunities.
Looking back at the first half of 2000, stocks of bank and thrifts suffered from
the effects of six successive interest rate hikes by the Federal Reserve. While
returns for the period ending June 30, 2000, were slightly negative, they
weren't as negative as the quarter's closing share prices would suggest.
Last-minute re-allocations in the major stock indices caused a substantial
sell-off in financial stocks at the quarter's end that were quickly reversed the
following business day, which allowed SIFE Trust Fund to begin the first day of
the third quarter with a positive year-to-date performance.
Although the volatility, caused in part by the current economic environment, is
still hampering the Fund's current performance, we appear to be near the end of
the higher interest rate cycle. We believe the Fed can achieve a 3% economic
growth rate without having to raise interest rates any further (or with only one
more increase). If so, we believe the one-year to two-year outlook for financial
services companies is quite positive. We expect investors to again focus on
revenue and earnings per share growth as the main drivers of value, rather than
focusing on higher interest rates.
Ironically some investors still believe that interest rate levels are the
over-riding factor in deciding whether to buy bank stocks. However, fee income,
as a percentage of average bank revenues, has consistently grown faster than
interest spread income since 1978 and grew to 43.3% of revenues in 1999. Looking
forward, fee income growth is expected to be a main driver of banks' revenue
growth, with trust services being one of the strongest business lines. Large-cap
banks are experiencing the greatest growth in fee income (45.3% of operating
revenue, versus 33% for mid-cap banks).
We believe that the better banks will be able to continue to generate
double-digit EPS growth, despite a more competitive environment. Normally a 10%
EPS growth requires at least 7% revenue growth over time. However, while most
banks grew revenues at a rate under 7% from 1990 to 1998, they were able to
sustain 10% + EPS growth through declining credit costs, easier productivity
gains, greater leverage through share buybacks, and a tamer competitive
environment. We select companies that focus on those business models and product
lines with the best productivity and cost efficiencies and therefore we believe
are the most likely to achieve double-digit EPS growth.
In summary, in view of the current economic environment, revenues, and EPS
growth rates, I believe the companies we have chosen in the financial services
industry represent a favorable investment return potential. We remain committed
to our proven investment principles of investing for the long-term in
well-managed, solid financial services institutions.
The information above may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, and readers are
urged to refer to the Cautionary Statement contained in the company's filing
with the Securities and Exchange Commission.
See Notes To Financial Statements 2
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
Assets:
Investments in securities, at market (cost $498,764,644) $676,200,327
Repurchase agreements ................................... 10,303,000
Cash .................................................... 2,643,272
Receivables for:
Dividends ............................................. 1,482,083
Investment securities sold ............................ 705,051
Fund shares sold ...................................... 77,639
Interest .............................................. 1,574
------------
Total assets ..................................... 691,412,946
------------
Liabilities:
Payables for:
Investment securities purchased ....................... 8,998,462
SIFE (the "Management Company") ....................... 793,522
Fund shares repurchased ............................... 517,809
------------
Total liabilities ................................ 10,309,793
------------
Net assets ............................................ $681,103,153
============
Class A-I:
Net asset value per share
($546,266,794l/13,678,484 shares outstanding) ......... $ 4.81
============
Maximum offering price per share (100/95 of $4.81) ...... $ 5.06
============
Class A-II:
Net asset value per share
($109,770,778/22,790,076 shares outstanding) ........... $ 4.82
============
Maximum offering price per share (100/95 of $4.82) ...... $ 5.07
============
Class B:
Net asset value and offering price per share
($23,206,657/4,834,139 shares outstanding) ............. $ 4.80
============
Class C:
Net asset value per share
($l,858,924/387,896 shares outstanding) ................ $ 4.79
============
Maximum offering price per share (100/99 of $4.79) ...... $ 4.84
============
3 See Notes To Financial Statements
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
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Investment Portfolio
--------------------------------------------------------------------------------
June 30, 2000 (unaudited) Number of Shares Market Value
--------------------------------------------------------------------------------
Common Stocks: 99.3%
Financial Institutions: 82.7%
AmSouth Bancorporation ................... 488,950 $ 7,700,963
Bank of New York Company, Inc. ........... 447,400 20,804,100
BancWest Corporation ..................... 151,000 2,482,063
BB&T Corporation ......................... 350,096 8,358,542
Charter One Financial, Inc. .............. 766,070 17,619,610
Chase Manhattan Corp. .................... 825,000 38,001,563
Chittenden Corporation ................... 107,700 2,631,919
Citigroup Inc. ........................... 430,000 25,907,500
City National Corporation ................ 360,000 12,510,000
Comerica Incorporated .................... 616,550 27,667,681
Community First Bankshares, Inc. ......... 338,024 5,514,016
Compass Bancshares, Inc. ................. 452,400 7,719,075
Cullen/Frost Bankers, Inc. ............... 383,300 10,085,581
Federal Home Loan Mortgage Co. ........... 133,300 5,398,650
Federal National Mortgage Asscociation ... 300,000 15,656,250
Fifth Third Bancorp ...................... 165,500 10,467,875
First Tennessee National Corporation ..... 684,604 11,338,754
Firstar Corporation ...................... 1,061,100 22,349,419
FleetBoston Financial Corp. .............. 1,273,760 43,307,840
Imperial Bancorp* ........................ 239,000 3,719,437
Independent Bank Corp. ................... 541,000 6,120,062
M & T Bank Corp. ......................... 39,100 17,595,000
MBNA Corporation ......................... 97,500 2,644,687
Mellon Financial Corporation ............. 1,113,800 40,584,088
National City Corporation ................ 700,000 11,943,750
National Commerce Bancorporation ......... 126,000 2,023,875
Northern Trust Corp. ..................... 136,800 8,900,550
North Fork Bancorp Inc. .................. 779,232 11,785,884
Old Kent Financial Corporation ........... 105,000 2,808,750
Pacific Century Financial Corp. .......... 40,000 585,000
PNC Bank Corporation ..................... 330,000 15,468,750
See Notes To Financial Statements 4
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
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Investment Portfolio
--------------------------------------------------------------------------------
June 30, 2000 (unaudited) Number of Shares Market Value
--------------------------------------------------------------------------------
Common Stocks, continued
Financial Institutions, continued
Regions Financial Corp. ................... 97,200 $ 1,931,850
SouthTrust Corporation .................... 135,000 3,054,375
Sovereign Bancorp, Inc. ................... 596,000 4,190,625
State Street Corporation .................. 103,400 10,966,863
Sterling Bancshares, Inc. ................. 400,000 4,325,000
Summit Bancorp ............................ 579,530 14,270,926
Summit Bancshares, Inc. ................... 290,000 5,002,500
SunTrust Banks, Inc. ...................... 410,700 18,763,856
TCF Financial Corporation ................. 181,200 4,654,575
U.S. Bancorp .............................. 550,000 10,587,500
Wachovia Corporation ...................... 374,100 20,294,925
Washington Mutual, Inc. ................... 40,000 1,155,000
Wells Fargo & Company ..................... 830,000 32,162,500
Westamerica Bancorporation ................ 350,000 9,143,750
Zions Bancorporation ...................... 70,300 3,226,111
-----------
563,431,590
Brokerages: 8.4%
A.G. Edwards, Inc. ........................ 99,600 3,884,400
Alliance Capital Management L.P. .......... 162,400 7,703,850
Donaldson, Lufkin & Jenrette, Inc. ........ 66,400 2,817,850
Legg Mason, Inc. .......................... 99,000 4,950,000
Lehman Brothers Holdings, Inc. ............ 40,000 3,782,500
Merrill Lynch & Co., Inc. ................. 68,600 7,889,000
Morgan Stanley Dean Witter & Co. .......... 62,100 5,169,825
National Discount Brokers Group, Inc. ..... 77,600 2,473,500
Paine Webber Group, Inc. .................. 82,000 3,731,000
Southwest Securities Group, Inc. .......... 59,400 2,212,650
The Bear Stearns Companies Inc. ........... 100,100 4,166,662
The Charles Schwab Corporation ............ 132,000 4,438,500
The Goldman Sachs Group, Inc. ............. 42,800 4,060,650
-----------
57,280,387
Insurance: 1.9%
American International Group, Inc. ........ 100,000 11,750,000
Transatlantic Holdings, Inc. .............. 17,000 1,423,750
-----------
13,173,750
5 See Notes To Financial Statements
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
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Investment Portfolio
--------------------------------------------------------------------------------
June 30, 2000 (unaudited) Number of Shares Market Value
--------------------------------------------------------------------------------
Common Stocks, continued
Miscellaneous: 6.2%
Applied Power Inc. ......................... 103,300 $ 3,460,550
AT & T Corporation ......................... 20,000 632,500
AutoZone Inc.* ............................. 116,000 2,552,000
Clayton Homes, Inc. ........................ 342,000 2,736,000
Donaldson Company, Inc. .................... 26,300 519,425
Helen of Troy Limited* ..................... 85,000 475,469
Honeywell International, Inc. .............. 76,700 2,583,831
Illinois Tool Works Inc. ................... 50,900 2,901,300
Ingersoll-Rand Company ..................... 125,000 5,031,250
Jacobs Engineering Group Inc.* ............. 49,600 1,621,300
Johnson Controls, Inc. ..................... 23,500 1,205,844
Leggett & Platt Inc. ....................... 147,600 2,435,400
Pentair, Inc. .............................. 127,100 4,512,050
Reynolds and Reynolds Company .............. 91,000 1,660,750
Ryan's Family Steak Houses, Inc.* .......... 139,500 1,177,031
Teleflex Incorporated ...................... 116,000 4,147,000
United Technologies Corp. .................. 79,200 4,662,900
-------------
42,314,600
-------------
Total Common Stocks (cost $498,764,644) ......... 676,200,327
-------------
Repurchase agreements: 1.5%
State Street Bank and Trust Company,
5.5%, due 07/03/2000
Collateral: U.S. government obligations,
market value of $10,513,800 ......... 10,303,000
-------------
Total Investments (cost $509,067,644): 100.8% ... 686,503,327
-------------
Other Assets and Liabilities, net: (0.8%) ....... (5,400,174)
-------------
Net Assets: 100.0% .............................. $ 681,103,153
=============
*Non-income producing
See Notes To Financial Statements 6
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
Statement of Operations
--------------------------------------------------------------------------------
For the Six-Month Period Ended June 30, 2000 (unaudited)
--------------------------------------------------------------------------------
Investment income:
Income:
Dividends ........................... $ 10,483,226
Interest ............................ 289,968
Other ............................... 233,225
------------
Total investment income ...... $ 11,006,419
Expenses:
Management fees 4,701,668
Service and distribution expenses
Class A-II ........................ 126,015
Class B ........................... 130,943
Class C ........................... 12,328
------------
Total expenses ............... 4,970,954
-------------
Net investment income ........ 6,035,465
Realized and unrealized gain/(loss) on investments:
Net realized gain ................... 31,324,546
Net decrease in unrealized
appreciation of investments
during the period ................ (101,068,056)
------------
Net loss on investments ...... (69,743,510)
--------------
Net decrease in net assets resulting from
operations ........................... $ (63,708,045)
==============
7 See Notes To Financial Statements
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
--------------------------------------------------------------------------------
For the Six-Month period Ended June 30, 2000 (unaudited) and the Year Ended
December 31, 1999
--------------------------------------------------------------------------------
<CAPTION>
Operations: June 30, 2000 December 31, 1999
<S> <C> <C>
Net investment income ................................... $ 6,035,465 $ 10,797,747
Net realized gain from investment transactions .......... 31,324,546 95,269,313
Net decrease in unrealized appreciation of investments .. (101,068,056) (192,785,631)
------------- -------------
Net decrease in net assets resulting from operations (63,708,045) (86,718,571)
Distributions paid to investors:
From net investment income:
Class A-I ............................................. (4,871,723) (9,902,948)
Class A-II ............................................ (641,146) (859,708)
Class B ............................................... (92,369) (23,388)
Class C ............................................... (8,455) (2,338)
From net realized gain on investments:
Class A-I ............................................. -- (69,722,826)
Class A-II ............................................ -- (7,712,259)
Class B ............................................... -- (2,833,576)
Class C ............................................... -- (287,041)
--------------- ---------------
Total distributions ................................ (5,613,693) (91,344,084)
Capital share transactions:
Increase from capital shares sold and reinvested ........ 157,639,575 619,054,512
Decrease from capital shares repurchased ................ (304,201,192) (718,891,881)
--------------- ---------------
Net decrease from capital share transactions ....... (146,561,617) (99,837,369)
--------------- ---------------
Total decrease in net assets ....................... (215,883,355) (277,900,024)
Net assets:
Beginning of year ....................................... 896,986,508 1,174,886,532
--------------- ---------------
End of year ............................................. $ 681,103,153 $ 896,986,508
=============== ===============
Net assets consist of:
Shares of beneficial interests .......................... $ 457,813,468 $ 604,374,600
Undistributed net investment income ..................... 462,276 40,989
Undistributed net realized gain on sale of
investment securities and option contracts ............. 45,391,726 14,067,180
Unrealized appreciation of investment securities ........ 177,435,683 278,503,739
--------------- ---------------
$ 681,103,153 $ 896,986,508
=============== ===============
<FN>
See Notes To Financial Statements 8
</FN>
</TABLE>
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
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Notes to Financial Statements (unaudited)
Note 1.
Significant Accounting Policies
SIFE Trust Fund (the "Trust Fund") is an open-end diversified management
investment company offering its shares on a continuous basis to the public. The
Trust Fund was organized as a business trust under the laws of the State of
Delaware on February 28, 1997. The Trust Fund is the successor-in-interest to
SIFE Trust Fund, a California trust organized on September 26, 1960 which had
operated as a mutual fund since July 2, 1962. The Trust Fund is registered under
the Investment Company Act of 1940, as amended.
The Trust Fund offers four classes of shares: Class A-I, Class A-II, Class B and
Class C. Class A-I shares are available for purchase only by (i) a Trust Fund
account which was established on or prior to April 30, 1996; (ii) directors,
employees and registered representatives of SIFE (the "Management Company") and
the Trust Fund, and their immediate family members; and (iii) broker/dealers and
certain other institutional purchasers. The offering of Class A-II shares began
May 1, 1996 and the offering of Class B and C shares began May 1, 1997. Realized
and unrealized gains or losses and investment income, net of management fees,
are allocated daily to each class of shares based upon the relative proportion
of net assets of each class. Each class of shares differs in its respective
distribution expenses and certain other class-specific fees and expenses.
The preparation of the financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Trust Fund in the preparation of its financial
statements.
Portfolio valuation:
Portfolio securities which are listed on a national stock exchange are valued at
the closing price on the stock exchange on which they are primarily traded. If
there has been no daily trading in a listed security, that security is valued at
the last available closing price. Securities which are traded over-the-counter
and for which closing prices are readily available (such as NASDAQ) are valued
at the closing price. Other securities which are traded over-the-counter but for
which closing prices are not readily available are valued at the closing bid
price. Short-term obligations having 60 days or less to maturity are valued at
amortized cost, which approximates market value. Temporary investments in
repurchase agreements are valued at cost.
Security transactions and related investment income:
Security transactions are accounted for on the day after trade date (the date
the order to buy or sell is executed). Realized gains or losses on security
transactions are recorded on the specific identified cost basis. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis.
Distributions to investors:
Distributions paid to investors are recorded on the ex-distribution date. Net
investment income is distributed proportionately to each investor's account as
of the last business day in February, May, August and December. Realized gains,
net of losses, from securities held for more than one year are distributed
annually as of the last business day in November. Realized gains, net of losses,
from securities held for less than one year are distributed annually as of the
last business day in December.
Income taxes:
The Trust Fund's policy is to comply with the requirements of the Internal
Revenue Code and regulations thereunder applicable to regulated investment
companies and to distribute all of its taxable income to its investors.
Therefore, no provision for federal income taxes is recorded in the financial
statements.
Covered call and put options:
The Trust Fund may write covered call options on securities held by the Trust
Fund for non-speculative or hedging purposes, may write covered put options on
securities for the same purposes, and may enter into closing purchase
transactions with respect to such options. Options written by the Trust Fund
normally will have expiration dates between three and nine months from the date
written.
All call and put options written by the Trust Fund must be "covered." A call
option will be considered covered if the Trust Fund, so long as it remains
obligated as a writer, owns the securities underlying the options. A put option
will be covered if the Trust Fund, so long as it remains obligated as a writer,
maintains in a segregated account held by State Street Bank and Trust Company
("State Street Bank") as custodian of the Trust Fund, cash, U.S. Treasury Bills
or high-grade short-term debt securities in an amount equal to or greater than
the exercise price of the put option.
The exercise price of an option may be below, equal to or above the current
market value of the underlying security at the time the option is written. When
the Trust Fund writes an option, an amount equal to the premium received by the
Trust Fund is recorded as an asset and equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market value
of the option written. The current market value of a written option is the last
sale price or in the absence of a sale, the last bid price on that day. If a
written option expires on the stipulated expiration date or if the Trust Fund
enters into
9 See Notes To Financial Statements
<PAGE>
SIFE TRUST FUND 2000 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
a closing purchase transaction, the Trust Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, the Trust Fund realizes a gain or a loss from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received. If a written put option is exercised, the cost
basis of the underlying security is reduced by the premium originally received.
Repurchase agreements:
The Trust Fund may invest in repurchase agreements secured by U.S. Government
obligations or by other securities. Securities pledged as collateral for
repurchase agreements are held by the Trust Fund's custodian bank until maturity
of the repurchase agreements. Provisions of the agreements are intended to
ensure that the market value of the collateral is sufficient in the event of
default; however, in the event of default or bankruptcy by the other party to
the agreements, realization and/or retention of the collateral may be subject to
legal proceedings and other uncertainties and expenses.
Note 2.
Affiliated Party Transactions - Agreements with SIFE
(the "Management Company")
The Management Company is the investment advisor, administrator, transfer agent,
and underwriter for the Trust Fund and has acted in such capacities since the
formation of the Trust Fund. State Street Bank serves as custodian, sub-transfer
agent and service provider to existing Trust Fund investors.
Transfer agency agreement and administrative services agreement:
Pursuant to a transfer agency agreement, the Management Company acts as the
Trust Fund's transfer agent, as well as providing fund accounting services.
Effective March 24,1997 the Management Company, in turn, engaged State Street
Bank to provide certain transfer agency functions for the Trust Fund. Effective
April 1, 1996, all expenses related to the operation of the Trust Fund are the
responsibility of the Management Company (see "Investment Advisory Agreement"
below). Under the terms of a prior investment advisory agreement, certain Trust
Fund expenses were paid by the Management Company and reimbursed by the Trust
Fund monthly.
Investment advisory agreement:
The Trust Fund has entered into an investment advisory agreement with the
Management Company. Under the terms of the current investment advisory
agreement, the Management Company provides investment advice, a broad range of
administrative, regulatory and other services for the Trust Fund and the
investors, and receives an all-inclusive management fee of 1.25% of the Trust
Fund's average daily net assets, per annum. During the six-month period ended
June 30, 2000, management fees incurred by the Trust Fund totaled $4,701,668.
Distribution plan and underwriting agreement:
Pursuant to Rule 12b-l under the 1940 Act, the Management Company's Board of
Directors has adopted separate distribution plans with respect to the Trust
Fund's Class A-II, Class B and Class C shares, pursuant to which the Trust Fund
reimburses the Management Company for a portion of its shareholder servicing and
distribution expenses.
Under the Class A-II Plan, the Trust Fund may pay the Management Company a
distribution fee at the annualized rate of up to 0.25% of the average daily net
assets of the Trust Fund's Class A-II shares for expenditures incurred by the
Management Company in providing services as principal underwriter to the Trust
Fund for such shares. Under each of the Class B and Class C Plans, the Trust
Fund may pay the Management Company a distribution fee at the annualized rate of
up to 0.75% of the average daily net assets of the Trust Fund's Class B and
Class C shares for its expenditures incurred in providing services as principal
underwriter for such shares, and may pay the Management Company a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Trust
Fund's Class B and Class C shares, for the Management Company's expenditures
incurred in servicing and maintaining shareholder accounts.
In its capacity as principal underwriter for the Trust Fund, the Management
Company receives commissions of 2.5% to 5.0% on sales of the Trust Fund's Class
A-I and Class A-II shares. No sales charge is assessed on purchases of
$1,000,000 or more, purchases by directors, trustees, employees and registered
representatives of the Management Company and the Trust Fund, and their
immediate family members, as well as broker- dealers and certain other
institutional purchasers.
Class B shares are offered at net asset value per share, without the imposition
of a sales charge, but are subject to a contingent deferred sales charge
("CDSC") of up to 5.0% if redeemed within six years of purchase. Class B shares
automatically convert into Class A-II shares, based on relative net asset
values, on the sixth anniversary of their purchase. The Management Company will
pay to the selling dealer, out of its own resources, a sales commission of 4.0%
of the Class B shares purchased.
Class C shares are subject to an initial sales charge of 1.0%. Any shares
redeemed prior to one year following the initial purchase are subject to a 1.0%
CDSC.
Commissions are deducted from the gross proceeds received from the sale of
investment shares, and as such are not expenses of the
See Notes To Financial Statements 10
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
Trust Fund.
Commissions retained by the Management Company totaled $16,656 for the six-month
period ended June 30, 2000.
Certain officers and directors of the Trust Fund are also officers and directors
of the Management Company. On June 30, 2000, the Management Company owned
469,682 Class A-I shares of the Trust Fund.
Note 3.
Unrealized Appreciation of Investments
On June 30, 2000, the net unrealized appreciation for all securities was as
follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost ........... $ 192,808,035
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value ........... (15,372,352)
-------------
Net unrealized appreciation .................................. $ 177,435,683
=============
The tax cost basis used in the above calculation is the same as that used for
financial statement purposes.
Note 4.
Capital Share Transactions
<TABLE>
The following is a summary of share transactions for the six-month period ended
June 30, 2000 (unaudited) and the year ended December 31, 1999:
<CAPTION>
2000 1999
------------------------------ ------------------------------
Class A-I Shares Amount Shares Amount
--------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold .......................... 1,775,218 $ 8,718,399 4,440,235 $ 26,929,517
Shares issued in connection with
reinvestment of distributions 881,345 4,312,570 12,729,786 72,114,581
------------- ------------- ------------- -------------
2,656,563 13,030,969 17,170,021 99,044,098
Shares repurchased ................... (37,834,703) (182,993,370) (30,470,548) (185,254,096)
------------- ------------- ------------- -------------
Net decrease ......................... (35,178,140) $(169,962,401) (l3,300,527) $ (86,209,998)
============= ============= ============= =============
2000 1999
------------------------------ ------------------------------
Class A-II Shares Amount Shares Amount
---------- ------ ------ ------ ------
Shares sold .......................... 29,170,402 $ 142,651,462 79,872,303 $ 502,078,483
Shares issued in connection with
reinvestment of distributions 127,739 639,593 1,467,098 8,303,473
------------- ------------- ------------- -------------
29,298,141 143,29l,055 8l,339,401 5l0,381,956
Shares repurchased ................... (23,231,777) (113,123,898) (83,244,262) (522,459,422)
------------- ------------- ------------- -------------
Net increase/(decrease) .............. 6,066,364 $ 30,167,157 (l,904,861) $ (12,077,466)
============= ============= ============= =============
See Notes To Financial Statements
2000 1999
------------------------------ ------------------------------
Class B Shares Amount Shares Amount
------- ------ ------ ------ ------
Shares sold .......................... 206,385 $1,00l,459 920,240 $ 5,691,528
Shares issued is connection with
reinvestment of distributions 15,318 73,210 460,054 2,594,233
------------- ------------- ------------- -------------
221,703 1,074,669 1,380,294 8,285,761
Shares repurchased ................... (1,384,204) (6,721,698) (1,658,790) (10,117,214)
------------- ------------- ------------- -------------
Net decrease ......................... (1,162,501) $ (5,647,029) (278,496) $ (l,831,453)
============= ============= ============= =============
2000 1999
------------------------------ ------------------------------
Class C Shares Amount Shares Amount
------- ------ ------ ------ ------
Shares sold .......................... 47,327 $ 235,310 180,699 $ 1,116,707
Shares issued in connection with
reinvestment of distributions 1,551 7,572 40,643 225,990
------------- ------------- ------------- -------------
48,878 242,882 221,342 1,342,697
Shares repurchased ................... (276,186) (1,362,226) (174,969) (1,061.149)
------------- ------------- ------------- -------------
Net (decrease)/increase .............. (227,308) $ (l,l19,344) 46,373 $ 281,548
============= ============= ============= =============
</TABLE>
Note 5.
Purchases and Sales of Securities
Purchases and sales of investment securities were $91,054,575 and $208,691,418,
respectively for the six-month period ended June 30, 2000.
Note 6.
Concentration of Credit Risk
On June 30, 2000, approximately $563,431,590 (82.7% of net assets) of the Trust
Fund's investments were in equities of financial institutions.
Note 7.
Financial Instruments
The Trust Fund may trade in financial instruments with off-balance sheet risk
during the normal course of investing activities to assist in managing exposure
to various market risks. These financial instruments include written covered
call and put options and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. As of June
30, 2000 there were no covered call or put options outstanding.
11 See Notes To Financial Statements
<PAGE>
<TABLE>
SIFE TRUST FUND 2000 SEMI-ANUAL REPORT
------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
<CAPTION>
Class A-I
------------------------------------------------------------------
Years Ended, December 31 2000+ 1999 1998 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
(For one share outstanding throughout each period):
Net asset value, beginning of period ................. $ 5.21 $ 6.26 $ 6.45 $ 4.86 $ 4.58
------------------------------------------------------------------
Income from investment operations:
Net investment income ............................. 0.04 0.07 0.07 0.08 0.09
Net realized and unrealized
gain (loss) on investments ..................... (0.40) (0.56) 0.24 2.07 1.16
------------------------------------------------------------------
Total from investment operations ............ (0.36) (0.49) 0.31 2.15 1.25
------------------------------------------------------------------
Less distributions to investors:
Distributions from net investment income .......... (0.04) (0.07) (0.07) (0.08) (0.09)
Distributions from capital gains .................. -- (0.49) (0.43) (0.48) (0.88)
------------------------------------------------------------------
Total distributions ......................... (0.04) (0.56) (0.50) (0.56) (0.97)
------------------------------------------------------------------
Net asset value, end of period ...................... $ 4.81 $ 5.21 $ 6.26 $ 6.45 $ 4.86
==================================================================
Total Return++ .......................................... (6.9%) (8.5%) 5.1% 44.8% 27.4%
==================================================================
Ratios and Supplemental Data
Net assets, end of period (in millions) .............. $ 546 $ 775 $ 1,015 $ 1,049 $ 769
==================================================================
Ratios to average net assets:
Expenses .......................................... 1.25% 1.25% 1.25% 1.25% 1.20%
==================================================================
Net investment income ............................. 1.70% 1.07% 1.04% 1.38% 1.82%
==================================================================
Portfolio turnover rate .............................. 22.0% 25.0% 31.0% 63.0% 140.2%
==================================================================
</TABLE>
<TABLE>
<CAPTION>
Class A-II
-------------------------------------------
Years Ended, December 31 2000+ 1999 1998 1997 1996*
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
(For one share outstanding throughout each period):
Net asset value, beginning of period $5.21 $6.26 $6.46 $4.86 $4.73
---------------------------------------------
Income from investment operations:
Net investment income ................................ 0.03 0.05 0.05 0.07 0.07
Net realized and unrealized
gain (loss) on investments ........................ (0.39) (0.56) 0.23 2.07 1.01
---------------------------------------------
Total from investment operations ............... (0.36) (0.51) 0.28 2.14 1.08
---------------------------------------------
Less distributions to investors:
Distributions from net investment income .......... (0.03) (0.05) (0.05) (0.06) (0.07)
Distributions from capital gains .................. -- (0.49) (0.43) (0.48) (0.88)
---------------------------------------------
Total distributions ............................ (0.03) (0.54) (0.48) (0.54) (0.95)
---------------------------------------------
Net asset value, end of period ....................... $4.82 $5.21 $6.26 $6.46 $4.86
=============================================
Total Return++ ....................................... (6.9%) (8.7%) 4.7% 44.6% 22.8%
=============================================
Ratios and Supplemental Data
Net assets, end of period (in millions) .............. $110 $87 $ 117 $ 85 $ 18
=============================================
Ratios to average net assets:
Expenses.......................................... 1.50% 1.50% 1.50% 1.50% 1.48%
=============================================
Net investment income ............................ 1.40% 0.81% 0.79% 1.11% 1.77%
=============================================
Portfolio turnover rate .............................. 22.0% 25.0% 31.0% 63.0% 140.2%
=============================================
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
--------------------------------- ----------------------------------
Years Ended, December 31 2000+ 1999 1998 1997** 2000+ 1999 1998 1997**
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per Share Data
(For one share outstanding throughout each period):
Net asset value, beginning of period $5.21 $6.26 $6.45 $5.41 $5.20 $6.24 $6.46 $5.41
----------------------------------------------------------------------
Income from investment operations:
Net investment income ................................ 0.02 -- -- 0.01 0.02 -- -- 0.01
Net realized and unrealized
gain (loss) on investments ........................ (0.41) (0.56) 0.24 1.53 (0.41) (0.55) 0.21 1.54
----------------------------------------------------------------------
Total from investment operations ............... (0.39) (0.56) 0.24 1.54 (0.39) (0.55) 0.21 1.55
----------------------------------------------------------------------
Less distributions to investors:
Distributions from net investment income .......... (0.02) -- -- (0.02) (0.02) -- -- (0.02)
Distributions from capital gains .................. -- (0.49) (0.43) (0.48) -- (0.49) (0.43) (0.48)
----------------------------------------------------------------------
Total distributions ............................ (0.02) (0.49) (0.43) (0.50) (0.02) (0.49) (0.43) (0.50)
----------------------------------------------------------------------
Net asset value, end of period ....................... $4.80 $5.21 $6.26 $6.45 $4.79 $5.20 $6.24 $6.46
======================================================================
Total Return++ .......................................... (7.5%) (9.4%) 4.1% 28.9% (7.5%) (9.3%) 3.6% 29.1%
======================================================================
Ratios and Supplemental Data
Net assets, end of period (in millions) .............. $ 23 $31 $39 $16 $2 $3 $4 $1
======================================================================
Ratios to average net assets:
Expenses.......................................... 2.25% 2.25% 2.25% 2.22% 2.25% 2.25% 2.25% 2.25%
======================================================================
Net investment income ............................ 0.70% 0.06% 0.00% 0.30% 0.60% 0.06% 0.00% 0.30%
======================================================================
Portfolio turnover rate .............................. 22.0% 25.0% 31.0% 63.0% 22.0% 25.0% 31.0% 63.0%
======================================================================
<FN>
* For the period May 1, 1996 (commencement of operations) to December 31, 1996.
** For the period May 1, 1997 (commencement of operations) to December 31, 1997.
+ For the six-month period ended June 30, 2000 (unaudited).
++ Sales loads are not reflected in total return.
</FN>
See Notes To Financial Statements 12
</TABLE>
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
SIFE Trust Fund Performance (unaudited)
------------------------------------------------------
Average Annual Compounded Total Return
years min. load 0% max. load 5% S & P 500 Index
1 -17.80% -21.91% 7.25%
5 14.46% 13.29% 23.80%
10 16.05% 15.46% 17.80%
SIFE Trust Fund's Investment Portfolio (unaudited)
--------------------------------------------------
(as of June 30, 2000)
PIE CHART OMITTED
Financial Institutions 82.7%
Brokerages 8.4%
Miscellaneous 6.2%
Insurance 1.9%
Repurchase Agreements 1.5%
Comparison to the S & P 500 Index (unaudited)
--------------------------------------------------------------------------------
(as of June 30, 2000)
GRAPH OMITTED PLEASE SUPPLY FIGURES
*Average Annual Compounded Total Return
The above chart represents a hypothetical illustration comparing a $9,500
investment and a $10,000 investment made in SIFE Trust Fund on June 30, 1990 to
a $10,000 investment made in the Standard and Poor's 500 Composite Price Index
and includes reinvestments of dividends and capital gains.
The above graph represents a hypothetical illustration comparing a $9,500
investment made in SIFE Trust Fund on June 30, 1990 ($9,500 represents a $10,000
investment with the maximum sales charge deducted) to a $10,000 investment made
in the Standard and Poor's 500 Composite Price Index and includes reinvestments
of dividends and capital gains. The Standard and Poor's 500 Index is an
unmanaged value-weighted price index composed of 500 large capitalized U.S.
stocks and is regarded as a broad based benchmark for market conditions.
Please be aware that the return information in the chart and graph for SIFE
Trust Fund includes operating expenses (such as management fees) that reduce
returns, while the return for the Standard and Poor's 500 Composite Price Index
does not.
Performance data quoted represents past performance and does not predict future
results. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. Data is quoted for Class A-I only
(performance for other classes will vary due to differences in fee structures)
and does not reflect the effect of any market volatility that has occurred since
the date of the information. As a result, returns after the date of this report
may be substantially more or less than those shown.
SIFE Trust Fund is a sector fund and as such may exhibit higher volatility than
the overall stock market. Please refer to the prospectus for a complete
disclosure of the risks associated with the financial services sector, as well
as the expenses, investment objectives, and operating policies of the SIFE Trust
Fund. You should read the prospectus carefully before investing in any fund, For
a free copy of the SIFE Trust Fund's prospectus, please call (800) 524-7433.
13 See Notes To Financial Statements
<PAGE>
SIFE TRUST FUND 2000 SEMI-ANNUAL REPORT
--------------------------------------------------------------------------------
SIFE Trust Fund's Top Ten Holdings (as a percentage of net assets)
(as of June 30,2000) (unaudited)
--------------------------------------------------------------------------------
FleetBoston Financial Corp. 6.4% Citigroup Inc. 3.8%
--------------------------------------------------------------------------------
Mellon Financial Corporation 6.0% Firstar Corporation 3.3%
--------------------------------------------------------------------------------
Chase Manhattan Corp. 5.6% Bank of New York Company, Inc. 3.1%
--------------------------------------------------------------------------------
Wells Fargo & Company 4.7% Wachovia Corporation 3.0%
--------------------------------------------------------------------------------
Comerica lncorporated 4.1% SunTrust Banks, Inc. 2.8%
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Officers And Trustees of the SIFE Trust Fund
----------------------------------------------------------------------------------------------
<S> <C> <C>
Haig G. Mardikian* Charles W. Froehlich, Jr. Diane Howard Belding
Chairman of the Board and Trustee Secretary and Trustee Trustee
Walter S. Newman* John A. Meany* Gary A. Isaacson
Vice Chairman of the Board and Trustee Trustee Treasurer
Sam A. Marchese Neil L. Diver*
President and Trustee Trustee *Independent Trustees
Officers And Directors of SIFE (the "Management Company")
----------------------------------------------------------------------------------------------
Sam A. Marchese Gary A. Isaacson Sharon E. Tudisco
Chairman of the Board and Director Chief Financial Officer Director
John P. King Charles W. Froehlich, Jr. Diane Howard Belding
President and Chief Executive Officer Secretary and Director Director
Michael J. Stead
Chief Investment Officer and Director
</TABLE>
Custodian
-------------------------------------
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agent
-------------------------------------
Boston Financial Data Services
P.O. Box 8244
Boston, MA 02266
Legal Counsel
-------------------------------------
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
Independent Auditors
-------------------------------------
Deloitte & Touche LLP
50 Fremont Street
San Francisco, CA 94105
Additional SIFE Trust Fund Services
--------------------------------------------------------------------------------
SIFE Trust Fund provides continuing individual services to the Investor,
including assistance for changes of beneficiary, assignments, collateral bank
loans, redemptions and the purchase of additional fund shares. SIFE service
representatives are prepared to assist you in establishing retirement accounts,
including IRA's, IRA-SEP's, SIMPLE IRA's, Roth IRA's, Education IRA's and
Section 403 (b) (7) accounts.
Inquiries concerning any of SIFE Trust Fund's services may be directed to your
representative or the home office. For the convenience of Investors, you may
call toll free (800)231-0356 or (925) 988-2400 if you have a need for
information or service. For the current share price, SIFE Trust Fund has a 24
hour toll-free number: (800) 553-7433.
This report and the financial statements contained herein are provided for the
general information of the shareholders of SIFE Trust Fund. This report is not
authorized for distribution to prospective investors in SIFE Trust Fund unless
preceded or accompanied by an effective prospectus.
See Notes To Financial Statements 14
<PAGE>
SIFE Presorted
----- First Class
Selected Investments in Financial Equities U.S. Postage
PAID
GMS
100 North Wiget Lane, P.O. Box 9007
Walnut Creek, CA 94598-0907
SIFE
100 North Wiget Lane, P.O. Box 9007
Walnut Creek, CA 94598-0907
Phone (800) 231-0356/fax (925) 943-1743
Website: www.sife.com
Ticker Symbol: SIFEX
@2000 SIFE Trust Fund
