As filed with the Securities and Exchange Commission on April 28, 2000
File No. 2-17277
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 48 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 [X]
(Check appropriate box or boxes)
SIFE Trust Fund
(Exact Name of Registrant as Specified in Charter)
100 North Wiget Lane
Walnut Creek, California 94598
(Address of Principal Executive Offices, with Zip Code)
(800) 231-0356
(925) 988-2400
(Registrant's Telephone Number, including Area Code)
Sam Marchese
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):
[X] immediately upon filing pursuant to paragraph (b)
[ ] on April 30, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on April 30, 2000 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
<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
<PAGE>
===================================
Part A - Prospectus for Class A-I Shares, Class A-II Shares, Class B Shares
and Class C Shares of SIFE Trust Fund
===================================
The Fund Pg 6
<PAGE>
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[LOGO]
SIFE
TRUST FUND
PROSPECTUS
April 30, 2000
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. 6 0 . 0 0 % 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 Qurterly Return:
Highest 19.60% December 31, 1998
Lowest -22.79% September 30, 1990
Average Annual Total Returns (through December 31, 1999)
1 Year 5 Years 10 Years
Class A-I (8.45%) 21.62% 15.97%
Class A-II (8.67 N/A N/A
Class A-I (9.40%) N/A N/A
Clsss A-I (9.27%) N/A N/A
S&P 500 Index 21.04% 28.56% 18.21%
Pg 4 Past Performance
<PAGE>
Fees & Expenses
<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 Purchases1 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 Fee4 1.00%5 1.00%5 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 and Shareholder Servicing (12b-1) Fees none 0.25%6 1.00%7 1.00%7
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 Redemptions or exchanges of Class A-I and Class A-II shares within 30 days
of purchase may be subject to a 1.00% short-term redemption fee. Please see
the section titled Transaction & Account Policies for further information
about the Short-Term Redemption Fee.
6 Class A-II shares of the Fund have a distribution plan which provides for
distribution fees in the amount of .25%.
7 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.
Fees & Expenses - Pg 5
</FN>
</TABLE>
Pg 5 - Fees & Expenses
<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*
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
*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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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 (called the "Managment Company" or "SIFE"), 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 the Fund
s average daily assets for investment advice given to the Fund. For the year
ended December 31, 1999, the Fund paid SIFE $13,497,674 in investment advisory
fees.
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, L. Scott 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. L.
Scott 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
details, 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 $1000 ($250 for fiduciary
accounts), and the minimum subsequent investment is $100. If you buy shares
through your broker or investment advisor, different minimums may apply.
ClassA-I
o This class is available for purchases by SIFE and SIFE Trust Fund
employees (and their immediate family members) as well as by
registered representatives, bank trust officers, and other
employees (and their immediate families) of investment
professionals having agreements with the Management Company, and
any employee benefit plan established for such people, provided
shares are not resold. Additionally, Class A-I accounts which were
established prior to April 30, 1996 may make additional purchases
of Class A-I shares.
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.
ClassA-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, thereby 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
How Sales Charges are Calculated
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<PAGE>
Class A-I & Class A-II
Class A-I and Class A-II shares are sold to investors at an offering price equal
to the net asset value per share plus any initial sales charge as set out in the
table below. The Fund also imposes a short-term redemption fee on redemptions of
shares held less than 30 days (see "Short-Term Redemption Fee" on Page 22).
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.
- --------------------
*You pay no front-end sales charge on purchases of $1 million or more, but if
you sell those shares in less than one year you may pay a deferred sales charge
of 0.60%.
Pg 10 - How Sales Charges are Calculated
<PAGE>
How Sales Charges are Calculated
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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.
Class C
Class C shares are sold to investors 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 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
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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-I Purchases
Subject to approval of the Management Company sales charges do not apply to
Class A-I purchases:
1) by directors, employees, and registered representatives of the
Fund and SIFE, their immediate family members, and any employee
benefit plan established for such persons; or
2) 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.
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 not for profit organizations, as defined by Section 501(c)(3)
of the Internal Revenue Code, investing $50,000 or more;
Pg 12 - Sales Charge Reductions & Waivers
<PAGE>
Sales Charge Reductions & Waivers
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4) by an insurance company separate account used to fund annuity
contracts purchased by employee benefit plans which have more
than 25 participants or $1,000,000 or more invested in the Fund;
5) 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", purchasing through
a single omnibus account and having more than 25 participants or
$100,000 in plan assets invested in the Fund;
6) by a trust institution (including bank trust departments)
investing $250,000 or more on their own behalf or on the behalf
of others;
7) through a "wrap account" or other similar fee-based program;
8) by shareholders and their designated beneficiaries who have
pursuant to a written exchange offer, exchanged their Class A-I
shares into Class A-II shares;
9) by investors who, subject to showing proper documentation, have
within the last 90 days redeemed from another mutual fund (having
paid a sales load) and reinvesting the proceeds of such sale in
shares of the Fund; or
10) by investors who have closed a Class A-I, Class A-II, or Class B
account and who wish to reinvest some or all of the proceeds in
the Fund within 180 days, as long as Investor Services is
notified before you reinvest. All accounts involved must have the
same registration.
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 701/2,
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:
$1000 for a regular account
$250 for a retirement account
$100 for an account opened with a systematic purchase plan (see the
section titled "Additional Investor Services")
3) Complete the appropriate parts of the account application, carefully
following the instructions. If you have any questions, please contact your
financial representative or call SIFE's Investor Services Division at
1-800-231-0356.
4) Complete the appropriate part of the account privileges section of the
application. By applying for privileges now, you can avoid the delay and
inconvenience of having to file a "Service Option Agreement and Account
Update" form if you want to add privileges later.
5) Make your initial investment by following the instructions on the next
page. You and/or your financial representative may initiate any purchase.
6) Mail your completed application to:
Regular Mail Express, Certified, or Registered Mail
SIFE Trust Fund SIFE Trust Fund
c/o Boston Financial Data Services c/o Boston Financial Data Services
P.O. Box 8244 66 Brooks Drive
Boston, MA 02266-8244 Braintree, MA 02184-3800
Pg 14 - Opening & Contributing to an Account
<PAGE>
Opening & Contributing to an Account
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Opening an Account
By Check
o Make out a check for the investment amount, payable to "SIFE Trust Fund".
o Deliver the check and completed application to financial representative, or
mail to SIFE Trust Fund at the address listed on page 14.
o Please note that SIFE does not accept starter or third party checks.
Contributing to an Existing Account
o Make out a check for the investment amount, payable to "SIFE Trust Fund" .
o Fill out the detachable slip from an account your statement. If no slip is
available, include a note specifying your share class, account number and
the name(s) in which the account is registered.
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 Investor Services at
1-800-231-0356 to request exchange.
o Call your financial representative or SIFE's Investor Services at
1-800-231-0356 to request an an exchange.
By Wire
o Deliver the check and completed application to your financial
representative, or mail to SIFE Trust Fund at the address listed on page
14.
o Obtain your account number by calling your financial representative or
SIFE's Investor Services.
o Instruct your bank to wire the amount of your investment to:
State Street Bank and Trust Company
225 Franklin Street
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.
Instruct your bank to wire the amount of your investment to:
State Street Bank and Trust Company
225 Franklin Street
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 Trust Fund
c/o Boston Financial Data Services
P.O. Box 8244
Boston, MA 02266-8244
o If you are redeeming funds, a check will be mailed to the name(s) and
address in which the account is registered, or otherwise according to your
letter of instruction.
By Phone
o Sales and exchanges of up to $100,000.
o Call your registered representative or SIFE s Investor Services between
6:00 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.
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>
Changes to Account Status
- --------------------------------------------------------------------------------
<TABLE>
Requirements for Commonly Requested Account Changes
<CAPTION>
Type of Change Requirement
<S> <C>
Add or Delete Beneficiary Complete a Service Option Form.
Add Telephone Redemptions Complete a Service Option Form.
Enclose a voided check (for wire transfers).
Change Bank Information Complete a Service Option Form or write a letter of
instruction requesting the bank information be changed.
Obtain a signature guarantee.
Enclose a voided check.
Transfer out of UGMA/UTMA* Complete a new application.
Write a letter of instruction
requesting the funds be transferred out
of the account.
Obtain a signature guarantee.
Postmortem Transfer to Beneficiary* Complete a new application.
Provide a certified death certificate.
Obtain a signature guarantee.
Provide proof of beneficiary status if no beneficiary
previously listed.
Postmortem Transfer to Joint Tenant* Complete a new application.
Provide a certified death certificate.
Write a letter of instruction requesting the
account be retitled to the surviving joint tenant.
Obtain a signature guarantee.
Postmortem Transfers of IRA Accounts* Complete a new application.
Provide a certified death certificate.
Write a letter of instruction requesting the
account be retitled to the beneficiary.
Obtain a signature guarantee.
Provide proof of beneficiary status if no
beneficiary previously listed.
Change Address Information Complete a Service Option Form or call 1-800-231-0356.
<FN>
*Please contact SIFE s Investor Service Division for further information before
submitting any materials.
</FN>
</TABLE>
Changes to Account Status - Pg 17
<PAGE>
Additional Investor Services
- --------------------------------------------------------------------------------
Systematic Purchase Plan
The Systematic Purchase Plan allows you make regular investments from your bank
account (minimum of $100 per transaction) 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
($100 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 Investor Service Division or your financial
representative for further information on opening one of these accounts.
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.
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. Also, exchanges between
the Fund and the SSgA Money Market Fund may be taxable events. Please note when
exchanging to the Money Market, you must leave a minimum balance in your SIFE
account of $1000 for a regular account or $250 for a retirement account.
Pg 18 - Additional Investor Services
<PAGE>
Additional Investor Services
- --------------------------------------------------------------------------------
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. Please note that for contributions, an order is
considered received when the application (for a new account) or information
identifying the account and the additional investment is received in good order
by Boston Financial Data Services (BFDS), SIFE's transfer agent.
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 the Fund may terminate this
right to new redemptions with 90-day written notice to the shareholders. In
addition, please note that this repayment feature will no longer be available
for purchases made after May 1, 2002.
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
$1000, 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.
Short-Term Redemption Fee
Class A-I and Class A-II shares have a short-term redemption fee on redemptions
of shares held less than 30 days. This fee is 1.00% of the net asset value of
the shares being redeemed and will be assessed and retained by the Fund for the
benefit of the remaining shareholder. This fee is intended to encourage
long-term investment in the Fund, to avoid transaction and market impact costs
associated with erratic redemption activity, and to facilitate portfolio
management. This fee is not a contingent deferred sales charge, is not a
commission for SIFE, and does not benefit SIFE in any way. Please be aware that
exchanges to the SSgA Money Market Fund are considered a redemption for this
purpose and money exchanged from the SSgA Money Market to the Fund will be
considered to be a new deposit subject to the 30 day rule. "The first-in, first
out" (FIFO) method is used to determine the holding period. This means that if
you bought shares on different days, the shares purchased first will be redeemed
first for the purposes of determining if this fee applies. Please note that this
fee may be waived at the discretion of SIFE.
Buying and Selling Shares Through a Securities Broker
You may purchase and sell shares through a securities broker or their subagents.
You should contact them directly for information regarding how to invest or
redeem through them. They may also charge you service or transaction fees. If
you purchase or redeem shares through them, you will receive the next NAV
calculated after receipt of the order by them (generally, orders received before
1:00 p.m. Pacific Time will be processed at that day s closing price, while
orders received after that will be processed at the next day's closing price) on
any day the NYSE is open. Brokers who perform shareholder servicing for the Fund
may receive fees from the Fund or Management Company for providing these
services.
Pg 22 - Transaction & Account Policies
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
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 1999 was audited by Deloitte & Touche LLP, whose Independent
Auditor's Report along with the Fund's financial statements, are included in the
Annual Report, which is available upon request. Information for 1995 was audited
by other independent accountants. Their report is not included here.
<CAPTION>
Class A-I Class A-II
Years Ended, December 31 1999 1998 1997 1996 1995 1999 1998 1997 19962
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period $ 6.26 $ 6.45 $ 4.86 $ 4.58 $ 3.55 $ 6.26 $ 6.46 $ 4.86 $ 4.73
Income from investment operations:
Net investment income 0.07 0.07 0.08 0.09 0.10 0.05 0.05 0.07 0.07
Net realized and
unrealized gain (loss) on investments (0.56) 0.24 2.07 1.16 1.68 (0.56) 0.23 2.07 1.01
Total from investment operations (0.49) 0.31 2.15 1.25 1.78 (0.51) 0.28 2.14 1.08
Less distributions to investors:
Dividends from net investment income (0.07) (0.07) (0.08) (0.09) (0.10) (0.05) (0.05) (0.06) (0.07)
Distributions from capital gains (0.49) (0.43) (0.48) (0.88) (0.65) (0.49) (0.43) (0.48) (0.88)
Total distributions (0.56) (0.50) (0.56) (0.97) (0.75) (0.54) (0.48) (0.54) (0.95)
Net asset value, end of period $ 5.21 $ 6.26 $ 6.45 $ 4.86 $ 4.58 $ 5.21 $ 6.26 $ 6.46 $ 4.86
Total Return3 (%) (8.5) 5.1 44.8 27.4 49.9 (8.7) 4.7 44.6 22.8
Ratios and Supplemental Data
Net assets, end of period (in millions)($) 775 1,015 1,049 769 614 87 117 85 18
Ratios to average net assets:
Expenses4 (%) 1.25 1.25 1.25 1.20 1.03 1.50 1.50 1.50 1.48
Net investment income (%) 1.07 1.04 1.38 1.82 2.25 0.81 0.79 1.11 1.77
Portfolio turnover rate (%) 25.0 31.0 63.0 140.2 93.5 25.0 31.0 63.0 140.2
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
Years Ended, December 31 1999 1998 19971 1999 1998 19971
<S> <C> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value, beginning of period $ 6.26 $ 6.45 $ 5.41 $ 6.24 $ 6.46 $ 5.41
Income from investment operations:
Net investment income -- -- 0.01 -- -- 0.01
Net realized and unrealized gain
(loss) on investments (0.56) 0.24 1.53 (0.55) 0.21 1.54
Total from investment operations (0.56) 0.24 1.54 (0.55) 0.21 1.55
Less distributions to investors:
Dividends from net investment income -- -- (0.02) -- -- (0.02)
Distributions from capital gains (0.49) (0.43) (0.48) (0.49) (0.43) (0.48)
Total Distributions (0.49) (0.43) (0.50) (0.49) (0.43) (0.50)
Net asset value, end of period $ 5.21 $ 6.26 $ 6.45 $ 5.20 $ 6.24 $ 6.46
Total Return3(%) (9.4) 4.1 28.9 (9.3) 3.6 29.1
Ratios and Supplemental Data
Net assets, end of period (in millions)($) 31 39 16 3 4 1
Ratios to average net assets:
Expenses4(%) 2.25 2.25 2.22 2.25 2.25 2.25
Net investment income(%) 0.06 0.00 0.30 0.06 0.00 0.30
Portfolio turnover rate(%) 25.0 31.0 63.0 25.0 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, or by electronic request at [email protected]. Information
about the Fund (including the 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 1-202-942-8090.
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
===================================
<PAGE>
SIFE TRUST FUND
STATEMENT OF ADDITIONAL INFORMATION
April 30, 2000
------------------------------
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, 2000, 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
Code of Ethics B-18
Financial Statements B-18
Service Providers B-19
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. The Fund may also hold
cash and cash equivalents pending other investment
opportunities, to satisfy redemptions and for defensive
purposes. See "Investment Policies" 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, entering into repurchase agreements 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
B-2
<PAGE>
control or management; (vii) issue senior securities; or
(viii) make short sales or purchases on margin.
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 and the Fund may use cash
for defensive purposes as part of its investment strategy.
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
B-3
<PAGE>
extent that the repurchase obligation exceeds the acquiring party's cost. Under
the terms of a typical repurchase agreement, the Fund acquires United States
Government securities for a relatively short period of time, subject to the
seller's obligation to repurchase and the Fund's obligation to resell the
securities. The Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Fund is delayed or
prevented from exercising its rights to dispose of the subject securities,
including the risk that the market value of the subject securities might decline
prior to the Fund being able to dispose of them. The Management Company reviews,
on an ongoing basis to evaluate potential risks, the creditworthiness of the
counterparties as well as the market values of collateral securities.
Under the relevant terms of the Investment Company Act of 1940, as
amended (the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the underlying securities.
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
B-4
<PAGE>
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 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.
B-5
<PAGE>
A closing purchase transaction is effected on an exchange which
provides a secondary market for an option of the same series. If the Fund is
unable to effect a closing purchase transaction with respect to a call option it
has written, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.
Accordingly, the Fund may run the risk of either foregoing the opportunity to
sell the underlying security at a profit or being unable to sell the underlying
security as its price declines. If the Fund is unable to effect a closing
purchase transaction with respect to a put option it has written, it will not be
permitted to undesignate those funds which are being held to cover the potential
exercise of the put option.
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 10,
2000, the Officers and Trustees of the Fund, as a group, owned beneficially or
of record less than 1% of the outstanding shares. The first table below sets
forth the names and compensation information of the Trustees of the Fund. The
second table below provides the names, ages and principal occupation information
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 $41,000 N/A N/A $41,000
Walter S. Newman,
Trustee $41,000 N/A N/A $41,000
Neil L. Diver,
Trustee $41,000 N/A N/A $41,000
John A. Meany,
Trustee $41,000 N/A N/A $41,000
Diane H. Belding,
Trustee* $15,000 N/A N/A $15,000
Charles W. Froehlich, Jr.,
Trustee* $15,000 N/A N/A $15,000
Bruce W. Woods,
Trustee* $15,000 N/A N/A $15,000
=============================================================================================================
<FN>
+The total compensation listed reflects all compensation paid to the Trustees
for attending regular board and audit committee meetings during 1999. In
addition to the compensation stated above, Trustees Mardikian, Newman, Diver,
and Meany also received additional compensation from the management company
(paid directly from the management companies own assets) in the amount of
$12,550, $11,150, $12,900, $11,150, 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 (52) 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 (78) 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 (43) * 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 (62) 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. (71) * 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 (59) 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 (47)* President & Chief Executive Officer and Director of Management
Trustee Company, July 1996-November 1999; SIFE Management Company
employee, June 1986- November 1999.
Sam Marchese (58) Chairman of the Board of Management Company; November
President & CEO, SIFE Trust Fund 1999-Present; Portfolio Manager of Management Company,
1984-1996; President and
CEO of Management Company 1994-1996.
Gary A. Isaacson (40) 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 10, 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 or Class A-II shares of the Fund and the following
shareholders owned of record 5% or more of the outstanding Class B, and Class C
shares as indicated:
CLASS B SHARES SHARES PERCENT
- -------------- ------ -------
MLPF&S INC. 286,477 5.53%
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
- -------------- ------ -------
Winkler Family Trust B 26,468 5.27%
3234 Rossmoor Pkway Apt 1
Walnut Creek, CA 94595
Evangeline C. Winkler Trust 74,564 14.85%
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 April 3, 2000. The Management Company
does not act in a similar capacity for any other person or entity.
The Advisory Agreement is for an initial term of 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
B-9
<PAGE>
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, $11,960,037 (1997), $14,504,536 (1998),
and $13,497,674 (1999) 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 1999 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 1999 calendar year, the Fund paid brokerage commissions of
$566,451 and total purchases and sales of portfolio securities aggregated
$583,019,914. Portfolio turnover rates for the years 1997, 1998 and 1999 were
63.0%, 31%, and 25%, respectively.
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
---- ------- -------------- ----
1997 30 $966,121 $1,242,328,896
1998 32 $601,341 $ 780,635,406
1999 28 $566,451 $ 583,019,914
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.
The Fund reserves the right, if conditions exist that make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
(a redemption-in-kind). These securities shall be valued for redemption-in-kind
purposes in the same manner they are valued for purposes of calculating the
Fund's net asset value. If the Fund elects to make payments in securities, a
B-11
<PAGE>
shareholder may incur transaction expenses in converting these securities to
cash. However, because SIFE Trust Fund has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940, as amended, the Fund is obligated to
redeem your shares, during any ninety-day period, solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
the period. The Fund may, at its option, seek an order from the Securities and
Exchange Commission to withdraw its election to be governed by Rule 18f-1.
CALCULATION OF NET ASSET VALUE
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
B-12
<PAGE>
federal income tax on taxable income (including realized capital gains) that is
distributed to shareholders in accordance with the timing requirements of the
Code. If the Fund is unable to meet certain requirements of the Code, it may be
subject to taxation as a corporation.
Distributions of net investment income and net realized capital gains
by the Fund will be taxable to Investors whether made in cash or reinvested by
the Fund in shares. In determining amounts of net realized capital gains to be
distributed, any available capital loss carryovers from prior years will be
applied against capital gains. Investors receiving distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share of the Fund on the
reinvestment date. Fund distributions also will be included in individual and
corporate shareholders' income on which the alternative minimum tax may be
imposed.
The Fund or the securities dealer effecting a redemption of the Fund's
shares by an Investor generally will be required to file information reports
with the Internal Revenue Service (the "IRS") with respect to distributions and
payments made to the Investor. In addition, the Fund will be required to
withhold federal income tax at the rate of 31% on taxable dividends, redemptions
and other payments made to accounts of individual or other non-exempt Investors
who have not furnished their correct taxpayer identification numbers and certain
required certifications on the Account Application Form or with respect to which
the Fund or the securities dealer has been notified by the IRS that the number
furnished is incorrect or that the account is otherwise subject to withholding.
The Fund intends to declare and pay dividends and other distributions,
as stated in the Prospectus. In order to avoid the payment of a 4% nondeductible
federal excise tax based on net income, the Fund must declare on or before
December 31 of each year and pay on or before January 31 of the following year,
distributions at least equal to 98% of its ordinary income for that calendar
year and at least 98% of the excess of any capital gains over any capital losses
realized in the one-year period ending October 31 of that year, together with
any undistributed amounts of ordinary income and capital gains (in excess of
capital losses) from previous calendar years.
The Fund will receive dividend distributions from U.S. corporations. To
the extent that the Fund receives such dividends and distributes them to
Investors and meets certain other requirements of the Code, corporate Investors
in the Fund may be entitled to the "dividends received" deduction. Availability
of the deduction is subject to certain holding period and debt-financing
limitations.
The Fund may be subject to foreign withholding taxes on dividends and
interest earned with respect to securities of foreign corporations. Foreign
corporations in which the Fund invests may be treated as "passive foreign
investment companies" ("PFICs") under the Code. Part of the income and gains
that the Fund derives from PFIC stock may be subject to a non-deductible federal
income tax at the Fund level. In some cases, the Fund may be able to avoid this
tax by electing to be taxed currently on its share of the PFIC's income, whether
or not such income is actually distributed by the PFIC. The Fund will endeavor
to limit its exposure to the PFIC tax by investing in PFICs only where the
election to be taxed currently will be made. Because it is not always possible
to identify a foreign issuer as a PFIC in advance of making the investment, the
Fund may incur the PFIC tax in some instances.
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
B-13
<PAGE>
position entered into or held by the Fund that substantially diminishes the
Fund's risk of loss from any other position held by the Fund may constitute a
"straddle" for federal income tax purposes. In general, straddles are subject to
certain rules that may affect the amount, character and timing of the Fund's
gains and losses with respect to straddle positions (including rules that may
result in gain being treated as short-term capital gain rather than long-term
capital gain).
Redemptions and exchanges of shares of the Fund will result in gains or
losses for tax purposes to the extent of the difference between the proceeds and
the Investor's adjusted tax basis for the shares. Any loss realized upon the
redemption or exchange of shares within six months from their date of purchase
will be treated as a long-term capital loss to the extent of distributions of
long-term capital gain dividends during such six-month period. All or a portion
of a loss realized upon the redemption of shares may be disallowed to the extent
shares are purchased (including shares acquired by means of reinvested
dividends) within 30 days before or after such redemption. In addition, the
sales charge savings that may be available for reinvesting amounts from previous
redemptions will, in certain circumstances, increase the amount of the gain (or
reduce the amount of the loss) from those redemptions. Distributions and
redemptions may be subject to state and local income taxes, and the treatment
thereof may differ from the federal income tax treatment. Nonresident aliens and
foreign persons are subject to different tax rules and may be subject to
withholding of up to 30% on certain payments received from the Fund.
The foregoing and the related discussion in the Prospectus are only a
summary of some of the important federal income tax considerations generally
affecting the Fund and its Investors and is only accurate as of the date of this
Statement of Additional Information. The law firm of Paul, Hastings, Janofsky &
Walker LLP has expressed no opinion in respect thereof. No attempt is made to
present a detailed explanation of the federal income tax treatment of the Fund
or its 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 April 3, 2000.
B-14
<PAGE>
<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>
1997 $2,405,671 $969,688 $2,098,423 $(662,440)
1998 $820,213 $1,063,223 $294,000 $(537,010)
1999 $732,209 $233,486 $47,288 $451,435
</TABLE>
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 (Chairman of the
Board); and Sharon E. Tudisco. Bruce W. Woods resigned as a Director and as
President and CEO of the Management Company on November 18, 1999. John P. King,
a long time executive of SIFE has been appointed Acting President of the
Management Company. Mrs. 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 $30,012 $343,117 -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 (up to 0.25% of average daily net assets in the
case of the Class A-II shares and up to 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 reimburse 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
B-15
<PAGE>
payments to broker/dealers, financial institutions and others who sell shares
and/or service shareholder accounts.
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.
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, 1999 the Fund paid out
distribution fees of $265,690 for Class A-II, and distribution and services fees
of $373,806 for Class B and $36,368 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.
- --------
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>
For the year ended December 31, 1999, 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, 1999 through December 31,
1999) would have decreased to $8,697 and $8,676 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 $25,281 and $41,810, respectively. Since Class A-II
shares were first offered May 1, 1996, performance history for Class A-II shares
is not applicable for five, and ten year periods.
<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 $ 8,697 -13.03% -8.45% -8.45% 21.04%
3 years $13,240 9.81% 11.70% 39.37% 107.56%
5 years $25,281 20.38% 21.62% 166.11% 251.12%
10 years $41,810 15.38% 15.97% 340.10% 432.78%
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 $ 8,676 -13.24% -8.67% -8.67% 21.04%
3 year $13,129 9.50% 11.39% 31.29% 107.56%
</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
B-17
<PAGE>
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
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.
CODE OF ETHICS
The Trust and the Management Company have adopted a Unified Code of
Ethics pursuant to Section 17(j) of the Investment Company Act and Rule 17j-1
thereunder (the "Code of Ethics"). This Code of Ethics has been revised, as
appropriate, to conform with certain new provisions of Rule 17j-1 as adopted by
the SEC on October 29, 1999. Currently, the Codes of Ethics permits personnel to
buy and sell securities for their respective accounts, unless such securities at
the time of such purchase or sale: (i) are being considered for purchase or sale
by a Fund; (ii) are being purchased or sold by a Fund; or (iii) were purchased
or sold by a Fund within the most recent 7 calendar days.
FINANCIAL STATEMENTS
Audited Financial Statements for the relevant periods ending December
31, 1999, for SIFE Trust Fund, as contained in the Annual Report to shareholders
of the Fund for the fiscal year ended December 31, 1999, are incorporated herein
by reference to the report.
B-18
<PAGE>
SERVICE PROVIDERS
-----------------
Investment Adviser, Underwriter and Distributor
SIFE
100 North Wiget Lane
Walnut Creek, CA 94598
-----------------
Custodian
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, Massachusetts 02110
-----------------
Transfer Agent
BOSTON FINANCIAL DATA SERVICES
P.O. Box 8244
Boston, MA 02266-8244
----------------
Independent Auditors
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-19
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Exhibits filed in Part C of the Registration Statement:
Exhibit
Number
------
1. Copy of Registrant's Trust Agreement as currently in effect:
a. Copy of Agreement and Declaration of Trust, dated
February 28, 1997(3)
b. Copy of Certificate of Trust (3)
2. By-laws of SIFE Trust Fund (3)
3. Instruments defining rights of securities holders - Not
Applicable
4. Copy of Investment Advisory Agreement, dated as of April 30,
1997 (3)
5. Copy of Underwriting Agreement, dated as of April 30, 1997 (3)
6. Bonus or Profit Sharing Contracts - Not Applicable
7. a. Custodian Contract between SIFE Trust Fund and State
Street Bank & Trust Co. (2)
b. Retirement Plans Service Contract among SIFE, Inc.,
SIFE Trust Fund and State Street Bank & Trust Co. (2)
c. Assignment & Assumption Agreement (3)
8. Other Material Contracts - Not Applicable
9. Opinion and Consent of Counsel - Filed herewith
10. Consent of Independent Accountants - Filed herewith
11. Omitted Financial Statements - Not Applicable
12. Initial Capital Agreements - Not Applicable
13. Copies of Rule 12b-1 Plans
a. Rule 12b-1 Plan of Distribution and Rule 12b-1
Agreement for Class A-II Shares (1)
b. Rule 12b-1 Plan of Distribution and Rule 12b-1
Agreement for Class B Shares(3)
c. Rule 12b-1 Plan of Distribution and Rule 12b-1
Agreement for Class C Shares(3)
14. Code of Ethics - Filed herewith
15. Rule 18f-3 Plan:
a. Rule 18f-3 Plan (2)
b. Restated Rule 18f-3 Plan(3)
- ------------------------------
(1) 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.
(2) 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.
(3) Filed February 29, 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.
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
<PAGE>
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.
Item 28. Location of Accounts and Records
<PAGE>
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.
<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 27th day of April, 2000.
SIFE Trust Fund
By: /s/ Sam Marchese
----------------------------
Sam Marchese
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>
SAM MARCHESE /s/ Trustee; President & Chief Executive Officer April 27. 1999
--------------- of the Trust Fund (Principal Executive
(Sam Marchese) Officer & Principal Accounting Officer)
GARY ISAACSON /s/ Chief Financial Officer of the Trust Fund *
---------------- (Principal Accounting Officer)
(Gary Isaacson)
HAIG G. MARDIKIAN /s/ Trustee; Chairman of the Board *
---------------------
(Haig G. Mardikian)
WALTER S. NEWMAN /s/ Trustee; Vice-Chairman of the Board *
--------------------
(Walter S. Newman)
CHARLES W. FROEHLICH, JR. /s/ Trustee; Secretary *
-----------------------------
(Charles W. Froehlich, Jr.)
NEIL L. DIVER /s/ Trustee *
-----------------
(Neil L. Diver)
DIANE HOWARD BELDING /s/ Trustee *
------------------------
(Diane Howard Belding)
JOHN A. MEANY /s/ Trustee *
-----------------
(John A. Meany)
</TABLE>
/s/ Bruce W. Woods Trustee*
------------------------
Bruce W. Woods
* By: /s/ SAM MARCHESE Dated: APRIL 27, 2000
------------------------ --------------
Sam Marchese, Attorney-in-Fact
===================================
EXHIBIT 9
Opinion of Counsel
===================================
<PAGE>
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, California 94104-2635
Telephone (415) 835-1600
Facsimile (415) 217-5333
Internet www.phjw.com
April 28, 2000
Mr. Sam A. Marchese
SIFE Trust Fund
100 North Wiget Lane
Walnut Creek, CA 94598
Re: SIFE Trust Fund (the "Registrant")
Ladies and Gentlemen:
We hereby consent to the continued use in the Registrant's Registration
Statement, until its withdrawal, of our opinion dated April 27, 1999 (the "Prior
Opinion") respecting the issuance by the Registrant of an indefinite number of
no-par value shares of beneficial interest.
The Prior Opinion was filed as an exhibit to Post-Effective Amendment
No. 45 filed with the Commission on April 30, 1999.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker LLP
===================================
EXHIBIT 10
Independent Auditors' Consent
===================================
<PAGE>
INDEPENDENT AUDITORS' CONSENT
SIFE Trust Fund:
We consent to (a) the incorporation by reference in this Post-Effective
Amendment No. 48 to Registration Statement No. 2-17277 of the SIFE Trust Fund
(the "Trust") on Form N-1A of our report dated January 31, 2000 appearing in the
Trust's 1999 Annual Report to Shareholders incorporated by reference in the
Statement of Additional Information ("SAI"), which is part of such Registration
Statement, (b) the reference to us under the heading "Investment Advisory &
Other Services - Independent Accountants" in the SAI, and (c) the reference to
us under the heading "Financial Highlights" in the Prospectus, which is a part
of such Registration Statement.
/s/ Deloitte & Touche
San Francisco, California
April 28, 2000
===================================
EXHIBIT 11
Code of Ethics
===================================
SIFE & SIFE TRUST FUND
RESTATED CODE OF ETHICS
(Restated as of April 3, 2000)
This Restated Code of Ethics (the "Code") has been adopted, and is approved on
an annual basis, by SIFE, a California Corporation ("SIFE"), and SIFE Trust
Fund, a Delaware Trust ("the Fund"), primarily for the purpose of providing
rules for employees of SIFE with respect to their personal securities
transactions, specifically, and, more generally, their business conduct insofar
as the interests of SIFE's investment advisory clients are concerned. By setting
out broad ethical standards, as well as making clear the legal structure within
which investment advisors and their employees must work, employees will be able
to conduct business so as to avoid not only any violation of the law but also
any appearance of impropriety or unethical behavior.
SIFE is an investment advisor registered with, and closely regulated by, the
Securities and Exchange Commission ("SEC") under the Investment Advisers Act of
1940 (the "Advisers Act"). Additionally, the activities of investment advisers
and their employees, particularly with respect to securities transactions, are
governed by the relevant provisions of the Securities Act of 1933 (the "1933
Act"), the Securities Exchange Act of 1934 (the "1934 Act") and the Investment
Company Act of 1940 (the "1940 Act"), as well as by state law and, in certain
particular respects, by the rules and regulations of the National Association of
Securities Dealers, Inc. While the rules of conduct articulated in this Code are
based upon the rules of law and legal concepts developed under those statutes
and by those agencies, it is important to note that these rules and concepts do
not remain static, and further developments should be expected. Similarly, where
a literal application effects a result clearly varying from the intent of this
Code, the President, upon the recommendation of the Compliance Officer and with
the concurrence of the Board of Trustees, may grant appropriate exceptions.
SECTION 1: SCOPE AND APPLICATION
1.1 General.
The Code covers two general topic areas. First, the Code includes some broad
prohibitions against fraudulent conduct in connection with SIFE's investment
advisory business. However, because fraudulent conduct can take many forms, the
Code should not be looked upon as an all-inclusive list of actions or omissions.
Second, the Code includes some specific rules, restrictions and reporting
obligations with respect to personal securities transactions. These restrictions
have been crafted with the objective of minimizing any actual or potential
conflict of interest, or any appearance of conflict of interest, between the
securities trading which SIFE undertakes on behalf of its investment advisory
client(s) and any personal securities trading by persons subject to this Code.
They are intended to ensure that trading on behalf of SIFE's investment advisory
client(s) is given priority over trading for personal accounts, and that trading
for personal accounts does not take place at a time or in a manner which could
adversely affect the interests of SIFE's investment advisory client(s).
1
<PAGE>
1.2
Persons Covered by the Code:
All persons affiliated with SIFE, including its directors, employees and
registered representatives, are subject to the anti-fraud provisions set forth
below under the caption, "Legal Concepts and Restrictions." In addition, any
"Access Person" (as that term is defined in the following paragraph) is subject
to the reporting requirements concerning personal securities transactions.
For purposes of this Code, the term "Access Person(1)" shall include each
director or officer of SIFE, each director or officer of SIFE Trust Fund, and
any employee of SIFE who makes, participates in, or obtains information
regarding the purchase or sale of a securities by SIFE Trust Fund, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales, as well as any shareholder of SIFE who owns more than 25% of
the shares of SIFE and who obtains information concerning recommendations made
to SIFE Trust Fund with regard to the purchase or sale of a security, as well as
any other SIFE employee or registered representative whose classification is
determined by the Compliance Officer to be appropriate, given the objectives of
this Code, because of such person's particular relationship to, or access to
sensitive or proprietary information about, SIFE or any investment advisory
client of SIFE. The Compliance Officer shall inform each access person, upon
becoming an access person, of the requirements under this Code and shall
distribute a list of Access Persons to every Access Person at the end of every
calendar quarter.
Two other concepts of importance to this Code are "Insiders," discussed more
fully in the section entitled "Legal Concepts and Restrictions - Who Is An
`Insider'" and "Independent Trustees," discussed more fully in the section
entitled "Provisions Applicable to Independent Trustees." As a practical matter,
an "Insider" is anyone who comes into possession of "inside information," and
thereby becomes subject to the rules governing insider trading. This could be
anyone associated with SIFE, whether covered by this Code or not. With respect
to the independent trustees of SIFE Trust Fund (the "Independent Trustees"), the
application of this Code is, generally, advisory.
SECTION 2: LEGAL CONCEPTS AND RESTRICTIONS
The general concepts discussed below mirror those found in the federal
securities laws, as applied to investment advisors and investment companies. It
should be noted, however, that these laws are expansive and dynamic in nature,
and are intended to be interpreted broadly.
2.1 Fiduciary Duty:
Investment advisors owe a fiduciary duty to their clients. This means that each
employee of SIFE has a duty of loyalty, fairness and good faith owed to each of
our investors, and a corresponding duty not to do anything prejudicial to, or
which might be in conflict with, the interests of our investors. This is a
higher standard than that applicable to ordinary arm's length business
transactions. Fiduciary duty means that, at all times, each employee of SIFE
must place the interests of the investors first, and not do anything
- ---------------------------------
(1) Access Person is defined by Rule 17j-1(a)(1) under the 1940 Investment
Company Act
2
<PAGE>
which might be interpreted as taking inappropriate advantage of our position of
trust. More generally, fiduciary duty requires that each employee of SIFE adhere
to the provisions of this Code with respect to personal securities transactions.
As fiduciaries, Access Persons must avoid activities, interests and
relationships that might interfere with making decisions in the best interest of
the clients of SIFE, including but not limited to:
1) Placing the interest of SIFE's clients first. In other words, as a
fiduciary you must strictly serve the interests of the clients of SIFE
before your own personal interests.
2) Conduct all personal securities transactions in full compliance with
the Code of Ethics.
3) Do not take inappropriate advantage of your position. The receipt of
investment opportunities, perquisites, or gifts from people seeking
business with SIFE or its clients will call into question your
independent judgment.
Doubtful situations will be resolved in favor of clients. Technical compliance
with the Code of Ethics will not automatically insulate any trades that indicate
an abuse of fiduciary duties.
2.2 Restrictions Under SEC Rule 17j-1(b):
No Access Person or other person covered by this Code may (a) employ any device,
scheme or artifice to defraud any client of SIFE, (b) make to clients of SIFE
any untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements made not misleading, (c) engage in any
act, practice or course of business which operates, or would operate, as a fraud
or deceit upon the clients of SIFE, or (d) engage in any manipulative practice
with respect to any client of SIFE.
It is important to note that Rule 17j-1(b) sets forth a standard of conduct to
which each investment advisor and each person associated with an investment
advisor) must adhere, but does not specify practices which are, per se,
fraudulent, deceptive or manipulative. Rather Rule 17j-1(c)(1) requires that
each investment advisor adopt its own written code of ethics addressing these
matters, as well as adopt procedures reasonably necessary to ensure that
violations of the code of ethics not occur. This Code is intended to serve as
the Code of Ethics required by Rule 17j-1(c)(1). Further, this Code also
establishes policies and procedures for preventing insider trading by SIFE
employees and for preventing the use of material, non-public information by such
persons, as required by Section 204A of the Advisers Act.
2.3 Policies With Respect to Fraud, Deceit and "Insider Trading":
The various securities laws contain broad provisions prohibiting fraud or deceit
or "any manipulative or deceptive device or contrivance" in connection with any
securities transaction or the giving of investment advice. These proscriptions
include the improper use of material, non-public ("inside") information
concerning issuers or securities, as well as any activity which might be
construed as manipulating the market for any issuer or security. The Advisers
Act requires investment advisors to adopt, maintain and enforce written policies
and procedures to
3
<PAGE>
prevent employees from improper personal securities transactions or otherwise
misusing inside information (including "tipping"). The policies and procedures
set forth in this Code are intended to meet this requirement.
2.4 Who is an "Insider"?:
For purposes of this Code, every Access Person and Independent Trustee,
including every member of his or her immediate family(2), should consider him or
herself an "Insider" with respect to any material, non-public information which
may come into his or her possession. Further, a person may be deemed to be an
"Insider" if he or she enters into a confidential relationship in the conduct of
the affairs of SIFE, and as a result is given access to material, non-public
information. Questions regarding whether a person has become an "Insider" with
respect to specific information will depend upon whether the information in
question is "material" and, if so, whether that information is "non-public," and
should be directed to the Compliance Officer.
2.5 What is "Material, Non-Public Information"?:
Generally, information will be considered "material" if there is a substantial
likelihood that a reasonable investor would consider it important in making an
investment decision. Information that is reasonably certain to have a
substantial effect on the market price of a company's securities (including
information relating to tender offers) is almost always material, however there
is no bright-line test to determine materiality, and whether or not information
is material will almost always revolve around a fact-specific inquiry. Questions
regarding whether information is material and/or non-public should be directed
to the Compliance Officer.
Information, whether material or not, will be "non-public" when it has not yet
been made available to the general public through normal channels of
communication. This would include SEC filings, public announcements and other
accepted means of public communication, as well as the passage of sufficient
time to ensure widespread availability. It should be noted that information
about clients is always "non-public," must be kept confidential and must never
be disclosed in contravention of SIFE's policies and procedures under any
circumstances.
2.6 Rules Governing "Insider Trading":
The following rules apply, without exception, to every person to whom any part
of this Code applies:
(a) No Insider may engage in any "insider trading" (i.e., using
any material, non-public information, no matter how acquired,
in his or her own transactions) on his or her own behalf or on
behalf of others;
- --------------------
(2) "Immediate family" means a person's spouse, children under the age of 25
residing with such person, and any trust or estate in which such person or any
member of his or her immediate family has a substantial beneficial interest,
unless neither such person or any member of his or her immediate family is able
to control or participate in the investment decisions of such trust or estate.
4
<PAGE>
(b) No Insider may communicate any material, non-public
information, no matter how acquired, to any person, whether or
not such person is an Access Person ("tipping");
(c) No Insider may recommend the purchase or sale of any
securities to any other person on the basis of material,
non-public information, no matter how acquired;
(d) No person to whom any part of this Code applies may provide
assistance to anyone who is engaged in any of the above
activities.
Information about actual purchase or sale decisions, contemplated purchases or
sales, or other transactions under consideration by SIFE, whether or not
actually authorized, must be kept confidential. An Access Person shall not
divulge to any person contemplated or completed securities transactions of any
SIFE client, except in the performance of his or her duties, unless such
information previously has become a matter of public knowledge. Research
information on portfolio transactions must not be divulged to persons who do not
have a need to know such information in connection with their employment by
SIFE.
2.7 Penalties under Securities Laws: Under the various federal securities laws,
penalties which may be imposed for insider trading, market manipulation and
other violations include civil liability for damages, temporary or permanent
suspension from the securities and/or investment advisory business, and, in
particularly egregious cases, criminal penalties. Persons in a control
relationship with anyone found to have violated the insider trading provisions
of the federal securities laws may also be held civilly and criminally liable.
Any violation of the rules and policies set forth above will be grounds for
immediate termination and, under appropriate circumstances, notice to the SEC or
other appropriate authority, as further described under "Enforcement of the
Code; Penalties for Violation" below.
SECTION 3: RESTRICTIONS ON PERSONAL SECURITIES TRANSACTIONS
The fundamental purpose of this Code is to provide legal protection to the
investment advisory clients of SIFE. At the same time SIFE believes that, as a
matter of policy, a code of ethics should not inhibit responsible personal
investment by professional investment personnel, within boundaries necessary and
appropriate to protect the client portfolios. This policy is based upon the
belief that personal investment experience can lead over time to a better sense
of the individual's professional investment responsibility. If, however, such
personal investment experience should involve securities which are suitable for
investment for any client portfolio, the possibility of overlapping transactions
presents a clear conflict of interest. The provisions of this Code have been
designed to foster personal investment while minimizing the potential for
conflict of interest, and establishing safeguards against any misuse of a
position of trust.
Unless exempted, the restrictions on personal securities transactions described
below will apply to all purchases and sales of securities by an Access Person.
Personal securities transactions are defined as all purchases and sales of
securities for by and Access Person for his or her account, for the account of a
member of his or her immediate family or for any account in which such Access
Person or a member of his or her immediate family may have a direct or indirect
5
<PAGE>
beneficial ownership interest, or any account for which the access person or
member of his or her immediate family may provide investment advice for. Most of
such transactions are also subject to the reporting requirements described in
the following sections.
3.1 Exempted Securities:
Trading (including, in the case of open-end investment company securities,
purchases and redemptions) in the following securities is exempted from the
prior clearance and quarterly reporting requirements described below:
1. United States Government securities;
2. High quality short-term money market instruments;
3. Bank certificates of deposit; and
4. Shares of open-end investment companies registered under the 1940 Act.
Please note that, while shares of open-end investment companies are exempt from
the prior clearance and quarterly reporting requirements, transactions in
closed-end investment companies and unit trusts must be both pre-approved and
reported quarterly.
3.2 Exempted Transactions:
The following transactions are exempted from the prior clearance requirements
(but not the quarterly reporting requirements described below):
1. Purchases or sales effected in any account over which the Access Person
does not have direct or indirect influence or control;
2. Purchases or sales which are involuntary (e.g., mandatory sale or
exchange in connection with a merger or acquisition) or non-volitional
(e.g., purchases in connection with dividend reinvestment plans);
3. Purchases pursuant to the exercise of rights acquired directly from an
issuer, and sales of rights so acquired; and
4. Transactions which receive the prior approval of the Compliance Officer
on the basis that the potential for harm to any investment advisory
client of SIFE is remote because the transactions would be unlikely to
affect the market price of such security or because such transactions
are not related economically to the securities to be purchased, sold or
held by any investment advisory client of SIFE.
3.3 Prior Clearance Procedure:
Prior to effecting any transaction in any security (other than those exempted,
as described above), an Access Person must notify the Compliance Officer, in
writing, of the proposed transaction, including the name, title and amount of
the security involved, using the Prior Approval Form, in the form attached
hereto as Exhibit A. Upon receipt of the Prior Approval Form the Compliance
Officer shall (a) confirm with the appropriate portfolio management personnel
that the security has not been traded by SIFE in the past seven calendar days,
and is not under consideration by SIFE for trading, and (b) otherwise determine
whether such proposed
6
<PAGE>
transaction would or would not be consistent with this Code. Such conclusion
shall be promptly communicated in writing to the Access Person making the
request, at which point the trade may be executed, if approved. Any approval
which is granted will be good for four business days only (including the date of
the request), after which time the approval will no longer be valid and the
Access Person will be required to reapply for approval if the transaction has
not been executed in full. The Compliance Officer will maintain written records
of applications made and decisions rendered hereunder, and will make such
records available in the manner required by the Advisers Act.
Absent extraordinary circumstances, no Access Person shall be deemed to have
violated this Code if such Access Person has been advised in writing by the
Compliance Officer that the transaction in question is consistent with this Code
after disclosure to the Compliance Officer of all relevant information
respecting the transaction and the access person.
3.4 Private Placement Transactions:
The prior clearance procedure described above applies to transactions by Access
Persons in a private placement (for purposes of this Code, a "private placement"
is a non-public distribution of securities by a private or a public company). In
connection with a private placement transaction, the Compliance Officer, in
consultation with the appropriate portfolio management personnel, will take into
account whether the investment opportunity should be reserved for investment
advisory clients of SIFE, and whether the opportunity is being offered to the
Access Person by virtue of his or her position with SIFE.
3.5 "Blackout" Periods:
An Access Person may not be granted prior clearance to execute a securities
transaction on a day during which any investment advisory client account has a
pending "buy" or "sell" order in that same security. In addition, Access Persons
may not buy or sell a security within at least seven calendar days before or
after any investment advisory client account has traded in that security. Any
profits realized by any Access Person on trades (exclusive of transaction costs)
within these periods must be disgorged by the Access Person to the affected
investment advisory account(s).
3.6 Other Restrictions on Personal Securities Transactions:
The following additional restrictions are intended to prevent any suggestion or
implication that Access Persons are using their relationship with SIFE to obtain
treatment disadvantageous to the clients of SIFE.
Dealing with Clients: Other than securities issued by a mutual fund
sponsored or advised by SIFE, no Access Person may knowingly sell any
security or other asset or property to, or purchase any security or
other asset property from, any client of SIFE.
Short-Term Trading: While SIFE believes that the extent of personal
securities trading should be left to an individual's judgment,
consistent with his or her personal objectives,
7
<PAGE>
risk tolerance, and past practices, all Access Persons should be aware
that short-term trading may increase the risk of problems arising under
this Code. Accordingly, no purchase and sale, or sale and purchase, of
the same or equivalent securities by an Access Person will be allowed:
1. within a period of sixty (60) calendar days, for securities issued
by a company with a market capitalization of less than 1 billion
dollars and held or considered by a SIFE investment advisory client
account;
2. within a period of thirty (30) calendar days, for securities issued
by a company with a market capitalization of at least 1 billion
dollars and held or considered by a SIFE investment advisory client
account; and
3. within a period of three (3) calendar days, for securities not held
or considered by a SIFE investment advisory client account, without
regard to the market capitalization of the issuer.
Short Sales: Short sales are permitted only for securities not held or
considered for purchase by an investment advisory account, and are
subject to the prior clearance requirements described above.
Convertibles, Options and Derivatives: All the restrictions described
above apply with equal force to (a) any security which is convertible
into, or exchangeable or exercisable for, a security, (b) any put or
call option, whether tied to a specific security or an index, that is
being purchased or sold, or is being actively considered for purchase
or sale, by or for any investment advisory account of SIFE.
Initial and Secondary Public Offerings ("Hot Issues"): No Access Person
may purchase any security in any initial or secondary public offering,
whether or not such issue is construed as a "hot issue" under the NASD
Conduct Rules. This restriction is imposed in order to preclude the
possibility of an Access Person benefiting improperly from his or her
position with respect to any investment advisory account of SIFE.
SECTION 4: REPORTING REQUIREMENTS
As required by the Investment Company Act Rule 17j-1 and Investment Advisers'
Act Rule 204-2, each Access Person must file with the Compliance Officer
quarterly a record of all personal trading activity, as well as annual reports
of securities holdings. Persons covered by the Code are also required to have
sent to the Compliance Officer duplicate copies of brokerage firm confirmation
statements, for cross-checking purposes relative to the prior clearance
requirement and other reporting requirements. These reports will be reviewed to
determine whether there has been any violation of the provisions of this Code,
and will be made available to the SEC and any other appropriate regulatory
authority (individually and collectively the "regulator") whenever such
regulator undertakes a compliance examination of SIFE. In addition to assisting
to ensure compliance with the provisions of this Code, the reporting
requirements serve to create greater consciousness of possible conflicts and, at
the same time, provide a means to detect and prevent
8
<PAGE>
possible problems. The reporting system is an essential part of the compliance
system, and must be adhered to strictly and without exception.
4.1 Quarterly Reports:
Records of personal securities transactions (as defined in the beginning of
Section 3) must be filed with the Compliance Officer not later than ten (10)
calendar days after the end of each calendar quarter. Each report must contain
the following information:
1. The date of every transaction, the title and number of shares, and the
principal amount of each security involved;
2. The interest rate and maturity date of the security if applicable;
3. The nature of the transaction (e.g., purchase, long or short sale,
option or any other type of acquisition or disposition);
4. The price at which such transaction was effected;
5. The name of the broker, dealer or bank effecting the transaction; and
6. A summary of all securities held.
This reporting requirement is satisfied by the filing of an Exhibit B with the
Compliance Officer and fulfilling the duplicate account statement requirement as
set out in Section 4.4, provided such account statement contains all required
information.
In order to facilitate reporting by Access Persons who do not hold any
securities and have not executed any personal securities transaction for a
quarter, those Access Persons may, instead of filing a personal securities
transaction report, file instead a Simplified Quarterly Report in the form set
forth in Exhibit C to this Code. Please note that certain transactions exempted
from the prior clearance procedure are not exempted from the quarterly reporting
procedure. For a list of transactions that are exempted from the prior clearance
procedure, see Section 3.2 "Exempted Transactions" above.
All Access Persons' (other than the Compliance Officer's) personal trading
activity must be reviewed by the Compliance Officer. The Compliance Officer's
personal trading activity must be reviewed by the General Counsel or, in his
absence, the Chief Financial Officer, of SIFE. The results of the quarterly
reporting and review procedure and the related documentation must reviewed by
the Compliance Officer, with such reviews documented; all such presentations
will be made, and documentation kept, by the Compliance Officer, or other person
as the Compliance Officer may designate.
In addition to the quarterly reports required above, Access Persons promptly
shall report any transaction which is, or might appear to the Access Person to
be, in violation of this Code.
<PAGE>
4.2 Initial Disclosure of Personal Holdings:
---------------------------------------
Within 10 days of the commencement of employment with SIFE or upon a change of
duties that would qualify a person as such, each Access Person will be required
to disclose, in writing, all personal securities holdings owned directly or
beneficially. This disclosure list shall include all securities held, whether or
not exempt from the prior clearance and/or quarterly reporting procedures
outlined above. The disclosure shall be in a form substantially similar to the
form titled "Initial and Annual Disclosure of Personal Securities Holdings" in
Exhibit D and shall also include a completed Exhibit B titled "Quarterly and
Annual Certification to Brokerage Account Statement."
4.3 Annual Disclosure of Personal Holdings:
--------------------------------------
Each Access Person will be required to provide annually an updated listing of
personal holding holdings, current as of 30 days prior to submission, in a form
substantially similar to the form titled "Initial and Annual Disclosure of
Personal Securities Holdings" in Exhibit D. In addition, each Access Person
shall also file an Exhibit B, disclosing all brokerage accounts held or
beneficially controlled by the Access Person, simultaneous with the filing of
Exhibit D. Access Persons who do not either directly or beneficially hold any
reportable securities, must also file a null report in a form substantially
similar to Exibit D.
4.4 Duplicate Confirmations and Account Statements:
----------------------------------------------
Each Access Person shall direct his or her securities broker to provide to the
Compliance Officer with duplicate copies of trade confirmations and copies of
periodic securities account statements, at the earlier of commencement of
employment with SIFE or the opening of the subject account. These documents are
intended to permit SIFE to better ensure the effectiveness of its compliance
efforts under this Code.
4.5 Enforcement of the Code; Penalties for Violation:
------------------------------------------------
The enforcement of the rules and procedures set forth in this Code is the
responsibility of SIFE's Compliance Officer. It is obvious that all possible
situations cannot be anticipated by the Code, and that, under certain
circumstances, exceptions may be appropriate. Any employee contemplating a
personal securities transaction, or anyone who has any other question as to any
part of the Code or SIFE's compliance policies should consult with the
Compliance Officer.
Any person charged with a violation of the Code will have an opportunity to meet
with the Compliance Officer and present such oral or written information that
may be necessary or appropriate to address any apparent violation of this Code.
The President of SIFE, after reviewing all the information submitted by the
Compliance Officer, and upon a determination that a violation of this Code has
occurred, may impose such sanctions as he deems appropriate, including but not
limited to a memorandum in the violator's personnel file, an appropriate fine,
suspension or termination of the personal trading privilege, or suspension or
termination of employment. Further, if the violation involves any usurpation of
an opportunity otherwise available to any client of SIFE, any profits realized
may have to be disgorged and paid over to such client. All material violations
of this Code will be reported periodically to the Board of Trustees of SIFE and
to the Board of Trustees of any registered investment company advised by SIFE.
4.6 Annual Report of Compliance Officer to Board of Trustees:
--------------------------------------------------------
Annually, or as frequently as might be necessary or appropriate, the Compliance
Officer will file a report with the Board of Directors of SIFE and the Board of
Trustees of any registered investment company advised by SIFE. Such report will
detail any material compliance violations, including remedial action taken by
the Compliance Officer and/or the President.
4.7 Other Important Restrictions:
----------------------------
Receipt of Gifts: No Access Person may accept any gift or other item
worth more than fifty dollars ($50.00) from any person doing business
with SIFE. This restriction shall not be interpreted to prohibit
acceptance of an occasional meal or entertainment event ticket,
provided that such gifts are not so frequent or extensive as to raise
any question of propriety. This restriction does not apply to gifts to
or from any Access Person to or from any member of such Access Person's
immediate family, provided, however, that the circumstances surrounding
such gift does not give rise to the appearance of impropriety, any
conflict of interest or violation of the provisions of this Code.
Service as Director: No Access Person may serve as an officer or
director of any publicly held entity without the prior authorization of
SIFE, and disclosure of such service to the Board of Trustees of any
investment company advised by SIFE. Further, if such permission is
given, then any Access Person may be subject to such other procedures
or restrictions as SIFE may determine.
<PAGE>
SECTION 5: PROVISIONS APPLICABLE TO INDEPENDENT TRUSTEES
5.1 Definition:
----------
The "Independent Trustees" are those persons serving on the Board of Trustees of
any registered investment company advised by SIFE who are not "interested
persons" of the investment company, as defined in Section 2(a)(19) of the 1940
Act. Although the definition in the 1940 Act is quite long and complex,
generally speaking "Independent Trustees" are those persons who are neither
employed by, nor have any direct or indirect beneficial interest in the
ownership of, SIFE.
5.2 Restrictions:
------------
Except in extraordinary circumstances, and with the concurrence of the
Compliance Officer, no Independent Trustee will be granted access to any area of
SIFE where portfolio trading and/or significant research activities take place.
In addition, the Independent Trustees are prohibited from contacting any of
SIFE's portfolio management personnel and discussing any subject relating to any
portfolio managed by SIFE, specifically including any current or proposed
transactions, other than during the course of Board or Committee meetings for
which minutes are taken.
The Independent Trustees will receive certain portfolio and other confidential
information in connection with their fiduciary and oversight duties. All such
information must be held in strict confidence, and may not be acted upon in
contravention of the broad principles set forth above in the section entitled
"Legal Concepts and Restrictions."
5.3 Reporting Provisions:
--------------------
Pursuant to SEC Rule 17j-1(d)(2)(ii), an Independent Trustee is not required to
report a security transaction unless, at the time he or she entered into the
transaction, he knew, or in the ordinary course of fulfilling his duties as a
trustee, should have known that, during the 15-day period preceding or following
such Independent Trustee's security transaction, the security is or was
purchased or sold by the registered investment company or such purchase or sale
by such registered investment company is or was considered by the registered
investment company or SIFE. Subject to the foregoing, the restrictions
(including the prior clearance procedures) and requirements associated with the
reporting of personal securities transactions described in this Code will not
apply to any Independent Trustee. However, all Independent Trustees shall file a
report in the form set forth as Exhibit E to this Code, at least quarterly,
stating that the Trustee has not violated Rule 17j-1(d)(2)(ii) while placing
trades for his/her personal accounts or any accounts that he/she beneficially
controls. It should be noted, however, that the legal prohibitions on insider
trading, market manipulation and underwriting apply with equal force to
Independent Trustees.
<PAGE>
<TABLE>
EXHIBIT A
PRE-APPROVAL FORM FOR SECURITIES TRANSACTIONS
To Be Completed By Employee
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Name of Security Type of Type of # of Shares Price Per Total Amount Brokerage Used
Security Symbol Security Trade Share
Traded
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
5
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
To Be Completed by Portfolio
<CAPTION>
-----------------------------------------------------------------------------------------------
Held by SIFE? Considered for Traded by SIFE Price, Date & Time Traded at by SIFE,
Purchase by SIFE in in Last 7 Days? if Traded in Last 7 Days
Last 7 Days?
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
<S> <C>
1
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
2
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
3
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
4
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
5
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
6
-----------------------------------------------------------------------------------------------------
</TABLE>
Employee:
Print Name: ________________________
Date & Time: _______________________
Signature: _________________________
Portfolio Manager: Compliance Officer:
Print Name: ________________________ Print Name: _______________________
Date & Time: _______________________ Date & Time: ______________________
Signature: _________________________ Signature: ________________________
Exhibit A
<PAGE>
EXHIBIT B
QUARTERLY AND ANNUAL CERTIFICATION TO
BROKERAGE ACCOUNT STATEMENT
I hereby certify that the following list of brokerage accounts are all the
brokerage accounts that I or any immediate family member may have a direct or
beneficial interest in, or provide investment advice for. Additionally, I hereby
certified that I have instructed the broker for each of the following accounts
to provide duplicate transaction and monthly or quarterly summary statements to
SIFE as required by the Restated Code Of Ethics in Section 4.4.
Name on Account Name of Broker Broker Phone # Account Number
1. _______________ _____________ _____________ ______________
2. _______________ _____________ _____________ ______________
3. _______________ _____________ _____________ ______________
4. _______________ _____________ _____________ ______________
5. _______________ _____________ _____________ ______________
6. _______________ _____________ _____________ ______________
7. _______________ _____________ _____________ ______________
8. _______________ _____________ _____________ ______________
Signature: _________________________
Print Name: _________________________
Date: _________________________
Exhibit B
<PAGE>
EXHIBIT C
SIMPLIFIED QUARTERLY REPORT
FOR ACCESS PERSONS WITH NO BROKERAGE ACCOUNTS
OR INDIVIDUAL SECURITIES
I _______________________________, hereby certify that during the quarter ending
________________________________, there were no securities transactions that I
am required to report pursuant to the SIFE Restated Code of Ethics, and that I
do not directly or beneficially hold or control any securities that I would be
required to report under the Code of Ethics.
Signature: _________________________
Print Name: _________________________
Date: _________________________
Exhibit C
<PAGE>
EXHIBIT D
INITIAL AND ANNUAL DISCLOSURE
OF PERSONAL SECURITIES HOLDINGS
I am filing this disclosure as
_____ Initial Disclosure of Personal Securities Holdings
_____ Annual Disclosure of Personal Securities Holdings
INITIAL DISCLOSURES
I hereby certify that as of the date set forth below, the following constitutes
all securities holdings in which I either directly or beneficially have an
interest:
Name of Security Type of Security Number of Shares Value of Holding
- ---------------- ---------------- ---------------- ----------------
(include additional pages, if necessary)
Signature: _________________________
Print Name: _________________________
Date: _________________________
ANNUAL DISCLOSURES
As of the date set forth below, (check one of the following)
I hereby certify that I do not directly or beneficially have any
reportable securities under the Code of Ethics, and that I understand that I
must immediately notify the Compliance Officer if I have any reportable
securities under the Code of Ethics.
I hereby certify that as of the date set forth below, the following
constitutes all securities holdings in which I either directly or beneficially
have an interest:
Name of Security Type of Security Number of Shares Value of Holding
- ---------------- ---------------- ---------------- ----------------
(include additional pages, if necessary)
Signature: _________________________
Print Name: _________________________
Date: ________________________
<PAGE>
19
EXHIBIT E
INDEPENDENT TRUSTEES' 17j-1 REPORT
To Be Completed By Each Independent Trustee
I hereby certify that during the quarter ended _______________________________,
all personal securities transactions, if any, effected by me or for my direct or
indirect benefit complied with the provisions of Rule 17j-1(c)(3)(ii) under the
Investment Company Act of 1940, as amended.
Signature: _________________________
Print Name: _________________________
Date: _________________________
<PAGE>
SIFE
RESTATED CODE OF ETHICS
ACKNOWLEDGMENT OF RECEIPT
BROKERAGE ACCOUNT AUTHORIZATION
I acknowledge receipt of the SIFE Restated Code of Ethics, and understand that
my personal securities transactions are subject to the Code's terms. I certify
that, to the best of my knowledge, I have complied, and will comply, with the
terms of the Restated Code of Ethics, and hereby authorize access to my
brokerage accounts by SIFE, as it shall deem necessary or appropriate for
compliance or security purposes.
Print Name:_____________________________ Date:________________________
Signature:______________________________ SSN:_________________________
- --------
===================================
Power of Attorneys
===================================
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
--------------------------------
The undersigned Officer of SIFE Trust Fund (the "Trust") hereby
appoints JULIE ALLECTA, MITCHELL E. NICHTER and DAVID A. HEARTH (with full power
to each of them to act alone), his attorney-in-fact and agent, in all
capacities, to execute and to file any documents relating to the Registration
Statement of the Trust on Forms N-1A and N-14 under the Investment Company Act
of 1940, under the Securities Act of 1933, and under the laws of all states and
other domestic and foreign jurisdictions, including any and all amendments
thereto, covering the registration statement and the sale of shares by the
Trust, including all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, including applications for
exemptive orders rulings or filings of proxy materials. The undersigned grants
to each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he could
do if personally present, thereby ratifying all that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue hereof.
The undersigned Officer hereby executes this Power of Attorney as of
this 30th day of November, 1999.
/s/ Sam Marchese
- ----------------
Sam Marchese
President & CEO, SIFE Trust Fund
