<PAGE>
Registration Nos.
Securities Act - 2-58160
Investment Company Act - 811-2726
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 24
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23
State Farm Interim Fund, Inc.
____________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
One State Farm Plaza, Bloomington, Illinois 61710
__________________________________________________ ____________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (309) 766-2029
Janet Olsen
Bell, Boyd & Lloyd
Roger Joslin 3 First National Plaza
One State Farm Plaza Suite 3300, 70 West Madison
Bloomington, Illinois 61710 Chicago, Illinois 60602
____________________________________________________________________
(Names and addresses of agents for service)
__________
X It is proposed that this filing will become effective on
April 1, 1995 pursuant to Rule 485 (b)
__________
Amending the revised prospectus, Statement of Additional Information and Part
C and filing Exhibits
Registrant has elected to register an indefinite number of securities pursuant
to Rule 24f-2. On January 25, 1996, Registrant filed its Rule 24f-2 Notice for
the year ended November 30, 1995.
Total Number of Pages ________
(including attachments and exhibits)
Exhibit Index is on Page _______
<PAGE>
STATE FARM INTERIM FUND, INC.
----- ---- ------- ----- ----
CROSS REFERENCE SHEET
Pursuant to Rule 404(a) of Regulation C
Item Number Location or Caption*
---- ------ -------- -- --------
Part A (Prospectus)
---- - ------------
1 . . . . . . . .Front Cover
2 (a) . . . . . .Fee Table
2 (b), (c). . . .Not Applicable
3 (a) . . . . . .Financial Highlights
3 (b), (c). . . .Not Applicable
3 (d) . . . . . .Financial Highlights
4 (a) . . . . . .The Fund;
Investment Objective and Policies;
Organization and Capital Stock
4 (b) . . . . . .Investment Objective and Policies;
Investment Restrictions
4 (c) . . . . . .Investment Risks
5 (a) . . . . . .Management of the Fund
5 (b), (c). . . .Management of the Fund;
Fee Table
5 (d) . . . . . .Management of the Fund
5 (e), (f). . . .Management of the Fund; Fee Table;
Financial Highlights
5 (g) . . . . . .Not Applicable
5A . . . . . . .The information called for is contained in
Registrant's annual report to shareowners
6 (a) . . . . . .Organization and Capital Stock
6 (b), (c), (d) .Not Applicable
6 (e) . . . . . .Cover Page
6 (f), (g). . . .Dividends, Distributions and Taxes
6 (h) . . . . . .Not Applicable
7 . . . . . . . .Purchase of Fund Shares; Retirement Plans
7 (a) . . . . . .Management of the Fund
<PAGE>
STATE FARM INTERIM FUND, INC.
----- ---- ------- ----- ----
CROSS REFERENCE SHEET
Pursuant to Rule 404(a) of Regulation C
(Continued)
Item Number Location or Caption*
- ---- ------ -------- -- ---------
7 (b) . . . . . .Determination of Net Asset Value;
Purchase of Fund Shares
7 (c) . . . . . .Not Applicable
7 (d) . . . . . .Purchase of Fund Shares
7 (e), (f). . . .Not Applicable
8 (a) . . . . . .Redemption of Fund Shares;
Signature Guarantee;
Systematic Withdrawal Program; Exchange of
Fund Shares
8 (b), (c). . . .Not Applicable
8 (d) . . . . . .Redemption of Fund Shares
9 . . . . . . . .Not Applicable
Part B (Statement of Additional Information)
---- - ---------- -- ---------- ------------
10 (a), (b). . . .Front Cover
11 . . . . . . . .Table of Contents
12 . . . . . . . .Not Applicable
13 (a) . . . . . .Investment Objective and Policies
13 (b), (c). . . .Investment Restrictions
13 (d) . . . . . .Not Applicable
14 (a), (b). . . .Directors and Officers
14 (c) . . . . . .Not Applicable
15 (a) . . . . . .Not Applicable
15 (b) . . . . . .General Information - Ownership of Shares
<PAGE>
STATE FARM INTERIM FUND, INC.
----- ---- ------- ----- ----
CROSS REFERENCE SHEET
Pursuant to Rule 404(a) of Regulation C
(Continued)
Item Number Location or Caption*
- ---- ------ -------- -- --------
15 (c) . . . . . .Directors and Officers
16 (a)(i). . . . .Investment Advisory and Other Services;
Part A - Management of the Fund
16 (a)(ii) . . . .Directors and Officers
16 (a)(iii), (b) .Management Services Agreement; Part A - Management
of the Fund
16 (c) . . . . . .Not Applicable
16 (d), (e). . . .Management Services Agreement; Service Agreement
16 (f), (g). . . .Not Applicable
16 (h) . . . . . .General Information - Custody of Assets;
General Information - Independent Auditors
16 (i) . . . . . .Transfer Agent Agreement
17 (a) . . . . . .Portfolio Transactions
17 (b) . . . . . .Not Applicable
17 (c), (d). . . .Portfolio Transactions
17 (e) . . . . . .Not Applicable
18 (a), (b). . . .Not Applicable
19 (a) . . . . . .Purchase and Redemption of Fund Shares
19 (b) . . . . . .Determination of Net Asset Value
19 (c) . . . . . .Not Applicable
20 . . . . . . . .Additional Tax Considerations
21 (a) . . . . . .Underwriting Agreement
21 (b), (c). . . .Not Applicable
22 (a) . . . . . .Not Applicable
22 (b) . . . . . .Performance Information
23 . . . . . . . .Financial Information
<PAGE>
STATE FARM INTERIM FUND, INC.
----- ---- ------- ----- ----
CROSS REFERENCE SHEET
Pursuant to Rule 404(a) of Regulation C
(Continued)
Item Number Location or Caption*
- ---- ------ -------- -- --------
Part C (Other Information)
---- - ------ ------------
24 . . . . . . . .Financial Statements and Exhibits
25 . . . . . . . .Persons Controlled by or Under Common Control with
Registrant
26 . . . . . . . .Number of Security Holders
27 . . . . . . . .Indemnification
28 . . . . . . . .Business and Other Connections of Investment
Adviser
29 . . . . . . . .Principal Underwriters
30 . . . . . . . .Location of Accounts and Records
31 . . . . . . . .Management Services
32 . . . . . . . .Undertakings
* References are to the captions in the part of the registration statement
indicated unless noted otherwise.
<PAGE>
PROSPECTUS--APRIL 1, 1996
State Farm Interim Fund, Inc.
ONE STATE FARM PLAZA, BLOOMINGTON, ILLINOIS 61710
--------------------------------------------
| For Account Information and Shareowner |
| Services: (309) 766-2029 |
|------------------------------------------|
| For Price Information Only: |
| (800) 447-0740 |
--------------------------------------------
Offered to the Agents and Employees of
the State Farm Insurance Companies and their families
The investment objective of the Fund is the realization over
a period of years of the highest yield consistent with
relative price stability (relatively low volatility). The
Fund seeks to achieve its investment objective through
investment in high quality debt securities with primarily
short-term (less than five years) and intermediate-term
(five to fifteen years) maturities.
Shares of the Fund are offered at their net asset value.
There is no sales charge. The Fund is not a "money market"
fund, and the purchase and redemption price of its shares
changes from day to day.
--------------------------------------------------
This prospectus contains information you should know before
investing in the Fund. Please read it and keep it for future
reference. A Statement of Additional Information dated
April 1, 1996 containing further information about the Fund,
which is incorporated herein by reference, has been filed with
the Securities and Exchange Commission. You can obtain a copy
without charge by writing to State Farm Investment Management
Corp., One State Farm Plaza, Bloomington, Illinois 61710 or by
calling the shareowner services number stated above.
--------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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>
FEE TABLE
The Fund is 100% no-load; you pay no fees to purchase, exchange or redeem
shares, nor any ongoing marketing ("12b-1") expenses. Lower expenses benefit
you by increasing the Fund's investment return.
Shown below are all expenses the Fund incurred during its 1995 fiscal year.
Expenses are expressed as a percentage of fiscal 1995 average net assets.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES ANNUAL FUND OPERATING EXPENSES
<S> <C> <S> <C>
Sales load "charge" on purchases NONE Management fee 0.19%
Sales load "charge" on reinvested dividends NONE Distribution ("12b-1") fees NONE
Redemption fees NONE Other expenses 0.06%
Exchange fees NONE -----
TOTAL FUND EXPENSES 0.25%
Example
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and 1 year 3 years 5 years 10 years
(2) redemption at the end of each ------ ------- ------- --------
time period........................ $3 $8 $14 $32
</TABLE>
The purpose of this table is to help you understand the various costs and
expenses that an investor in the Fund will bear directly or indirectly. (See
"Management of the Fund.") There is a charge (currently $7.50) for the
payment of redemption proceeds by wire transfer. (See "Redemption of Fund
Shares.")
THIS IS AN ILLUSTRATION ONLY. The figures in the example are not necessarily
representative of past or future expenses and actual expenses and performance
may be greater or less than that shown.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
PER SHARE INCOME AND CAPITAL CHANGES (for a share outstanding throughout the
period)
The following information has been audited by Ernst & Young LLP, independent
auditors, whose report thereon is unqualified. The audited financial statements
of the Fund, the auditor's report thereon and additional performance information
are contained in the Fund's annual report dated November 30, 1995, which may be
obtained from the Fund upon request at no cost.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 9.72 10.52 10.46 10.50 10.16 10.17 9.86
Income from Investment Operations
- ---------------------------------
Net investment income.......... .70 .71 .74 .78 .78 .82 .81
Net gain or loss on securities
(both realized and unrealized). .43 (.80) .06 (.04) .34 (.01) .31
-------------------------------------------------------------------------------------
Total from investment operations.. 1.13 (.09) .80 .74 1.12 .81 1.12
Less Distributions
- ------------------
Dividends (from net investment
income)....................... (.70) (.71) (.74) (.78) (.78) (.82) (.81)
Distributions (from capital
gain)......................... -- -- -- -- -- -- --
-------------------------------------------------------------------------------------
Total distributions.............. (.70) (.71) (.74) (.78) (.78) (.82) (.81)
Net asset value, end of period... $ 10.15 9.72 10.52 10.46 10.50 10.16 10.17
=====================================================================================
Total Return..................... 11.91% (.85%) 7.82% 7.19% 11.41% 8.27% 11.82%
- ------------
Ratios/Supplemental Data
- ------------------------
Net assets, end of period
(millions).................... $ 104.7 94.3 103.7 85.9 66.8 52.7 42.2
Ratio of expenses to average net
assets........................ .25% .22% .25% .27% .28% .30% .31%
Ratio of net investment income to
average net assets............ 7.00% 7.00% 7.00% 7.30% 7.65% 8.12% 8.16%
Portfolio turnover rate (b)...... 17% 15% 15% 15% 14% 14% 17%
Number of shares outstanding at
end of period (millions)...... 10.3 9.7 9.9 8.2 6.4 5.2 4.2
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
1988 1987 1987 1986
Net asset value, beginning of
period........................ 9.99 10.05 10.21 9.91
Income from Investment Operations
- ---------------------------------
Net investment income............ .78 .39 .80 .89
Net gain or loss on securities
(both realized and unrealized). (.13) (.06) (.16) .30
------------------------------------------------------------
Total from investment
operations................... .65 .33 .64 1.19
Less Distributions
- ------------------
Dividends (from net investment
income)...................... (.78) (.39) (.80) (.89)
------------------------------------------------------------
Distributions (from capital
gain)........................ -- -- -- --
Total distributions.............. (.78) (.39) (.80) (.89)
Net asset value, end of period... 9.86 9.99 10.05 10.21
============================================================
Total Return..................... 6.67% 6.67%(a) 6.33% 12.40%
- ------------
Ratios/Supplemental Data
- ------------------------
Net assets, end of period
(millions)................... 32.9 23.9 16.8 11.7
Ratio of expenses to average net
assets........................ .36% .41%(a) .41% .42%
Ratio of net investment income to
average net assets............ 7.85% 7.78%(a) 7.77% 8.75%
Portfolio turnover rate (b)...... 15% 9%(a) 12% 6%
Number of shares outstanding at
end of period (millions)...... 3.3 2.4 1.7 1.1
</TABLE>
Notes: (a) Ratios and rates have been calculated on an annualized basis.
-2-
<PAGE>
THE FUND
The Fund is a no-load, open-end, diversified, management investment company
(mutual fund). The Fund is a no-load fund, which means that it imposes no
sales charges or commissions. The Fund is "open-end" because it continuously
offers its shares for sale and redeems its shares upon request of the
shareowners.
The Fund makes available to investors an investment portfolio of short-term
and intermediate-term high quality debt securities under the continuous
supervision of experienced investment management. By combining individual
shareowner investments into a pool of assets, the Fund is able to invest in
securities which require sizable minimum purchases, but often provide
investors with higher yields than securities purchasable in smaller amounts.
Through ownership of shares of the Fund, as contrasted with ownership of a
number of individual securities, shareowners are relieved of many details in
the selection and management of their investments and the safeguarding of
securities, and their bookkeeping and income tax records are greatly
simplified. In addition, the Fund provides its shareowners with liquidity, as
shares can normally be redeemed at any time at their net asset value. However,
ownership of shares of the Fund does not constitute a complete financial
program. The Fund is intended to serve primarily as an interim investment
medium, pending the shareowner's commitment of the funds to longer-term
investments or to other uses.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is the realization over a period of
years of the highest yield consistent with relative price stability
(relatively low volatility). The Fund seeks to achieve its investment
objective through investment in high quality debt securities with short-term
and intermediate-term maturities.
In attempting to achieve this objective, the Fund may invest its assets in
the following types of investments:
(1) Obligations of or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government obligations") which may be supported by
the full faith and credit of the U.S. Treasury or may be supported only by the
credit of the particular agency or instrumentality;
(2) Corporate debt securities which are either rated A or better by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S & P"), or deemed by the Fund's investment manager, State Farm Investment
Management Corp. ("Manager"), to be of comparable quality (see "Appendix,
Description of Ratings" in the Statement of Additional Information);
(3) Commercial paper and other money market instruments rated as Prime-1,
Prime-2 or Prime-3 by Moody's (see "Appendix, Description of Ratings" in the
Statement of Additional Information).
Cash may be accumulated in an interest-bearing demand bank savings account
as a temporary measure pending investment in securities.
Subsequent to its purchase by the Fund a security may no longer be rated or
its rating may be reduced below the minimum required for purchase by the Fund.
Neither occurrence will automatically require the elimination of the security
from the Fund's portfolio, but the Manager will consider the reasons for the
change in determining whether to retain the security in the portfolio.
The Fund's investments will typically be distributed in varying amounts
among securities maturing in up to six or seven years from the time of
purchase, but occasionally may extend to securities maturing in no more than
fifteen years from the time of purchase. The average maturity of all
investments owned by the Fund will be changed from time to time on the basis
of the Manager's judgment as to prospective yields and price changes among
securities of different qualities, rates of interest and maturities.
Yields on securities of comparable quality are usually higher for issues
with longer maturities than for those with shorter maturities. An increase in
interest rates will usually reduce the value of the Fund's investments and a
decline in interest rates will usually increase their value. In seeking to
achieve relative price stability over time, the Manager may choose to forego
the higher yields available on securities with longer maturities in favor of
the more limited price volatility of securities with shorter maturities.
At certain times, yields available from securities with shorter maturities
may exceed those on securities of comparable quality but longer maturities. When
these bond market conditions prevail, the Manager may choose to forego the
higher yield and greater price stability of short-term securities if in its
judgment a higher average yield over time will result from investing in issues
with longer maturities.
-3-
<PAGE>
The Fund's investment objective as set forth in the first paragraph of
"Investment Objective and Policies" may not be changed without the approval
of the shareowners. However, the investment policies followed in seeking that
investment objective may be altered from time to time without shareowners'
approval.
INVESTMENT RISKS
Risks are inherent in all securities investments, including mutual funds.
The Fund seeks to achieve relative price stability by investing in high
quality debt securities with primarily short-term and intermediate-term
maturities. However, inherent in the ownership of debt securities is the risk
that the issuer may be unable to make interest and principal payments when
due. The net asset value per share of the Fund may decrease if prevailing
interest rates rise in relation to the interest rates on the Fund's portfolio
securities. There can be no assurance that the objective of the Fund will be
achieved.
INVESTMENT RESTRICTIONS
The Fund will not:
(1) Invest more than 5% of the value of its total assets in securities of
any one issuer except U.S. Government obligations, which may be purchased
without limitation;
(2) Purchase more than 10% of any class of securities of any one issuer
except U.S. Government obligations;
(3) Invest more than 5% of its total assets (at the time of the investment)
in securities of companies with records of less than three years continuous
operation, including that of predecessors;
(4) Invest more than 25% of the value of its total assets in any one
industry except that the Fund may invest more than 25% of the value of the
Fund's total assets in certificates of deposit or bankers' acceptances of U.S.
commercial banks when deemed advisable in view of yield differentials and
money market conditions (this restriction is not applicable to securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities).
The policies described in the above paragraph, which cannot be changed
without the approval of a majority of the outstanding shares (as defined in
the Investment Company Act of 1940), are some of the important restrictions
upon investments of the Fund. All of the Fund's investment restrictions are
set forth in the Statement of Additional Information.
PURCHASE OF FUND SHARES
Shares of the Fund may be purchased by agents and employees of the State
Farm Insurance Companies and members of their families.
To open an account eligible investors should complete and sign the Application
furnished with this prospectus and mail it to State Farm Investment Management
Corp. ("Manager") together with either a check (minimum $50) made payable to
State Farm Investment Management Corp., or a compensation deduction
authorization, or both. Agents and employees may authorize a compensation
deduction (minimum $20) through the State Farm Insurance Companies by completing
the Compensation Deduction Authorization section of the Application.
Subsequent investments (minimum $50) may be made at any time by mailing to
the Manager a check accompanied by the detachable purchase form at the bottom
of the confirmation. Similarly, agents and employees may authorize, change or
cancel a compensation deduction by completing and signing the reverse side of
the detachable purchase form and mailing it to the Manager. The Fund will
accept investments and compensation deduction changes by letter from a
shareowner which provides clear instructions and indicates the account
registration and account number.
The Fund will invest the entire dollar amount of each purchase in full and
fractional shares of the Fund at the net asset value next determined after the
order to purchase is received and accepted by the Manager. Unless otherwise
instructed, all income dividends and capital gain distributions will be
reinvested in full and fractional shares. However, a shareowner may request that
income dividends and capital gain distributions be paid in cash. Stock
certificates will not be issued unless the shareowner requests a certificate in
writing. Certificates will be issued for full shares only.
A confirmation of each transaction, except purchases by compensation
deduction, will be mailed to the shareowner by the Manager. A confirmation of
purchases by compensation deduction will be mailed to each shareowner promptly
after the end of each calendar quarter.
-4-
<PAGE>
The Fund reserves the right, in its sole discretion, to reject purchases
when, in the judgment of management, the purchase would not be in the best
interest of the Fund. No order to purchase shares is binding on the Fund until
it has been confirmed in writing and payment has been received by the Fund.
SYSTEMATIC WITHDRAWAL PROGRAM
A shareowner owning $5,000 or more of the Fund's shares at the current net
asset value may provide for the payment of a specified dollar amount from the
shareowner's account to the shareowner or a designated payee monthly,
quarterly or annually.
A shareowner who has a systematic withdrawal program is not permitted to
participate in the compensation deduction plan. The Fund reserves the right to
amend the systematic withdrawal program on 30 days' notice. The program may be
terminated at any time by the shareowner or the Fund. Additional information
may be obtained by contacting State Farm Investment Management Corp., One
State Farm Plaza, Bloomington, Illinois 61710.
RETIREMENT PLANS
INDIVIDUAL RETIREMENT ACCOUNT PLAN -- A prototype Individual Retirement Account
Plan ("IRA") is available through which investors may invest in the Fund and
certain other State Farm funds. Eligible investors who wish to establish an
IRA may request copies of the plan and related documents, including a
disclosure statement which the Internal Revenue Service requires to be
furnished to individuals who are considering adopting an IRA, from State Farm
Investment Management Corp., One State Farm Plaza, Bloomington, Illinois
61710. Commerce Bank acts as custodian of the Plans. The custodian currently
assesses a fee of $1.00 per year per plan participant.
Shares of the Fund and other State Farm mutual funds may be used as an
investment in other IRAs, SEP-IRAs, or other retirement plans (including Keogh
plans, corporate profit-sharing and money purchase plans, and 401(k) plans)
established by or for the benefit of individuals eligible to buy shares of the
Fund. Arrangements for establishment of a retirement plan must be made
directly with the investor's selected trustee or custodian. The Fund does not
offer prototypes of these plans.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined as of 3:00 p.m.
Bloomington, Illinois time on Monday through Friday exclusive of the following
federal holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Fund need
not compute a net asset value on any day when no purchase or redemption order
has been received by the Manager or the Fund. The net asset value per share is
computed by dividing the value of the Fund's portfolio securities, plus any
cash and other assets of the Fund, less all liabilities of the Fund, by the
number of shares outstanding. Interest earned on portfolio securities and
expenses, including fees payable to the Manager, are accrued daily.
In determining the net asset value per share of the Fund, long-term debt
securities and U.S. Treasury bills are valued at a fair market value by a
pricing service approved by the Board of Directors. Short-term debt
securities, other than U.S. Treasury bills, are valued on an amortized cost
basis. Securities for which the Board of Directors believes the value obtained
by the above procedures does not reflect a fair value, and all other assets,
are valued at a fair value determined in good faith by the Board of Directors.
REDEMPTION OF FUND SHARES
The Fund will redeem shares from a shareowner's account at the net asset
value next determined after receipt by the Fund of a proper request for
redemption.
Requests for redemption of shares in the Fund may be made in writing or by
telephone if the shareowner has so indicated on the application or previously
completed a Telephone Redemption Authorization Form. These redemption methods
are explained in detail below.
BY WRITTEN REQUEST -- Shareowners may redeem all or any portion of their
shares by sending a written request to: State Farm Investment Management
Corp., One State Farm Plaza, Bloomington, Illinois 61710. A redemption request
must clearly identify the exact name(s) in which the account is registered,
the account number and the number of shares or dollar amount to be redeemed.
Also, any stock certificates representing the shares to be redeemed must be
returned, in proper form for cancellation, along with the redemption request.
It is suggested that stock certificates returned for cancellation be sent by
certified
-5-
<PAGE>
mail, return receipt requested. The request must be properly signed
by each shareowner of record, including each joint holder of a joint account.
The Fund reserves the right to require further documentation in order to
verify the validity of the redemption request.
On a redemption of $50,000 or more, the signature of the registered
shareowner must be guaranteed as described below in the section entitled
Signature Guarantee.
Proceeds of redemption by written request normally will be sent by check to
the registered shareowner's address of record. However, upon specific
instructions included in the redemption request, proceeds may be sent to
another payee or to an address other than the address of record.
BY TELEPHONE -- Shareowners can redeem by telephone at (309) 766-2029 up to
$50,000 of their uncertificated shares if the proceeds are to be mailed to the
address of record, or they can redeem up to the entire value of their
uncertificated shares if the proceeds are to be wired to a pre-designated bank
account. Shareowners cannot redeem shares by telephone if stock certificates are
held for those shares. Shareowners may not utilize this method of redemption
unless they have so elected on the application or until a completed
Authorization Form for Telephone Redemption and Exchange Privileges
("Authorization Form") has been filed. When this election is made by submitting
an Authorization Form, the signature of the shareowner must be guaranteed (see
"Signature Guarantee"). Further documentation may be required from corporations,
partnerships, trusts and other entities. Telephone redemption is not available
for IRA accounts.
If elected by the shareowner, proceeds of telephone redemptions of $2,500 or
more will be wired to a bank as directed in the Telephone Redemption election.
The cost per wire transfer (currently $7.50) will be deducted from the
redemption proceeds. A similar charge may be assessed by the shareowner's bank.
In order to change the bank or account designated to receive proceeds, a written
request must be sent to State Farm Investment Management Corp., One State Farm
Plaza, Bloomington, Illinois 61710. Such requests must be signed by each
shareowner, with each signature guaranteed as described in the section entitled
Signature Guarantee.
Telephone redemption proceeds of less than $2,500 and proceeds of up to
$50,000 of all telephone redemptions by shareowners not electing wire transfer
will be sent by check to the registered shareowner at the address of record.
During periods of volatile economic and market conditions, a shareowner may
have difficulty making a redemption request by telephone, in which case
redemption requests would have to be made in writing.
By electing the Telephone Redemption Privilege, the shareowner authorizes
the Manager to act upon an instruction by telephone to redeem shares from any
account for which such services have been elected. The Manager and the Fund
will employ reasonable procedures, including tape recording of telephone
instructions and providing written confirmation of each resulting transaction,
to confirm that telephone instructions are genuine. If the Manager and the
Fund fail to employ such procedures, they may be liable for any losses due to
unauthorized or fraudulent instructions. However, the Fund, its transfer agent
and their respective officers, directors, employees and agents will not be
liable for acting upon instructions given under the authorization when
reasonably believed to be genuine. In such case, the shareowner will bear the
risk of loss in the event of a fraudulent telephone redemption transaction. To
reduce that risk, proceeds of telephone redemptions will be sent only by check
payable to the shareowner of record to the shareowner's address of record or
wired to a pre-designated bank account.
Although the Authorization Form authorizes the Fund or its adviser to
tape-record all telephone instructions, the Fund may not honor telephone
instructions unless permission to record is confirmed by the caller.
Once the Telephone Redemption Privilege with a State Farm mutual fund has
been established by a shareowner, it may be established at the request of the
shareowner in any identically registered new account in any other State Farm
mutual fund offering the Telephone Redemption Privilege by the exchange of
shares of the first fund for those of the second fund by use of the Exchange
Privilege.
REDEMPTION GENERALLY -- The Fund will generally redeem shares in cash (by
check or bank wire). Redemptions of more than $500,000 during any 90-day period
by one shareowner will normally be paid in cash, but may be paid wholly or
partly by a distribution in kind of securities. If a redemption is paid in kind,
the redeeming shareowner may incur brokerage fees in selling the securities
received.
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<PAGE>
Payment for shares redeemed will be mailed or wired within seven days after
the Fund receives a redemption request, either written or by telephone, in
proper form (including stock certificates, if any). However, if the Fund is
requested to redeem shares within several days after they have been purchased,
the Fund may delay mailing the redemption proceeds until it can verify that
payment of the purchase price for the shares has been, or will be, collected.
If the shareowner requests payment by wire, the cost of the wire transfer
(currently $7.50) will be deducted from the redemption proceeds.
A redemption is treated as a sale for federal income tax purposes. A
shareowner's redemption proceeds may be more or less than the shareowner's
cost depending upon the net asset value at the time of the redemption and, as
a result, the shareowner may realize a capital gain or loss. Gain or loss is
computed on the difference between the fair market value of the shares
redeemed and their cost basis. If shares of the Fund are purchased during the
30 days before or after a redemption, the Internal Revenue
Code wash sale rules might apply.
Although it is not anticipated that the Fund will impose a redemption fee,
the Fund reserves the right to charge a redemption fee not to exceed one
percent of the redemption price.
The Fund may suspend the right of redemption or postpone a redemption
payment more than seven days during any period when (a) the New York Stock
Exchange is closed for other than customary weekend and holiday closings, (b)
trading on that Exchange is restricted, (c) an emergency exists making
disposal of securities owned by the Fund or valuation of its assets not
reasonably practicable, or (d) the Securities and Exchange Commission has by
order permitted such suspension for the protection of shareowners of the Fund;
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether any condition prescribed in (b) through
(d) exists.
SIGNATURE GUARANTEE
A signature guarantee is a written representation, signed by an officer or
authorized employee of the guarantor, that the signature of the shareowner is
genuine. The guarantor must be an institution authorized to guarantee
signatures by applicable state law. Such institutions include banks,
broker-dealers, savings and loan associations and credit unions.
The signature guarantee must appear, together with the signature of each
registered owner, either: (1) on the written request for redemption, which
clearly identifies the exact name(s) in which the account is registered, the
account number and the number of shares or the dollar amount to be redeemed;
or (2) on a separate "stock power," an instrument of assignment which should
specify the total number of shares to be redeemed (this stock power may be
obtained from most banks and stockbrokers); or (3) on the back of each stock
certificate tendered for redemption; or (4) on the Telephone Redemption and
Exchange Privileges Authorization Form.
EXCHANGE OF FUND SHARES
GENERAL -- A shareowner may redeem part or all of the shares in the
shareowner's account and purchase shares of another State Farm mutual fund
without charge, by meeting the established redemption procedures and minimum
subscription requirements of that fund. A written exchange request must be
accompanied by a properly completed application for the fund being purchased if
an account in the new fund has not previously been established. A telephone
exchange request can be transacted as described under "Telephone Exchange
Privilege".
An exchange transaction is a sale and purchase of shares for federal tax
purposes, and may result in capital gain or loss. Before making an exchange, a
shareowner should obtain the prospectus for the fund to be purchased from the
Manager at One State Farm Plaza, Bloomington, Illinois 61710, and read it
carefully.
TELEPHONE EXCHANGE PRIVILEGE -- Shareowners who wish to use the Telephone
Exchange Privilege, which permits them to exchange by telephone shares of the
Fund for those of another fund managed by State Farm Investment Management
Corp., must so elect on the application or complete the Authorization Form,
have their signatures guaranteed and mail the form to the Fund.
Once the Telephone Exchange Privilege has been granted by the Fund, the
shareowner may telephone the Fund and request an exchange for any amount
meeting or exceeding the applicable minimum investment of the fund being
purchased. The shareowner must identify the existing account by designating
the Fund's name, registration of the account and account number, and must
specify the dollar amount or number of shares to be exchanged and
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<PAGE>
the fund to which the exchange should be made. The registration of the account
to which an exchange is made must be exactly the same as that of the Fund
account from which an exchange is made. If the shareowner has not established an
account in the fund to which the exchange is to be made, a new account will be
opened automatically and will carry the same registration as the Fund account
from which the exchange is made; accordingly, the Telephone Exchange Privilege
will also apply to the fund being purchased. The Fund's transfer agent's records
of such instructions are binding.
The Manager and the Fund will employ reasonable procedures, including tape
recording of telephone instructions and providing written confirmation of each
resulting transaction, to confirm that telephone instructions are genuine. If
the Manager and the Fund fail to employ such procedures, they may be liable for
any losses due to unauthorized or fraudulent instructions. However, the Fund,
its transfer agent, and their respective officers, directors, employees and
agents will not be liable for acting upon instructions given by any person under
the Telephone Exchange Privilege when reasonably believed to be genuine. In such
case, the shareowner will bear the risk of loss in the event of a fraudulent
telephone exchange transaction. To reduce the risk of loss, the registration of
the account into which shares are exchanged must be identical with the
registration of the originating account.
The Telephone Exchange Privilege is not available for shares represented by a
certificate or if good payment for shares being redeemed has not been received.
(The other funds into which exchanges may be made have adopted similar
policies.)
During periods of volatile economic and market conditions, a shareowner may
have difficulty making an exchange request by telephone, in which case exchange
requests would have to be made in writing. The Fund reserves the right at any
time to suspend, limit, modify or terminate the telephone exchange privilege,
but will not do so without giving shareowners at least 30 days' prior written
notice.
MANAGEMENT OF THE FUND
The Board of Directors has overall management responsibilities for the Fund.
However, the Fund has engaged State Farm Investment Management Corp., One State
Farm Plaza, Bloomington, Illinois 61710, as Manager to provide professional
investment management for the Fund.
The Fund's portfolio is managed by a team consisting of Kurt Moser and John
Concklin. Mr. Moser has participated in the Fund's portfolio management since
1988. Mr. Concklin became part of the Fund's portfolio management team in 1995.
Presently, Mr. Moser is a Director and a Vice President of the Manager. In
addition to his offices with the Manager, Mr. Moser has also held the following
positions during the past five years: Vice President of the Fund since 1990;
Director of State Farm Life Insurance Company and State Farm Fire and Casualty
Company since 1991; Vice President of State Farm Life Insurance Company since
1989, and Vice President--Investments of State Farm Mutual Automobile Insurance
Company and State Farm and Casualty Company since 1989.
Mr. Concklin is an Investment Officer of the Manager. In addition to his
office with the Manager, Mr. Concklin has also held the following positions
during the last five years: Vice President--Fixed Income, State Farm Life
Insurance Company, State Farm Mutual Automobile Insurance Company and State Farm
Fire and Casualty Company since 1995; and Investment Officer for State Farm Life
Insurance Company, State Farm Mutual Automobile Insurance Company and State Farm
Fire and Casualty Company from 1986 through 1995.
Since its inception in 1967, the Manager's sole business has been to act as
investment adviser, principal underwriter, transfer agent and dividend
disbursing agent for the State Farm mutual funds.
The Manager is wholly-owned by State Farm Mutual Automobile Insurance Company.
For the fiscal year ended November 30, 1995 management fees paid by the Fund
amounted to 0.18% of the Fund's average net assets.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund declares a dividend each day from its net investment income,
distributable at the end of each calendar quarter. Shares begin to earn
dividends on the day following the date of purchase. Net realized capital gains,
if any, are distributed annually. All distributions are automatically reinvested
in shares of the Fund at the net asset value on the payment date, except that
any shareowner may elect to receive dividends and capital gains distributions in
cash, upon signed written request received by the Manager. If the entire amount
in a shareowner's account is redeemed, dividends credited to that account
through the day of redemption are paid with the proceeds of redemption.
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<PAGE>
Distributions from net investment income and from short-term capital gains, if
any, are taxable to shareowners as ordinary income, whether received in cash or
additional shares.
Distributions of long-term capital gains are taxable to shareowners as long-
term capital gains, whether received in cash or additional shares and regardless
of the period of time the shares have been held.
If a shareowner is not subject to tax on its income, it will not be required
to pay tax on amounts distributed to it. Shareowners must provide their social
security or tax identification number and furnish appropriate certification.
Otherwise, IRS regulations require the Fund to withhold 31% from taxable
distributions payable to accounts whose owners have not complied. Information
concerning the tax status of dividends and distributions is mailed to
shareowners annually.
Because this section is not intended to be a full discussion, shareowners may
wish to consult their tax advisers regarding the tax consequences of investments
in the Fund.
ORGANIZATION AND CAPITAL STOCK
The Fund is a Maryland corporation, organized on November 10, 1976, with
40,000,000 shares of authorized common stock, $1 par value.
Holders of shares are entitled to share pro rata in dividends and other
distributions on shares when and as declared by the Board of Directors, to one
vote per share in elections of directors and other matters presented to
shareowners, and to equal rights per share in the event of liquidation. The
shares are nonassessable, have no pre-emptive, subscription or conversion rights
and have no sinking fund provisions. The shares are transferable and are
redeemable upon request of the holder. Shares redeemed by the Fund may be
reissued.
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PROSPECTUS
April 1, 1996
STATE
FARM
INTERIM
FUND, INC.
ONE STATE FARM PLAZA
BLOOMINGTON, ILLINOIS 61710
TELEPHONE (309) 766-2029
<PAGE>
State Farm Interim Fund, Inc.
ONE STATE FARM PLAZA, BLOOMINGTON, ILLINOIS 61710
Telephone: (309) 766-2029
STATEMENT OF ADDITIONAL INFORMATION --APRIL 1, 1996
- -------------------------------------------------------------------------------
This Statement of Additional Information is not the Fund's
prospectus but contains information in addition to and more
detailed than that set forth in the prospectus. It should be read
in conjunction with the prospectus.
The Fund's prospectus dated April 1, 1996, which provides the
basic information you should know before investing in the Fund,
may be obtained without charge by contacting the Fund at the
address or telephone number shown above.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Financial Information..................................................... 2
Investment Objective and Policies......................................... 2
Investment Restrictions................................................... 3
Purchase and Redemption of Fund Shares.................................... 4
Determination of Net Asset Value.......................................... 4
Investment Advisory and Other Services.................................... 4
Management Services Agreement............................................. 4
Service Agreement......................................................... 5
Underwriting Agreement.................................................... 5
Transfer Agent Agreement.................................................. 5
Performance Information................................................... 5
Portfolio Transactions.................................................... 6
Additional Tax Considerations............................................. 6
Directors and Officers.................................................... 7
General Information....................................................... 8
Appendix.................................................................. 9
<PAGE>
FINANCIAL INFORMATION
Please refer to the financial statements (including Financial Highlights),
notes thereto and Report of Independent Auditors (all of which are "Financial
Information") contained in the Fund's annual report for the fiscal year ended
November 30, 1995, a copy of which accompanies this Statement of Additional
Information. This Financial Information (but no other material from the annual
report) is incorporated by reference in this Statement of Additional
Information. Additional copies of the annual report may be obtained by writing
or telephoning the Fund, (309) 766-2029.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is the realization over a period of
years of the highest yield consistent with relative price stability
(relatively low volatility), from high quality debt securities with short-term
and intermediate term maturities.
In attempting to achieve this objective, the Fund may invest its assets in
the following types of investments:
(1) Obligations of or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government obligations") which may be supported by
the full faith and credit of the U.S. Treasury or may be supported only by the
credit of the particular agency or instrumentality;
(2) Corporate debt securities which are either rated A or better by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S & P")
or deemed by the Fund's investment manager, State Farm Investment Management
Corp. ("Manager"), to be of comparable quality (see "Appendix, Description of
Ratings"); and
(3) Commercial paper and other money market instruments rated as Prime-1,
Prime-2, or Prime-3 by Moody's (see "Appendix, Description of Ratings").
Cash may be accumulated in an interest-bearing demand bank savings account
as a temporary measure pending investment in securities.
Subsequent to its purchase by the Fund an issue may no longer be rated or
its rating may be reduced below the minimum required for purchase by the Fund.
Neither occurrence will automatically require the elimination of the issue
from the Fund's portfolio, but the Manager will consider the reasons for the
change in determining whether to retain the issue in the portfolio.
The Fund's investments will typically be distributed in varying amounts
among issues maturing in up to six or seven years from the time of purchase,
but occasionally may extend to issues maturing in no more than fifteen years
from the time of purchase. The average maturity of all investments owned by the
Fund will be changed from time to time on the basis of the Manager's judgment as
to prospective yields and price changes among issues of different qualities,
rates of interest and maturities.
Yields on securities of comparable quality are usually higher for issues
with longer maturities than for those with shorter maturities. An increase in
interest rates will usually reduce the value of the Fund's investments and a
decline in interest rates will usually increase their value. In seeking to
achieve relative price stability over time, the Manager may choose to forego
the higher yields available on issues with longer maturities in favor of the
more limited price volatility of issues with shorter maturities.
At certain times, yields available from issues with shorter maturities may
exceed those on issues of comparable quality but longer maturities. When these
bond market conditions prevail, the Manager may choose to forego the higher
yield and greater price stability of short-term issues if, in its judgment, a
higher average yield, over time, will result from investing in issues with
longer maturities.
The Fund expects that its annual portfolio turnover rate will usually be
less than 100%, but the rate of turnover will not be a limiting factor when
the Manager considers it advisable to sell or purchase securities. The annual
portfolio turnover rate would be 100%, for example, if an amount of securities
equal to the average value of all portfolio securities during the year were
sold and reinvested, exclusive in both cases of all securities with maturities
at time of acquisition of one year or less. Historical portfolio turnover rate
information is set forth in the Fund's prospectus in the Financial Highlights
table which is incorporated herein by reference.
The Fund's investment objective may not be changed without the approval of
the shareowners. However, the investment policies followed in seeking that
investment objective may be altered from time to time without shareowners'
approval.
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<PAGE>
INVESTMENT RESTRICTIONS
The Fund is subject to certain restrictions upon its investments which provide
that the Fund may not:
(1) Invest more than 5% of the value of the Fund's total assets in securities
of any one issuer except securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, which may be purchased without limitation;
(2) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes, and then only in an amount not exceeding 5% of the
value of the Fund's total assets at the time of borrowing;
(3) Pledge, mortgage or hypothecate the Fund's assets, except that, to secure
borrowings permitted by subparagraph (2) above, the Fund may pledge securities
having a market value not exceeding 10% of the Fund's net asset value;
(4) Underwrite any securities issued by other persons;
(5) Purchase or sell real estate, but the Fund may invest in securities
secured by real estate or interests therein;
(6) Purchase or sell commodities or commodities contracts, or interests in
oil, gas or other mineral exploration or development programs;
(7) Make loans to others (except to the extent that the purchase of debt
securities may be deemed the making of a loan);
(8) Make short sales of securities or purchase any securities on margin,
except for such short-term credits as are necessary for the clearance of
transactions, or purchase or sell any put or call options or combinations
thereof;
(9) Purchase or retain for the portfolio of the Fund the securities of any
issuer, if, to the Fund's knowledge, those directors and officers of the Fund
who individually own more than 1/2 of 1% of the outstanding securities of such
issuer together own more than 5% of such outstanding securities;
(10) Purchase more than 10% of any class of securities of any one issuer (for
this purpose all indebtedness of an issuer shall be deemed a single class)
except U.S. Government obligations;
(11) Purchase securities subject to restrictions on disposition under the
Securities Act of 1933;
(12) Purchase securities of other investment companies or investment trusts,
except by purchases in the open market involving no commission or profit (other
than the customary broker's commission) to a sponsor or dealer, and then only in
an amount up to 5% of the value of the Fund's total assets, or except as a part
of a plan of merger or consolidation;
(13) Invest in the securities of a company for the purpose of exercising
management or control;
(14) Invest more than 5% of the market value of the Fund's total assets (at
the time of the investment) in securities of companies with records of less than
three years' continuous operation, including that of predecessors;
(15) Invest more than 25% of the value of the Fund's total assets in any one
industry except that the Fund may invest more than 25% of the value of the
Fund's total assets in certificates of deposit or bankers' acceptances of U.S.
commercial banks when deemed advisable in view of yield differentials and money
market conditions (this restriction is not applicable to securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities).
For purposes of restrictions numbered 1, 9 and 10 above, the Fund will
classify the issuer or issuers of a security according to the entity or entities
which constitute the source of payment of interest and principal on the
security.
Other than for purposes of restriction number 3 above, if a percentage
restriction is not violated at the time of investment or borrowing, a change in
the value of the Fund's net assets or in the outstanding securities of an issuer
will not result in a violation of the restriction.
These investment restrictions have been adopted by the Fund and may not be
changed without the consent of the shareowners holding a majority of the shares.
A majority of the shares, as used in this Statement of Additional Information
and in the Prospectus, means the vote of (i) 67% or more of the shares present
and entitled to vote at a meeting, if the holders of more than 50% of the shares
are present or represented by proxy, or (ii) more than 50% of the shares,
whichever is less.
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<PAGE>
PURCHASE AND REDEMPTION OF FUND SHARES
Purchases and redemptions of Fund shares are discussed in the prospectus under
the headings "Purchase of Fund Shares", "Systematic Withdrawal Program",
"Retirement Plans", "Redemption of Fund Shares" and "Exchange of Fund Shares"
and that information is incorporated herein by reference.
DETERMINATION OF NET ASSET VALUE
Determination of net asset value is set forth in the prospectus under the
heading "Determination of Net Asset Value" and that information is incorporated
herein by reference.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund has an Investment Advisory and Management Services Agreement, a
Transfer Agent Agreement and an Underwriting Agreement with State Farm
Investment Management Corp., One State Farm Plaza, Bloomington, Illinois 61710.
There is a separate Service Agreement among the Fund, the Manager and State Farm
Mutual Automobile Insurance Company ("Auto Company"). Each of these four
agreements may be continued beyond its current term only so long as such
continuance is specifically approved at least annually by the Board of Directors
of the Fund or by vote of a majority of the outstanding shares of the Fund and,
in either case, by vote of a majority of the directors who are not interested
persons of any party to such agreement, except in their capacity as directors of
the Fund, cast in person at a meeting called for the purpose of voting on such
approval. Each agreement may be terminated upon 60 days' written notice by any
of the parties to the agreement, or by a majority vote of the outstanding
shares, and will terminate automatically upon its assignment by any party.
The Manager is also the investment manager, transfer agent, dividend
disbursing agent and underwriter for State Farm Growth Fund, Inc., State Farm
Balanced Fund, Inc. and State Farm Municipal Bond Fund, Inc. There are similar
agreements among those funds, the Manager and the Auto Company, except that the
Investment Advisory and Management Services Agreements with State Farm Growth
Fund, Inc. and State Farm Balanced Fund, Inc. provide for investment advisory
fees at annual rates different from those applicable to the Fund.
Since its inception in 1967, the Manager's sole business has been to act as
investment adviser, principal underwriter, transfer agent and dividend
disbursing agent for the State Farm mutual funds.
The Manager is wholly-owned by State Farm Mutual Automobile Insurance Company,
which is an Illinois mutual insurance company.
Messrs. Rust, Joslin, Grimes, Moser, Tipsord, Chevalier and Ms. Dysart are
directors and/or officers of the Fund, the Manager and the other State Farm
mutual funds (see "Directors and Officers").
MANAGEMENT SERVICES AGREEMENT
Pursuant to an Investment Advisory and Management Services Agreement, the
Manager: (1) acts as the Fund's investment adviser; (2) manages the Fund's
investments; (3) administers the Fund's business affairs; (4) provides clerical
personnel, suitable office space, necessary facilities and equipment and
administrative services; and (5) permits its officers and employees to serve as
directors, officers and agents of the Fund, without compensation from the Fund,
if duly elected or appointed.
The agreement requires the Fund to pay: (1) the fees and expenses of
independent auditors, legal counsel, the custodian, the transfer agent, the
registrar, the dividend disbursing agent and directors who are not affiliated
with the Manager; and (2) the cost of preparing and distributing stock
certificates, proxy materials, reports and notices to shareowners, brokerage
commissions, interest, taxes, federal securities registration fees and
membership dues in the Investment Company Institute or any similar organization.
The Manager is required to pay all other Fund expenses.
As compensation for the services and facilities furnished, the Fund pays a
management fee (computed on a daily basis and paid quarterly) at the annual rate
of .20% of the first $50 million of average net assets, .15% of the next $50
million of average net assets and .10% of the average net assets in excess of
$100 million.
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<PAGE>
However, the management fee will be reduced, or the Manager will reimburse the
Fund, by any amount necessary to prevent the Fund's total expenses (excluding
taxes, interest, extraordinary litigation expenses, brokerage commissions and
other portfolio transaction costs) from exceeding .40% of the average net assets
of the Fund on an annual basis.
For the fiscal years ended November 30, 1995, 1994 and 1993, the Manager
earned $170,812, $176,259, and $164,292, respectively, for its services as
investment adviser to the Fund. Neither the Manager nor any affiliated company
receives any brokerage commissions from the Fund as such business is transacted
with non-affiliated broker-dealers.
Some affiliated companies of the Manager (including Auto Company) and the
other State Farm funds managed by the Manager carry on extensive investment
programs. Securities considered as investments for the Fund may also be
appropriate for the accounts of one or more of such companies. Although
investment decisions for the Fund are made independently from those for such
other companies, securities of the same issuer may be acquired, held or disposed
of by the Fund and one or more of such other companies at or about the same
time, if consistent with the investment objectives and policies of the
respective parties. When both the Fund and one or more of such other companies
are concurrently engaged in the purchase or sale of the same securities, the
transactions are allocated as to amount and price in a manner considered
equitable to the Fund. In some cases this procedure may affect the price or
amount of the securities as far as each party is concerned. It is the opinion of
the Directors of the Fund, however, that the benefits available to the Fund
outweigh any possible disadvantages that may arise from such concurrent
transactions.
The obligation of performance under the management agreement between the
Manager and the Fund is solely that of the Manager, for which the Auto Company
assumes no responsibility.
SERVICE AGREEMENT
Under the Service Agreement, the Auto Company makes available to the Manager
the services, on a part-time basis, of employees of the Auto Company engaged in
its investment operations, and also certain other personnel, services and
facilities to enable the Manager to perform its obligations to the Fund. The
Manager reimburses the Auto Company for such costs, direct and indirect, as are
fairly attributable to the services performed and the facilities provided by the
Auto Company under the Service Agreement. Accordingly, the Fund makes no payment
to the Auto Company under the Service Agreement.
UNDERWRITING AGREEMENT
Pursuant to the Underwriting Agreement the Manager: (1) is the underwriter of
the Fund's shares; (2) acts as agent of the Fund in the continuous sale of its
shares; (3) prepares and distributes literature relating to the Fund and its
investment performance; (4) distributes and pays for the printing of the Fund's
prospectus; (5) circulates advertising and public relations materials; and (6)
pays the cost of qualifying and maintaining the qualification of the Fund's
shares for sale under the securities laws of the various states.
The Manager receives no discount, commission or other compensation as
underwriter.
TRANSFER AGENT AGREEMENT
The Transfer Agent Agreement appoints the Manager as the Fund's transfer agent
and dividend disbursing agent. Under the terms of the agreement, the Manager:
(1) maintains all shareowner account records; (2) prepares and mails transaction
confirmations, annual records of investments and tax information statements; (3)
effects transfers of Fund shares; (4) arranges for the issuance and cancellation
of stock certificates; (5) prepares annual shareowner meeting lists; (6)
prepares, mails and tabulates proxies; (7) mails shareowner reports; and (8)
disburses dividends and capital gains distributions. These services are
performed by the Manager at no charge to the Fund.
PERFORMANCE INFORMATION
The Fund provides information on its "Average Annual Total Return" in its
annual reports to shareowners. "Average Annual Total Return" is the average
annual compounded rate of change in value represented by the percentage change
in value during a period of an investment in shares of the Fund, including the
value of shares acquired through reinvestment of all dividends and capital gains
distributions for the period.
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Average Annual Total Return is computed as follows:
n
ERV = P(1 + T)
Where: P = the amount of an assumed initial investment in shares of the Fund
T = average annual total return
n = number of years from initial investment to the end of the period
ERV = ending redeemable value of shares held at the end of the period
For example, as of November 30, 1995 the Average Annual Total Return of a
$1,000 investment in the Fund for the following periods was:
Average Annual
Total Return
------------
1 year.............................. 11.91%
5 years............................. 7.38
10 years............................ 7.99
The Fund imposes no sales charges and pays no distribution expenses. Income
taxes are not taken into account. Performance figures quoted by the Fund are not
necessarily indicative of future results. The Fund's performance is a function
of conditions in the securities markets, portfolio management and operating
expenses. Although information about past performance is useful in reviewing the
Fund's performance and in providing some basis for comparison with other
investment alternatives, it should not be used for comparison with other
investments using different reinvestment assumptions or time periods.
In its annual report, the Fund's performance may be compared with movements of
markets indexes, including the Lehman Brothers Intermediate Treasury Index and
the Lehman Brothers Three-Year Index.
PORTFOLIO TRANSACTIONS
To date all purchases and sales of portfolio securities for the Fund have been
made on a net basis without brokerage commissions, in transactions with
securities dealers who buy and sell those securities as market makers. Market
makers earn the spread between the bid and asked prices at which they buy and
sell. The Fund may occasionally purchase new issues of securities offered by
underwriters, at prices which are marked up from the discounted prices at which
the underwriters purchase for resale. For the fiscal years ended November 30,
1995, 1994 and 1993, the Fund paid no brokerage commissions.
The Manager's primary consideration in selecting dealers or brokers to execute
transactions is the best net price consistent with competent execution. Among
the factors considered in evaluating quality of execution are: (1) skill,
knowledge and effort required in executing particular transactions; (2) trading
and operational capability; (3) financial condition and stability; (4)
confidentiality; and (5) reliability and integrity.
The Manager and the Auto Company perform extensive investment research, which
is used in making investment decisions for the Fund in the performance of the
Investment Advisory and Management Services Agreement, for the State Farm
Companies, and for the other State Farm funds. The availability of additional
information from a diversity of sources, some of which have in-depth knowledge
of specialized subjects, and have proven insight and acumen in economic,
financial, political and investment matters, may tend to reduce the Manager's
costs by some indeterminable amount, but more importantly is believed to provide
a quantity and range of information greater than could be generated solely
within a single advisory organization, even for a larger advisory fee. While the
State Farm Companies and the other State Farm funds, as well as the Fund, may
benefit from information obtained for the Fund with the Fund's transactions, the
Fund may also realize a benefit from information obtained for the State Farm
Companies and for other State Farm funds with their transactions.
ADDITIONAL TAX CONSIDERATIONS
The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code. A 4% excise tax is imposed on
the excess of the required distribution for a calendar year over the distributed
amount for such calendar year. Generally, the required distribution is the sum
of 98% of the Fund's net investment income for the calendar year plus 98% of its
capital gain net income for the
-6-
<PAGE>
one year period ending November 30. The Fund intends to declare or distribute
dividends during the calendar year in an amount sufficient to prevent imposition
of the 4% excise tax.
Because capital gain distributions reduce net asset value, if you purchase
shares shortly before a record date for such a distribution you will, in effect,
receive a return of a portion of your investment although the distribution will
be taxable to you. This is true even if the net asset value of your shares was
reduced below your cost. However, for federal income tax purposes your original
cost would continue as your tax basis. Any loss recognized on the disposition of
Fund shares acquired which have been held by the shareowner for six months or
less will be treated as long-term capital loss to the extent the shareowner
received a long-term capital gain distribution with respect to those Fund
shares.
Distributions of long-term capital gains are taxable to shareowners as long-
term capital gains, whether received in cash or additional shares and regardless
of the period of time the shares have been held. Dividends and capital gains are
taxed to shareholders at the same rates. However, the distinction between
ordinary income or loss and capital gain or loss remains important for certain
tax purposes, such as a taxpayer's ability to offset losses against income.
DIRECTORS AND OFFICERS
The directors and officers of the Fund, their principal occupations for the
last five years and their affiliations, if any, with State Farm Investment
Management Corp., the Fund's investment adviser and principal underwriter, are
listed below. Unless otherwise noted, the address of each is One State Farm
Plaza, Bloomington, Illinois 61710.
Edward B. Rust, Jr., President and Director*
President and Chairman of the Board, State Farm Mutual Automobile Insurance
Company and Director of certain wholly owned insurance subsidiaries and
affiliates. President and Director, State Farm Investment Management Corp.
Albert H. Hoopes, Director
Attorney at Law. Address: 102 S. East Street, Suite 350, Bloomington,
Illinois 61701.
Roger S. Joslin, Vice President, Treasurer and Director*
Senior Vice President and Treasurer, State Farm Mutual Automobile Insurance
Company and certain wholly owned insurance subsidiaries and affiliates.
Chairman of the Board, State Farm Fire and Casualty Company. Vice President,
Treasurer and Director, State Farm Investment Management Corp.
Davis U. Merwin, Director
Investor. Address: P.O. Box 8, Bloomington, Illinois 61702.
James A. Shirk, Director
Director and President, Beer Nuts, Inc., Address: 103 N. Robinson,
Bloomington, Illinois 61701.
David R. Grimes, Assistant Vice President and Secretary
Assistant Vice President of Accounting, State Farm Mutual Automobile Insurance
Company. Secretary, State Farm Investment Management Corp.; Since 1994,
Assistant Vice President and Secretary, State Farm Investment Management Corp.
Kurt G. Moser, Vice President
Director of State Farm Life Insurance Company and State Farm Fire and Casualty
Company since 1991; Vice President of State Farm Life Insurance Company and
Vice President--Investments of State Farm Mutual Automobile Insurance Company
and State Farm Fire and Casualty Company since 1989. Director since 1991 and
Vice President since 1990, State Farm Investment Management Corp.
John S. Concklin, Vice President
Vice President--Fixed Income, State Farm Life Insurance Company, State Farm
Mutual Automobile Insurance Company and State Farm Fire and Casualty Company
since 1995; Investment Officer for State Farm Life Insurance Company, State
Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty
Company from 1986-1995. Since 1995, Investment Officer, State Farm Investment
Management Corp.
Michael L. Tipsord, Assistant Secretary
Director of Accounting, State Farm Mutual Automobile Insurance Company.
Assistant Secretary, State Farm Investment Management Corp.
-7-
<PAGE>
Jerel S. Chevalier, Assistant Secretary-Treasurer
Director-Mutual Funds, State Farm Mutual Automobile Insurance Company. Since
1992, Assistant Treasurer, State Farm Investment Management Corp.; Since 1994,
Assistant Secretary-Treasurer, State Farm Investment Management Corp.
Patricia L. Dysart, Assistant Secretary
Assistant Tax Counsel, State Farm Mutual Automobile Insurance Company since
1991; Since 1995, Assistant Secretary, State Farm Investment Management Corp.
*Director who is an "interested person" of the Fund or the Manager, as defined
in the Investment Company Act of 1940.
The directors and officers as a group owned less than one percent of the
Fund's outstanding shares on January 31, 1996.
The directors and officers of the Fund, excluding John S. Concklin, hold
identical positions with State Farm Growth Fund, Inc., State Farm Balanced Fund,
Inc. and State Farm Municipal Bond Fund, Inc. Mr. Concklin holds an identical
position with State Farm Balanced Fund, Inc. Messrs. Rust and Joslin are members
of the Executive Committee which has authority during intervals between meetings
of the board of directors to exercise the powers of the board with certain
exceptions.
GENERAL INFORMATION
OWNERSHIP OF SHARES
As of February 29, 1996, Continental Trust Company, 231 South LaSalle Street,
Chicago, Illinois 60693, as trustee for numerous trusts created in connection
with Self-Employed Individuals Retirement Plans for State Farm Independent
Contractor Agents owned of record in the aggregate 1,885,488 shares (18% of the
Fund's outstanding shares), as to which it has sole right to vote and shared
right of disposition.
CUSTODY OF ASSETS
The securities and cash of the Fund are held by Morgan Guaranty Trust Company
of New York ("Morgan"), 60 Wall Street, New York, NY 10260, as custodian. Morgan
delivers and receives payment for securities sold, receives and pays for
securities purchased, collects income from investments and performs other
duties, all as directed by persons duly authorized by the Board of Directors.
Cash of the Fund is also held by Commerce Bank ("Commerce"), 120 S. Center
Street, Bloomington, Illinois 61701, as custodian. Commerce receives payments
from the Manager for sale of Fund shares and performs other duties, as directed
by persons duly authorized by the Board of Directors.
INDEPENDENT AUDITORS
The Fund's independent auditors are Ernst & Young LLP, 233 South Wacker Drive,
Chicago, Illinois 60606. The firm audits the Fund's annual financial statements,
reviews certain regulatory reports and the Fund's income tax returns, and
performs other professional accounting, auditing, tax and advisory services when
engaged to do so by the Fund.
CODE OF ETHICS
The Manager intends that: all of its activities function exclusively for the
benefit of the owners or beneficiaries of the assets it manages; assets under
management or knowledge as to current or prospective transactions in managed
assets are not utilized for personal advantage or for the advantage of anyone
other than the owners or beneficiaries of those assets; persons associated with
the Manager and the Fund avoid situations involving actual or potential
conflicts of interest with the owners or beneficiaries of managed assets; and,
situations appearing to involve actual or potential conflicts of interest or
impairment of objectivity are avoided whenever doing so does not run counter to
the interests of the owners or beneficiaries of the managed assets. The Board of
Directors of the Fund has adopted a Code of Ethics which imposes certain
prohibitions, restrictions, preclearance requirements and reporting rules on the
personal securities transactions of subscribers to the Code, who include the
Fund's officers and directors and employees of the Manager. The Board of
Directors believes that the provisions of the Code are reasonably designed to
prevent subscribers from engaging in conduct that violates these principles.
-8-
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
(AS PUBLISHED BY THE RATING COMPANIES)
STANDARD & POOR'S BOND RATINGS
AAA. Bonds rated AAA are highest grade obligations. They possess the ultimate
degree of protection as to principal and interest. Marketwise they move with
interest rates, and hence provide the maximum safety on all counts.
AA. Bonds rated AA also qualify as high grade obligations, and in the majority
of instances differ from AAA issues only in small degree. Here, too, prices move
with the long-term money market.
A. Bonds rated A are regarded as upper medium grade. They have considerable
investment strength but are not entirely free from adverse effects of changes in
economic and trade conditions. Interest and principal are regarded as safe. They
predominantly reflect money rates in their market behavior, but to some extent
also respond to economic conditions.
MOODY'S BOND RATINGS
Aaa. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat greater than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
MOODY'S COMMERCIAL PAPER RATINGS
Prime-1. Commercial Paper issuers rated Prime-1 are judged to be of the best
quality. Their short-term debt obligations carry the smallest degree of
investment risk. Margins of support for current indebtedness are large or stable
with cash flow and asset protection well assured. Current liquidity provides
ample coverage of near-term liabilities and unused alternative financing
arrangements are generally available. While protective elements may change over
the intermediate or longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Prime-2. Issuers in the Commercial Paper market rated Prime-2 are of high
quality. Protection for short-term note holders is assured, with liquidity and
value of current assets as well as cash generation in sound relationship to
current indebtedness. They are rated lower than the best commercial papers
issuers because margins of protection may not be as large or because
fluctuations of protective elements over the near or intermediate term may be of
greater amplitude. Temporary increases in relative short term and overall debt
load may occur. Alternative means of financing remain assured.
Prime-3. Commercial Paper issuers rated Prime-3 possess favorable investment
attributes for short-term commitment. Liquidity considerations and cash
generation provide satisfactory support for short-term debt repayment. While
near-term investors are well-protected, elements may be present which suggest
improvement or deterioration in support at some time in the future. Alternative
financing strategies have been outlined.
Issuers rated in all three Prime categories are judged by Moody's to be
investment grade.
-9-
<PAGE>
(This page intentionally left blank)
-10-
<PAGE>
ANNUAL REPORT
State Farm Interim Fund, Inc.
ONE STATE FARM PLAZA . BLOOMINGTON, ILLINOIS 61710
For Account Information and Shareowner
Services:(309) 766-2029
For Price Information ONLY:
1-800/447-0740
November 30, 1995
This report is not to be distributed unless preceded or accompanied by a
prospectus.
<PAGE>
STATE FARM INTERIM FUND, INC.
Dear Shareowner:
The past fiscal year has been a good one for bond markets and investors in the
Interim Fund. Yields on U. S. Treasury securities held by your Fund have dropped
more than 200 basis points (a basis point is .01%) during the year causing the
values of the securities to increase significantly. Correspondingly, the net
asset value of the Interim Fund rose to $10.15 from $9.72, a 4.4% improvement.
The total return, which is derived by adding dividends declared by the Fund to
the change in net asset value, for the past year was 11.91%.
The following graph compares a $10,000 investment in the Interim Fund over the
last ten years to theoretical investments of the same amount in the Lehman
Brothers Intermediate Treasury Index and the Lehman Brothers Three-year Treasury
Index:
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT FOR THE YEARS
ENDED NOVEMBER 30
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
Interim
- -------
<CAPTION>
Lehman
X-Axis Interim Lehman 3-Yr
Year Fund Intermediate Treasury
- ------ ------- ------------ --------
<S> <C> <C> <C>
1985 10,000 10,000 10,000
1986 11,321 11,545 11,328
1987 11,702 11,879 11,745
1988 12,481 12,727 12,504
1989 13,954 14,312 13,903
1990 15,110 15,495 15,075
1991 16,830 17,490 16,968
1992 18,042 18,928 18,283
1993 19,441 20,667 19,685
1994 19,274 20,318 19,943
1995 21,570 23,088 22,444
</TABLE>
The fall in interest rates over the course of the year has been fueled by
evidence that growth of the U. S. economy is slowing and inflationary pressures
are slight. Furthermore, capital markets have been helped to some degree by
prospects for a program, which will hopefully be agreed upon by the President
and Congress, to eliminate the federal budget deficit over seven years.
The prevailing mood in the bond markets is quite optimistic at the moment.
Many investors seem to be convinced that the Federal Reserve Board has done its
job well and the twin perils of inflation and recession will be avoided for a
long time leaving room for further drops in interest rates. Such a view is
comforting and may well prove to be correct, but we caution you, as investors,
against believing the future is predictable. Markets are always vulnerable to
unanticipated surprises and changes in investors' perceptions, and vulnerability
along these lines tends to be greatest when optimism is rampant.
-2-
<PAGE>
The general composition of the Fund's portfolio changes very little from
year to year with primary investments consisting of U. S. Treasury issues which
mature regularly over the following six years. The high quality investments held
by the Fund continue to produce a dependable flow of dividend income to
shareowners.
As you know, the Fund declares a dividend each day from its net investment
income which is payable on the last day of the calendar quarter. All dividends
are automatically invested in shares of the Fund unless you have advised State
Farm Investment Management Corp. otherwise in writing.
Sincerely,
/s/ Kurt G. Moser
Kurt G. Moser
Vice President
December 19, 1995
-3-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareowners
State Farm Interim Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of State Farm Interim Fund, Inc. as of November
30, 1995, the related statements of operations and changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the fiscal periods since 1986. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of State
Farm Interim Fund, Inc. at November 30, 1995, the results of its operations and
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the fiscal periods since 1986, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 15, 1995
-4-
<PAGE>
STATE FARM INTERIM FUND, INC.
PORTFOLIO OF INVESTMENTS
November 30, 1995
<TABLE>
<CAPTION>
Principal
amount Value
<S> <C> <C>
LONG-TERM INVESTMENTS -- U.S. TREASURY
OBLIGATIONS (95.4%):
$2,000,000 8-7/8%, due February 15, 1996.................................................... $ 2,012,820
1,000,000 7-1/2%, due February 29, 1996.................................................... 1,004,530
1,000,000 7-5/8%, due April 30, 1996....................................................... 1,008,590
1,000,000 7-3/8%, due May 15, 1996......................................................... 1,008,440
1,000,000 4-1/4%, due May 15, 1996......................................................... 994,690
1,250,000 7-7/8%, due July 15, 1996........................................................ 1,267,963
1,000,000 7-7/8%, due July 31, 1996........................................................ 1,015,470
1,000,000 7%, due September 30, 1996....................................................... 1,012,340
6,500,000 8%, due October 15, 1996......................................................... 6,639,165
2,000,000 8%, due January 15, 1997......................................................... 2,055,320
1,000,000 6-3/4%, due February 28, 1997.................................................... 1,016,090
1,000,000 6-7/8%, due March 31, 1997....................................................... 1,018,750
1,000,000 8-1/2%, due April 15, 1997....................................................... 1,040,310
1,500,000 8-1/2%, due May 15, 1997......................................................... 1,564,215
1,000,000 6-3/8%, due June 30, 1997........................................................ 1,014,840
2,000,000 8-1/2%, due July 15, 1997........................................................ 2,094,380
1,750,000 8-5/8%, due August 15, 1997...................................................... 1,841,332
1,000,000 5-1/2%, due September 30, 1997................................................... 1,002,190
3,500,000 8-3/4%, due October 15, 1997..................................................... 3,706,185
3,000,000 7-7/8%, due January 15, 1998..................................................... 3,146,730
1,000,000 8-1/8%, due February 15, 1998.................................................... 1,055,940
3,000,000 7-7/8%, due April 15, 1998....................................................... 3,162,180
750,000 5-1/8%, due June 30, 1998........................................................ 744,960
3,000,000 8-1/4%, due July 15, 1998........................................................ 3,204,840
1,000,000 4-3/4%, due September 30, 1998................................................... 982,500
4,000,000 7-1/8%, due October 15, 1998..................................................... 4,178,760
4,000,000 6-3/8%, due January 15, 1999..................................................... 4,103,120
3,750,000 7%, due April 15, 1999........................................................... 3,922,838
4,000,000 6-3/8%, due July 15, 1999........................................................ 4,114,360
4,000,000 6%, due October 15, 1999......................................................... 4,071,240
2,000,000 6-3/8%, due January 15, 2000..................................................... 2,061,880
2,000,000 8-1/2%, due February 15, 2000.................................................... 2,218,120
2,000,000 5-1/2%, due April 15, 2000....................................................... 2,001,560
1,000,000 6-3/4%, due April 30, 2000....................................................... 1,046,720
1,000,000 8-7/8%, due May 15, 2000......................................................... 1,130,780
4,000,000 8-3/4%, due August 15, 2000...................................................... 4,523,760
3,750,000 8-1/2%, due November 15, 2000.................................................... 4,223,437
4,000,000 7-3/4%, due February 15, 2001.................................................... 4,389,360
4,000,000 8%, due May 15, 2001............................................................. 4,449,360
4,000,000 7-7/8%, due August 15, 2001...................................................... 4,437,480
4,000,000 7-1/2%, due November 15, 2001.................................................... 4,376,240
------------
Total long-term investments (cost: $100,041,445).................................... 99,863,785
SHORT-TERM INVESTMENTS (4.1%)
3,000,000 U.S. Treasury bills, 5.245% to 5.385% effective yield, due 12-1995 to 2-1996..... 2,979,571
560,000 General Motors Acceptance Corp., 5.80%, 12-5-1995................................ 560,361
550,000 General Motors Acceptance Corp., 5.78%, 12-5-1995................................ 550,265
220,000 General Motors Acceptance Corp., 5.79%, 12-5-1995................................ 220,036
------------
Total short-term investments (cost: $4,310,233)..................................... 4,310,233
------------
TOTAL INVESTMENTS (99.5%) (cost:$104,351,678).......................................... 104,174,018
CASH AND OTHER ASSETS, LESS LIABILITIES (0.5%)......................................... 524,580
------------
NET ASSETS (100.00%).................................................................. $104,698,598
============
Note: At November 30, 1995, net unrealized depreciation of $177,660 consisted of gross unrealized appreciation of
$1,103,559 and gross unrealized depreciation of $1,281,219 based on cost of $104,351,678 for federal income
tax purposes.
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
STATE FARM INTERIM FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
ASSETS
Investments, at value (cost $104,351,678)............ $104,174,018
Cash................................................. 343,901
Receivable for:
Interest........................................... $1,499,818
Shares of the Fund sold............................ 81,487
Sundry............................................. 3,544 1,584,849
----------
Prepaid expenses..................................... 7,520
------------
Total assets..................................... 106,110,288
LIABILITIES AND NET ASSETS
Payable for:
Dividends to shareowners........................... 1,182,549
Shares of the Fund redeemed........................ 178,615
Other accounts payable (including $44,701
to Manager)........................................ 50,526
----------
Total liabilities................................ 1,411,690
------------
Net assets applicable to 10,312,977 shares
outstanding of $1 par value common stock
(40,000,000 shares authorized)..................... $104,698,598
============
Net asset value, offering price and redemption price
per share.......................................... $ 10.15
============
ANALYSIS OF NET ASSETS
Excess of amounts received from sales of shares over
amounts paid on redemptions of shares on account
of capital......................................... $105,921,126
Accumulated net realized loss on sales
of investments..................................... (1,044,868)
Net unrealized depreciation of investments........... (177,660)
------------
Net assets applicable to shares outstanding.......... $104,698,598
============
See accompanying notes to financial statements.
-6-
<PAGE>
STATE FARM INTERIM FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year ended November 30,
1995 1994
<S> <C> <C>
Interest income...................................... $ 7,033,902 7,308,531
Expenses:
Investment advisory and management fees............ 170,812 176,259
Audit fees......................................... 16,310 16,113
Legal fees......................................... 1,789 2,026
Fidelity bond expense.............................. 3,554 3,653
Directors' fees.................................... 1,100 1,100
Reports to shareowners............................. 6,457 2,959
Securities evaluation fees......................... 2,564 3,237
Franchise taxes.................................... 8,391 6,161
Custodian fees..................................... 25,358 --
Other.............................................. 8,953 13,517
------------------------
Total expenses................................... 245,288 225,025
Less: custodian fees paid indirectly............ 16,301 --
------------------------
Net expenses..................................... 228,987 225,025
------------------------
Net investment income................................ 6,804,915 7,083,506
Realized and unrealized gain (loss) on investments:
Net realized loss on sales of investments.......... (321,293) (335,277)
Change in net unrealized appreciation/depreciation. 4,460,809 (7,628,065)
------------------------
Net realized and unrealized gain (loss) on
investments........................................ 4,139,516 (7,963,342)
------------------------
Net change in net assets resulting from operations... $10,944,431 (879,836)
========================
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE>
STATE FARM INTERIM FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended November 30,
1995 1995
<S> <C> <C>
From operations:
Net investment income............................ $ 6,804,915 7,083,506
Net realized loss on sales of investments........ (321,293) (335,277)
Change in net unrealized
appreciation/depreciation...................... 4,460,809 (7,628,065)
--------------------------
Net change in net assets resulting from
operations..................................... 10,944,431 (879,836)
Dividends to shareowners from net investment
income (per share $.70 in 1995 and $.71 in 1994). (6,804,915) (7,083,506)
From Fund share transactions:
Proceeds from shares sold........................ 26,160,841 30,546,445
Reinvestment of ordinary income dividends........ 6,131,262 6,479,922
--------------------------
32,292,103 37,026,367
Less payments for shares redeemed................ 25,990,885 38,546,040
--------------------------
Net increase (decrease) in net assets from Fund
share transactions............................. 6,301,218 (1,519,673)
--------------------------
Total increase (decrease) in net assets............ 10,440,734 (9,483,015)
Net assets:
Beginning of year................................ 94,257,864 103,740,879
--------------------------
End of year...................................... $104,698,598 94,257,864
==========================
</TABLE>
See accompanying notes to financial statements.
-8-
<PAGE>
STATE FARM INTERIM FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation --
Debt securities are valued using quotations provided by an independent
pricing service, except short-term debt securities having a maturity of 60 days
or less from the valuation date are valued on an amortized cost basis. Any
securities not valued as described above are valued at fair value as determined
in good faith by the Board of Directors or its delegate.
Security transactions and interest income --
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the accrual basis.
Realized gains and losses from security transactions are reported on an
identified cost basis.
Fund share valuation, dividends and distributions to shareowners --
Fund shares are sold and redeemed on a continuous basis at net asset value.
Net asset value per share is determined as of 3:00 p.m. Bloomington, Illinois
time on each business day other than customary weekend and holiday closings,
except that the Fund need not compute a net asset value on any day when no
purchase or redemption order has been received by the Fund. The net asset value
per share is computed by dividing the value of the Fund's investments and other
assets, less liabilities, by the number of Fund shares outstanding. The Fund
declares a daily dividend equal to its net investment income, and distributions
of such amounts are made at the end of each calendar quarter. Net realized gains
on sales of investments, if any, are distributed annually after the close of the
Fund's fiscal year.
Dividends and distributions payable to its shareowners are recorded by the
Fund on the ex-dividend date.
Federal income taxes --
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments reportable for federal income tax purposes. The
Fund has complied with this policy and, accordingly, no provision for federal
income taxes is required.
The accumulated net realized loss on sales of investments at November 30,
1995, amounting to $1,044,868, is available to offset future taxable gains. If
not applied, the capital loss carryover expires as follows: $14,537 in 1996,
$55,654 in 1997, $40,572 in 1998, $92,150 in 1999, $22,669 in 2000, $162,716 in
2001, $335,277 in 2002, and $321,293 in 2003.
A capital loss carryover of $2,235 expired in 1995 and was re-classified from
Accumulated net realized loss on sales of investments to Excess of amounts
received from sales of shares over amounts paid on redemptions of shares on
account of capital.
Custodian fees --
Custodian fees are reduced based on the Fund's cash balances maintained with
the custodian. Beginning in 1995, in accordance with changes in the requirements
of the Securities and Exchange Commission, both gross custodian fees and the
amount by which such fees are reduced, are disclosed separately in the statement
of operations. This presentation does not affect the determination of net
investment income.
-9-
<PAGE>
STATE FARM INTERIM FUND, INC.
NOTES TO FINANCIAL STATEMENTS
2. Transactions with affiliates
The Fund has an investment advisory and management services agreement with
State Farm Investment Management Corp. (Manager) pursuant to which the Fund pays
the Manager an annual fee (computed on a daily basis and paid quarterly) of .20%
of the first $50 million of average net assets, .15% of the next $50 million of
average net assets and .10% of average net assets in excess of $100 million. The
Manager guarantees that all operating expenses of the Fund, including the
compensation of the Manager but excluding franchise taxes, interest,
extraordinary litigation expenses, brokerage commissions and other portfolio
transaction costs, shall not exceed .40% of average net assets annually.
Under the terms of this agreement, the Fund incurred fees of $170,812 for
1995 and $176,259 for 1994. The Fund pays no fees for transfer agent services
provided by the Manager. The Fund does not pay any discount, commission or other
compensation for underwriting services provided by the Manager.
Certain officers and/or directors of the Fund are also officers and/or
directors of the Manager. The Fund made no payments to its officers or directors
during the two years ended November 30, 1995, except for directors' fees of
$1,100 for 1995 and 1994, respectively, paid to the Fund's independent
directors.
3. Investment transactions
Investment transactions (exclusive of short-term instruments) for each of the
two years ended November 30 are as follows:
1995 1994
Purchases .............................. $20,285,313 14,830,156
Proceeds from sales .................... 15,750,313 15,750,000
=========================
4. Fund share transactions
Proceeds and payments on Fund shares as shown in the statement of changes in
net assets are in respect of the following number of shares:
Year ended November 30,
1995 1994
Shares sold .................................... 2,617,200 3,002,212
Shares issued in reinvestment of ordinary
income dividends ............................. 617,354 639,513
-----------------------
3,234,554 3,641,725
Less shares redeemed ........................... 2,615,871 3,811,808
-----------------------
Net increase (decrease) in shares outstanding .. 618,683 (170,083)
=======================
-10-
<PAGE>
STATE FARM INTERIM FUND, INC.
FINANCIAL HIGHLIGHTS
Per Share Income and Capital Changes (For a share outstanding throughout each
period)
<TABLE>
<CAPTION>
Six months
ended Year ended
Year ended November 30, November 30, May 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........................ $ 9.72 10.52 10.46 10.50 10.16 10.17 9.86 9.99 10.05 10.21 9.91
Income from
- -----------
Investment
----------
Operations
----------
Net investment
income....................... .70 .71 .74 .78 .78 .82 .81 .78 .39 .80 .89
Net gain or
loss on
securities (both
realized and
unrealized).................. .43 (.80) .06 (.04) .34 (.01) .31 (.13) (.06) (.16) .30
-------------------------------------------------------------------------------------------------
Total from
investment
operations.................... 1.13 (.09) .80 .74 1.12 .81 1.12 .65 .33 .64 1.19
Less Distributions
- ------------------
Dividends (from
net investment
income)...................... (.70) (.71) (.74) (.78) (.78) (.82) (.81) (.78) (.39) (.80) (.89)
Distributions
(from capital
gain)........................ -- -- -- -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------
Total distributions............ (.70) (.71) (.74) (.78) (.78) (.82) (.81) (.78) (.39) (.80) (.89)
Net asset value, end of
period........................ $10.15 9.72 10.52 10.46 10.50 10.16 10.17 9.86 9.99 10.05 10.21
=================================================================================================
Total Return................... 11.91% (.85%) 7.82% 7.19% 11.41% 8.27% 11.82% 6.67% 6.67%(a) 6.33% 12.40%
- ------------
Ratios/
- -------
Supplemental
------------
Data
----
Net assets, end of
period (millions)............. $104.7 94.3 103.7 85.9 66.8 52.7 42.2 32.9 23.9 16.8 11.7
Ratio of expenses to
average net
assets........................ .25%(b) .22% .25% .27% .28% .30% .31% .36% .41%(a) .41% .42%
Ratio of net
investment
income to
average net assets............ 7.00% 7.00% 7.00% 7.30% 7.65% 8.12% 8.16% 7.85% 7.78%(a) 7.77% 8.75%
Portfolio turnover rate........ 17% 15% 15% 15% 14% 14% 17% 15% 9%(a) 12% 6%
Number of shares outstanding
at end of period (millions)... 10.3 9.7 9.9 8.2 6.4 5.2 4.2 3.3 2.4 1.7 1.1
</TABLE>
Notes: (a) Ratios and rates have been calculated on an annualized basis.
(b) The ratio based on net custodian expenses would have been .24%.
-11-
<PAGE>
STATE FARM INTERIM FUND, INC.
TAX INFORMATION
The Fund paid ordinary income dividends in March, June, September and
December. The dividends paid to you will be included on the Form 1099-DIV to be
sent in January 1996.
Since the Fund's investment income was derived from interest, none of the Fund's
distributions are eligible for the dividend received deduction for corporations.
NOTE: Dividends paid to you must be included in your federal income tax return
and must be reported by the Fund to the Internal Revenue Service in
accordance with provisions of the Internal Revenue Code.
<PAGE>
STATE FARM INTERIM FUND, INC.
PART C OF THE REGISTRATION STATEMENT
---- - -- --- ------------ ---------
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Financial statements included in Part B of this amendment:
Statement of assets and liabilities - November 30, 1995*
Statement of operations for each of the two years in the period
ended November 30, 1995*
Statement of changes in net assets for each of the two years in
the period ended November 30, 1995*
Portfolio of investments - November 30, 1995*
Notes to financial statements*
Report of independent auditors*
Schedule I has been omitted as the required information is
presented in the portfolio of investments at November 30, 1995.
Schedules II, III, IV and V are omitted as the required
information is not present.
*Incorporated by reference to the Annual Report of registrant for
the fiscal year ended November 30, 1995. A copy of that Annual
Report is attached hereto, but, except for those portions
incorporated by reference, the Annual Report is furnished for
the information of the Commission and is not deemed to be
filed as part of this amendment.
(b) Exhibits Note: As used herein the term "Registration Statement"
refers to registration statement of registrant on Form S-5, N-1
or N-1A no. 2-58160.
1. Amended and restated articles of incorporation of
registrant
2. By-laws of registrant (as amended and restated
March 12, 1993)
3. None
4(a). Form of stock certificate
5(a). Investment advisory and management services agreement
between registrant and State Farm Investment
Management Corp. dated October 1, 1978.
5(b). Service agreement among registrant, State Farm
Investment Management Corp. and State Farm Mutual
Automobile Insurance Company, as amended, dated
September 9, 1977
<PAGE>
STATE FARM INTERIM FUND, INC.
6. Underwriting agreement between registrant and State
Farm Investment Management Corp., as amended, dated
September 9, 1977
7. None
8(a). Custodian agreement between registrant and Morgan
Guaranty Trust Company of New York dated November 1,
1990
8(b). Custodian agreement between registrant and The
Peoples Bank dated October 1, 1991
9. Transfer agent agreement between registrant and State
Farm Investment Management Corp. dated April 1, 1992
10. Opinion of Bell, Boyd & Lloyd, dated March 8, 1996
11. Consent of Independent Auditors dated March 15, 1996
12. None
13. None
14(a)(1). State Farm Funds Individual Retirement Account Plan
14(a)(2). State Farm Funds Individual Retirement Account Plan
Disclosure Statement
14(a)(3). State Farm Funds Individual Retirement Account Plan
Custodial Account Agreement
15. None
16. Schedule for Computation of Performance
Quotations
17. Financial Data Schedule
Item 25. Persons controlled by or under Common Control with Registrant
The registrant does not consider that there are any persons directly
or indirectly controlling, controlled by, or under common control
with, the registrant within the meaning of this item. The
<PAGE>
STATE FARM INTERIM FUND, INC.
information in the Statement of Additional Information under the
caption "Directors and Officers" and "General Information -Ownership
of Shares" and in the first two paragraphs under the caption
"Investment Advisory and Other Services" is incorporated herein by
reference.
Item 26. Number of Security Holders
Number of Record Holders
Title of Class at December 31, 1995
----- -- ----- -- -------- --- ----
Common Stock, $1 par 3,255
Item 27. Indemnification
Section 2-418 of the Maryland General Corporation Law authorizes the
registrant to indemnify its directors and officers under specified
circumstances.
Paragraph 5 of Article Seventh of the Articles of Incorporation of
the registrant and Section 6 of Article VI of the by-laws of the
registrant provide that the registrant shall indemnify its
directors and officers under specified circumstances.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the 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 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
The information in the prospectus under the caption "Management of the
Fund" is incorporated herein by reference. Neither State Farm
Investment Management Corp., nor any of its directors or officers, has
at any time during the past two years engaged in any other business,
profession, vocation or employment of a substantial nature either for
its own account or in the capacity of director, officer, employee,
partner or trustee.
Directors and Officers of Investment Adviser -
<PAGE>
STATE FARM INTERIM FUND, INC.
Edward B. Rust, Jr., Director and President *
Roger Joslin, Director, Vice President and Treasurer *
Kurt G. Moser, Director and Vice President *
John J. Killian, Director - Vice President and Controller, State Farm
Mutual Automobile Insurance Company and holds a similar position
with certain subsidiaries and affiliates.
Vincent J. Trosino, Director - Executive Vice President,
State Farm Mutual Automobile Insurance Company.
David R. Grimes, Assistant Vice President and Secretary *
Michael L. Tipsord, Assistant Secretary *
Jerel S. Chevalier, Assistant Secretary-Treasurer *
Patricia L. Dysart, Assistant Secretary *
* Information in the Statement of Additional Information under the
caption "Directors and Officers" is incorporated herein by
reference.
Item 29. Principal Underwriters
(a) Information under the caption "Investment Advisory and Other
Services" in the Statement of Additional Information is
incorporated herein by reference.
(b) Registrant's principal underwriter is also registrant's
investment adviser. Accordingly, the information in Item 28
hereof is incorporated herein by reference.
(c) Not applicable.
Item 30. Location of Accounts and Records
Jerel S. Chevalier, State Farm Investment Management Corp., One State
Farm Plaza, Bloomington, Illinois 61710 maintains physical possession
of each account, book, or other document required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder.
Item 31. Management Services
None
Item 32. Undertakings
(a) Not applicable
<PAGE>
STATE FARM INTERIM FUND, INC.
(b) Not applicable
(c) Registrant undertakes to furnish each person to whom
a prospectus is delivered a copy of the Registrant's
latest annual report to shareowners, upon request and
without charge.
<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 registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Bloomington, and State of Illinois on
the 15th day of March, 1996.
STATE FARM INTERIM FUND, INC.
By: /s/ Edward B. Rust, Jr.
---------------------------------
Edward B. Rust, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
/s/ Edward B. Rust, Jr. Director and President
- -------------------------------------(Principal Executive Officer)
Edward B. Rust, Jr.
/s/ Roger Joslin Director, Vice President,
- -------------------------------------and Treasurer
Roger Joslin (Principal financial and
accounting officer)
/s/ Albert H. Hoopes Director March 15, 1996
- -------------------------------------
Albert H. Hoopes
/s/ Davis U. Merwin Director
- -------------------------------------
Davis U. Merwin
/s/ James A. Shirk Director
- -------------------------------------
James A. Shirk
<PAGE>
INDEX FOR EXHIBITS
FILED WITH THIS AMENDMENT
-------------------------
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
1 Amended and restated articles of
incorporation
2 By-laws of registrant
4(a) Form of stock certificate
5(a) Investment advisory and management
services agreement
5(b) Services agreement
6 Underwriting agreement
8(a) Custodian agreement between registrant
and Morgan Guaranty Trust Company of
New York
8(b) Custodian agreement between registrant
and The Peoples Bank
9 Transfer agent agreement
10 Opinion of Bell, Boyd & Lloyd
11 Consent of Independent Auditors
dated March 15, 1996
14(a)(1) State Farm Funds Individual Retirement
Account Plan
14(a)(2) State Farm Funds Individual Retirement
Account Plan Disclosure Statement
14(a)(3) State Farm Funds Individual Retirement
Account Plan Custodial Account Agreement
16 Schedule for computation of performance
quotations
17 Financial Data Schedule
<PAGE>
STATE FARM INTERIM FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
STATE FARM INTERIM FUND, INC., a Maryland corporation, having its principal
office in Baltimore City, Maryland (which is hereinafter called the
"Corporation") , hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended and restated in its
entirety to read as follows:
STATE FARM INTERIM FUND, INC.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
FIRST: THE UNDERSIGNED, Donald F. Storm, whose address is One State Farm
Plaza, Bloomington, Illinois, 61701, being at least eighteen years of age,
acting as incorporator, does hereby form a corporation under the General Laws of
the State of Maryland.
SECOND: (a) The name of the corporation (which is hereinafter called the
"Corporation") is:
State Farm Interim Fund, Inc.
(b) The Corporation acknowledges that it has adopted its corporate name
through permission of State Farm Mutual Automobile Insurance Company, an
Illinois mutual insurance company (hereinafter referred to as "State Farm
Mutual") and acknowledges that State Farm Mutual has the sole and exclusive
right to use or license the use of the name "State Farm" in commerce. The
Corporation agrees that at the request of State Farm Mutual the Corporation
shall take all requisite action to amend its Charter to eliminate the name
"State Farm" from the Corporation's corporate name and from the designations of
its shares of capital stock. The Corporation further acknowledges that State
Farm Mutual reserves the right to grant the non-exclusive right to use the name
"State Farm" to any other corporation, including other investment companies,
whether now in existence or hereafter created.
THIRD: (a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
<PAGE>
(1) To engage generally in the business of investing, reinvesting,
owning, holding or trading in securities, as defined in the Investment Company
Act of 1940, as from time to time amended (hereinafter referred to as the
"Investment Company Act"), as an investment company classified under the
Investment Company Act as an open-end, management company.
(2) To engage in any one or more businesses or transactions, or to
acquire all or any portion of any entity engaged in any one or more businesses
or transactions, which the Board of Directors may from time to time authorize or
approve, whether or not related to the business described elsewhere in this
Article or to any other business at the time or theretofore engaged in by the
Corporation.
(b) The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of the Charter of the Corporation, and each
shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of corporations
under the General Laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation in
this State is 11 East Chase Street, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation in
this State are Prentice-Hall Corporation Systems Maryland, Inc., 11 East Chase
Street, Baltimore, Maryland 21202. Said resident agent is a Maryland
corporation.
SIXTH: (a) The total number of shares of capital stock which the
Corporation initially has authority to issue is 40,000,000 shares of capital
stock (par value $1.00 per share), amounting in aggregate par value to
$40,000,000. All of such shares are classified as "Common Stock".
(b) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the Investment Company Act, the Board of
Directors shall have the power and authority, without the approval of the
holders of any outstanding shares, to increase or decrease the number of shares
of capital stock that the Corporation has authority to issue.
<PAGE>
(c) The following is a description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of Common
Stock:
(1) Dividends and Distributions. Dividends and capital gains
distributions on shares of Common Stock may be paid with such frequency, in such
form and in such amount as the Board of Directors may determine by resolution
adopted from time to time, or pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Board of Directors may
determine, after providing for actual and accrued liabilities. All dividends
and distributions on shares of Common Stock shall be distributed pro rata to the
holders of Common Stock in proportion to the number of shares of Common Stock
held by such holders at the date and time of record established for the payment
of such dividends or distributions.
Dividends and distributions may be paid in cash, property or additional
shares of Common Stock, or a combination thereof, as determined by the Board of
Directors or pursuant to any program that the Board of Directors may have in
effect at the time for the election by stockholders of the form in which
dividends or distributions are to be paid. Any such dividend or distribution
paid in shares shall be paid at the current net asset value thereof.
(2) Voting. On each matter submitted to a vote of the stockholders,
each holder of shares of Common Stock shall be entitled to one vote for each
share standing in his name on the books of the Corporation.
(3) Redemption by Stockholders. Each holder of shares of Common Stock
shall have the right at such times as may be permitted by the Corporation to
require the Corporation to redeem all or any part of his shares of Common Stock,
at a redemption price per share equal to the net asset value per share of Common
Stock next determined after the shares are properly tendered for redemption,
less such redemption fee (not to exceed l% of the net asset value of the shares
redeemed), if any, as may be established by the Board of Directors in its sole
discretion. Payment of the redemption price shall be in cash; provided, however,
that the Corporation may, to the extent and in the manner permitted by the
Investment Company Act, make payment wholly or partly in securities or other
assets of the Corporation, at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Corporation may postpone payment of the
redemption price and may suspend the right of the holders of shares of Common
Stock to require the Corporation to redeem shares of Common Stock during any
period or at any time when and to the extent permissible under the Investment
Company Act.
<PAGE>
(4) Net Asset Value Per Share. The net asset value per share of Common
Stock shall be the quotient obtained by dividing the value of the net assets of
the Corporation (being the value of the assets of the Corporation less the
liabilities of the Corporation) by the total number of shares of Common Stock
outstanding, all as determined by or under the direction of the Board of
Directors in accordance with generally accepted accounting principles and the
Investment Company Act. Subject to the applicable provisions of the Investment
Company Act, the Board of Directors, in its sole discretion, may prescribe and
set forth in the By-Laws of the Corporation or in a duly adopted resolution of
the Board of Directors such bases and times for determining the value of the
assets belonging to the Corporation and the net asset value per share of
outstanding shares of Common Stock, or the net income attributable to such
shares, as the Board of Directors deems necessary or desirable. The Board of
Directors shall have full discretion, to the extent not inconsistent with the
Maryland General Corporation Law and the Investment Company Act, to determine
which items shall be treated as income and which items as capital and whether
any item of expense shall be charged to income or capital. Each such
determination and allocation shall be conclusive.
(d) The Corporation may issue and sell fractions of shares of Common Stock
having pro rata all the rights of full shares, including, without limitation,
the right to vote and to receive dividends, and wherever the words "share" or
"shares" are used in the Charter or By-Laws of the Corporation as amended from
time to time, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.
(e) The Corporation shall not be obligated to issue certificates
representing shares of Common Stock. At the time of issue or transfer of shares
without certificates, the Corporation shall provide the stockholder with such
information as may be required under the Maryland General Corporation Law.
SEVENTH: The number of directors of the Corporation shall be five, which
number may be increased or decreased pursuant to the By-Laws of the Corporation
as amended from time to time, but shall never be less than the minimum number
permitted by the General Laws of the State of Maryland now or hereafter in
force. The names of the directors who are serving until the next annual meeting
and until their successors are elected and qualify are as follows:
Edward B. Rust, Jr.
Albert H. Hoopes
Roger S. Joslin
Davis U. Merwin
James A. Shirk
EIGHTH: (a) The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
directors and stockholders:
<PAGE>
(1) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its capital stock, whether now or
hereafter authorized, for such consideration as may be deemed advisable by the
Board of Directors and without any action by the stockholders.
(2) No holder of any stock or any other securities of the Corporation,
whether now or hereafter authorized, shall have any preemptive right to
subscribe for or purchase any stock or any other securities of the Corporation
other than such, if any, as the Board of Directors, in its sole discretion, may
determine and at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix.
(3) Notwithstanding any provision of law requiring the authorization
of any action by a greater proportion than a majority of the total number of
shares of all classes of capital stock or of the total number of shares of any
class of capital stock, such action shall be valid and effective if authorized
by the affirmative vote of the holders of a majority of the total number of
shares of all classes outstanding and entitled to vote thereon, except as
otherwise provided in the Charter.
(4) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act, no
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. No amendment of the Charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal.
(5) The Corporation reserves the right from time to time to make any
amendments of its Charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its Charter, of any of its outstanding stock by classification,
reclassification or otherwise.
(b) The enumeration and definition of particular powers of the Board of
Directors included in the foregoing shall in no way be limited or restricted by
reference to or inference from the terms of any other clause of this or any
other Article of the Charter of the Corporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the General Laws of the State of Maryland now
or hereafter in force.
<PAGE>
NINTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation, acknowledging
the same to be my act, on November 8, 1976.
Witness:
/s/ Donald F. Storm
-------------------
************
SECOND: The amendment and restatement does not increase the authorized
stock of the Corporation.
THIRD: The foregoing amendment and restatement to the Charter of the
Corporation has been advised by the Board of Directors and approved by the
stockholders of the Corporation.
IN WITNESS WHEREOF, STATE FARM INTERIM FUND, INC. has caused these presents
to be signed in its name and on its behalf by its Vice President and witnessed
by its Secretary on April 17, 1995.
WITNESS: STATE FARM INTERIM FUND, INC.
/s/ David R. Grimes /s/ Kurt G. Moser
------------------- -----------------
Secretary Vice President
THE UNDERSIGNED, Vice President of STATE FARM INTERIM FUND, INC., who
executed on behalf of the Corporation the foregoing Articles of Amendment and
Restatement of which this certificate is made a part, hereby acknowledges in the
name and on behalf of said Corporation the foregoing Articles of Amendment and
Restatement to be the corporate act of said Corporation and hereby certifies
that to the best of his knowledge, information, and belief the matters and facts
set forth therein with respect to the authorization and approval thereof are
true in all material respects under the penalties of perjury.
/s/ Kurt G. Moser
-----------------
Vice President
<PAGE>
Authorized UserAuthorized User
BYLAWS
------
STATE FARM INTERIM FUND, INC.
(as amended and restated March 12, 1993)
ARTICLE I
OFFICES
Section 1.01. Principal office. The principal office of the corporation
in the State of Maryland shall be located in the City of Baltimore.
Section 1.02. Other offices. The corporation may also have offices at
such other places both within and without the State of Maryland as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. Place of meetings. All meetings of the stockholders shall
be held in the City of Bloomington, State of Illinois, or at such other place in
the United States as shall be designated from time to time by the board of
directors, at such time and place, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2.02. Annual meeting. As long as the corporation is registered
as an investment company under the Investment Company Act of 1940, the
corporation shall not be required to hold an annual meeting of stockholders
during any year in which none of the following is required to be acted on by
stockholders under that Act: (1) an election of directors; (2) approval of an
investment advisory agreement; (3) ratification of a selection of independent
public accountants; and (4) approval of a distribution agreement. If there is
to be an annual meeting, it shall be held on the first Friday after the second
Monday of March if not a legal holiday, and if a legal holiday, then on the next
secular day following, at 10:00 a.m., or at such other date and time within the
month of March as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which they shall elect a
board of directors and transact such other business as may properly be brought
before the meeting.
<PAGE>
Section 2.03. Special meetings. Special meetings of stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
articles of incorporation, may be called at any time by the president or the
board of directors. Special meetings of stockholders shall be called by the
secretary upon the written request of stockholders entitled to cast at least 25
percent of all the votes entitled to be cast at such meeting, provided that (a)
such request shall state the purpose or purposes of the meeting and the matters
proposed to be acted on at it; and (b) the stockholders requesting the meeting
shall have paid to the corporation the reasonably estimated cost of preparing
and mailing the notice thereof, which the secretary shall determine and specify
to such stockholders. Upon payment of these costs to the corporation, the
secretary shall notify each stockholder entitled to notice of the meeting.
Unless requested by stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at any
special meeting of stockholders held during the preceding twelve months.
Section 2.04. Stockholders entitled to vote; number of votes. If a
record date has been fixed for the determination of stockholders entitled to
notice of or to vote at any meeting of stockholders, each stockholder of the
corporation shall be entitled to vote, in person or by proxy, each share of
stock (or fraction thereof) registered in his name on the books of the
corporation outstanding at the close of business on such record date, with one
vote (or fraction of a vote) for each share (or fraction thereof) so
outstanding.
Section 2.05. Notice of meetings. Written notice of each meeting of
stockholders stating the place, date and hour of the meeting and, in the case of
a special meeting or if otherwise required by law, the purpose or purposes for
which the meeting is called, shall be given, not less than 10 nor more than 90
days before the date of the meeting, to each stockholder entitled to vote at
such meeting.
Section 2.06. Quorum; adjournment. The holders of a majority of the
stock entitled to vote at a meeting of stockholders, present in person or
represented by proxy, shall constitute a quorum at the meeting for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of stockholders, the stockholders entitled to vote
thereat present in person or represented by proxy shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At any adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than 120 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled to vote at the
meeting.
Section 2.07. Voting. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy and voting on the question shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of any statute or the charter or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
<PAGE>
Section 2.08. Proxies. No proxy shall be valid more than eleven months
after its date, unless it provides for a longer period.
Section 2.09. Action without meeting. Any action required or permitted
to be taken at a meeting of stockholders may be taken without a meeting if a
unanimous written consent which sets forth the action is signed by each
stockholder entitled to vote on the matter is filed with the record of
stockholders' meetings.
Section 2.10. Stock ledger. The secretary of the corporation shall
cause an original or duplicate stock ledger to be maintained at the office of
the corporation's transfer agent. The stock ledger shall contain the name and
address of each stockholder and the number of shares of stock which the
stockholder holds.
ARTICLE III
DIRECTORS AND COMMITTEES
Section 3.01. Function and powers. The business and affairs of the
corporation shall be managed under the direction of its board of directors. All
powers of the corporation may be exercised by or under the authority of the
board of directors except as conferred on or reserved to the stockholders by
statute or the charter or these bylaws.
Section 3.02. Number. The number of directors which shall constitute the
entire board of directors shall be not less than three nor more than fifteen.
Within such limits the number of directors may be changed by resolution, or by
amendment to these bylaws, adopted by a majority of the entire board of
directors, but no such action shall affect the tenure of office of any director.
Section 3.03. Election and term of office. The directors shall be
elected at the annual meeting of the stockholders (if any such meeting is held),
except as provided in Section 3.04 of this article, and each director elected
shall hold office until his successor is elected and qualifies or until his
earlier resignation or removal. Directors need not be stockholders of the
corporation.
Section 3.04. Vacancies. Any vacancy occurring in the board of
directors for any cause other than by reason of an increase in the number of
directors may be filled by a majority of the remaining members of the board of
directors, although such majority is less than a quorum; provided, however, that
no vacancy shall be so filled unless immediately thereafter at least two-thirds
of the directors then holding office shall have been elected to such office by
the stockholders, and provided further that if at any time
<PAGE>
less than a majority
of the directors holding office at that time were elected by the stockholders, a
meeting of the stockholders shall be held promptly and in any event within 60
days for the purpose of electing directors to fill any existing vacancy in the
board of directors, unless the Securities and Exchange Commission shall by order
extend such period under the authority granted by section 16(a) of the
Investment Company Act of 1940. A director elected to fill a vacancy shall be
elected to hold office until the next annual meeting of stockholders or until
his successor is elected and qualifies.
Section 3.05. Regular meetings. The board of directors from time to
time may provide for the holding of regular meetings of the board and fix their
time and place.
Section 3.06. Special meetings. Special meetings of the board may be
called by the president on 24 hours notice to each director, either personally,
by mail, by telegram or by facsimile transmission. Special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of a majority of the directors or a majority of the members of
the executive committee.
Section 3.07. Quorum and voting. At all meetings of the board a
majority of the directors in office shall constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by statute or the
articles of incorporation or these bylaws. If a quorum shall not be present at
any meeting of the board of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 3.08. Telephone meetings. Members of the board of directors or
any committee thereof may participate in a meeting of such board or committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time, and participation by such means shall constitute presence in person at the
meeting.
Section 3.09. Action without meeting. Unless otherwise restricted by
statute or the articles of incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting if a unanimous written consent
which sets forth the action is signed by each member of the board or committee,
as the case may be, and filed with the minutes of proceedings of the board or
committee.
<PAGE>
Section 3.10. Committees. The board of directors may, by resolution
passed by a majority of the entire board, designate an executive committee and
other committees, each committee to consist of two or more directors of the
corporation. In the absence of a member of a committee, the members thereof
present at any meeting, whether or not they constitute a quorum, may appoint
another member of the board of directors to act at the meeting in the place of
any such absent member.
Section 3.11. Executive committee. Unless otherwise provided by
resolution of the board of directors, the executive committee shall have and may
exercise all powers of the board of directors in the management of the business
and affairs of the corporation that may lawfully be exercised by an executive
committee, except the power to: (i) declare dividends or distributions on stock;
(ii) issue stock; (iii) recommend to the stockholders any action which requires
stockholder approval; (iv) amend the bylaws; or (v) approve any merger or share
exchange which does not require stockholder approval.
Section 3.12. Other committees. To the extent provided by resolution of
the board of directors, other committees of the board shall have and may
exercise any of the powers that may lawfully be granted to the executive
committee.
Section 3.13. Minutes of committee meetings. Each committee shall keep
regular minutes of its meetings and report the same to the board of directors
when required.
Section 3.14. Expenses and compensation of directors. Directors shall
not receive any stated salary for their services as directors, but, by
resolution of the board of directors, a fixed sum, and expenses of attendance,
if any, may be allowed to directors for attendance at each regular or special
meeting of the board of directors, or of any committee thereof, but nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
NOTICES
Section 4.01. Type of notice. Whenever, under the provisions of any
statute or the articles of incorporation or these bylaws, notice is required to
be given to any director or stockholder, such notice may be given in writing, by
personal delivery, or by mail, addressed to such director or stockholder, at his
or her address as it appears on the records of the corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice to directors may
also be given by telegram or by facsimile transmission.
<PAGE>
Section 4.02. Waiver of notice. Whenever the provisions of any statute
or the articles of incorporation or these bylaws require notice of the time,
place or purpose of a meeting of the board of directors or a committee of the
board, or of stockholders, each person who is entitled to the notice waives
notice if: (a) before or after the meeting he or she signs a waiver of notice
which is filed with the records of the meeting; or (b) he or she is present at
the meeting or, in the case of a stockholders' meeting, is represented by proxy.
ARTICLE V
OFFICERS
Section 5.01. Offices. The officers of the corporation shall be elected
by the board of directors and shall be a president, one or more vice presidents,
a secretary and a treasurer. The board of directors may also appoint a
chairperson of the board, assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the articles of
incorporation or these bylaws otherwise provide, except that no one may serve
concurrently as both president and vice president. A person who holds more than
one office may not act in more than one capacity to execute, acknowledge or
verify an instrument required by law to be executed, acknowledged or verified by
more than one officer.
Section 5.02. Annual election. The board of directors annually shall
elect a president one or more vice presidents, a secretary and a treasurer. The
board of directors may elect one of its members to serve as chairperson of the
board.
Section 5.03. Other officers and agents. The board of directors may
appoint such other officers and agents as it shall deem necessary, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the board.
Section 5.04. Term of office; removal; vacancies. The officers of the
corporation shall hold office until their respective successors are chosen and
qualify. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors, when the board in its judgment finds that the best interests of the
corporation will be served by such action. The removal of an officer or agent
does not prejudice his contract rights, if any. Any vacancy occurring in any
office of the corporation shall be filled by the board of directors.
<PAGE>
Section 5.05. The chairperson of the board of directors. The
chairperson of the board of directors, if one shall be elected, shall preside at
all meetings of the directors and stockholders, and shall perform such other
duties as the board of directors may prescribe.
Section 5.06. The president. The president shall be the chief executive
officer of the corporation and shall have general management of the business of
the corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect. In the absence of a chairperson of the board
of directors, or if a chairperson is not elected, the president shall preside at
all meetings of the directors and stockholders. The president may execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation.
Section 5.07. The vice presidents. In the absence of the president or
in the event of the president's inability or refusal to act, the vice president
(or in the event there be more than one vice president, the vice presidents in
the order designated, or in the absence of any designation, then in the order of
their election) shall perform the duties of the president, and when so acting
shall have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
Section 5.08. The secretary. The secretary shall record all votes and
proceedings of meetings of directors and stockholders in the corporation
records. The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and meetings of the board of directors when notice thereof
is required. The secretary shall have custody of the seal of the corporation
and may affix the same to any instrument requiring the corporate seal and attest
to the same with his or her signature. The secretary shall perform such other
duties as the board of directors may prescribe.
Section 5.09. The assistant secretary. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the secretary or in the event of the
secretary's inability or refusal to act, perform the duties and exercise the
powers of the secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
Section 5.10. The treasurer. The treasurer: (a) shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; (b) shall deposit with the corporation's custodian all moneys and
other valuable effects in the name and to the credit of the corporation; (c)
shall direct the custodian to make such disbursements of the funds of the
corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements; and (d) shall render to the president and
<PAGE>
the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his or her transactions as treasurer and financial statements
of the corporation.
Section 5.11. The assistant treasurer. The assistant treasurer, or if
there shall be more than one, the assistant treasurers in the order determined
by the board of directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the treasurer or in the event
of the treasurer's inability or refusal to act, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
ARTICLE VI
CAPITAL STOCK
Section 6.01. Certificates of stock. Every holder of stock in the
corporation shall be entitled, upon request, to have a certificate or
certificates, signed by, or in the name of the corporation by, the president or
a vice president and countersigned by the treasurer, an assistant treasurer, the
secretary or an assistant secretary of the corporation, certifying the number of
full shares owned by him in the corporation. No certificates shall be issued
for fractional shares. Where a certificate is countersigned by a transfer agent
other than the corporation or its employee, any other signature on the
certificate may be facsimile. In case any officer or transfer agent who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer or transfer agent before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer or transfer agent at the date of issue.
Section 6.02. Lost certificates. The board of directors may direct a
new certificate or certificates be issued in place of any certificate or
certificates previously issued by the corporation which are alleged to be lost,
mutilated or destroyed, upon such terms and upon such conditions as the board of
directors may prescribe.
Section 6.03. Transfers of stock. The shares of stock of the
corporation shall be transferable on the books of the corporation at the request
of the record holder thereof in person or by a duly authorized attorney, upon
presentation to the corporation or its transfer agent of a duly executed
assignment or authority to transfer, or proper evidence of succession, and, if
the shares are represented by a certificate, a duly endorsed certificate or
certificates of stock surrendered for cancellation, and with such proof of the
authenticity of the signatures as the corporation or its transfer agent may
reasonably require. The transfer shall be recorded on the books of the
corporation, the old certificates, if any, shall be cancelled, and the new
record holder, upon request, shall be entitled to a new certificate or
certificates.
<PAGE>
Section 6.04. Fixing of record date. The board of directors may fix in
advance a date as a record date for the determination of the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
provided that such record date shall not be a date more than 90 days, and in the
case of a meeting of stockholders not less than 10 days, prior to the date on
which the particular action requiring such determination of stockholders is to
be taken. In such case only such stockholders as shall be stockholders of
record on the record date so fixed shall be entitled to such notice of, and to
vote at, such meeting or adjournment, or to give such consent, or to receive
payment of such dividend or other distribution, or to receive such allotment of
rights, or to exercise such rights, or to take such other action, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after any such record date.
Section 6.05. Registered stockholders. The corporation shall be
entitled to treat the holder of record of shares as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
statute.
ARTICLE VII
CUSTODIAN
Section 7.01. Qualifications. The corporation shall at all times
employ, pursuant to a written contract, one or more banks or trust companies,
each having an aggregate capital, surplus and undivided profits (as shown in its
last published report) of at least $2,000,000, as custodian to hold the funds
and securities of the corporation.
Section 7.02. Contract. Such contract shall be upon such terms and
conditions and may provide for such compensation as the board of directors deems
necessary or appropriate, provided such contract shall further provide that the
custodian shall deliver securities owned by the corporation only upon sale of
such securities for the account of the corporation and receipt of payment
therefor by the custodian or when such securities may be called, redeemed,
retired or otherwise become payable. Such limitation shall not, however,
prevent:
(a) the delivery of securities for examination to the broker selling the
same in accord with the "street delivery" custom whereby such securities are
delivered to such broker in exchange for a
<PAGE>
delivery receipt exchanged on the
same day for an uncertified check of such broker to be presented on the same day
for certification;
(b) the delivery of securities of an issuer in exchange for or conversion
into other securities alone or cash and other securities pursuant to any plan of
merger, consolidation, reorganization, recapitalization or readjustment of the
securities of such issuer;
(c) the conversion by the custodian of securities owned by the
corporation pursuant to the provisions of such securities into other securities;
(d) the surrender by the custodian of warrants, rights or similar
securities owned by the corporation in the exercise of such warrants, rights or
similar securities, or the surrender of interim receipts or temporary securities
for definitive securities;
(e) the delivery of securities owned by the corporation as a redemption
in kind of securities issued by the corporation.
The custodian shall deliver funds of the corporation only upon the purchase of
securities for the portfolio of the corporation and the delivery of such
securities to the custodian, but such limitation shall not prevent the release
of funds by the custodian for redemption of shares issued by the corporation,
for payment of interest, dividend disbursements, taxes and management fees, for
payments in connection with the conversion, exchange or surrender of securities
owned by the corporation as set forth in sub-paragraphs (b), (c) and (d) above,
for operating expenses of the corporation and for any other purpose authorized
by the board of directors.
Section 7.03. Termination of contract. The contract of employment of
the custodian shall be terminable by either party on 60 days' written notice to
the other party. Upon any termination, the board of directors shall use its
best efforts to obtain a successor custodian, but lacking success in the
appointment of a successor custodian, the question of whether the corporation
shall be liquidated or shall function without a custodian shall be submitted to
the stockholders before delivery of any funds or securities of the corporation
to any person other than a successor custodian, including a temporary successor
selected by the retiring custodian. If a successor custodian is found, the
retiring custodian shall deliver funds and securities owned by the corporation
directly to the successor custodian.
<PAGE>
Section 7.04. Agents of custodian. The provisions of any other section
of these bylaws to the contrary notwithstanding, any contract of employment of a
custodian to hold the funds and securities of the corporation may authorize the
custodian, upon approval of the board of directors, to appoint other banks or
trust compan ies meeting the requirements of this article, domestic and foreign
(including domestic and foreign branches), to perform all or a part of the
duties of the custodian under its contract with the corporation.
Section 7.05. Negotiable instruments. All checks and drafts for the
payment of money shall be signed in the name of the corporation by such officer
or officers or such other person or persons as the board of directors may
designate, and all requisitions or orders for the payment of money by the
custodian or for the issue of checks and drafts therefor, all promissory notes,
all assignments of shares or securities standing in the name of the corporation,
and all requisitions or orders for the assignment of shares or securities
standing in the name of the custodian or its nominee, or for the execution of
powers to transfer the same, shall be signed in the name of the corporation by
not less than two of its officers. Promissory notes, checks or drafts payable
to the corporation may be endorsed only to the order of the custodian or its
agent.
ARTICLE VIII
TRANSACTIONS WITH OFFICERS AND DIRECTORS
Section 8.01. Purchase and sale of securities. The corporation shall
not purchase any securities (other than shares issued by the corporation) from,
or sell any securities (other than shares issued by the corporation and
securities paid in satisfaction of shares deposited for redemption during a
period during which the corporation is redeeming its shares principally in kind)
to, any director or officer of the corporation, or any director, officer or
partner of any firm which acts as investment adviser or principal underwriter
for the corporation acting as principal, except to the extent permitted to do so
under the Investment Company Act of 1940 or the rules or regulations thereunder
or by appropriate order or written advice of the Securities and Exchange
Commission.
Section 8.02. Concentration in any one issuer. The corporation shall
not purchase or retain securities of a company if all of the directors and
officers of the corporation and of its investment adviser who individually own
beneficially more than 1/2% of the securities of the company collectively own
more than 5% of such securities.
Section 8.03. Transactions in shares of the corporation. No director or
officer of the corporation or of its investment adviser shall take a long or
short position in the capital stock of the corporation, except that officers or
directors may purchase shares of the corporation for investment purposes at the
same price as that available to the public at the time of purchase.
<PAGE>
ARTICLE IX
INDEMNIFICATION
Section 9.01. Indemnification. Each person who is or was a director or
officer of the corporation, and each person who serves or served at the request
of the corporation as a director or officer of another corporation (and their
respective heirs, executors and administrators), shall be indemnified by the
corporation in accordance with, and to the fullest extent authorized by, the
General Corporation Law of the State of Maryland as it may be in effect from
time to time, provided that (unless otherwise permitted by the Investment
Company Act of 1940, the rules and regulations thereunder or the Securities and
Exchange Commission):
(a) this provision shall not protect any person against any liability to
the corporation or to its stockholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office;
(b) if there is neither a final court determination on the merits that
the person seeking indemnification is not liable nor a court determination that
he was not guilty of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office, no
indemnification shall be permitted unless a determination that the person was
not guilty of any such misconduct has been made by (i) the vote of a majority of
a quorum of directors who are neither "interested persons" of the corporation as
defined in section 2(a)(19) of the Investment Company Act of 1940 nor parties to
the proceedings ("disinterested, non-party directors") or (ii) an independent
legal counsel (not including a counsel who does work for either the corporation,
its investment adviser or principal underwriter, or any person affiliated with
any of these persons); and
(c) before the final disposition of a proceeding, the corporation may pay
the expenses, including attorneys' fees, incurred by any such person in
defending a civil or criminal action, suit or proceeding, only if:
(i) authorized in the specific case, by a majority of the
disinterested, non-party directors, or if there are no disinterested, non-party
directors, by the board of directors;
<PAGE>
(ii) any advances are limited to amounts used, or to be used, for the
preparation and/or presentation of a defense to the action (including costs
connected with preparation of a settlement);
(iii) any advances are accompanied by a written promise by, or on behalf
of, the recipient to repay that amount of the advance which exceeds the amount
which it is ultimately determined that the recipient is entitled to receive from
the corporation by reason of indemnification;
(iv) such promise is secured by (1) a surety bond or other security
provided by the recipient of the advance or (2) other suitable insurance, unless
a majority of a quorum of the disinterested, non-party directors, or an
independent legal counsel in a written opinion, has determined, based on a
review of readily available facts, that there is reason to believe that the
recipient of the advance ultimately will be found entitled to indemnification.
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Dividends.
-------------- ---------
(a) The board of directors, from time to time as they may deem advisable,
may declare and pay dividends in cash or other property of the corporation, out
of any source available for dividends, to the stockholders according to their
respective rights and interests and in accordance with the applicable provisions
of the charter.
(b) The board of directors may prescribe from time to time that dividends
declared are payable at the election of any of the stockholders, either in cash
or in shares of the corporation.
(c) The board of directors shall cause any dividend payment to be
accompanied by a written statement if paid wholly or partly from any source
other than:
(i) the corporation's accumulated undistributed net income (determined in
accordance with generally accepted accounting principles and the rules and
regulations of the Securities and Exchange Commission then in effect) and not
including profits or losses realized upon the sale of securities or other
properties; or
<PAGE>
(ii) the corporation's net income so determined for the current or
preceding fiscal year.
Such statement shall adequately disclose the source or sources of such payment
and the basis of calculation, and shall be in such form as the Securities and
Exchange Commission may prescribe.
Section 10.02. Fiscal year. The fiscal year of the corporation shall
-------------- -----------
end on November 30.
Section 10.03. Seal. The corporate seal shall have inscribed thereon
the name of the corporation and shall be in such form and contain such other
words and figures as the directors shall determine or the law require. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or by placing the word "seal" adjacent to the signature of the
authorized officer of the corporation. Any officer or director of the
corporation shall have authority to affix the corporate seal of the corporation
to any document requiring the same.
ARTICLE XI
AMENDMENTS
Section 11.01. General. Except as provided in section 11.02, these
bylaws may be altered, amended or repealed, and new bylaws may be adopted solely
by the board of directors, at any meeting of the board of directors.
Section 11.02. Amendment by stockholders only. Sections 2.06 and 2.07
of article II, section 3.04 of article III, article VIII, and article XI of
these bylaws may be altered, amended or repealed only with the approval of the
holders of a "majority of the outstanding voting securities" of the corporation,
as that term is defined in section 2(a)(42) of the Investment Company Act of
1940.
<PAGE>
NUMBER SHARES
- -------------- ------------
STATE FARM INTERIM FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CUSIP 856848 10 6
This is to Certify that is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES
OF THE COMMON STOCK OF
STATE FARM INTERIM FUND, INC.,
of the par value of One Dollar ($1.00) per share, transferable on the books of
the Company by the holder hereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to the provisions of the
Articles of Incorporation and of the By-Laws of the Company, and of all
amendments from time to time made thereto. Copies are on file with the Transfer
Agent.
This Certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Company and the facsimile signatures of
its duly authorized officers.
Dated
[SIGNATURE OF PAUL ANDERSON, JR.] [SIGNATURE OF EDWARD B. RUST]
Secretary President
[CORPORATE SEAL OF STATE FARM INTERIM FUND, INC.]
Countersigned:
STATE FARM INVESTMENT MANAGEMENT CORP.
(Delaware) Transfer Agent
By
Authorized Signature
<PAGE>
INVESTMENT ADVISORY AND MANAGEMENT
SERVICES AGREEMENT
AGREEMENT dated October 1, 1978, by and between STATE FARM INTERIM
FUND, INC., a Maryland corporation registered under the Investment Company Act
of 1940 as an open-end diversified management investment company (hereinafter
called the "Fund"), and STATE FARM INVESTMENT MANAGEMENT CORP., a Delaware
corporation registered under the Investment Advisers Act of 1940 as an
investment adviser (hereinafter called the "Adviser"):
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. Engagement of Adviser. The Fund hereby employs the Adviser to act
as investment adviser for and to manage the investment and reinvestment of the
assets of the Fund, and to administer its affairs to the extent requested by and
subject to the supervision and control of the Board of Directors of the Fund for
the period and upon the terms herein set forth. The Adviser shall give due
consideration to the investment policies and restrictions and the other
statements concerning the Fund in the Fund's articles of incorporation, by-laws,
and registration statements under the Investment Company Act of 1940 (the "Act")
and the Securities Act of 1933 (the "Securities Act"), and to the provisions of
the Internal Revenue Code applicable to the Fund as a regulated investment
company.
The Adviser is authorized to make the decisions to buy and sell
securities of the Fund, to place the Fund's portfolio transactions with
securities broker-dealers, and to negotiate brokerage commissions and other
terms of such transactions on behalf of the Fund. The Adviser is authorized to
exercise discretion within the Fund's policy concerning allocation of its
portfolio brokerage as permitted by law, including but not limited to section
28(e) of the Securities Exchange Act of 1934, and in so doing shall not be
required to make any reduction in its investment advisory fees.
The Adviser shall for all purposes herein provided be deemed to be an
independent contractor, and unless otherwise expressly provided or authorized
shall have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
2. Expenses. The Adviser shall at its own expense furnish to the Fund
suitable office space in its own offices or in such other place as may be agreed
upon from time to time between the parties, hereto, and in addition shall
furnish all necessary office facilities, equipment, administrative services and
<PAGE>
clerical personnel for managing the affairs and investments of the Fund. The
Adviser shall arrange, if desired by the Fund, for officers or employees of the
adviser to serve without salary from the Fund as directors, officers or agents
of the Fund if duly elected or appointed to such positions by the shareholders
of the Fund or by the Board of Directors thereof and subject to their individual
consent and to any limitations imposed by law. The Adviser assumes and shall
pay all of the expenses of the Fund, other than those expressly to be paid by
the Fund as specified herein and expenses payable by any distributor of the
Fund's shares pursuant to a separate agreement between the Fund and such
distributor.
The Fund assumes and shall pay the following expenses related to the
Fund: (i) all fees of the Adviser hereunder; (ii) all charges of independent
auditors, of legal counsel, of depositaries, custodians and other agencies for
the safekeeping and servicing of its cash, securities and other property, and
for keeping the Fund's books of account and calculating the Fund's net asset
value if such books are kept and such calculations are made by a custodian, and
of its transfer agents, registrars and dividend disbursing and redemption
agents, if any; (iii) all compensation of directors other than those affiliated
with the Adviser; (iv) interest, if any, on obligations incurred by the Fund;
(v) the cost of preparing, printing and distributing stock certificates,
corporate reports, notices, proxy solicitation material and reports to its
shareholders; (vi) all taxes and corporate fees payable to federal, state and
other governmental agencies, domestic or foreign; (vii) all registration and
filing fees payable under federal securities laws; and (viii) the cost of the
Fund's membership in any association of investment companies. The Fund shall
also assume and pay the following expenses related to the Fund except to the
extent that they shall be assumed and paid by a distributor of the Fund's shares
pursuant to a separate agreement between the Fund and such distributor: (i) all
expenses of printing and distributing any prospectus of the Fund and of
preparing, printing, distributing and disseminating any other literature,
advertising and selling aids in connection with the offering of the shares for
sale (except the cost of preparing, printing and distributing reports and other
communications to shareholders in their capacity as such); (ii) all expenses of
advertising in connection with such offering; and (iii) all fees payable to
states in connection with the qualification of Fund shares for sale, or the
qualification of the Fund as a dealer or broker, under the laws of such states
as may be designated by the Underwriter. In addition to the payment of
expenses, the Fund shall also assume and pay all brokers' commissions and other
charges incurred in connection with the purchase and sale of portfolio
securities. The Fund shall not pay or incur any obligation for any management
or administrative expenses for which the Fund intends to seek reimbursement from
the Adviser as herein provided without first obtaining the written approval of
the Adviser. The Fund shall be free to retain at its expense other persons to
furnish it with any services whatsoever, including, without limitation,
statistical, factual or technical information or advice.
3. Compensation of Adviser; limitation of Fund's expenses. For the
services to be rendered, the facilities to be furnished and the expenses to be
assumed by the Adviser, as provided in this Agreement, the Fund shall pay to the
Adviser for each of the Fund's fiscal quarters a fee equal to one quarter of the
annual percentage of the average net assets of the fund during each such fiscal
quarter in accordance with the following schedule:
<PAGE>
Annual Rate of Advisory Fee Based on Average Net Assets
-------------------------------------------------------
.20% of the first $50 million
.15% of the next $50 million
.10% in excess of $100 million
Such payment to the Advisor shall be made within 20 days after the last day of
each of the Fund's fiscal quarters with a final adjustment as of the end of each
fiscal year so that the annual fee will equal appropriate annual percentages of
the average net assets of the Fund during the fiscal year.
The Adviser shall reimburse the Fund to such extent as the total
expenses of the Fund for any fiscal year during the term of this agreement
chargeable to income on the accrual basis of accounting, including fees to the
Adviser but excluding all (i) taxes, (ii) interest and (iii) extraordinary
litigation expenses, shall exceed .4% of the average net assets to the Fund
during such year. Brokers' commissions and other charges incurred in connection
with the purchase and sale of portfolio securities shall not be regarded as
expenses for this purpose. Such reimbursement shall be made quarterly on an
interim basis, with a final adjustment as of the end of each year.
For the quarter and year in which this agreement becomes effective or
terminates there shall be an appropriate proration of the fee and of the
reimbursement (if any) on the basis of the number of days that the agreement is
in effect during such quarter and year.
For purposes of this section the average net asset value during a
period shall be determined on the basis of the net asset value of the Fund as of
the close of each business day during the period in accordance with the articles
of incorporation of the Fund. If pursuant to the articles of incorporation of
the Fund the net asset value is not required to be determined on any particular
business day, then for the purpose of the foregoing computations the net asset
value last determined shall be deemed to be the net asset value as of the close
of business on that day.
4. Interested parties; services other than as Adviser. It is
understood that the officers, directors, agents and shareholders of the Fund are
or may be interested in the Adviser as officers, directors, agents, shareholders
or otherwise, and that the officers, directors, shareholders and agents of the
Adviser may be interested in the Fund otherwise than as a shareholder. It is
further understood that the Adviser, by virtue of separate agreements, may also
act as transfer agent, dividend disbursing agent and underwriter for the Fund
and that State Farm Mutual Automobile Insurance Company, by virtue of a separate
agreement, may furnish services to the Adviser to assist the Adviser in
fulfilling its obligations to the Fund pursuant to this agreement. The services
of the Adviser herein provided are not to be deemed exclusive and the Adviser
shall be free to render similar services or other services to others so long as
its services hereunder shall not be impaired thereby.
<PAGE>
5. Limitation of liability of Adviser. The Adviser shall not be liable
for any error of judgment or import of law, or for any loss suffered by the Fund
or its shareholders from or as a consequence of any act or omission of the
Adviser, or of any of the directors, officers, employees or agents of the
Adviser, in connection with the matters to which this agreement relates, except
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its obligations and duties or by
reason of its reckless disregard of its obligations and duties under this
agreement.
6. Term and termination. This agreement shall become effective on the
date hereof and, unless sooner terminated as hereinafter provided, shall
continue in effect until December 1, 1979, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually in
the manner required by the Act.
This agreement may be terminated at any time without the payment of
any penalty by the Board of Directors of the Fund, or by vote of the holders of
a majority of the outstanding shares of the Fund, or by the Adviser, on sixty
(60) days' written notice to the other party.
This agreement may be terminated at any time without the payment of
any penalty by vote of the Board of Directors of the Fund in the event that it
shall have been established by a court of competent jurisdiction that the
Adviser or any officer or director of the Adviser has taken any action which
results in a breach of the covenants of the Adviser set forth herein.
This agreement shall automatically terminate in the event of its
assignment (as defined in the Act).
7. Notices. Any notice under this agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
8. "State Farm" name. The Fund agrees that upon the termination of
this agreement at any time or for any reason it shall, when so requested by the
Adviser, eliminate all reference to the name "State Farm" from its corporate
name and thereafter refrain from using the name "State Farm" in connection with
its business or activities in any form or combination whatsoever except as may
be necessary to identify its prior name.
<PAGE>
9. Amendment. This agreement may be amended only with the affirmative
vote (i) of a majority of those directors who are not "interested persons" (as
defined in the Act) of the Fund or the Advisor, voting in person at a meeting
called for the purpose of voting on such approval, and (ii) of the holders of a
majority of the outstanding shares of the Fund.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
agreement to be executed in their names and on their behalf by and through their
duly authorized officers all on the day and year first above written.
STATE FARM INTERIM FUND, INC.
By: /s/ Edward B. Rust
--------------------------
President
ATTEST:
/s/ Donald F. Storm
-------------------
Assistant Secretary
STATE FARM INVESTMENT MANAGEMENT CORP.
By: /s/ Roger Joslin
----------------------------
Vice President
ATTEST:
/s/ Paul R. Dotson
------------------
Assistant Secretary
<PAGE>
SERVICE AGREEMENT
(As amended September 9, 1977)
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois
corporation (Auto Company), STATE FARM INVESTMENT MANAGEMENT CORP., a Delaware
corporation and a wholly-owned second-tier subsidiary of Auto Company (Manager),
and STATE FARM INTERIM FUND, INC., a Maryland corporation and an open-end
diversified management investment company registered under the Investment
Company Act of 1940 (Fund) to which Manager is investment adviser under an
Investment Advisory and Management Services Agreement dated December 21, 1976
and amended September 9, 1977 agree that:
1. Manager shall have the right to use, and Auto Company shall make
available for the use of Manager, (i) such part-time services of employees of
Auto Company engaged in its investment operations, and such services of
administrative and other employees of Auto Company, for periods to be agreed
upon by Manager and Auto Company, and (ii) such administrative, clerical,
stenographic and other support services and office supplies and equipment, as
may in each case be reasonably required by Manager in the performance of its
obligations as investment adviser to the Fund under their Investment Advisory
and Management Services Agreement and any agreements amending or superseding
such agreement.
2. Manager shall have the right to use, and Auto Company shall furnish
for the use of Manager such office space as is reasonably needed by Manager in
the performance of its obligations as investment adviser to the Fund.
3. In performing services for Manager under this agreement, the
employees of Auto Company may, to the full extent that they deem appropriate,
have access to and utilize statistical and economic data, investment research
and reports and other information prepared for or contained in the files of the
Auto Company which are relevant to making investment decisions within the
investment objectives of the Fund, and may make such information available to
Manager; provided, that any such information prepared or obtained in connection
with a private placement or other nonpublic transaction need not be made
available to Manager if Auto Company deems such information confidential.
4. Employees of Auto Company performing services for Manager pursuant
hereto shall report and be responsible solely to the officers and directors of
Manager or persons designated by them. Auto Company shall have no
responsibility for investment recommendations and decisions of Manager based
upon information or advice given or obtained by or through such Auto Company
employees; provided, however, that the foregoing shall not be construed to
relieve Auto Company of any liability to the Fund or its security holders to
which the Auto Company would otherwise be subject by reason of its willful
misfeasance, bad faith or gross negligence, in the performance of its duties
hereunder, or by reason of its reckless disregard of its obligations and duties
hereunder.
<PAGE>
5. The obligation of performance of the Investment Advisory and
Management Services Agreement of Manager with the Fund is solely that of
Manager, for which Auto Company assumes no responsibility except as otherwise
expressly provided herein.
6. In consideration of the services to be rendered and the facilities
to be provided to Manager by Auto Company and its employees pursuant to this
agreement, Manager agrees to reimburse Auto Company for such costs, direct and
indirect, as may be fairly attributable to the services performed and the
facilities provided for Manager. Such costs shall include, but shall not be
limited to, an appropriate portion of salaries, employee benefits, general
overhead expense, and supplies and equipment, and a charge in the nature of rent
for the cost of space in the Auto Company offices fairly allocable to activities
of Manager under its Investment Advisory and Management Services Agreement with
the Fund. In the event of disagreement between Manager and Auto Company, as to
a fair basis for allocating or apportioning costs, such basis shall be fixed by
the independent public accountants for the Fund.
7. This agreement shall become effective on the date hereof and shall
continue in effect until December 1, 1978, and thereafter shall continue in
effect from year to year if its continuance is specifically approved by (i) the
vote of a majority of the outstanding voting securities of the Fund (as defined
in section 2(a)(42) of the Investment Company Act of 1940 ("Act")), or (ii) the
vote of a majority of the Board of Directors of the Fund, and in either case by
a majority of the Directors of the Fund who are not parties to the agreement or
interested persons (as defined in section 2(a)(19) of the Act) of the Fund, Auto
Company or Manager, voting in person at a meeting called for such purpose;
provided, however, that this agreement (a) may be terminated at any time,
without the payment of any penalty, either by the Board of Directors of the Fund
or by vote of a majority of the outstanding voting securities of the Fund, on
sixty days' written notice to Manager and to Auto Company, (b) shall terminate
automatically in the event of its assignment (as defined in section 2(a)(4) of
the Act), and (c) may be terminated by Manager or by Auto Company on sixty days'
written notice to each other and to the Fund.
8. This agreement may be amended at any time by mutual consent of the
parties, provided that such amendment shall not become effective until it has
been approved by vote of a majority of the outstanding voting securities of the
Fund.
9. Any notice under this agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other parties, at such addresses as
such other parties may designate for the receipt of such notices. Until further
notice to the other parties, it is agreed that the address of Auto Company, that
of Manager and that of the Fund for this purpose shall be One State Farm Plaza,
Bloomington, Illinois 61701.
<PAGE>
Dated: December 21, 1976
Amended September 9, 1977
STATE FARM INVESTMENT MANAGEMENT CORP.
By: /s/ Roger Joslin
----------------
Vice President
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
By: /s/ Robert O. Noel
------------------
Vice President - Operations
STATE FARM INTERIM FUND, INC.
By: /s/ Edward B. Rust
------------------
President
<PAGE>
UNDERWRITING AGREEMENT
(As amended September 9, 1977)
AGREEMENT made this 21st day of December, 1976 and amended September
9, 1977, between STATE FARM INTERIM FUND, INC., a Maryland Corporation
(hereinafter called the "Fund"), and STATE FARM INVESTMENT MANAGEMENT CORP., a
Delaware corporation (hereinafter called the "Underwriter"):
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. Appointment of Underwriter. The Underwriter is hereby appointed the
Fund's agent for the distribution of shares of common stock of the Fund.
2. Undertaking of Underwriter. The Underwriter agrees to use its best
efforts to sell shares of the Fund at prices and on terms as hereinafter
provided, all subject to applicable federal and state laws and regulations and
to the Articles of Incorporation of the Fund, and subject also to such
limitations on the class of investors to whom shares may be offered as may be
described from time to time in the Fund's prospectus currently effective
("Prospectus") under the Securities Act of 1933 ("Securities Act"). The
Underwriter may in its discretion refuse to sell shares to any particular
applicant, and the Fund may similarly refuse to sell shares to any person. The
Underwriter or its agent shall be entitled to rely upon the certification of any
purchaser that he is a member of that class of investors to whom shares may be
offered as may be described from time to time in the Prospectus.
3. Appointment of dealers. The Underwriter, as agent of the Fund,
shall sell shares of the Fund directly or to or through qualified dealers or
others in such manner (not inconsistent with the provisions hereof and the then
effective registration statement of the Fund under the Securities Act
("Registration Statement")) as the Underwriter may determine from time to time,
provided that no dealer or other person shall be appointed or authorized to act
as agent of the Fund without the prior written consent of the Fund and that the
form of each agreement between the Underwriter and any such dealer or other
person shall have been approved by the Fund.
4. Sales price of shares. All shares of the Fund offered for sale or
sold by the Underwriter shall be so offered or sold at a price per share
determined in accordance with the Prospectus except as departure from such
prices may be permitted by the rules and regulations of the Securities and
Exchange
<PAGE>
Commission; provided however, that any public offering price for shares of the
Fund shall be the net asset value per share (computed in accordance with the
Articles of Incorporation of the Fund) next determined after the order for such
shares is placed with the Underwriter, to which there may be added a
distribution charge of not more than 9% of the public offering price.
5. Commissions and concessions. The price the Fund shall receive for
all shares purchased from the Fund shall be the net asset value used in
determining the public offering price applicable to the sale of such shares.
The excess, if any, of the sales price over the net asset value of the shares
sold by the Underwriter as agent shall be retained by the Underwriter as a
commission for its services hereunder. Out of such commission the Underwriter
may allow commissions or concessions to dealers and may allow them to others in
its discretion in such amounts as the Underwriter shall determine from time to
time. Except as may be otherwise determined by the Underwriter and the Fund
from time to time, such commissions or concessions shall be uniform to all
dealers.
6. Confirmations. The Underwriter shall issue and deliver on behalf of
the Fund such confirmations of sales made by it pursuant to this agreement as
may be required. At or prior to the time of delivery by the Fund to or on the
order of the Underwriter of certificates for any shares of common stock of the
Fund, the Underwriter will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
the Underwriter may specify.
7. Blue sky qualification; dealer registration. The Fund will execute
any and all documents and furnish any and all information which may be
reasonably necessary in connection with the qualification of its shares for sale
(including the qualification of the Fund as a dealer where necessary or
advisable) in such states as the Underwriter may reasonably request (it being
understood that the Fund shall not be required without its consent to qualify to
do business in any jurisdiction or to comply with any requirement which in its
opinion is unduly burdensome).
8. Sales material. All sales material used or distributed by the
Underwriter or its dealers or others will conform to applicable laws and
regulations, and the Underwriter will furnish the Fund with copies of all such
material.
9. Repurchase of shares. The Underwriter, as agent of and for the
account of the Fund, may repurchase shares of common stock of the Fund at such
prices and upon such terms and conditions as shall be specified in the
Prospectus.
<PAGE>
10. Indemnification. The Underwriter will indemnify and save harmless
the Fund from any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the Underwriter.
11. Conformity to Registration Statement. The Underwriter will require
each dealer to conform to the provisions hereof and of the Registration
Statement and Prospectus and neither the Underwriter nor any such dealer shall
withhold the placing of purchase orders so as to make a profit thereby.
12. Expenses. The Fund will pay or cause to be paid (i) all expenses
(including the fees and disbursements of its legal counsel and independent
auditors, but not including printing expenses) related to the registration of
shares of its common stock under the Securities Act and (ii) all expenses
incident to the issuance of such shares (such as the cost of stock certificates,
issue taxes and fees of the transfer agent). The Underwriter will pay all
expenses (other than expenses which one or more dealers may bear pursuant to any
agreement with the Underwriter) incident to the offering, sale and distribution
of the shares offered hereunder, including, without limiting the generality of
the foregoing, (i) all expenses of printing and distributing any prospectus of
the Fund and of preparing, printing, distributing and disseminating any other
literature, advertising and selling aids in connection with the offering of the
shares for sale (except the cost of preparing, printing and distributing reports
and other communications to shareowners in their capacity as such), (ii) all
expenses of advertising in connection with such offering, (iii) all fees payable
to states in connection with the qualification of Fund shares for sale and (iv)
all fees payable under state and federal laws in connection with the
qualification of the Fund or the Underwriter as a dealer, broker or agent.
13. Term and termination. This agreement shall become effective on the
date hereof, and, unless sooner terminated as hereinafter provided shall
continue in effect until December 1, 1978 and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually in
the manner required by the Investment Company Act of 1940. Either party hereto
may terminate this agreement at any time by giving the other party at least
sixty days' prior written notice of such termination specifying the date fixed
therefor. This agreement shall automatically terminate in the event of its
assignment (as defined in the Investment Company Act of 1940).
14. Notices. Any notice under this agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
IN WITNESS WHEREOF, the Fund and the Underwriter have caused this
agreement to be executed in their names and on their behalf by and through their
duly authorized officers all on the day and year first above written.
<PAGE>
STATE FARM INTERIM FUND, INC.
By: /s/ Edward B. Rust
------------------
President
ATTEST:
/s/ Donald F. Storm
-------------------
Assistant Secretary
STATE FARM INVESTMENT MANAGEMENT CORP.
By: /s/ Roger Joslin
----------------
Vice President
ATTEST:
/s/ Paul R. Dotson
------------------
Assistant Secretary
<PAGE>
JPMORGAN
DOMESTIC CORPORATE CUSTODY AGREEMENT
------------------------------------
AGREEMENT dated as of Nov 1, 1990 between MORGAN GUARANTY TRUST COMPANY of
New York, a New York banking corporation (the "Bank"), and STATE FARM INTERIM
FUND, INC. (the "Client").
WHEREAS, the Client, which is a Maryland Corporation and an investment
company registered as such under the Investment Company Act of 1940, desires to
arrange for the custody of certain of its assets by the Bank and by certain
depositories located in the United States;
WHEREAS, the Client specifically approves the designation by the Bank of
its New York Office as the office through which the Bank will perform many of
the services and fulfill many of its obligations under this Agreement;
NOW THEREFORE, in consideration of the mutual agreement made herein, the
Bank and the Client agree as follows:
1. The Bank agrees to establish and maintain (a) one or more separate
custody accounts (singly a "Custody Account" and collectively the "Custody
Accounts") for any and all stocks, bonds and other securities (the "Securities")
from time to time received for the account of the Client by the Bank or a
Domestic Subcustodian and (b) one or more separate deposit accounts (singly a
"Deposit Account" and collectively the "Deposit Accounts") for any and all cash
(the "Cash") received for the account of the Client by the Bank. The term
"Domestic Subcustodian" means a depository located in the United States
including, but not limited to, the Depository Trust Company, the Federal Reserve
Bank of New York and the Participants Trust Company, the use of which has been
expressly authorized by the Client.
2. Securities and Cash are permitted to be held by
a) the Bank; and
b) Domestic Subcustodians.
<PAGE>
JP MORGAN
3. (a) The records maintained by the Bank of the Custody Accounts and the
Deposit Accounts will reflect all Securities and Cash maintained in accordance
with Section 1 hereof.
(b) The Bank will require each Domestic Subcustodian holding Securities to
identify Securities held by it as being held for the account of the Bank for its
clients.
(c) The Bank shall physically segregate any Securities which are physically
held by it; in all other respects the Securities may be commingled with other
securities no matter by whom owned, except for securities owned by the Bank as
principal, subject to the record-keeping requirements of subsection (b) above.
Securities may be held in certificated and uncertificated form.
(d) Any Securities or Cash held by a Domestic Subcustodian will be subject
only to the instructions of the Bank acting in its capacity as agent of the
Client.
(e) The Bank will authorize or permit the holding of Securities and Cash by
a Domestic Subcustodian only as long as (i) the Securities are not subject to
any right, charge, security interest, lien or claim of any kind in favor of such
Domestic Subcustodian or its creditors, including a receiver or trustee in
bankruptcy, except for a claim of payment for the safe custody or administration
of the Securities and (ii) beneficial ownership of the Securities is freely
transferable without the payment of money or value other than for safe custody
or administration of the Securities.
(f) The Bank will allow independent public accountants of the Client
reasonable access to the records of the Bank relating to the Securities and Cash
as is required by those accountants in connection with their examination of the
books and records pertaining to the affairs of the Client. Upon request, the
Bank will provide the Client with any reports obtained by the Bank on a Domestic
Subcustodian's accounting system, internal accounting controls and procedures
for safekeeping securities.
4. The Bank shall make payments of Cash only:
(a) upon the purchase of Securities for the Client and against the delivery
of Securities to the Bank, or the crediting of such Securities to the account of
the Bank or its Domestic Subcustodian for the account of the Client; provided,
however that such payment is made in the amount specified by Authorized
Instructions;
(b) for any payments to be made in connection with the sale, conversion,
exchange or surrender of any Securities,
(c) for purchase or redemption of shares of the Client upon delivery
thereof;
(d) for payment of interest, dividends, taxes, management or supervisory
fees, and operating expenses;
<PAGE>
JP MORGAN
(e) for other purposes of the Client, but only upon receipt of, in addition
to Authorized Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Client signed by an officer of
the Client and certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose, and naming the person
or persons to whom such payment is to be made; and
(f) upon termination of this Agreement as set forth in section 16 of this
Agreement.
5. Securities will be transferred, exchanged, or delivered by the Bank
only:
(a) upon the sale of Securities and against receipt by the Bank of payment
therefor in accordance with Authorized Instructions; provided that the Bank may
accept payment in such form as shall be satisfactory to it, and may deliver such
Securities and arrange for payment subsequent to delivery therefor in accordance
with customary established securities trading practices or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs (it being agreed that the Client bears the risk that the recipient of
such Securities may fail to make payment, to return such Securities, or to hold
such Securities or the proceeds of their sale in trust for the Bank;
(b) in exchange for or upon conversion into other Securities or Cash
pursuant to a plan of merger, consolidation, reorganization, recapitalization or
readjustment;
(c) upon the conversion of Securities pursuant to their terms into other
Securities;
(d) upon the exercise of subscription, purchase or other similar rights
represented by Securities;
(e) for the purpose of redeeming in kind shares of the Client in accordance
with Authorized Instructions;
(f) for other purposes of the Client, but only upon receipt of, in addition
to Authorized Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Client signed by an officer of
the Client and certified by its Secretary or an Assistant Secretary, specifying
the Securities to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such delivery is to be made; and
(g) upon termination of this Agreement as set forth in Section 16 of this
Agreement.
6. Until the Bank receives Authorized Instructions to the contrary, the
Bank will:
(a) deposit all Cash received by the Bank in a Deposit Account and all
Securities received by the Bank in a Custody Account;
<PAGE>
JP MORGAN
(b) collect dividends, interest and other income payments made and stock
dividends, rights and similar Securities paid or issued with respect to
Securities and collect and hold all such payments in a Deposit Account and all
such stock dividends, rights and similar Securities in a Custody Account;
(c) take such steps as may reasonably be necessary to secure or otherwise
prevent the loss of rights relating to any Securities;
(d) promptly notify the Client upon receiving notices or reports of
corporate actions affecting any Securities;
(e) present for payment maturing obligations and those called for
redemption to the extent that the Bank receives notice of such opportunities for
payment and hold monies received upon presentation of such maturing obligations
for credit to a Deposit Account;
(f) execute in the name of the Client such ownership and other certificates
as may be required to obtain payment in respect of any Securities;
(g) accept, open and act appropriately with respect to all mail directed to
the Client in care of the Bank;
(h) disclose the Client's name, address and Securities position to the
issuers of Securities when requested to do so by them and approved by the
Client; and
(i) dispose of fractional interests received by the Bank as a result of
stock dividends by selling any fractional interest received.
7. (a) The Bank shall have responsibility as a bailee for hire under the
law of the State of New York with respect to any Securities or Cash held by it.
Without limiting the generality of the foregoing, the Bank will hold the Client
harmless from and indemnify it against any loss that occurs as a result of the
negligence or willful misconduct of the Bank.
(b) The Bank's responsibility with respect to any Securities or Cash held
by a Domestic Subcustodian is limited to the failure on the part of the Bank to
exercise reasonable care in the selection or retention of such Domestic
Subcustodian and the Bank will hold the Client harmless from and indemnify it
against any loss that occurs as a result of the Bank's failure to exercise such
reasonable care.
8. The Bank will, at its sole discretion, accept orders from the Client
for the purchase or sale of Securities and either execute such orders itself or
by means of an affiliate of the Bank or a broker or other financial organization
of its choice, subject to the fees and commissions in effect from time to time.
The Bank will not be responsible for any act or omission, or for the solvency,
of any affiliate, broker or other financial organization selected by the Bank to
effect any transaction for the account of the Client.
<PAGE>
JP MORGAN
When instructed to buy or sell Securities for which the Bank acts as a dealer,
the Bank will buy or sell such Securities from or to either itself, as
principal, or such affiliate.
9. The Client agrees that, when the Bank is instructed to receive any
Securities against payment, it will have sufficient Cash in the Deposit Accounts
or will make sufficient funds available to the Bank for such purpose. Any
dividends or interest automatically credited to the Deposit Accounts which are
not subsequently received by the Bank from the corporation making such payment
will be reimbursed to the Bank and the Bank may debit the Deposit Accounts for
this purpose.
10. Securities may be registered in the name of the Bank's nominee or, as
to any Securities in the possession of an entity other than the Bank, in the
name of such entity's nominee. The Client agrees to hold such nominees harmless
from any liability as a holder of record of such Securities and will have the
same responsibility as if the Securities were registered in the name of the
Client.
11. The Bank shall be responsible for the performance of only those duties
as are set forth herein or contained in Authorized Instructions given to the
Bank that are not contrary to the provisions of this Agreement. The Bank is not
under any duty to provide the Client with investment advice or to supervise its
investments.
12. Notwithstanding the provisions of Section 7 of this Agreement:
(a) all collections of funds or other property paid or distributed with
respect to any Securities shall be made at the risk of the Client;
(b) the Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank of any payment, redemption, proceeding
or other transaction regarding, or of any rights exercisable by the Client in
connection with, any Securities with respect to which the Bank has agreed to
take action as provided in Section 6 of this Agreement;
(c) the Bank shall not be liable for any action taken in good faith and in
the exercise of reasonable care upon Authorized Instructions or upon any
certified copy of any vote of the Board of Directors or Trustees of the Client
and may rely on any such documents that it in good faith believes to be validly
executed.
<PAGE>
JP MORGAN
13. The Bank shall forward to the Client communications relating to any
Securities which call for voting or the exercise of rights or other specific
action (including materials relating to legal proceedings intended to be
transmitted to holders of such Securities) to the extent such communications are
received by the Bank in time for forwarding to each client of the Bank. The
Bank will cause its nominee to execute and deliver to the Client proxies
relating to Securities registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted. Proxies relating
to bearer Securities will be delivered in accordance with Authorized
Instructions.
14. The Client agrees to pay the Bank as compensation for its services a
fee computed at rates determined by the Bank from time to time and communicated
to it in advance, as well as all taxes, assessments, charges and expenses
including, without limitation, legal expenses and attorney's fees incurred by
the Bank in connection with the maintenance of the Custody Accounts and Deposit
Accounts and the transfer of Securities and Cash pursuant to the terms of this
Agreement. The Bank is authorized to charge the Deposit Accounts for such items
and such amounts, as well as any other obligation or liability of any kind which
the Client may have to the Bank in connection with this Agreement, and the Bank
may exercise such right of set-off against the Deposit Accounts as may be
accorded it under applicable law. The Client agrees that it is the duty of the
Client to reconcile statements and advices sent to it by mail or electronic
media and that all such statements and advices will be considered final sixty
days from the date of dispatch.
15. The term "Authorized Instructions" means a communication given in
writing by two Authorized Persons and received by the Bank by facsimile
transmission, telegram, teletype, cablegram or other teleprocess or electronic
instruction system which the Bank believes in good faith to have been given by
the Client or which are transmitted with proper testing or authentication
pursuant to terms and conditions specified in writing by the Bank. The Client
agrees to assume all risks which may result from any action taken by the Bank in
reliance in good faith on Authorized Instructions. The term "Authorized
Persons" means those officers of the Client who have been designated by or
pursuant to a vote of the Board of Directors or Trustees, a certified copy of
which has been filed with the Bank, to act on behalf of the Client in the
performance of any acts that Authorized Persons may do under this Agreement
pursuant to such vote. Such persons shall continue to be Authorized Persons
until such time as there has been filed with the Bank a properly certified copy
of a vote of the Board of Directors or Trustees revoking the authority of such
persons. The Client shall safeguard any testkeys, identification codes or other
security devices with which the Bank provides it.
16. This Agreement may be terminated by the Bank or the Client on 60 days'
written notice to the other party, sent by registered mail. If notice of
termination is given by the Bank, Authorized Persons shall, within 60 days
following the giving of such notice, specify in writing the names of the persons
to whom all Securities and Cash shall be delivered or paid. In such case, the
Bank, subject to the satisfaction of amounts owed to it pursuant to Section 14
hereof, will deliver such Securities and pay such Cash to the persons so
specified. If within 60 days following the giving of a notice of termination by
the Bank, the
<PAGE>
JP MORGAN
Bank does not receive from the Client the names of the persons to whom such
Securities shall be delivered and such Cash shall be paid, the Bank at its
election may deliver such Securities and pay such Cash to a bank or trust
company doing business in the State of New York to be held and disposed of
pursuant to the provisions of this Agreement or the Authorized Instructions of
any Authorized Persons or may continue to hold such Securities and Cash until
the names of such persons are delivered to the Bank. If notice of termination
is given by the Client, the Bank, subject to the satisfaction of amounts owed to
it pursuant to Section 14 hereof, will deliver such Securities and pay such Cash
to the persons specified in Authorized Instructions.
17. Any notice or other communication to the Bank is to be addressed to
Morgan Guaranty Trust Company of New York, 23 Wall Street, New York, New York
10015, Attention: Safekeeping Administration. Any notice or other communication
to the Client is to be mailed postage prepaid and addressed to it in care of B.
R. Vanderpool.
18. This Agreement shall bind the successors and assigns of the Bank
and the Client and shall be governed by and construed in accordance with the law
of the State of New York.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Stella Milano
-----------------
Vice President
STATE FARM INTERIM FUND, INC.
By: /s/ Rex J. Bates
- ----------------
President
<PAGE>
CUSTODIAN AGREEMENT FOR
STATE FARM INTERIM FUND, INC.
THIS AGREEMENT, is made this first day of October, 1991, by and between the
State Farm Interim Fund, Inc., a corporation existing under the laws of the
State of Maryland, having its principal place of business at Bloomington,
Illinois (hereinafter referred to as the "Fund"), and the Peoples Bank of
Bloomington, a commercial banking institution organized under the laws of
Illinois, having its principal place of business at Bloomington, Illinois
(hereinafter referred to as the "Custodian").
WITNESSETH
WHEREAS, the Fund has entered into a separate custody agreement with Morgan
Guaranty Trust Company of New York, a New York banking corporation, (hereinafter
referred to as "Morgan") which establishes a custodial arrangement for certain
of the Fund's securities and cash assets; and
WHEREAS, the Fund has a need for the Custodian to maintain custody of
certain of the Fund's moneys and other cash assets not held by Morgan;
WHEREAS, the Fund also has a need to establish a checking account, in
addition to a custodial account, with the Custodian;
NOW, THEREFORE, for and in consideration of the mutual promises contained
in this Agreement, the Fund and the Custodian agree as follows.
1. APPOINTMENT OF CUSTODIAN. The Fund hereby appoints the Custodian as
the custodian of certain of the Fund's moneys and other cash assets delivered to
the Custodian by the Fund. The Custodian hereby accepts this appointment.
2. DUTIES OF THE CUSTODIAN.
A. DEPOSIT ACCOUNT. The Custodian shall establish and maintain one
or more separate deposit accounts and shall hold in the account(s), subject to
the terms of this Agreement, all moneys and other cash assets received by it
from or for the account of the Fund. The Custodian shall keep
<PAGE>
all moneys and other cash assets received by it on deposit either in its
banking, savings or trust department as depository.
B. SAFEKEEPING OF ASSETS. The Custodian will receive and keep safely
the assets of the Fund delivered to it. The Custodian will not deliver any of
the assets received from the Fund to any person except as permitted by the terms
of this Agreement.
C. PAYMENT AND TRANSFER OF FUND MONEYS AND OTHER CASH ASSETS. Upon
receipt of Authorized Instructions (which may be an instruction that continues
until changed, when deemed appropriate by the Fund and the Custodian), the
Custodian shall transfer or pay out moneys and other cash assets of the Fund in
only the following cases:
(1) For the transfer, including wire transfer via the Federal Reserve
system, of moneys and other cash assets from the Fund's account(s)
with the Custodian to the Fund's account with Morgan as custodian for
the Fund.
(2) For the transfer of moneys and other cash assets to the Fund's
checking account maintained and established by the Custodian for the
Fund;
(3) For the purchase or redemption of shares issued by the Fund in
accordance with Article 3 of this Agreement;
(4) For the payment of any dividends or distributions on shares of the
Fund in accordance with Article 4 of this Agreement;
(5) For the payment of interest, taxes, management or supervisory fees,
and operating expenses (including, without limitation, fees for legal,
auditing and accounting services);
(6) For the payment upon termination of the Agreement pursuant to Article
10 of this Agreement; and
<PAGE>
(7) For any other proper purpose of the Fund, but only upon receipt of a
certified copy of a resolution of the Fund's Board of Directors or of
the Fund's Executive Committee signed by an officer of the Fund and
certified by its Secretary or Assistant Secretary specifying the
amount of the payment, setting forth the purpose of the payment,
declaring the purpose to be a proper purpose and naming the person(s)
to whom such payment is to be made.
E. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian
will allow independent public accountants of the Fund reasonable access to the
records of the Custodian relating to the Fund's moneys and other cash assets
held by the Custodian pursuant to this Agreement as is required by those
accountants in connection with their examination of the books and records
pertaining to the affairs of the Fund. Upon request, the Custodian shall
provide the Fund with reports obtained by the Custodian on the Custodian's
accounting system and its internal accounting controls and procedures.
F. ENDORSEMENT. The Custodian is authorized to endorse for the
credit of the Fund when received, all checks, drafts or other orders for the
payment of money drawn to or for the order of the Fund or to or for the order of
the Custodian for the account of the Fund. Except as provided below with
respect to the Fund's checking account with the Custodian, such amounts shall be
placed in the Fund's deposit account with the Custodian.
3. PAYMENTS FOR REDEMPTIONS AND SALES OF FUND SHARES. The Fund may
utilize its moneys and other cash assets held by the Custodian for the purpose
of redeeming its shares. The Fund may draw upon its checking account with the
Custodian for this purpose, or the Fund may elect to utilize the services of the
State Farm Investment Management Corporation to disburse the proceeds of
redemption. Upon receipt of Authorized Instructions from the Fund, the
Custodian shall withdraw from the Fund's deposit account the amount stated in
the Authorized Instructions and (i) deposit such amount in the Fund's checking
account, (ii) deposit such amount in an account of State Farm Investment
Management Corporation maintained for the purpose of disbursing the proceeds of
redemption of Fund shares, or (iii) otherwise deliver such amount, all as
provided in the Authorized Instructions.
The Custodian shall receive from the Fund or the State Farm Investment
Management Corporation and deposit into the Fund's deposit account such payments
as are received for the sale of the Fund's shares.
4. DIVIDENDS OR DISTRIBUTIONS ON FUND SHARES. The Fund may utilize its
moneys and other cash assets held by the Custodian for the purpose of paying
dividends or distributions on its shares. The Fund may draw upon its checking
account with the Custodian for this purpose, or may elect to utilize the
services of the State Farm Investment Management Corporation to disburse such
dividend or distribution payments. Upon receipt of Authorized Instructions
from the Fund, the Custodian shall withdraw from the Fund's deposit account the
amount stated in the Authorized Instructions and (i) deposit such amount in the
Fund's checking account, or (ii) deposit such amount in an account of State
Farm Investment
<PAGE>
Management Corporation maintained for the purpose of disbursing such dividend or
distribution payments, which may be the same account as that maintained for the
disbursement of redemption proceeds, all as provided in the Authorized
Instructions.
5. AUTHORIZED INSTRUCTIONS. For purposes of subparagraph (1) of
paragraph C of Article 2 of this Agreement, the phrase Authorized Instructions
shall mean the instructions agreed to in writing by the Fund and the Custodian
as satisfactory for this purpose. The Fund and the Custodian hereby acknowledge
and agree that the instructions described in the letter dated October 23, 1990,
and attached to this Agreement as Exhibit A, shall be satisfactory for this
purpose and shall remain in effect under the terms of this Agreement until
amended by the Fund and the Custodian.
For purposes of subparagraphs (2), (3), (4), (5), (6) and (7) of paragraph C of
Article 2 of the Agreement, "Authorized Instructions" shall mean a communication
containing the information specified in this Article 5, given in writing by two
Authorized Persons and received by the Custodian by facsimile transmission,
telegram, teletype, cablegram or other teleprocess or electronic instruction
system which the Custodian believes in good faith to have been given by the Fund
or which are transmitted with proper testing or authentication pursuant to the
terms and conditions specified in writing by the Custodian.
Authorized Persons means any persons who have been designated by or pursuant to
a resolution of the Fund's Board of Directors, a certified copy of which has
been filed with the Custodian, to act on behalf of the Fund in the performance
of any acts that the Authorized Persons may do under this Agreement pursuant to
such vote. Such persons shall continue to be Authorized Persons until such time
as there has been filed with the Custodian a properly certified copy of the
resolution of the Fund's Board of Directors revoking the authority of such
persons.
The Authorized Instructions must specify (1) the account, person, firm, or
corporation to whom the payment is to be made, (2) the purpose for which the
payment is to be made, (3) the amount of the payment, and (4) that the purpose
listed as the basis for the payment is authorized as one of the purposes under
Article 2.
6. CHECKING ACCOUNT. A checking account shall be established upon receipt
by the Custodian of a certified copy of a resolution adopted by the Fund's Board
of Directors authorizing the creation and funding of that checking account with
the Custodian. The resolution must specify the purposes for which moneys placed
in the checking account may be disbursed, that the balance maintained in the
account does not exceed the Fund's fidelity bond coverage and that the balance
maintained in the account does not exceed the amount which is necessary to meet
current or recurring expenses and distributions declared and payable to
shareowners. A check drawn on the checking account shall be honored only if:
<PAGE>
1. The check is prenumbered by a printer and is in an amount no greater
than the maximum amount established by resolution of the Fund's Board
of Directors from time to time, a certified copy of which resolution
shall have been delivered to the Custodian;
2. The check bears the signatures of at least two Authorized
Persons; and
3. The check is payable to a designated payee.
7. COMPENSATION OF CUSTODIAN. The Fund agrees to pay the Custodian
reasonable compensation for its services and expenses as Custodian, as agreed
upon in writing between the Fund and the Custodian.
8. REPORTS BY THE CUSTODIAN. The Custodian shall cooperate with the Fund
and supply the information necessary to enable the Fund (1) to keep and complete
the books of account and reports for the Fund and (2) to compute the net asset
value per share of the Fund's shares. The Custodian shall furnish the Fund
following the close of each business day on which transactions in the account(s)
occur with a statement summarizing all transactions and entries for the
account(s) of the Fund.
9. CUSTODIAN'S RESPONSIBILITY. The Custodian shall be responsible for
the performance of the duties set forth in this Agreement or contained in
Authorized Instructions given to the Custodian that are consistent with the
terms of this Agreement. The Custodian is not under any duty to provide the
Fund with investment advice or supervise any investments.
10. TERMINATION OR ASSIGNMENT This Agreement may be terminated by the
Fund, or by the Custodian, on sixty (60) days' written notice and sent by
registered mail to the Custodian or to the Fund at the following address:
Fund - Attention: David Grimes
One State Farm Plaza
Bloomington, Illinois 61710
Custodian - Attention: Sharon Sullivan
120 North Center Street
Bloomington, Illinois 61701
<PAGE>
Upon termination of this Agreement, the Custodian shall not deliver the
Fund's property to the Fund, but shall (i) deliver such property to a successor
Custodian designated by resolution of the board of Directors of the Fund, a
certified copy of which has been delivered to the Custodian, or (ii) if no
certified copy of a resolution designating a successor custodian is received by
the Custodian within 60 days' of the Custodian's receipt of the notice of
termination, the Custodian shall deliver the Fund's property to Morgan, if
Morgan is then acting as a custodian for assets of the Fund, or (iii) if Morgan
is not then acting as a custodian for assets of the Fund, the Custodian shall
continue to hold the Fund's property pursuant to the provisions of this
Agreement or the Authorized Instructions of any Authorized Persons, until a
successor custodian is designated.
The Custodian shall not be required to make any such delivery or payment
until full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by the Custodian or
on or against the Custodian, and until full payment shall have been made to the
Custodian of all its fees, compensation, costs and expenses, subject to the
provisions of Article 7 of this Agreement. The Fund agrees to name a successor
custodian within sixty (60) days after the written notice of termination is
received or delivered.
This Agreement may not be assigned by Custodian without the consent of the
Fund authorized or approved by a resolution of its Board of Directors.
11. GOVERNING LAW. This Agreement is executed and delivered in the State
of Illinois and shall be governed by the laws of Illinois.
12. AMENDMENT. No provisions of this Agreement may be amended or modified
in any manner except by a written agreement executed by the Fund and the
Custodian.
13. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original.
14. EFFECTIVE DATE. This Agreement shall become effective on the date
first above written.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their respective corporate seals to be affixed hereto as of the
date first above written by their respective duly authorized officers.
STATE FARM INTERIM FUND, INC.
By: /s/ Roger Joslin
----------------
Its Vice President and Treasurer
Attest: /s/ Michael L. Tipsord
----------------------
Its Assistant Secretary
PEOPLES BANK OF BLOOMINGTON
By: /s/ Sharon Sullivan
-------------------
Its Senior Vice President and Cashier
Attest: /s/ Ilene R. Beach
------------------
Its Assistant Vice President
<PAGE>
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of April, 1992, by and
between STATE FARM INTERIM FUND, INC., a Maryland corporation (hereinafter
referred to as the Fund) and State Farm Investment Management Corporation, a
Delaware corporation (hereinafter referred to as the Transfer Agent).
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, the parties
to this AGREEMENT hereby agree as follows:
1. The Fund hereby appoints the Transfer Agent as its transfer agent and
dividend disbursing agent.
2. The Transfer Agent hereby accepts appointment as the Fund's transfer
agent and dividend disbursing agent.
3. The Transfer Agent shall perform all of the usual and ordinary
services as a transfer agent and dividend disbursing agent for no
consideration. A listing of such services is included on Exhibit A
which is attached to the Agreement and incorporated herein by this
reference.
4. The Transfer Agent shall perform such other extraordinary or unusual
services as directed by the Fund in exchange for payment by the Fund
in an amount to be mutually agreed upon in advance by the parties to
this Agreement.
5. This Agreement shall continue in effect until April 1, 1993, and from
year to year thereafter, but only so long as such continuance is
approved annually in a manner required by the Investment Company Act
of 1940.
<PAGE>
IN WITNESS WHEREOF, the Fund and the Transfer Agent have caused this
Agreement to be executed in their names and on their behalf by their duly
authorized officers all on the day and year first above written.
STATE FARM INTERIM FUND, INC.
By: /s/ Edward B. Rust, Jr.
-----------------------
Its: President
ATTEST: /s/ David R. Grimes
-------------------
Its: Secretary
STATE FARM INVESTMENT MANAGEMENT CORP.
By: /s/ Roger Joslin
----------------
Its: Vice President & Treasurer
ATTEST: /s/ David R. Grimes
-------------------
Its: Secretary
<PAGE>
EXHIBIT A
1. Opening, maintaining and safeguarding all shareowner accounts;
2. Changing names and addresses;
3. Receiving subsequent investment payments, and purchasing and crediting
shares to proper accounts;
4. Preparing and mailing historical-type confirmations of each transaction
(including initial purchase) to shareowners;
5. Preparing and mailing annual record of investment to each shareowner;
6. Addressing, enclosing and mailing quarterly, semi-annual and annual reports
to shareowners (provided they are of a size suitable for enclosing on an
automatic enclosing machine);
7. Preparing annual shareowner meeting lists in duplicate on all accounts;
preparing and mailing of proxies, notices and return envelopes; receiving
and tabulating proxies and reporting total shares voted;
8. Preparing and mailing an annual statement of dividends paid for each
shareowner account;
9. Preparing and filing all required tax returns and forms; expand to cover
all 1099 reporting including recipient statements;
10. Effecting dividend orders or special payment instructions upon receipt of
proper authorization;
<PAGE>
11. Replacing dividend checks lost upon receipt of proper affidavits.
12. Effecting stock transfers; examining stock powers and certificates
surrendered for transfer; passing on the validity of the transfer,
endorsements and signature guarantees; checking stock transfers; cancelling
surrendered certificates;
13. Issuing and delivering certificates withdrawn from a shareowner's account
and receiving and redepositing certificates to a shareowner's account;
14. Payment of each dividend and/or capital gain distribution whether paid in
cash or reinvested and mailing a check or confirmation to each shareowner;
and,
15. Furnishing transcripts of account to investors.
<PAGE>
Exhibit 10
BELL, BOYD & LLOYD
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207
312/372-1121
Fax 312/372-2098
March 8, 1996
State Farm Interim Fund, Inc.
One State Farm Plaza
Bloomington, Illinois 61710
Dear Sirs:
We have served as counsel for State Farm Interim Fund, Inc., a Maryland
corporation (Fund), in connection with the registration under the Securities Act
of 1933 (Act) of an indefinite number of shares of the Fund's capital stock, $1
par value per share (shares), pursuant to the Fund's registration statement,
no. 2-58160, on form N-1A (the registration statement). In this connection, we
have examined originals, or copies certified or otherwise identified to our
satisfaction, of such documents, corporate and other records, certificates and
other papers as we deemed it necessary to examine for the purpose of this
opinion, including the charter and bylaws of the Fund, resolutions of the board
of directors authorizing the issuance of the shares, the form of certificates to
evidence the shares, and the registration statement.
Based upon the above examination, it is our opinion that:
1. The Fund is a corporation duly organized and legally existing in
good standing under the law of Maryland.
2. Upon issuance and delivery of the shares in accordance with the
charter of the Fund and the resolutions of the Fund's board of directors
authorizing the issuance of its shares, and the receipt by the Fund of a
purchase price of not less than the net asset value or the par value per
share, the shares will be legally issued and outstanding, fully paid and
nonassessable.
<PAGE>
State Farm Interim Fund, Inc.
March 8, 1996
Page 2
In giving the opinion expressed in subparagraph 2 above, we have assumed
that the number of shares issued at any time will not exceed the total number of
shares authorized to be issued by the Fund's charter.
We consent to the filing of this opinion as an exhibit to the registration
statement. In giving this consent we do not admit that we are in the category
of persons whose consent is required under section 7 of the Act.
Very truly yours,
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our report dated
December 15, 1995 in the Registration Statement (Form N-1A) and its
incorporation by reference in the related Prospectus and Statement of Additional
Information of the State Farm Interim Fund, Inc., filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 24 to the Registration
Statement under the Securities Act of 1933 (File No. 2-58160) and this Amendment
No. 23 to the Registration Statement under the Investment Company Act of 1940
(File No. 811-2726).
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Chicago, Illinois
March 15, 1996
<PAGE>
STATE FARM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT PLAN
This prototype Individual Retirement Account Plan is for the use of Agents and
Employees of the State Farm Insurance Companies and members of their families.
SECTION I
DEFINITIONS
1.1 Participant means the individual who signs the Application and makes
contributions in the manner prescribed herein.
1.2 Custodial Account Agreement means the State Farm Funds Individual
Retirement Account Plan Custodial Account Agreement as described in Section
VIII.
1.3 Custodian means The Peoples Bank, Bloomington, Illinois, and any successor
thereto as herein provided.
1.4 State Farm Fund or State Farm Funds means the Investment Company or
Companies specified in the Application in which assets of the Plan may be
invested; provided that no Investment Company will be deemed available for
investment hereunder (i) prior to the date the prospectus for such
Investment Company discloses such availability, or (ii) with respect to any
Participant who resides in any state with respect to which shares of the
Investment Company are not available for sale.
1.5 Shares means shares of common stock of the State Farm Funds.
1.6 Compensation means wages, salaries, professional fees or other amounts
derived from personal services actually rendered (including, but not
limited to, commissions, tips, and bonuses) and includes earned income (as
defined in section 401(c) (2) of the Internal Revenue Code) reduced by the
deduction a self-employed individual takes for contributions made to a
Keogh plan. For purposes of this definition, section 401(c) (2) shall be
applied as if the term trade or business for purposes of section 1402 of
the Internal Revenue Code included service described in subsection (c) (6).
Compensation does not include amounts derived from or received as earnings
or profits from property (including, but not limited to, interest and
dividends) or amounts not includible in gross income. The term
"compensation" does not include any amount received as a pension or annuity
and does not include any amount received as deferred compensation. The term
"compensation" shall include any amount includible in the individual's
gross income under Section 71 of the Internal Revenue Code with respect to
a divorce or separation instrument described in subparagraph (A) of section
71 (b)(2) of the Internal Revenue Code.
1.7 Plan means the State Farm Funds Individual Retirement Account Plan.
1.8 Plan Sponsor means State Farm Interim Fund, Inc.
1.9 Beneficiary means any individual designated as a beneficiary pursuant to
paragraph 4.7.
1.10 Required Beginning Date means April 1 of the calendar year following the
calendar year in which the participant attains age 70 1/2.
SECTION II ELIGIBILITY
2.1 Participation in this Plan is limited to Agents and Employees of the State
Farm Insurance Companies and members of their families.
SECTION III CONTRIBUTIONS
3.1 RESTRICTIONS ON CONTRIBUTIONS. No contributions may be made by or on behalf
of a Participant (i) for any taxable year of the Participant during which
such Participant has attained or will attain the age of 70 1/2 (except
Rollover Contributions), and (ii) during any period of time during which
Participant is ineligible to purchase Shares of the State Farm Funds under
eligibility rules established from time to time by such Funds.
3.2 AMOUNTS OF CONTRIBUTIONS. Except as provided in Sections V and VII hereof,
the aggregate amount of contributions by the Participant for each taxable
year of the Participant shall not be more than an amount equal to the
lesser of the Compensation of the Participant within such taxable year or
$2,000. Contributions for a given taxable year may be made during such year
or not later than the time prescribed by law for filing Participant's
Federal income tax return for such taxable year (not including extensions
of time for filing). All contributions (except Rollover Contributions as
described in Section V) must be made by check or compensation deduction and
are subject to the minimum investment requirements established by the State
Farm Funds.
3.3 PARTICIPANT'S INTEREST IN PLAN. All contributions made by or on behalf of a
Participant and all investments made with such contributions, and the
earnings and losses thereon shall be deposited in a Custodial Account
established for such Participant in accordance with Section VIII herein. A
Participant's interest in the balance of his/her Custodial Account shall at
all times be nonforfeitable, but subject to the fees, expenses and charges
described in Article VII of the Custodial Account Agreement.
SECTION IV PAYMENT OF BENEFITS
4.1 DISTRIBUTIONS. The entire interest of the Participant in the Custodial
Account must be, or commence to be, distributed not later than the
Participant's Required Beginning Date. Not later than such time, the
Participant may elect, on a form and at such time as may be acceptable to
the Custodian, to have the balance in the Custodial Account distributed:
(A) In a single sum payment in Shares or cash (consisting of the entire
balance or a portion of the balance in the Custodial Account with
further distributions to be made pursuant to options B or C of this
paragraph 4.1) to be paid not later than the Participant's Required
Beginning Date;
<PAGE>
(B) In substantially equal annual or more frequent installments commencing
not later than the Participant's Required Beginning Date and
continuing over a period not to exceed the life expectancy of the
Participant (if payments are to be made solely to the Participant) or
life expectancy of such Participant and a beneficiary (if payments are
to be made to the Participant while living and upon the Participant's
death any remaining payments are to be made to the surviving
beneficiary); or
(C) By purchase from an insurance company and delivery of an immediate or
deferred annuity contract for the life of the Participant, or if the
Participant so elects, for the lives of the Participant and a
beneficiary (and the survivor thereof); provided, however, such
contract must commence payments not later than the Participant's
Required Beginning Date. The annuity contract must be selected by
Participant and must satisfy the requirements of sections 408(b) (1),
(2), (3) and (4) of the Internal Revenue Code.
Except for payment of a life annuity, the life expectancy of the
Participant and the Participant's spouse shall be redetermined annually.
Life expectancy and joint and last survivor expectancy are computed by use
of the return multiples contained in Tables V and VI of section 1.72-9 of
the Income Tax Regulations.
Even though distributions may have commenced pursuant to one of the above
options, the Participant may, at any time, request a distribution of part
or all of the balance in his/her Custodial Account or request the
distribution method be changed to another option allowed by this paragraph
4.1, subject to the minimum distribution requirements of paragraph 4.2. The
request shall be made to the Custodian in writing and in a form acceptable
to the Custodian.
4.2 MINIMUM DISTRIBUTIONS. If payments are made under option B of paragraph
4.1, payments made in calendar years beginning with the year in which the
Participant reaches age 70 1/2 shall be subject to the following:
(i) The minimum annual payment shall be calculated by dividing the
Participant's entire interest in the Custodial Account at the
beginning of each year by the lesser of (1) the applicable life
expectancy or (2) if the Participant's spouse is not the Beneficiary,
the applicable divisor determined from the table set forth in Q&A-4
or Q&A-5, as applicable, of section 1.401 (a) (9)-2 of the Proposed
Income Tax Regulations. Distributions after the death of the
Participant shall be distributed using the applicable life expectancy
as the relevant divisor without regard to proposed regulations
section 1.401 (a) (9)-2. For purposes of this section, the life
expectancy of the Participant and the Participant's spouse shall be
redetermined annually.
(ii) The minimum monthly payment shall be calculated by dividing the
result in (i) above by 12.
(iii) The minimum quarterly payment shall be calculated by dividing the
result in (i) above by 4.
For the year in which the Participant attains age 70 1/2, the minimum
distribution must be made by April 1 of the following calendar year. For
all years following the year in which the Participant attains age 70 1/2,
the minimum distribution must be made by December 31 of such years.
Notwithstanding any provision of this agreement to the contrary, the
distribution of a Participant's or Beneficiary's interest shall be made in
accordance with the minimum distribution requirements of section 408(a)(6)
or 408(b)(3) of the Internal Revenue Code and the regulations thereunder,
including the incidental death benefit provisions of section 1.401(a)(9)-2
of the proposed regulations, all of which are herein incorporated by
reference.
Furthermore, a Participant or Beneficiary may satisfy the minimum
distribution requirements under sections 408(a)(6) and 408(b)(3) of the
Internal Revenue Code by receiving a distribution from one IRA that is
equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the owner of two or
more IRAs may use the alternative method described in Notice 88-38, 1988-1
C.B. 524, to satisfy the minimum distribution requirements described above.
4.3 FAILURE TO ELECT OPTION. If the Participant fails to elect one of the
described methods of distribution on or before April 1 of the calendar year
following the calendar year in which the Participant attains age 70 1/2,
distribution to the Participant will be made not later than that time by a
single sum payment in cash or Shares at the sole discretion of the
Custodian; provided, however, that the Custodian shall have no liability to
the Participant for any tax penalty or other damages resulting from any
inadvertent failure by the Custodian to make such distribution.
4.4 PREMATURE DISTRIBUTIONS. Before any distribution is made from the Custodial
Account, except in the case of the Participant's death or disability (as
defined in section 72(m) (7) of the Internal Revenue Code) or attainment of
age 59 1/2, the Participant must furnish the Custodian with a declaration
of his intentions as to the disposition of the amount to be distributed;
however, the Custodian assumes no responsibility for the tax treatment of
any distribution from the Custodial Account; such responsibility is solely
that of the Participant ordering the distribution.
4.5 WITHDRAWAL OF EXCESS CONTRIBUTIONS. The Participant may elect to withdraw
any excess contributions (as described in section 408(d)(4) of the Internal
Revenue Code) made to the Custodial Account and, if withdrawn pursuant to
section 408(d)(4) of the Internal Revenue Code, the net income attributable
thereto. Participant must furnish Custodian a written notice (in a manner
acceptable to Custodian) of his/her election to make such a withdrawal.
4.6 DISTRIBUTION ON DEATH.
1. Beneficiary Designated
(a) If the Participant dies on or after his/her Required Beginning
Date and if distribution of his/her interest had previously
commenced in accordance with Option B in paragraph 4.1, any
remaining portion of such interest, at the election of the
Beneficiary in accordance with procedures established by the
Custodian, may be distributed either --
(i) in an immediate single sum payment, or
(ii) in installments paid at least as rapidly as under the
method of distribution being used as of the date of the
Participant's death.
<PAGE>
(b) If the Participant dies before reaching his/her Required Beginning
Date and any portion of the Participant's interest is payable to
or for the benefit of a Beneficiary, such portion, at the election
of the Beneficiary in accordance with procedures established by
the Custodian, may be distributed either -
(i) in a single sum payment, made not later than December 31
of the year following the year of the Participant's
death,
(ii) in installments commencing not later than December 31 of
the year following the year of the Participant's death,
and paid over a period not extending beyond the life
expectancy of such Beneficiary; provided, the
Beneficiary may accelerate such payments at any time, or
(iii) if the Beneficiary is the Participant's surviving
spouse, in a single sum or installments, commencing by
the later of 1) December 31 of the year following the
year of the Participant's death, and 2) December 31 of
the calendar year in which the Participant would have
attained age 70-1/2, and paid over a period not
exceeding the life expectancy of such spouse
Beneficiary. The surviving spouse may change the
frequency or amount of such payments, subject to the
limit of the preceding sentence.
(c) If the Beneficiary is the Participant's surviving spouse, the
spouse may, in lieu of the above distribution options in (a) and
(b), elect to treat the Participant's account as his/her own
individual retirement arrangement (IRA). This election will be
deemed to have been made if such surviving spouse makes a regular
IRA contribution to the account, makes a rollover contribution to
the account, or fails to elect any of the above distribution
options.
For purposes of the above, payments will be calculated by use of the return
multiples specified in Tables V and VI of section 1.72-9 of the Income Tax
Regulations. Life expectancy of a surviving spouse shall be recalculated
annually. In the case of any other designated beneficiary, life expectancy
will be calculated at the time payment first commences and payments for any
twelve-consecutive month period will be based on such life expectancy minus
the number of whole years passed since distribution first commenced.
For purposes of this requirement, any amount paid to a child of the
Participant will be treated as if it has been paid to the surviving spouse
if the remainder of the interest becomes payable to the surviving spouse
when the child reaches the age of majority.
2. No Designated Beneficiary
(a) If the Participant dies on or after his/her Required Beginning
Date and if distribution of his/her interest has commenced in
accordance with option B in paragraph 4.1, and no Beneficiary has
been designated or the designated Beneficiary and all secondary
Beneficiaries have either predeceased the Participant or cannot
after diligent effort, be found, the remaining portion of such
interest, at the election of the recipient in accordance with
procedures established by the Custodian, may be distributed -
(i) in an immediate single sum payment, or
(ii) in installments paid at least as rapidly as under the
method of distribution being used as of the date of the
Participant's death; provided that the entire remaining
interest must be distributed by December 31 of the
calendar year containing the fifth anniversary of the
Participant's death.
(b) If the Participant dies before reaching his/her Required Beginning
Date and no Beneficiary has been designated, or the designated
Beneficiary and all secondary Beneficiaries have predeceased the
Participant or cannot, after diligent effort, be found, the entire
interest of the Participant shall be distributed not later than
December 31 of the calendar year containing the fifth anniversary
of the Participants' death. In accordance with procedures
established by the Custodian, the recipient of the distribution
may elect to receive the distribution -
(i) in a single sum payment, or
(ii) in installment payments for a period not extending
beyond December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
3. Failure to Elect Option.
If any Beneficiary (other than a surviving spouse Beneficiary) under
subparagraph (1) above or any recipient under subparagraph (2) above
has the right to elect a method of distribution described in the
respective subparagraphs and fails to do so within the time allowed by
law, the Custodian has the right to make a single sum distribution at
such time in cash or Shares; provided however, that the Custodian shall
have no liability to any Beneficiary or recipient for any tax penalty
or other damages resulting from any inadvertent failure by the
Custodian to make such distribution.
4.7 DESIGNATION OF BENEFICIARY. A Participant shall have the right by written
notice to the Custodian to designate, or to change, his/her Beneficiary to
receive any amount to which Participant may be entitled in the event of
his/her death before the complete distribution of such benefits. Such
designation shall be on the Designation of Beneficiary Form or on a form
permitted by the Custodian and shall be effective only when filed with, and
acknowledged by, the Custodian before the death of the Participant. Such
designation may include secondary Beneficiaries. If no such designation is
in effect on the Participant's death, or if the designated Beneficiary and
all secondary Beneficiaries have predeceased the Participant, his/her
Custodial Account shall be distributed to his/her estate. Unless the
Participant (in writing filed with the Custodian) makes an election
described in subparagraph 4.6 (1) (a), the Beneficiary may elect one of the
methods of distribution of benefits under paragraph 4.6. Such election
shall be made in accordance with procedures established by the Custodian.
If the Beneficiary fails, or is unable, to elect a method of payment, the
Beneficiary's interest shall be distributed to him/her in cash in a single
sum. The Custodian shall be responsible for determining the identity of the
person or persons who qualify as the Beneficiary or Beneficiaries
designated by a Participant pursuant to the terms
<PAGE>
of this paragraph 4.7, or who qualify as the executor or administrator of
such Participant's estate in the case of a distribution required hereunder
to be made to such Participant's estate. If any person to whom all or a
portion of the Participant's interest is payable is a minor, payment of
such minor's interest shall be made on behalf of such minor to the person
designated by the Participant in the Designation of Beneficiary Form to
receive such minor's interest as a custodian under the Illinois Uniform
Gifts to Minors Act or similar statute. If any person to whom all or a
portion of the Participant's interest is payable is a minor and if the
Participant has not so designated a person to receive the minor's interest
on behalf of such minor, the Custodian may in its sole discretion:
(i) distribute the interest to the legal guardian of such minor; or
(ii) designate an adult member of the minor's family, a guardian or a
trust company (including the Custodian), as those terms are defined
in the Illinois Uniform Gifts to Minors Act, as custodian for such
minor under the Illinois Uniform Gifts to Minors Act or similar
statute and distribute such minor's interest to the person so
designated.
The receipt by the guardian or the person designated as custodian under the
Illinois Uniform Gifts to Minors Act or similar statute shall be a full
discharge of the Custodian.
4.8 PAYMENT ON DISABILITY. If a Participant becomes disabled (as defined in
section 72(m)(7) of the Internal Revenue Code), the amount credited to his
account may be distributed to him in accordance with paragraph 4.1. Before
making any distribution, however, the Custodian shall be furnished with
proof of such disability.
SECTION V ROLLOVER CONTRIBUTIONS
5.1 Regular Rollover Contribution means a rollover contribution to this Plan
from an eligible retirement plan as defined in section 402(a)(5) of the
Internal Revenue Code other than a Special Rollover Contribution. A
Participant who satisfies the eligibility requirements of Section II may
make a regular Rollover Contribution in any amount in cash or Shares. The
Participant shall execute such forms as the Custodian may require
describing the source of the rollover contribution.
5.2 Special Rollover Contribution means (i) a rollover contribution to this
Plan in a manner described in sections 402(c), 403(a)(4) or 403(b)(8) of
the Internal Revenue Code, or (ii) a rollover contribution to this Plan
from an Individual Retirement Account as defined in section 408(a) of the
Internal Revenue Code and the amount rolled over was previously rolled over
as described in sections 402(c), 403(a)(4) or 403(b)(8) of the Internal
Revenue Code. A person who satisfies the eligibility requirements of
Section II may adopt the Plan for the sole purpose of making a Special
Rollover Contribution. The Custodian shall accept the Special Rollover
Contribution in any amount in cash or Shares and establish a Custodial
Account for the Participant, provided, however, that the Custodial Account
shall consist only of the Special Rollover Contribution and the earnings
thereon. The Participant shall execute such forms as the Custodian may
require describing the source of the Special Rollover Contribution. A
person adopting this Plan for the sole purpose of making a Special Rollover
Contribution shall be treated as a Participant under the Plan for all
purposes.
SECTION VI TRANSFER OF ASSETS
6.1 The Custodian, in its sole discretion, may accept a transfer of cash or
Shares from a custodian of a custodial account (or a trustee of a trust)
maintained as an Individual Retirement Account, or a trustee of a trust
associated with a qualified retirement or profit-sharing plan. The
Custodian, by accepting a direct transfer of such assets, does not accept
the responsibility for the tax results of the transfer, the responsibility
for which rests with the individual who directs or consents to such
transfer. The individual for whom the assets are transferred shall become
the Participant for purposes of this Plan.
SECTION VII SPOUSAL IRA CONTRIBUTIONS
7.1 A Spouse who satisfies the eligibility requirements of Section II may adopt
this Plan. Such Spouse must execute an Application and establish his/her
own Custodial Account.
7.2 For any taxable year for which contributions are made by or on behalf of a
Spouse and his/her Working Spouse to this Plan or any other individual
retirement account plan, the aggregate amount of such contributions to both
plans shall not exceed the lesser of the Compensation of the Working Spouse
within the taxable year or $2,250. This limitation is in addition to the
limitations contained in paragraphs 3.1 and 3.2 (in the case of the
Spouse's Plan, the term ``Compensation'' used in paragraph 3.2 shall mean
the Working Spouse's Compensation). It shall be the sole responsibility of
the Spouse and Working Spouse to comply with these limitations.
7.3 SPECIAL DEFINITIONS
(a) Spouse means a person who (i) is married to a Working Spouse, (ii)
receives no Compensation or elects to be treated as having received no
Compensation within his/her taxable year, and (iii) has not attained
the age of 70 1/2. For purposes of this paragraph, if a spousal IRA
deduction is claimed on a joint tax return, the Spouse is deemed to
have elected to be treated as having no Compensation.
(b) Working Spouse means a person who (i) is married to a Spouse, (ii) has
received Compensation within his/her taxable year, and (iii) has not
attained the age of 70 1/2.
SECTION VIII. CUSTODIAL ACCOUNT AND INVESTMENT OF PLAN ASSETS
8.1 CUSTODIAL ACCOUNT AGREEMENT. Concurrently with the adoption of this Plan,
the Participant and Custodian shall execute the Custodial Account
Agreement. Such Agreement shall constitute a part of this Plan. If any
provisions of the Plan are inconsistent with the provisions of the
Custodial Account Agreement, the latter shall control.
<PAGE>
8.2 INVESTMENT OF CONTRIBUTIONS. The Custodian shall invest all contributions
solely in Shares of State Farm Funds as directed by Participant.
Participant (or a Beneficiary of a deceased Participant) may change the
State Farm Funds in which his/her account is invested as provided in
paragraph 5.2 of the Custodial Account Agreement.
8.3 REGISTRATION AND OWNERSHIP OF SHARES. Shares acquired by the Custodian
shall be registered in the name of the Custodian or its nominee. The
Participant for whom such Shares are acquired shall be the beneficial owner
of such Shares.
SECTION IX AMENDMENT AND TERMINATION
9.1 AMENDMENT OF PLAN. The Plan Sponsor may, at any time, amend this Plan in
any respect, by delivering to Participant and the Custodian a signed copy
of such amendment provided that: (i) no amendment shall be made at any time
under which any part of the Custodial Account may be diverted to purposes
other than for the exclusive benefit of Participant and his/her
Beneficiaries; and (ii) no amendment shall be made retroactively in a
manner so as to deprive any Participant of any benefit to which he/she was
entitled under this Plan by reason of contributions made before the
Amendment unless such Amendment is necessary to conform the Plan or
Custodial Account Agreement to, or satisfy the requirements of the Internal
Revenue Code or other applicable law.
9.2 TERMINATION OF PLAN. The Participant may elect to terminate this Plan,
provided such election is made concurrently with Participant's election to
terminate the Custodial Account pursuant to paragraph 11.2 of the Custodial
Account Agreement. Participant shall give written notice of his/her
election to terminate the Plan to Custodian by registered or certified
mail.
SECTION X MISCELLANEOUS
10.1 RIGHTS OF PARTICIPANT. Neither the establishment of the Plan, including the
execution of the Custodial Account Agreement nor any modification or
amendment thereof, nor the payment of any benefits shall be construed as
giving to the Participant any legal or equitable right against State Farm
Funds, the Custodian, or State Farm Investment Management Corp. except as
provided herein.
10.2 ADMINISTRATION. The Plan shall be administered by the Participant, who
shall have sole responsibility for the operation of the Plan in accordance
with its terms; shall determine all questions arising out of the
administration, except as is otherwise expressly provided in the Plan. The
Participant shall have sole authority and responsibility to determine the
amount of contributions and distributions to be made under the Plan and
neither the Custodian nor any other person shall be responsible therefor,
or for any consequences to the Participant resulting from the making of
excess contributions, or the failure to make required distributions, except
as is otherwise expressly provided in the Plan. Separate records will be
maintained for the interest of each Participant.
10.3 PAYMENT OF TAXES AND EXPENSES. Any income taxes or other taxes of any kind
whatsoever that may be levied upon or assessed against or in respect of
assets of the Plan, or on income arising therefrom, and any transfer taxes,
and any administrative expenses, maintenance fees, or other charges
incurred in connection with the Plan or Custodial Account shall be paid
from the assets of the Custodial Account as provided in the Custodial
Account Agreement.
10.4 OTHER CONDITIONS. It is a condition of the Plan and the Custodial Account
Agreement that a Participant, by participating in the Plan, expressly
agrees that he/she shall look solely to the assets of the Custodial Account
for the payment of any benefits to which he/she is entitled under the Plan.
The benefits provided under the Plan shall not be subject to alienation,
assignment, garnishment, attachment, execution or levy of any kind, and any
attempt to cause such benefits to be so subjected shall not be recognized,
except by the Custodian for its fees and expenses under the Custodial
Account Agreement, and except to such extent as may be required by law.
The Plan, Custodial Account Agreement, any forms provided by the Custodian,
including the Designation of Beneficiary Form filed pursuant to Section IV
and all property rights of Participant under the Plan, shall be construed,
administered, and enforced according to the laws of the state of Illinois,
other than its laws with respect to choice of laws.
10.5 INSTALLMENT PAYMENTS LESS THAN A MINIMUM AMOUNT. Notwithstanding any
language to the contrary contained herein, if any installment payments
under sections 4.1 and 4.6 is less than a minimum amount that may be
established from time to time by the Custodian, then at the option of the
Custodian, such installment payment may be paid less frequently, but not
less frequently than annually, or the value of the Custodial Account with
respect to such installments remaining unpaid may be paid in one sum to the
person then entitled to receive such payment, the contingent interest of
any other person notwithstanding.
<PAGE>
STATE FARM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT PLAN
DISCLOSURE STATEMENT
The following information is provided to you in accordance with the requirements
of the Internal Revenue Service regulations. You should read this Disclosure
Statement together with the Individual Retirement Account Plan, the Custodial
Account Agreement and the State Farm Funds prospectuses. This is not a
comprehensive discussion of the applicable law; nor is it intended to serve as a
substitute for the advice of your lawyer, accountant or other personal tax or
financial adviser.
1. Irrevocability of Account
The Internal Revenue Service requires that you receive this Disclosure
Statement at least 7 days prior to the establishment of your Individual
Retirement Account (IRA). Because of this, your Application will not be accepted
by the Custodian and your account will not be established until at least 7 days
after the date you receive this Disclosure Statement. Once your Application for
a State Farm Funds IRA is received and accepted by the Custodian, it cannot be
revoked by you.
2. Internal Revenue Service Approval
The State Farm Funds Individual Retirement Account Plan and Custodial Account
Agreement have been approved as to form by the Internal Revenue Service. Their
approval is a determination only as to form and not to the merits of the
account.
3. Eligibility
Participation in the State Farm Funds IRA Plan is limited to Agents and
Employees of the State Farm Insurance Companies and members of their families.
4. General Information
An IRA must be a United States trust or custodial account created for the
exclusive benefit of an individual and his/her beneficiary. The trustee or
custodian must be either a bank or such other person who has been approved by
the Secretary of the Treasury. No part of the contributions may be invested in
either life insurance contracts or collectibles (such as art works, antiques,
stamps, coins, etc.) as defined in section 408(m) of the Internal Revenue Code.
The assets of the IRA can not be commingled with other property except in a
common trust fund or common investment fund. In addition, an individual's right
to the entire balance in his/her account must at all times be nonforfeitable.
As with most laws which provide special tax treatment, there are certain
restrictions and limitations. The pertinent Federal tax laws include
requirements relating to contributions, use of account assets, and when and how
distributions can be made to you and your beneficiary.
5. Contributions
You may make contributions to your IRA for a taxable year if you receive
compensation during such year. Compensation includes your wages and salary as an
employee and earnings from self-employment, such as professional fees and other
amounts for your personal services. However, only a limited amount of
contributions can be made each year to your IRA.
Limitations - Regular Contributions. Your contributions to your IRA are
limited to the lesser of 100% of your compensation or $2,000 annually. If both
you and your spouse had compensation during the taxable year, then you may each
establish a separate IRA and each of you may make contributions to your separate
IRAs up to the lesser of 100% of your respective compensations or $2,000
annually.
Limitations - Spousal Contributions. If you had compensation during the
taxable year, your spouse either had no compensation or elected to be treated as
if he/she had no compensation, and you file a joint tax return, you may make
contributions to your IRA and a separate IRA for your spouse. Under such an
arrangement, you may make total contributions to both accounts up to the lesser
of 100% of your compensation or $2,250 annually. To qualify for the maximum
deduction, both IRAs must be funded, but you determine how much to contribute to
each account. However, you can not contribute more than $2,000 annually to
either account. If a spousal IRA deduction is claimed on your tax return for the
taxable year, your spouse is deemed to have elected to be treated as having no
compensation.
Deductibility of Contributions. Contributions (other than Rollover
Contributions) to your IRA (or your spouse's IRA) may be deductible from your
gross income on your Federal income tax return depending upon your adjusted
gross income and whether or not you are an active participant in a retirement
plan qualified under section 401(a) of the Internal Revenue Code, an annuity
plan under section 403(a) of the Code, an annuity contract under section 403(b)
of the Code, a simplified employee pension under section 408(k) of the Code or a
plan established for its employees by the United States, by a State or political
subdivision or by an agency or an instrumentality of a State or political
subdivision. You are permitted to make deductible IRA contributions up to the
lesser of $2,000 or 100% of compensation if you are not an active participant
(or, if you are married and file a joint return, neither you nor your spouse is
an active participant) in any of the above-mentioned employer-maintained
retirement plans for any part of the plan year ending with or within your
taxable year.
Even though you are an active participant in an employer-maintained plan, you
are permitted to make deductible IRA contributions up to the lesser of $2,000 or
100% of compensation if you (or you and your spouse if a joint return is filed)
have adjusted gross income that does not exceed an applicable dollar amount. The
applicable dollar amount is (1) $25,000 in the case of an individual, (2)
$40,000 in the case of a married couple filing a joint return, and (3) $0 in the
case of a married couple filing separately. If your adjusted gross income
exceeds the applicable dollar amount (and you are an active participant in one
of the above plans), you may make deductible contributions; however, the IRA
deduction limit (including the spousal IRA deduction limit) is reduced by an
amount that bears the same ratio to the applicable dollar limit as your adjusted
gross income in excess of the applicable dollar limit bears to $10,000.
Accordingly, you may not make deductible IRA contributions if your adjusted
gross income is (1) $35,000 or more, in the case of an individual, (2) $50,000
or more in the case of a married couple filing a joint return, and (3) $10,000
or more in the case of a married couple filing separately. To qualify as a
deductible contribution, your contribution must be made no later than the due
date for filing your Federal income tax return
<PAGE>
(not including any extensions). No deduction for contributions is allowed for
any year in which you are age 70-1/2 or older. Similarly, no deduction is
allowed for a contribution to your spouse's IRA in any year in which he/she is
age 70-1/2 or older.
You may also make designated nondeductible IRA contributions to the extent
that deductible contributions are not allowed. Thus, you may make nondeductible
contributions to the extent of the excess of (1) the lesser of $2,000 ($2,250 in
the case of a spousal IRA) or 100% of compensation over (2) your IRA deduction
limit. Additionally, you may elect to treat deductible IRA contributions as
nondeductible. Nondeductible IRA contributions must be designated as such on
your tax return in the manner prescribed by the Secretary of the Treasury.
Nondeductible contributions may be made no later than the due date for filing
your Federal income tax return (not including extensions).
Excess Contributions. Any contributions to your IRA (including spousal
contributions to your spouse's IRA) which exceed the maximum allowable
contribution are excess contributions. Any excess contributions which are not
withdrawn or eliminated prior to the due date for filing your Federal income tax
return (including any extensions) will be subject to a 6% penalty tax under
section 4973 of the Internal Revenue Code.
6. Rollover Contributions
All or a portion of certain distributions from qualified employer plans or
tax-sheltered annuities, and distributions from other IRA plans may be "rolled-
over" tax-free to an IRA, if the rollover (transfer) is made within 60 days
after receipt of the distribution. Rollovers from qualified employer plans and
tax-sheltered annuities will be retained in a Special IRA and, under certain
conditions, may be subsequently "rolled-over" tax-free to another qualified
employer plan or tax-sheltered annuity.
Strict limitations set forth in section 408(d)(3) of the Internal Revenue Code
apply to rollovers. You should seek competent tax advice in order to ensure
compliance with the rules governing tax-free rollovers.
7. Distributions
Income Tax Treatment. Federal income tax on your deductible IRA contributions,
earnings on such contributions as well as earnings on your nondeductible
contributions, generally, is deferred until you begin to receive distributions
from your account. Such distributions are taxed as ordinary income regardless of
their original source. On the other hand, the distributions of your
nondeductible contributions are generally not subject to income tax at the time
of the distributions since such contributions were previously subject to the
income tax.
Normal Distributions. The entire interest in your account must be distributed
to you, or begin to be distributed to you, no later than April 1 of the calendar
year following the calendar year in which you reach age 70-1/2. Distributions
may be in single sum payments; substantially equal or unequal installment
payments over a period which can not exceed your life expectancy or the joint
life expectancy of you and your beneficiary; or by purchase of an immediate or
deferred annuity.
Minimum Distributions. In calendar years after the calendar year in which you
reach age 70-1/2, the law requires you to receive at least a minimum
distribution from your account each year. A 50% penalty tax may be imposed on
any deficiency between the distributions received by you and minimum required
distributions under section 4974 of the Internal Revenue Code.
Distributions after Death. If you die before the distribution from your
account has begun, the portion of your account balance which is payable to a
designated beneficiary must be distributed to the beneficiary over a period not
to exceed the life expectancy of such beneficiary; any portion not payable to a
designated beneficiary must be distributed by December 31 of the calendar year
containing the fifth anniversary of your death. Additionally, if your designated
beneficiary is your surviving spouse, such spouse may elect, within the five-
year period commencing with your death, to receive substantially equal payments
over a period not to exceed the life expectancy of such spouse beginning by the
later of 1) December 31 of the calendar year following the date of your death,
or 2) December 31 of the calendar year in which you would have reached age
70-1/2. The surviving spouse could change the frequency or amount of these
payments (subject to the limits of the preceding sentence) at any time.
Alternatively, your surviving spouse designated beneficiary may elect to
treat the account as his/her own IRA; this election will be deemed to have been
made if your spouse makes a regular or rollover contribution to the account or
if your spouse fails to elect any other distribution option. For the purposes of
this paragraph, any amount paid to your child will be treated as if it had been
paid to your spouse if the remainder of the interest becomes payable to your
surviving spouse when the child reaches the age of majority.
If you die after the distribution from your account has begun, but before the
entire interest has been distributed, the remaining balance of your account must
be distributed to the designated beneficiary at least as rapidly as under the
method of distribution being used on the date of your death; any portion not
payable to a designated beneficiary must be distributed at least as rapidly as
under the method of distribution being used on the date of your death, but in no
event over a period beyond December 31 of the calendar year containing the fifth
anniversary of your death.
Premature Distributions. An IRA is intended as a savings plan to accumulate
funds for retirement. Accordingly, section 72(t) of the Internal Revenue Code
imposes a penalty on certain premature distributions. Generally, if you receive
a distribution from your account before you reach age 59-1/2, to the extent that
such distribution will be taxable as ordinary income, it will also be subject to
an additional 10% penalty tax. The additional 10% penalty tax does not apply
when distributions are made because of a permanent disability or your death.
Furthermore, this penalty does not apply to a distribution of an excess
contribution which is timely withdrawn or in the case of a qualifying rollover
distribution.
8. Prohibited Transactions
If you or your beneficiary were to engage in any prohibited transactions
(described in section 4975(c) of the Internal Revenue Code) with respect to your
IRA (such as any sale, exchange or leasing of any property between you and the
account; or any other interference with the independent status of the account)
then the account would lose its tax-exempt status by reason of section 408(e)
(2)(A) of the Internal Revenue Code and the entire account balance would be
treated as having been distributed to you in the year during which the
prohibited transactions occurred. The value of the entire account would be
included in your gross income and taxed as ordinary income. In addition, if you
are under age 59-1/2, the "distribution" would also be subject to the additional
10% penalty tax imposed on premature distributions.
<PAGE>
9. Prohibited Transactions - Loans
You are not permitted to pledge or otherwise use any portion of your IRA as
collateral for a loan. If you do use a portion of your account as collateral,
the portion used will be deemed to have been distributed to you by reason of
section 408(e)(4) of the Internal Revenue Code. The value of the portion
"distributed" would be included in your gross income and taxed as ordinary
income. In addition, if you are under age 59-1/2, the portion "distributed"
would also be subject to the additional 10% penalty tax imposed on premature
distributions.
10. Federal Estate and Gift Taxes
Transfers of IRA amounts are generally subject to estate and gift taxes in the
absence of any applicable exclusion (such as the unlimited marital deduction or
the unified estate and gift tax credit).
11. Reports to the Internal Revenue Service
You must file Form 5329 with the Internal Revenue Service for each taxable
year that you owe penalty taxes on excess contributions, premature
distributions, prohibited transactions and underdistributions.
12. Investment of Contributions
Contributions to your IRA and the earnings thereon, will be invested in shares
of the State Farm Funds selected by you. The assets in your IRA will be held in
a custodial account exclusively for your benefit and the benefit of your
designated beneficiary. The balance in your IRA represents a separate account
which is clearly identified as your property. Your right to the entire balance
in your account is nonforfeitable.
13. Financial Information
Growth in value of the mutual fund shares held in your account cannot be
guaranteed or projected. The earnings on your account will be derived from the
dividends and capital gain distributions (if any) received on the shares of the
State Farm Funds in your account and will be used to purchase additional shares.
The income and operating expenses of the mutual fund you select, as well as any
increase or decrease in the market value of the underlying assets of the mutual
fund, affects the value of its shares, and therefore the value of the shares in
your account. Additional information regarding each of the State Farm Funds
available for investment in your IRA may be obtained from each Fund's
prospectus.
Fees and other expenses of maintaining your account may be charged to your
account or directly to you by the Custodian. The Custodian's annual maintenance
fee is $1.00.
14. Additional Information
Further information concerning IRAs can be obtained from any district office
of the Internal Revenue Service.
<PAGE>
STATE FARM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT PLAN
CUSTODIAL ACCOUNT AGREEMENT
INTRODUCTION
The Participant and The Peoples Bank, Bloomington, Illinois (hereinafter
referred to as "Custodian"), by signing the Application have created this
Custodial Account Agreement (hereinafter referred to as the "Agreement"). The
Application is hereby made a part of this Agreement.
This Agreement has been established in accordance with the State Farm Funds
Individual Retirement Account Plan (hereinafter referred to as the "Plan"). In
the event of any conflict between the provisions of the Plan and those of this
Agreement, the latter shall prevail.
Participation in the Plan is limited to individuals who qualify to purchase
shares in the State Farm Funds, i.e. Agents and Employees of the State Farm
Insurance Companies and their family members. In the event the Participant
becomes ineligible to purchase shares in the State Farm Funds, no additional
contributions may be made to the Custodial Account established under this
Agreement until the Participant again becomes eligible to purchase such shares.
The Custodial Account is intended to qualify as an "individual retirement
account" within the meaning of section 408 of the Internal Revenue Code of 1986,
as amended or any successor statute. The Participant has made an initial
contribution (or authorized a compensation deduction) to the Custodial Account
as indicated on the Application. The Participant and Custodian agree that the
terms and conditions of the Custodial Account are as set forth in this
Agreement.
ARTICLE I DEFINITIONS
1.1 Participant means the individual who has signed the
Application and makes contributions in the manner prescribed herein.
1.2 Custodian means the The Peoples Bank, Bloomington, Illinois, and any
successor thereto as herein provided.
1.3 State Farm Fund or State Farm Funds means the Investment Company or
Companies specified in the Application, in which assets of the Plan may be
invested; provided that no Investment Company will be deemed available for
investment hereunder (i) prior to the date the prospectus for such
Investment Company discloses such availability, or (ii) with respect to any
Participant who resides in any state with respect to which shares of the
Investment Company are not available for sale.
1.4 Shares means shares of common stock of the State Farm Funds.
1.5 Plan means the State Farm Funds Individual Retirement Account Plan and any
amendments thereof.
1.6 Plan Sponsor means State Farm Interim Fund, Inc.
ARTICLE II ESTABLISHMENT OF PARTICIPANT'S CUSTODIAL ACCOUNT
2.1 The Custodian shall establish and maintain a Custodial Account for the sole
benefit of Participant and his/her Beneficiaries. The Custodial Account
shall be kept in a manner which will permit an accurate determination of
the contributions and any other transactions made by the Participant. The
Participant shall promptly notify the Custodian in writing of any change in
Participant's name or address.
ARTICLE III CONTRIBUTIONS
3.1 ACCEPTANCE OF CONTRIBUTIONS. The Custodian may accept contributions by
check or compensation deduction as deposits to the Custodial Account from
or on behalf of Participant, except as limited by paragraphs 3.2 and 3.3 of
this Article.
3.2 AMOUNTS OF CONTRIBUTIONS. Except in the case of a Rollover Contribution,
the Custodian will not accept contributions from or on behalf of the
Participant in excess of $2,000 for any taxable year of the Participant.
Contributions for a given taxable year may be made during such year or not
later than the time prescribed by law for filing Participant's Federal
income tax return for such taxable year (not including extensions of time
for filing). All contributions (except Rollover Contributions as described
in Section V of the Plan) must be made by check or compensation deduction
and are subject to the minimum investment requirements established by the
State Farm Funds. Contributions shall be invested pursuant to written
instructions on a form provided (or permitted) by the Custodian specifying
the State Farm Fund in which they are to be invested. If the Participant
becomes ineligible to purchase Shares of the State Farm Funds in accordance
with eligibility rules established from time to time by the State Farm
Funds, the Custodian shall not accept contributions to the Custodial
Account during the period of such ineligibility.
3.3 ROLLOVER CONTRIBUTIONS. The Custodian may accept Rollover Contributions as
a deposit to the Custodial Account, as described in Section V of the Plan.
The Participant shall execute such forms as the Custodian may require
describing the source of the Rollover Contribution.
ARTICLE IV NONFORFEITABLE
4.1 The interest of the Participant in the balance in the Custodial Account
shall at all times be nonforfeitable, but shall be subject to the fees,
expenses and charges described in Article VII.
-1-
<PAGE>
ARTICLE V INVESTMENT OF ASSETS OF CUSTODIAL ACCOUNT
5.1 INVESTMENT OF CONTRIBUTIONS. The Custodian shall invest all contributions
in Shares of the State Farm Funds as directed by Participant on a form
provided or permitted by the Custodian. If such directions are not received
by Custodian; or are received but are, in the opinion of the Custodian,
unclear; or if the accompanying contribution exceeds $2,000 and is not
identified as a Rollover Contribution; or if the Participant is ineligible
to purchase Shares; the Custodian may hold or return all of the
contribution uninvested without liability for loss of income or
appreciation and without liability for interest pending receipt of proper
instructions or clarification.
5.2 CHANGE OF INVESTMENT. A Participant (or a Beneficiary of a deceased
Participant) may change the State Farm Fund in which his/her account is
invested by filing with the Custodian directions on such form as is
provided or permitted by the Custodian at such times as the Participant (or
a Beneficiary of a deceased Participant) shall deem appropriate. No such
change of investment shall be effective until received by the Custodian
and, once effective, shall remain in effect until properly changed.
5.3 DIVIDENDS AND DISTRIBUTIONS. All income dividends and capital gain
distributions received in respect of Shares held in the Custodial Account
shall be reinvested in Shares of the State Farm Funds from which they were
received and such Shares shall be credited to the Custodial Account. Such
reinvestment shall be made on the date specified by the State Farm Funds
for reinvestment of the distributions. If any distributions may be received
at the election of the shareowner in additional Shares or in cash, the
Custodian shall elect to receive such distributions in additional Shares.
5.4 REGISTRATION AND OWNERSHIP OF SHARES. Shares acquired by the Custodian
shall be registered in the name of the Custodian or its nominee. The
Custodian shall deliver, or cause to be delivered, to Participant all
prospectuses, confirmations, notices, reports or other material as may be
required under applicable securities laws. The Custodian shall not vote any
such Shares except in accordance with written instructions received from
Participant.
5.5 MISCELLANEOUS (a) The Custodian does not undertake to render any investment
advice to the Participant. The responsibility of the Custodian to invest in
Shares is not an endorsement of any State Farm Fund.
(b) Anything to the contrary notwithstanding, no part of the assets of the
Custodial Account shall be invested in life insurance contracts; nor may
the assets of the Custodial Account be invested in collectibles as defined
in Section 408(m) of the Internal Revenue Code; nor may the assets of the
Custodial Account be commingled with other property except in a common
trust fund or common investment fund (within the meaning of section 408(a)
(5) of the Internal Revenue Code).
ARTICLE VI PAYMENT OF BENEFITS
6.1 DISTRIBUTIONS. The entire interest of the Participant in the Custodial
Account must be, or commence to be, distributed no later than April 1 of
the calendar year following the calendar year in which the Participant
attains age 70 1/2. Not later than such time, the Participant may elect, in
a form and at such time as may be acceptable to the Custodian, to have
his/her interest in the Custodial Account distributed in the manner
provided in Section IV of the Plan. If the Participant fails or is unable
to elect one of the methods of distribution described in Section IV of the
Plan on or before April 1 of the calendar year following the calendar year
in which Participant attains age 70 1/2, then the Custodian shall make such
distribution of benefits to Participant in a single sum payment in cash or
Shares at the sole discretion of the Custodian.
6.2 PAYMENT ON DISABILITY. If the Participant becomes disabled (as defined in
section 72(m)(7) of the Internal Revenue Code or any successor provision),
the Custodian shall distribute the Participant's interest in the Custodial
Account in the manner provided in paragraph 4.8 of the Plan.
6.3 PAYMENT ON DEATH. If Participant dies before distribution of his/her
interest has begun, or if Participant dies after distribution has commenced
but before the entire interest has been distributed, the Custodian shall
distribute the remaining interest in the Custodial Account in the manner
provided in paragraph 4.6 of the Plan.
6.4 PREMATURE DISTRIBUTION. Before any distribution is made from the Plan to a
Participant who has not attained age 59 1/2 (except in the case of the
Participant's death or disability as defined in section 72(m)(7) of the
Internal Revenue Code), the Participant must furnish the Custodian with a
declaration of his/her intentions as to the disposition of the amount to be
distributed.
6.5 EXCESS CONTRIBUTIONS. Anything herein to the contrary notwithstanding, if
the Custodian should at any time receive written notice from the
Participant that any contribution made by or on behalf of the Participant
was an Excess Contribution (as described in section 408(d)(4) of the
Internal Revenue Code) and Participant directs that such Excess
Contribution should be distribted to him/her, the Custodian shall
distribute to the Participant from the Custodial Account the amount of such
Excess Contribution and, if withdrawn pursuant to section 408(d)(4) of the
Internal Revenue Code, the net income attributable thereto in Shares or
cash, in the sole discretion of the Custodian.
6.6 LOSS OF EXEMPTION. On written notice from the Participant or the Internal
Revenue Service to the Custodian that for any taxable year the
Participant's account has lost its exemption, including loss of exemption
as provided in section 408(e)(2) of the Internal Revenue Code, the
Custodian shall, on or before the close of the ninety-day period beginning
with the date of the receipt of such notice, distribute to such Participant
the Participant's entire interest in the Custodial Account in Shares or
cash in the sole discretion of the Custodian. The Custodian is authorized,
however, to reserve funds as described in paragraph 10.1.
-2-
<PAGE>
6.7 CONFIRMATIONS. The Custodian will confirm to the Participant the redemption
of Shares made pursuant to any distribution from the Custodial Account.
ARTICLE VII CUSTODIAN FEES AND EXPENSES OF THE ACCOUNT
7.1 ANNUAL MAINTENANCE FEE. For maintaining this Custodial Account, the
Participant shall pay the Custodian an Annual Maintenance Fee of $1.00.
With the consent in writing of the Plan Sponsor, the Custodian may change
the Annual Maintenance Fee from time to time on at least forty-five (45)
days' notice in writing to the Participant.
7.2 PAYMENT OF FEES AND EXPENSES. Any income, gift, estate, inheritance taxes
and other taxes of any kind whatsoever that may be levied upon or assessed
against or in respect of the Custodial Account, the Annual Maintenance Fee,
and all administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to
the Custodian, shall be paid from the assets of the Custodial Account. The
Custodian may, at its option, collect any amounts so charged from the
amount of any contribution or distribution from the Custodial Account or by
sale or liquidation of the Shares credited to the Custodial Account and, if
the assets of the Custodial Account are insufficient to satisfy such
charges, the Participant shall pay any deficit therein to the Custodian.
ARTICLE VIII REPORTING AND DISCLOSURE
8.1 INFORMATION. The Participant agrees to provide information to the Custodian
at such time and in such manner and containing such information as may be
necessary for the Custodian to prepare any reports required by the Internal
Revenue Service.
8.2 REPORTS. The Custodian agrees to submit reports to the Internal Revenue
Service and the Participant at such time and in such manner and containing
such information as is prescribed by the Internal Revenue Service.
ARTICLE IX ADDITIONAL PROVISIONS REGARDING THE CUSTODIAN
9.1 CUSTODIAL ACCOUNT STATEMENTS. The Custodian shall keep accurate and
detailed records of all transactions it is required to perform hereunder.
Within sixty (60) days after the close of each calendar year (or after the
Custodian's resignation or removal pursuant to Article X hereof), the
Custodian shall deliver to the Participant a written statement of the
transactions effected by the Custodian during such year (or period ending
with such resignation or removal) and the fair market value of the assets
of the Custodial Account as of the close of such year. Upon expiration of
the sixty (60) day period following the date on which the foregoing
statement is delivered by the Custodian, the Custodian shall (to the extent
permitted by applicable law) be forever released and discharged from all
liability and accountability to anyone with respect to its acts in
transactions shown on or reflected by such statement, except with respect
to any such acts or transactions as to which the Participant has filed
written objections with the Custodian within the sixty (60) day period.
Nothing herein contained shall be deemed to preclude the Custodian from its
right to have its accounts judicially settled by a court of competent
jurisdiction.
9.2 MISCELLANEOUS. The Custodian shall not be liable and assumes no
responsibility for the collection of contributions provided for under the
Plan, the deductibility of any contributions, the purpose or propriety of
any distribution made pursuant to Article VI hereof, or any other action
taken at a Participant's direction, nor shall the Custodian have any duty
or responsibility to determine whether information furnished by a
Participant is correct. To the extent permitted by Federal law, nothing
contained in the Plan, either expressly or by implication, shall be deemed
to impose any powers, duties or responsibilities on the Custodian other
than those set forth in this Agreement.
The Custodian shall be indemnified and saved harmless by the Participant
from any and all liability whatsoever which may arise in connection with
this Agreement, except the obligation of the Custodian to perform in
accordance with the Agreement and with the applicable Federal law.
The Custodian shall be under no duty to take any action other than as
herein specified with respect to the Custodial Account unless the
Participant shall furnish the Custodian with instructions in proper form
and such instructions shall have been specifically agreed to by the
Custodian. The Custodian shall be under no duties to defend or engage in
any suit with respect to the Custodial Account unless the Custodian shall
have first agreed in writing to do so and shall have been fully indemnified
to the satisfaction of the Custodian. The Custodian shall be protected in
acting upon any written order or direction from a Participant or any other
notice, request, consent, certificate or any other instrument believed by
it to be genuine and to have been properly executed and, so long as it acts
in good faith, in taking or omitting to take any other action.
Before making any distribution in the case of the death of the Participant,
the Custodian shall be furnished with such certified death certificates,
inheritance tax releases, indemnity agreements and other documents as may
be required by the Custodian. Before making any distribution in the case of
the disability of a Participant, the Custodian shall be furnished with
proof of disability.
The Custodian shall be an agent for the Participant to receive and invest
contributions as directed by the Participant, hold and distribute such
investments, and keep adequate records and report thereon, all in
accordance with this Agreement. The parties do not intend to confer any
fiduciary duties on the Custodian, and none shall be implied. The Custodian
may perform any of its duties through other persons designated by the
Custodian from time to time, and the Custodian intends initially to
delegate all such duties to State Farm Investment Management Corp. No such
delegation or future change therein shall be considered as an amendment to
this Agreement.
-3-
<PAGE>
ARTICLE X RESIGNATION OF OR REMOVAL OF CUSTODIAN
10.1 The Custodian may resign at any time upon at least thirty (30) days' notice
in writing to the Participant and to the Plan Sponsor, and Custodian and
Participant agree that the Plan Sponsor may remove the Custodian at any
time upon at least thirty (30) days' notice in writing to the Custodian and
Participant. Upon such resignation or removal, the Plan Sponsor shall
appoint a Successor Custodian. Upon receipt by the Custodian of a written
acceptance of such appointment by a Successor Custodian, the Custodian
shall transfer to such Successor the assets of the Custodial Account and
all records pertaining thereto. The Custodian is authorized, however, to
reserve such a portion of such assets as it may deem advisable for payment
of all its fees, compensation, costs and expenses or for payment of any
other liabilities constituting a charge on or against the assets of the
Custodial Account or on or against the Custodian, with any balance of such
reserve remaining after the payment of all such items to be paid over to
the Successor Custodian. The Successor Custodian shall hold the assets paid
over to it under the terms of this Agreement.
10.2 The Custodian shall not be liable for the acts or omissions of any
Successor Custodian.
10.3 The Custodian and every Successor Custodian appointed to serve under this
Agreement, must be a bank as defined in section 408(n) of the Internal
Revenue Code or such other person who demonstrates to the satisfaction of
the Secretary of the Treasury or his delegate that the manner in which such
other person will administer the Custodial Account will be consistent with
the requirements of section 408 of the Internal Revenue Code.
10.4 After the Custodian has transferred the Custodial Account assets (including
any reserve balance as contemplated above) to the Successor Custodian, the
Custodian shall be relieved of all further liability with respect to this
Agreement, the Custodial Account and the assets thereof.
ARTICLE XI TERMINATION OF CUSTODIAL ACCOUNT
11.1 TERMINATION BY CUSTODIAN. The Custodian may elect to terminate the
Custodial Account if, within sixty (60) days after its resignation or
removal pursuant to Article X, the Plan Sponsor has not appointed a
Successor Custodian which has accepted such appointment. Termination of the
Custodial Account shall be effected by distributing to Participant all
assets of the Custodial Account in a lump-sum payment in cash or Shares, at
the sole discretion of Custodian, subject to Custodian's right to reserve
funds as described in paragraph 10.1.
11.2 TERMINATION BY PARTICIPANT. The Participant may elect to terminate the
Custodial Account at any time, provided such election is made concurrently
with Participant's election to terminate the Plan pursuant to paragraph 9.2
of the Plan. Participant shall give written notice of his/her election to
terminate the Custodial Account to the Custodian by registered or certified
mail. After receipt of such notice, the Custodian shall terminate the
Custodial Account and distribute all assets in the Custodial Account
pursuant to directions furnished by Participant and agreed to by Custodian.
If Participant fails or is unable to furnish such directions, the Custodian
shall distribute to Participant all assets of the Custodial Account in a
lump-sum payment in cash or Shares, at the sole discretion of Custodian,
subject to Custodian's right to reserve funds as described in paragraph
10.1.
11.3 TERMINATION OF AGREEMENT. Upon distribution of all assets of the Custodial
Account in accordance with the provisions of paragraphs 11.1 or 11.2, this
Agreement shall terminate and have no further force and effect. The
Custodian shall be relieved from all further liability with respect to this
Agreement, the Custodial Account and all assets thereof so distributed.
ARTICLE XII AMENDMENT
12.1 Subject to the provisions of paragraphs 12.2, 12.3, and 12.4, the
Participant and Custodian agree that the Plan Sponsor may, at any time,
unilaterally amend this Agreement in any respect (including retroactive
amendments). Any such Amendment shall be effective on a stated date which
shall be at least sixty (60) days after giving written notice of the
Amendment (including its exact terms) to Participant and Custodian. The
Participant and Custodian shall be deemed to have consented to such
Amendment unless, within thirty (30) days after the notice to Participant
and Custodian is mailed, either (i) Participant elects to terminate the
Custodial Account as provided under Article XI, or (ii) Custodian elects to
resign as provided in Article X.
12.2 No amendment shall be made at any time under which any part of the
Custodial Account may be diverted to purposes other than for the exclusive
benefit of Participant and his/her Beneficiaries.
12.3 No amendment shall be made retroactively in a manner so as to deprive any
Participant of any benefit to which he/she was entitled under this
Agreement by reason of contributions made before the Amendment, unless such
Amendment is necessary to conform the Plan or Agreement to, or satisfy the
requirements of, the Internal Revenue Code or other applicable law.
12.4 No amendment shall place any greater burden on the Custodian without its
written consent.
12.5 This Article XII shall not be construed to restrict the freedom of the
Custodian to change the Annual Maintenance Fee in the manner provided in
Article VII, and no such change shall be deemed an Amendment of this
Agreement.
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<PAGE>
ARTICLE XIII MISCELLANEOUS
13.1 Not withstanding any other paragraphs of this Agreement, paragraphs 3.1,
3.2, 3.3 and 5.5(b) and this sentence shall be controlling. Furthermore,
any provision of this Agreement shall be wholly invalid if it is
inconsistent, in whole or in part, with section 408(a) of the Internal
Revenue Code and the regulations thereunder.
13.2 Any notice, report or material required to be delivered by the Custodian to
the Participant shall be deemed delivered and effective on the date mailed
by the Custodian to the Participant at the Participant's last address of
record filed by the Participant with the Custodian.
13.3 This Agreement and Beneficiary Designations, and all property rights,
including rights to distributions after the death of the Participant, under
the Plan, shall be construed in accordance with the laws of the State of
Illinois, other than its laws with respect to the choice of laws.
-5-
<PAGE>
<TABLE>
<CAPTION>
STATE FARM INTERIM FUND
INVESTMENT RECORD - ALL DIVIDENDS AND CAPITAL GAINS REINVESTED
1, 5, AND 10 YEAR AVERAGE RETURNS
30-Nov-95
3 Month(s)
NET ASSET VALUES FOR VALUATION: ACCRUED DIVIDEND
AT VALUATION DATE
30-Nov-95 $10.15 0.1171012620
30-Nov-94 $9.72
30-Nov-90 $10.16
30-Nov-85 $10.00
QUARTER C.G. DIV REINV. INVESTMENT C.G. DIV SHARES SHARES
ENDED ACTION RATE RATE PRICE AMOUNT AMOUNT AMOUNT AQUIRED OWNED
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30-Nov-85 INITIAL INVEST. N/A N/A $10.00 $1,000.00 N/A N/A 100.000 100.000
28-Feb-86 DIVIDEND * N/A 0.219815012 $10.29 $0.00 21.98 2.136 102.136
31-May-86 DIVIDEND N/A 0.216282803 $10.16 $0.00 22.09 2.174 104.310
29-Aug-86 DIVIDEND N/A 0.207884331 $10.44 $0.00 21.68 2.077 106.387
30-Nov-86 DIVIDEND N/A 0.201021073 $10.44 $0.00 21.39 2.049 108.436
28-Feb-87 DIVIDEND N/A 0.201301884 $10.38 $0.00 21.83 2.103 110.539
31-May-87 DIVIDEND N/A 0.194324144 $10.02 $0.00 21.48 2.144 112.683
31-Aug-87 DIVIDEND N/A 0.195742261 $9.94 $0.00 22.06 2.219 114.902
30-Sep-87 DIVIDEND N/A 0.063792970 $9.84 $0.00 7.33 0.745 115.647
31-Dec-87 DIVIDEND N/A 0.193415134 $10.00 $0.00 22.37 2.237 117.884
31-Mar-88 DIVIDEND N/A 0.192715762 $10.09 $0.00 22.72 2.252 120.136
30-Jun-88 DIVIDEND N/A 0.194529093 $9.99 $0.00 23.37 2.339 122.475
30-Sep-88 DIVIDEND N/A 0.197331562 $9.93 $0.00 24.17 2.434 124.909
31-Dec-88 DIVIDEND N/A 0.198679640 $9.80 $0.00 24.82 2.533 127.442
31-Mar-89 DIVIDEND N/A 0.204275555 $9.70 $0.00 26.03 2.684 130.125
30-Jun-89 DIVIDEND N/A 0.204113066 $10.11 $0.00 26.56 2.627 132.752
30-Sep-89 DIVIDEND N/A 0.201380119 $10.03 $0.00 26.73 2.665 135.417
31-Dec-89 DIVIDEND N/A 0.201321103 $10.13 $0.00 27.26 2.691 138.108
31-Mar-90 DIVIDEND N/A 0.205864654 $9.95 $0.00 28.43 2.857 140.965
30-Jun-90 DIVIDEND N/A 0.204671441 $10.03 $0.00 28.85 2.876 143.842
30-Sep-90 DIVIDEND N/A 0.200545314 $10.04 $0.00 28.85 2.874 146.715
31-Dec-90 DIVIDEND N/A 0.207894291 $10.22 $0.00 30.50 2.984 149.700
31-Mar-91 DIVIDEND N/A 0.191817917 $10.22 $0.00 28.72 2.810 152.510
30-Jun-91 DIVIDEND N/A 0.198125027 $10.19 $0.00 30.22 2.966 155.476
30-Sep-91 DIVIDEND N/A 0.200333698 $10.40 $0.00 31.15 2.995 158.471
31-Dec-91 DIVIDEND N/A 0.195151602 $10.64 $0.00 30.93 2.907 161.378
31-Mar-92 DIVIDEND N/A 0.195850026 $10.38 $0.00 31.61 3.045 164.423
30-Jun-92 DIVIDEND N/A 0.197869216 $10.53 $0.00 32.53 3.089 167.512
30-Sep-92 DIVIDEND N/A 0.188460749 $10.74 $0.00 31.57 2.939 170.452
31-Dec-92 DIVIDEND N/A 0.187530792 $10.52 $0.00 31.96 3.038 173.490
31-Mar-93 DIVIDEND N/A 0.190245882 $10.67 $0.00 33.01 3.094 176.583
30-Jun-93 DIVIDEND N/A 0.183791300 $10.65 $0.00 32.45 3.047 179.630
30-Sep-93 DIVIDEND N/A 0.179591191 $10.66 $0.00 32.26 3.026 182.657
31-Dec-93 DIVIDEND N/A 0.185744392 $10.49 $0.00 33.93 3.235 185.891
31-Mar-94 DIVIDEND N/A 0.1736645940 $10.19 $0.00 32.28 3.168 189.059
30-Jun-94 DIVIDEND N/A 0.1739583860 $9.99 $0.00 32.89 3.292 192.351
30-Sep-94 DIVIDEND N/A 0.184906839 $9.88 $0.00 35.57 3.600 195.951
31-Dec-94 DIVIDEND N/A 0.174067659 $9.70 $0.00 34.11 3.516 199.468
31-Mar-95 DIVIDEND N/A 0.177197259 $9.88 $0.00 35.35 3.578 203.046
30-Jun-95 DIVIDEND N/A 0.174759945 $10.09 $0.00 35.48 3.516 206.562
30-Sep-95 DIVIDEND N/A 0.171724346 $10.06 $0.00 35.47 3.526 210.088
ACCRUED DIVIDEND / PER SHARE 0.117101262
SHARES OWNED 210.088
NAV 30-Nov-95 $10.15
ACCOUNT VALUE - 10 YEAR INVESTMENT $2,157.00
ONE YEAR AVERAGE RETURN 11.92%
FIVE YEAR AVERAGE RETURN 7.38%
TEN YEAR AVERAGE RETURN 7.99%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE FARM INTERIM FUND
1 Month(s)
5 YEAR
QUARTER CALCULATION DIVIDEND DIVIDEND REIN. SHARES SHARES
ENDED ORIGINAL INV. RATE AMOUNT PRICE AQUIRED OWNED
<S> <C> <C> <C> <C> <C> <C> <C>
30-Nov-90 INITIAL INVEST. $1,000.00 $10.16 98.425 98.425
30-Dec-90 DIVIDEND * 0.207894291 6.82 $10.22 0.667 99.092
31-Mar-91 DIVIDEND 0.191817917 19.01 $10.22 1.860 100.952
30-Jun-91 DIVIDEND 0.198125027 20.00 $10.19 1.963 102.915
30-Sep-91 DIVIDEND 0.200333698 20.62 $10.40 1.983 104.898
31-Dec-91 DIVIDEND 0.195151602 20.47 $10.64 1.924 106.822
31-Mar-92 DIVIDEND 0.195850026 20.92 $10.38 2.015 108.837
30-Jun-92 DIVIDEND 0.197869216 21.54 $10.53 2.046 110.883
30-Sep-92 DIVIDEND 0.188460749 20.90 $10.74 1.946 112.829
31-Dec-92 DIVIDEND 0.187530792 21.16 $10.52 2.011 114.840
31-Mar-93 DIVIDEND 0.190245882 21.85 $10.67 2.048 116.888
30-Jun-93 DIVIDEND 0.183791300 21.48 $10.65 2.017 118.905
30-Sep-93 DIVIDEND 0.179591191 21.35 $10.66 2.003 120.908
31-Dec-93 DIVIDEND 0.185744392 22.46 $10.49 2.141 123.049
31-Mar-94 DIVIDEND 0.1736645940 21.37 $10.19 2.097 125.146
30-Jun-94 DIVIDEND 0.1739583860 21.77 $9.99 2.179 127.325
30-Sep-94 DIVIDEND 0.1849068390 23.54 $9.88 2.383 129.708
31-Dec-94 DIVIDEND 0.174067659 22.58 $9.70 2.328 132.036
31-Mar-95 DIVIDEND 0.177197259 23.40 $9.88 2.368 134.404
30-Jun-95 DIVIDEND 0.174759945 23.49 $10.09 2.328 136.732
30-Sep-95 DIVIDEND 0.171724346 23.48 $10.06 2.334 139.066
SHARES OWNED 139.066
NAV 30-Nov-95 $10.15
ACCRUED DIVIDEND 0.117101262
ACCOUNT VALUE - 5 YEAR INVESTMENT $1,427.80
1 YEAR
QUARTER CALCULATION DIVIDEND DIVIDEND REIN. SHARES SHARES
ENDED ORIGINAL INV. RATE AMOUNT PRICE AQUIRED OWNED
30-Nov-94 INITIAL INVEST. $1,000.00 $9.72 102.881 102.881
31-Dec-94 DIVIDEND * 0.174067659 5.97 $9.70 0.615 103.496
31-Mar-95 DIVIDEND 0.177197259 18.34 $9.88 1.856 105.352
30-Jun-95 DIVIDEND 0.174759945 18.41 $10.09 1.825 107.177
30-Sep-95 DIVIDEND 0.171724346 18.40 $10.06 1.829 109.006
SHARES OWNED 109.006
NAV 30-Nov-95 $10.15
ACCRUED DIVIDEND 0.117101262
ACCOUNT VALUE - 1 YEAR INVESTMENT $1,119.18
* Dividend amount = rate * # of months/3, representing the number of months
the amount was invested for the quarter
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000205925
<NAME> STATE FARM INTERIM FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 104351678
<INVESTMENTS-AT-VALUE> 104174018
<RECEIVABLES> 1584849
<ASSETS-OTHER> 351421
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 106110288
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1411690
<TOTAL-LIABILITIES> 1411690
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 105921126
<SHARES-COMMON-STOCK> 10312977
<SHARES-COMMON-PRIOR> 9694294
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1044868)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (177660)
<NET-ASSETS> 104698598
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7033902
<OTHER-INCOME> 0
<EXPENSES-NET> 228987
<NET-INVESTMENT-INCOME> 6804915
<REALIZED-GAINS-CURRENT> (321293)
<APPREC-INCREASE-CURRENT> 4460809
<NET-CHANGE-FROM-OPS> 10944431
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6804915<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2617200
<NUMBER-OF-SHARES-REDEEMED> 2615871
<SHARES-REINVESTED> 617354
<NET-CHANGE-IN-ASSETS> 10440734
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (725810)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 170812
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 228987
<AVERAGE-NET-ASSETS> 97692317
<PER-SHARE-NAV-BEGIN> 9.72
<PER-SHARE-NII> .7
<PER-SHARE-GAIN-APPREC> .43
<PER-SHARE-DIVIDEND> .7
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> .25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1> $.70 per share in 1995.
</FN>
</TABLE>
