<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITES / /
ACT OF 1933
Pre-effective Amendment No. / /
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Post-Effective Amendment No. 43 /X/
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT / /
COMPANY ACT OF 1940
Amendment No. 26 /X/
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(Check appropriate box or boxes)
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AMWAY MUTUAL FUND TRUST
(Exact Name of Registrant as Specified in Charter)
2905 Lucerne Dr SE, Grand Rapids, Michigan 49546-7116
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (616) 787-6288
James J. Rosloniec, President and Treasurer
Amway Mutual Fund
7575 Fulton Street East
Ada, Michigan 49355-7150
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a) (1)
/ / on (date) pursuant to paragraph (a) (1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
AMWAY MUTUAL FUND
CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Item Caption in Prospectus Page No.
- ---- --------------------- --------
<S> <C> <C>
1 Front Page 1
2 Fee Expense Table 2
3 Financial Highlights 3
4 The Fund 3
The Fund's Investment Policy 4
5 Management of the Fund 4
Organization of the Fund 8
6 Stockholder Inquiries 10
Dividend and Capital Gain Distributions to Shareholders 10
Tax Consequences 10
7 Purchase of Shares 5
Determination of Net Asset Value and Offering Price of 8
the Fund's Shares
8 How Shares are Redeemed 6
9 Not Applicable --
</TABLE>
PART B
<TABLE>
<CAPTION>
Item Caption in Statement of Additional Information Page No.
- ---- ---------------------------------------------- --------
<S> <C> <C>
10 Cover Page 1
11 Contents 16
12 Not Applicable --
13 Objectives, Policies and Restrictions on Fund's Investments 3
14 Officers and Directors of the Fund 5
15 Principal Shareholders 5
16 Investment Adviser 6
Transfer Agent 8
Custodian 9
Auditors 9
</TABLE>
<PAGE>
AMWAY MUTUAL FUND
CROSS REFERENCE SHEET
PART B (Continued)
<TABLE>
<CAPTION>
Item Caption in Statement of Additional Information Page No.
- ---- ---------------------------------------------- --------
<S> <C> <C>
17 Portfolio Transactions and Brokerages 4
18 Organization of the Fund 9
19 Purchase of Shares 9
Determination of Net Asset Value and Offering Price of
the Fund's Shares 10
How Shares are Redeemed 11
Money Market Fund Exchange Privilege 12
20 Federal Income Tax 13
21 Plan of Distribution 8
22 Investment Performance Information 14
23 Reports to Stockholders and Annual Audit 15
</TABLE>
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART A
Information Required in a Prospectus
<PAGE>
AMWAY MUTUAL FUND
7575 Fulton Street East
Ada, Michigan, 49355-7150
(616) 787-6288
(800) 346-2670
<TABLE>
<CAPTION>
Contents Page
<S> <C>
Fee Expense Table 2
Financial Highlights 3
The Fund 3
The Fund's Investment Policy 4
Management of the Fund 4
Purchase of Shares 6
How Shares are Redeemed 6
Exchange Privilege 8
Determination of Net Asset Value and
Offering Price of the Fund's Shares 8
Retirement Plans 9
Description of Common Stock 9
Dividend and Capital Gain Distributions
to Shareholders 9
Tax Consequences 9
Shareholder Inquiries 10
Investment Performance Information 10
</TABLE>
AMWAY MUTUAL FUND LOGO
PROSPECTUS
The primary investment objective of the Fund is capital appreciation through the
ownership of common stock of companies in various industries which offer growth
potential. Income, while a factor in portfolio selection, is secondary to the
Fund's principal objective.
This Prospectus sets forth information regarding the Fund that a prospective
investor should know prior to investing. Investors are advised to carefully read
and retain this Prospectus for future reference. Additional information about
the Fund has been filed with the United States Securities and Exchange
Commission. Such information may be examined by any person at the Securities and
Exchange Commission in Washington, D.C. or may be obtained from the Commission
upon payment of the prescribed fee. The Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding registrants
that file electronically with the Commission. Prospective investors may request,
without charge, the Statement of Additional Information, dated April 22, 1998,
by writing or telephoning the Fund as indicated above. The Statement of
Additional Information is incorporated into this Prospectus by reference.
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.
The date of this Prospectus is April 22, 1998.
1
- -C-1998, AMWAY CORPORATION, U.S.A 795055 L-2598-SAK
<PAGE>
AMWAY MUTUAL FUND
FEE EXPENSE TABLE
<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases None
(as a percentage of offering price)
Maximum Sales Charge Imposed on Reinvested None
Dividends (as a percentage of offering price)
Deferred Sales Charge (as a percentage of None
original purchase price or redemption proceeds, as applicable)
Redemption Fees (as a percentage of amount None
redeemed, if applicable)
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .55%
12b-1 Fees .25%
Other Expenses .35%
-----
Total Fund Operating Expenses 1.15%
-----
-----
</TABLE>
<TABLE>
<CAPTION>
Example*
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption
at the end of each time period: $12 $36 $63 $139
--- --- --- ----
</TABLE>
*This example should not be considered a representation of past or future
expenses and actual expenses may be greater or lesser than those shown.
The purpose of the fee table is to provide an investor with an understanding of
the various costs and expenses incurred by all shareholder accounts that an
investor will bear directly or indirectly. Prior to April 22, 1998 the Fund
charged a sales charge of 3%. This charge was eliminated when the Fund adopted
a 12b-1 distribution plan which has been reflected in the fee expense table
above. Annual Fund operating expenses are based upon total expenses incurred by
the Fund for the year ended December 31, 1997, and have been adjusted to reflect
adoption of the 12b-1 distribution plan. Operating expenses include the Fund's
portfolio accounting service expenses in the amount of $2,500 per month ($30,000
annually) which was paid through the use of directed brokerage commissions. The
example, as required by the Securities and Exchange Commission, assumes a 5%
annual return in determining the total expenses paid on an investment.
Therefore, future expenses may be greater or lesser than those shown in the
example. Expenses include only those expenses incurred by all shareholder
accounts and not those expenses incurred for specific shareholder purposes such
as bank fees for wire transfers under $5,000 which is currently $15 (see "How
Shares Are Redeemed"), Individual Retirement Accounts, or Profit-Sharing
Trusts.
2
<PAGE>
AMWAY MUTUAL FUND
FINANCIAL HIGHLIGHTS
The table below shows financial information for Amway Mutual Fund
expressed in terms of one share outstanding throughout the period. The
information in the tables is covered by the report of the Fund's independent
auditors. The report is contained in the Fund's Registration Statement available
from the Fund. The financial statements are contained in the Fund's 1997 Annual
Report to Shareholders along with additional information about the performance
of the Fund which may be obtained by writing or calling the Fund.
<TABLE>
<CAPTION>
(Selected data for each share of capital stock outstanding throughout each period.)
Year ended December 31,
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1997 1996 1995* 1994 1993 1992 1991 1990 1989 1988
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $7.62 $7.43 $6.88 $7.71 $7.57 $8.11 $6.82 $7.26 $6.49 $7.87
Income from investment
operations:
Net investment income .09 .10 .10 .03 .02 .02 .06 .08 .16 .16
Net gain (loss) on securities 1.62 1.59 1.98 (.49) .78 .10 2.65 (.01) 1.93 .36
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Total from investment
operations 1.71 1.69 2.08 (.46) .80 .12 2.71 .07 2.09 .52
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Distributions:
Dividends (from net
investment income) .10 .09 .11 .03 .02 .02 .06 .08 .16 .15
Distributions (from
capital gains) 1.50 1.41 1.42 .34 .64 .64 1.36 .43 1.16 1.75
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Total distributions 1.60 1.50 1.53 .37 .66 .66 1.42 .51 1.32 1.90
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Net Asset Value, end of period $7.73 $7.62 $7.43 $6.88 $7.71 $7.57 $8.11 $6.82 $7.26 $6.49
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Total Return** 22.47% 23.18% 30.55% (5.87%) 10.85% 1.77% 41.81% 1.01% 32.83% 6.89%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $139,164 $113,327 $77,248 $58,921 $61,741 $55,342 $53,238 $38,286 $39,029 $31,274
Ratio of expenses to
average net assets*** .9% 1.0% 1.1% 1.1% 1.1% 1.1% 1.1% 1.2% 1.2% 1.3%
Ratio of net income to
average net assets 1.1% 1.2% 1.2% .4% .2% .3% .7% 1.1% 2.0% 1.9%
Portfolio turnover rate 103.1% 100.4% 173.3% 78.1% 91.5% 136.5% 160.4% 171.1% 14.6% 135.5%
Average commission
rate per share $.0574 $.0600 $.0598 $.0597 $.0682 $.0691 $.0697 $.0708 $.0684 $.0672
</TABLE>
The Supplementary Information has been audited by BDO Seidman, LLP the
Independent Certified Public Accountants for the Fund.
*Effective May 1, 1995, Ark Asset Management Co., Inc. entered into a
Sub-Advisory Agreement with the Fund. Kemper Financial Services previously
served as the Fund's Sub-Advisor.
**The Fund's base portfolio accounting services expense in the amount of $2,500
per month ($30,000 annual base fee) was paid through the use of directed
brokerage commissions. The ratio includes fees paid with brokerage
commissions for fiscal years ending after September 1, 1995. Effective April
22, 1998 the Fund adopted a 12b-1 plan of distribution (see page 6) which
expenses are not reflected prior to that date.
THE FUND
Amway Mutual Fund (the "Fund") is a series of Amway Mutual Fund Trust (the
"Trust"), a Delaware business trust. The Fund is the successor to Amway Mutual
Fund, Inc. a Delaware corporation.
The Fund is a mutual fund, i.e. a means by which many persons can, by
purchasing shares of beneficial interests ("shares") of the Fund, pool
relatively small amounts for a more diversified managed investment in
securities than would be possible for a single investor. The Fund will
redeem (buy back) its shares upon the request of a shareholder, at the net
asset value of the shares at the time of redemption (see "How shares are
redeemed").
3
<PAGE>
AMWAY MUTUAL FUND
THE FUND'S INVESTMENT POLICY
The primary investment objective of the Fund is capital appreciation.
Income, while a factor in portfolio selection, is secondary to the Fund's
principal objective. In pursuing this objective, it is the Fund's policy to
invest a major portion of its assets in common stocks (or securities convertible
into or with rights to purchase common stock) of companies believed by the Fund
to offer good growth potential over both the intermediate and the long-term
period. However, when current market or economic conditions make it seem
advisable by the Fund to do so, for temporary defensive reasons, the Fund may
invest all or any portion of its assets in other types of securities, including
preferred stocks, high-grade debt securities, or obligations of the United
States or of any State, or may hold its assets in cash.
In view of the Fund's investment objective of capital appreciation, with
income as a secondary objective, the Fund intends to purchase securities for
long-term or short-term profits, as appropriate. Securities will be disposed of
in situations where, in management's opinion, such potential is no longer
feasible or the risk of decline in the market price is too great. Therefore, in
order to achieve the Fund's objectives, the purchase and sale of securities will
be made without regard to the length of time the security is to be held.
Portfolio turnover rates for the years ended December 31, 1997 and 1996 were
103.1% and 100.4%, respectively. A 100% annual turnover rate would occur if all
of a Fund's securities were replaced one time during a period of one year.
Short-term gains realized from portfolio turnover are taxable to shareholders as
ordinary income. In addition, higher portfolio turnover rates can result in
corresponding increases in brokerage commissions.
Although care is being exercised in the selection of securities for
investment by the Fund, the Fund's investments are affected by market
fluctuations and are subject to the risks common to all security investments.
Therefore, there can be no certainty that the Fund's growth or income objective
will be realized.
The Fund's investment objective and policy as described above is
fundamental and may not be changed without the approval of the lesser of (i) 67%
or more of the shares present at a meeting at which the holders of more than 50%
of the shares are present in person or represented by proxy, or (ii) more than
50% of the outstanding shares of the Fund.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed and under the direction of
the Board of Trustees. The Fund has entered into an Advisory and Service
Contract ("Contract") with Amway Management Company (the "Investment
Advisor"), 7575 Fulton Street East, Ada, Michigan 49355. Under the Contract,
the Fund employs the Investment Advisor to furnish investment advice and manage
on a regular basis the investment portfolio of the Fund, subject to the
direction of the Board of Trustees, and to the provisions of the Fund's current
Prospectus; to furnish for the use of the Fund, office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Fund, and (with certain specific exceptions) administering its affairs; and to
pay the salaries and fees of all Officers and Trustees. Except when otherwise
specifically directed by the Fund, the Investment Advisor will make investment
decisions on behalf of the Fund and place all orders for the purchase and sale
of portfolio securities for the Fund's account. The Investment Advisor shall be
permitted to enter into an agreement with another advisory organization
(sub-advisor), whereby the sub-advisor will provide all or part of the
investment advice and services required to manage the Fund's investment
portfolio as provided for in this agreement. Amway Management Company has served
as Investment Advisor for the Fund and its predecessor since 1971. The Fund
pays the Adviser a fee at the annual rate of 0.55% on the first $100
million of average daily net assets of the Fund, 0.50% on the next $50 million
in assets, and 0.45% on the next $50 million in assets. When the Fund's assets
reach $200 million the rate would be 0.50% on assets up to $200 million and
0.45% on assets in excess of $200 million, so long as the Fund continued to have
at least $200 million in assets.
4
<PAGE>
AMWAY MUTUAL FUND
The Investment Advisor has entered into a Sub-Advisory Agreement with Ark
Asset Management Co., Inc. ("Sub-Advisor"), One New York Plaza, New York, NY
10004. Under the Sub-Advisory Agreement, the Advisor employs the Sub-Advisor to
furnish investment advice and manage on a regular basis the investment portfolio
of the Fund, subject to the direction of the Advisor, the Board of Trustees, and
to the provisions of the Fund's current Prospectus. Except when otherwise
specifically directed by the Fund or the Advisor, the Sub-Advisor will make
investment decisions on behalf of the Fund and place all orders for the purchase
or sale of portfolio securities for the Fund's account. The Sub-Advisor is
engaged in the management of investment funds for institutional clients in
excess of $23 billion. The Sub-Advisor and its affiliates provide investment
advice and manage investment portfolios for other corporate, pension,
profit-sharing and individual accounts. For services rendered, the Investment
Advisor, not the Fund, pays the Sub-Advisor a fee at the annual rate of
0.45% on the first $100 million of average daily net assets of the Fund, 0.40%
on the next $50 million in assets, and 0.35% on the next $50 million in assets.
When the Fund's assets reach $200 million the rate would be 0.40% on assets up
to $200 million and 0.35% on assets in excess of $200 million, so long as the
Fund continued to have at least $200 million in assets.
C. CHARLES HETZEL, VICE CHAIRMAN OF ARK ASSET MANAGEMENT, INC., IS THE HEAD
OF THE GROWTH AT A REASONABLE PRICE GROUP, WHICH, SINCE APRIL 1995, HAS BEEN
RESPONSIBLE FOR MANAGEMENT OF THE FUND'S PORTFOLIO. HE HAS SERVED AS THE HEAD OF
THE GROWTH AT A REASONABLE PRICE GROUP SINCE 1981. MR. HETZEL HAS SPENT HIS
ENTIRE CAREER AT ARK ASSET MANAGEMENT, INC. OR A PREDECESSOR FIRM. HE RECEIVED A
B.S. DEGREE FROM THE UNIVERSITY OF UTAH AND M.B.A. FROM THE COLUMBIA SCHOOL OF
BUSINESS ADMINISTRATION.
THE GROWTH AT A REASONABLE PRICE GROUP DETERMINES OVERALL INVESTMENT
STRATEGY FOR EQUITY PORTFOLIOS MANAGED BY THE SUB-ADVISOR. THE GROWTH AT A
REASONABLE PRICE GROUP, IN ADDITION TO MR. HETZEL, CONSISTS OF STEVEN M.
STEINER, JOHN E. BAILEY, WILLIAM G. STEUERNAGEL, AND JAMES G. PONTONE. THE
PORTFOLIO MANAGERS WORK TOGETHER AS A TEAM WITH THE FIRM'S RESEARCH ANALYSTS.
EQUITY ANALYSTS, THROUGH RESEARCH, ANALYSIS AND EVALUATION, WORK TO DEVELOP
INVESTMENT IDEAS APPROPRIATE FOR THESE PORTFOLIOS. THESE IDEAS ARE STUDIED AND
DEBATED BY THE GROWTH AT A REASONABLE PRICE GROUP AND DECISIONS REGARDING THE
PORTFOLIO ARE MADE BY THE GROUP. AFTER INVESTMENT DECISIONS ARE MADE, EQUITY
TRADERS EXECUTE THE PORTFOLIOS TRANSACTIONS THROUGH VARIOUS BROKER-DEALER FIRMS.
Amway Management Company, 7575 Fulton Street East, Ada, Michigan 49355,
performs the Transfer Agent function for the Fund and serves as the dividend
disbursing agent.
Jay Van Andel and Richard M. DeVos are controlling persons of the
Investment Advisor and Transfer Agent, since they own, together with their
spouses, substantially all of the outstanding securities of Amway Corporation,
which indirectly controls the outstanding securities of each entity. Amway
Corporation is a Michigan manufacturer and direct selling distributor of home
care and personal care products.
PURCHASE OF SHARES
Pursuant to a Principal Underwriter Agreement, the Investment Advisor acts
as exclusive agent for the sale of shares of the Fund. The minimum initial
investment required to establish an account is $500. An additional investment in
the minimum amount of $50 can be made in your account at any time. Investments
are made at the offering price (see "Determination of Net Asset Value and
Offering Price of the Fund's Shares"), next determined after the Fund receives
your purchase application and investment.
You may open a new account with the Fund by completing the enclosed
application, submitting your check made payable to Amway Management Company and
mailing the required information to Amway Management Company, 7575 Fulton Street
East, Ada, Michigan 49355-7150.
You may make additional investments to existing accounts by mail, wire, or
by the use of the pre-authorized check privilege. When making an additional
investment by check, please tear-off the stub from your statement of account, or
enclose a letter of instructions including your account number and your check
made payable to Amway Management Company. Wire transfers would normally be used
for large purchases. You may also arrange to make periodic investments through
automatic deductions from your checking account by completing the appropriate
form and providing the necessary documentation to establish this privilege.
Please contact the Fund for additional information for utilizing either of these
two options.
5
<PAGE>
AMWAY MUTUAL FUND
DISTRIBUTION PLAN
The Trust has adopted a Plan and Agreement of Distribution ("Distribution
Plan"). Under the Distribution Plan, which became effective on April 22, 1998,
the Adviser will provide services in connection with distributing the Fund's
shares, and will be compensated at a maximum annual rate of 0.25 of 1% of the
average daily net assets of the Fund.
Amounts received by the Adviser may be retained by the Adviser as
compensation for its services, or paid to other investment professionals who
provide services in connection with the distribution of Fund shares. The
Trustees will review the services provided and compensation paid pursuant to the
Distribution Plan no less often than quarterly.
The Adviser acts as the exclusive agent for sales of shares of the Fund
pursuant to a Principal Underwriting Agreement. Prior to April 22, 1998, the
adviser received a sales commission of 3% of the offering price of the Fund's
shares. The sales commission was eliminated when the Fund adopted the
Distribution Plan.
HOW SHARES ARE REDEEMED
The Fund will redeem your shares upon receiving a proper request. There is
no redemption charge by the Fund. However, if a shareholder uses the services of
a broker-dealer for the repurchase, there may be a charge by the broker-dealer
to the shareholder for such services. Shares can be redeemed by the mail,
telephone or telegram, or through the automatic withdrawal plan as described
below.
When redeeming by mail, if no certificates have been issued, you need only
send a written request for redemption to Amway Management Company, the Transfer
Agent, 7575 Fulton Street East, Ada, Michigan 49355-7150. This request must
state the portion of your account to be redeemed, including your account number
and the signature of each account owner, signed exactly as your name appears on
the records of the Fund. If a certificate has been issued to you for the shares
being redeemed, the certificate (endorsed or accompanied by a signed stock
power) must accompany your redemption request, with your signature guaranteed
without qualification by a national bank; a state bank; a member firm of a
principal stock exchange or other entity described in accordance with Rule
17Ad-15 under the Securities Exchange Act of 1934. Additional documents may be
required in the event of special circumstances (described below).
You can request the telephone or telegram exchange or redemption option by
so indicating on your application. You may redeem shares under this option by
calling the Fund at the number indicated on the front of this Prospectus on any
business day before 4:00 p.m., Eastern Time. By establishing the telephone or
telegram exchange or redemption option, you authorize the Transfer Agent to
honor any telephone or telegram exchange or redemption request from any person
representing themselves to be the investor. Procedures required by the Fund to
ensure that a shareholder's requested telephone or telegram transaction is
genuine include identification by the shareholder of the account by number,
recording of the requested transaction and sending a written confirmation to
shareholders reporting the requested transaction. The Fund is not responsible
for unauthorized telephone or telegram exchanges or redemptions unless the Fund
fails to follow these procedures. Shares must be owned for 15 days before
redeeming by the telephone and telegram exchange and cannot be in certificate
form unless the certificate is tendered with the request for redemption.
Certificated shares cannot be redeemed by the telephone and telegram exchange.
All redemption proceeds will be forwarded to the address or bank designated on
the account application.
The Transfer Agent and the Fund have reserved the right to change, modify,
or terminate the telephone or telegram exchange or redemption option at any
time. Before this option is effective for a corporation, partnership, or other
organizations, additional documents may be required. This option is not
available for Profit-Sharing Trust and Individual Retirement Accounts.
Additional documents may be required in the event of special circumstances
(described below). The Fund and the Transfer Agent disclaim responsibility for
verifying the authenticity of telephone and telegram exchange or redemption
requests which are made in accordance with the procedures approved by
shareholders.
If the value of your account is $10,000 or more, you may arrange to receive
automatic periodic cash payments. Please contact the Fund for more information.
6
<PAGE>
AMWAY MUTUAL FUND
Redemption proceeds are normally paid in cash (check form) and mailed to
the address of record within two or three business days after a proper request
is received. A request that redemption proceeds be wired or mailed to your bank
of record will be honored provided the bank account registration matches exactly
the Fund account registration. Wire transfers will normally be used for large
redemptions. Any bank charges charged the Fund for wire redemptions under $5,000
(currently $15) will be deducted from your redemption proceeds. This charge is
subject to change without notice. Your bank may charge you for receiving wires.
Your bank registration information should be provided on the account application
if this option will be used.
Before redeeming shares, in special circumstances, the Transfer Agent may
request additional documents such as, but not limited to, a stock power, a trust
instrument, a certificate of death, an appointment as personal representative,
court orders, a divorce decree or property settlement, a certification of
corporate authority, and a waiver of tax required in some states when settling
estates. These procedures are for the protection of shareholders and to ensure
proper payment. An inquiry as to the proper redemption requirements should be
directed to the Transfer Agent if these circumstances are present.
When redeeming shares from an Individual Retirement Account, you will be
subject to withholding of Federal income tax, unless you elect not to have
withholding apply. When redeeming shares from a Profit-Sharing Trust, you will
generally be subject to withholding of Federal income tax. Therefore, you will
be required to complete a Distribution Election Form prior to redemption from
these accounts.
The price at which shares will be redeemed by the Fund is the net asset
value per share as next computed after a proper request is received. However,
your right to redeem might be suspended or postponed for more than seven days if
the New York Stock Exchange is closed, other than weekends or holiday closings,
or trading on the Exchange is restricted or the Securities and Exchange
Commission deems an emergency exists. The Fund will not mail redemption proceeds
until checks (including certified or cashier's checks) received for the shares
purchased have cleared. The amount you receive may be more or less than your
cost, depending on the net asset value of the shares at the time of redemption
and will result in an event reportable for tax purposes.
MONEY MARKET FUND EXCHANGE PRIVILEGE
The Underwriter for Amway Mutual Fund ("Fund") has arranged for shares of
the three money market portfolios of Cash Equivalent Fund, an open-end money
market mutual fund ("Money Market Fund") to be available in exchange for
shares of the Fund for shareholders residing in the U.S. Also, clients of the
Underwriter can exchange shares in the Money Market Fund for shares of the Fund.
Shares of the Money Market Fund so acquired (including any reinvested dividends
thereon) may be re-exchanged for shares of the Fund without sales charge. All
other shares will be subject to the sales charge (see "Determination of Net
Asset Value and Offering Price of the Fund's shares"). The Underwriter receives
a maximum fee from Kemper Financial Services, Inc., the distributor and
administrator for the Money Market Fund, of .38 of 1% per year of the average
daily net asset value of shares of the Money Market and Government Securities
Portfolios, and of .33 of 1% per year of the average daily net asset value of
shares of Tax-Exempt Portfolio, acquired through this exchange privilege. This
exchange privilege does not constitute an offering or recommendation by the Fund
of the Money Market Fund. The Money Market Fund is separately managed.
The above described Exchange Privilege may be exercised by sending written
instruction to the Transfer Agent. See "How Shares Are Redeemed" for
applicable signatures and signature guarantee requirements. Shareholders may
authorize telephone or telegram exchanges or redemptions by making an election
on your application. Procedures required by the Fund to ensure that a
shareholder's requested telephone or telegram transaction is genuine include
identification by the shareholder of the account by number, recording of the
requested transaction and sending a written confirmation to shareholders
reporting the requested transaction. The Fund is not responsible for
unauthorized telephone or telegram exchanges unless the Fund fails to follow
these procedures. Shares must be owned for 15 days before exchanging and cannot
be in certificate form unless the certificate is tendered with the request for
exchange. An exchange requires the purchase of shares of the particular
portfolio of the Money Market Fund with a value of at least $1,000 to establish
a new account or $100 to add to an existing account. Exchanges will be accepted
only if the registration of the two accounts is identical. Exchange redemptions
and purchases are effected on the
7
<PAGE>
AMWAY MUTUAL FUND
basis of the net asset value next determined after receipt of the request in
proper order by the Fund. In the case of exchanges into the Money Market Fund,
dividends generally commence on the following business day. For federal and
state income tax purposes, an exchange is treated as a sale and may result in a
capital gain or loss, although if the shares exchanged have been held less than
91 days, the sales charge paid on such shares is not included in the tax basis
of the exchanged shares, but is carried over and included in the tax basis of
the shares acquired.
A prospectus for the Money Market Fund which contains information
concerning charges and expenses may be obtained from the Underwriter. A
shareholder should read the prospectus carefully and consider differences in
objectives and policies before making any exchange. The Fund or the Underwriter
can change or discontinue this privilege, although shareholders generally would
be given 60 days advance notice of any termination or material amendment of the
Fund Exchange Privilege and shareholders who had exchanged into the Money Market
Fund generally would be permitted to reacquire shares of the Fund without sales
charge for at least 60 days after notice of termination of the Exchange
Privilege with the Money Market Fund.
DETERMINATION OF NET ASSET VALUE AND OFFERING PRICE
OF THE FUND'S SHARES
The net asset value of the Fund's shares is determined by dividing the total
current value of the assets of the Fund, less its liabilities, by the number of
shares outstanding at that time. This determination is made as of the close of
business on the New York Stock Exchange, 4:00 P.M. Eastern time, on each
business day on which that Exchange is open or on any other day in which there
is a sufficient degree of trading in the Fund's portfolio, except no
computation will be made on a day in which no order to purchase or redeem shares
was received.
In determining the current value of the Fund's assets, securities listed
or admitted to trading on a national securities exchange are valued at their
last reported sale price on the market where principally traded, before the
time of valuation. If a security is traded only in the over-the-counter
market or if no sales have been reported for a listed security on that day,
it will be valued at the mean between the current closing bid and asked
prices. Securities for which market quotations are not readily available,
including any restricted securities, and other assets of the Fund are valued
at fair market value as determined in good faith by the Fund's Trustees. The
offering price is the net asset value per share at the next determined value
after the order is placed, as determined above.
RETIREMENT PLANS
The Fund sponsors a prototype Profit-Sharing Trust and Individual Retirement
Accounts. Persons interested in additional information regarding these plans
should contact the Fund.
ORGANIZATION OF THE FUND
The Fund is a series of Amway Mutual Fund Trust, an open-end management
investment company which was organized as a Delaware business trust on February
2, 1998. The Fund is the successor of Amway Mutual Fund, Inc., which was
organized as a Delaware corporation on February 13, 1970.
The Fund is presently the only series of the Trust. The Declaration of
Trust authorizes the Trustees to create additional shares and to issue an
unlimited number of units of beneficial interest, or "shares." The Trustees are
also authorized to issue different classes of shares of any series. No series
which may be issued by the Trust is entitled to share in the assets of any other
series or is liable for the expenses or liabilities of any other series.
When issued, shares of beneficial interest in the Fund will be fully paid
and non-assessable. Shares are freely transferable and have no preemptive,
subscription or conversion rights. Each share has a par value of $1.00.
8
<PAGE>
AMWAY MUTUAL FUND
The Trust is not required to hold annual meetings of shareholders and does
not intend to hold such meetings. Shareholders of the Trust will have voting
rights only with respect to the limited number of matters specified in the
Declaration of Trust, and such other matters as may be determined or as may be
required by law. A meeting will be called for the purpose of voting on the
removal of a Trustee at the written request of holders of 10% of the Trust's
outstanding shares. In the event a meeting of shareholders is held, each share
will be entitled to one vote on all matters presented to shareholders, including
the election of Trustees.
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS TO SHAREHOLDERS
It is the policy of the Fund to distribute to shareholders each year as
dividends and distributions substantially all net investment income of the Fund
for the year and substantially all net capital gains received by the Fund, if
any. Such distributions, in the past, have been paid in December. Net investment
income and capital gain distributions, if any, will be paid on a basis which is
consistent with past policy. All net investment income and capital gain
distributions may be received in cash or reinvested in additional shares of the
Fund at their net asset value at the time of distribution, at no sales charge.
This election can be changed at any time by requesting a change in writing,
signed by all account owners.
TAX CONSEQUENCES
The Fund intends to continue to comply with the provisions of Subchapter M
of the Internal Revenue Code. Therefore, the Fund intends to distribute
substantially all net investment income and realized capital gains, if any.
Dividends derived from net investment income and net short-term capital gains
are taxable to shareholders as ordinary income and long-term capital gain
dividends are taxable to shareholders as long-term capital gain regardless of
how long the shares have been held and whether received in cash or reinvested in
additional shares of the Fund. Long-term capital gain dividends received by
individual shareholders are taxed at a maximum rate of 28%. Shareholders not
subject to tax on their income will not be required to pay tax on amounts
distributed to them. Each shareholder will receive a statement annually
informing them of the amount of the income and capital gains which have been
distributed by the Fund during the calendar year.
In addition, shareholders may realize a capital gain or loss when shares
are redeemed. For most types of accounts, the Fund will report the proceeds of
redemptions to shareholders and the IRS annually. However, because the tax
treatment also depends on the purchase price and a shareholder's personal tax
position, you should also keep your regular account statements to use in
determining your tax.
On the record date for a distribution, the Fund's share value is reduced by
the amount of the distribution. If a shareholder buys shares just before the
record date ("buying a dividend"), they will pay the full price for the
shares, and then receive a portion of the price back as a taxable distribution.
The Fund is required by law to withhold 31% of taxable dividends and
redemption proceeds paid to certain shareholders who do not furnish correct tax
payer identification numbers (in the case of individuals, a social security
number) and in certain other circumstances. Trustees of qualified retirement
plans are required by law to withhold 20% of the taxable portion of any
distribution that is eligible to be "rolled over." The 20% withholding
requirement does not apply to distributions from IRA's or any part of a
distribution that is transferred directly to another qualified retirement plan,
403(b)(7) account or IRA. Shareholders should consult their tax advisor
regarding the 20% withholding requirement.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Fund by writing or
telephoning the Fund at the address or telephone number indicated on the cover
page of the Prospectus. Information relating to a specific account will be
disclosed, pursuant to a telephone inquiry, only if the shareholder identifies
the account by account number or by the social security number listed on the
account.
9
<PAGE>
AMWAY MUTUAL FUND
INVESTMENT PERFORMANCE INFORMATION
Following is a table illustrating the Fund's performance for annual periods
ended December 31, 1997, and its average annual total return percentages for
one, five, and ten years.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Accumulative Accumulative
Value of Shares Value of Shares
Calendar Years Cost of Value of Accepted As Accepted As
Ended Initial Initial Capital Gain Ordinary Income Total
December 31 Investment Investment Distributions Dividends Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1988 $1,000 825 226 18 1,069
1989 922 451 46 1,419
1990 867 509 58 1,434
1991 1,031 921 82 2,034
1992 962 1,026 82 2,070
1993 980 1,225 89 2,294
1994 874 1,196 89 2,159
1995 944 1,746 129 2,819
1996 968 2,336 168 3,472
1997 982 3,057 214 4,253
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return For
The Periods Ended December 31, 1997
Amway Ark Composite
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
One Year 22.47% 22.67%
Five Years 15.51% 19.56%
Ten Years 15.58% 17.48%
- ----------------------------------------------------------------------------------------------------
</TABLE>
Total return performance for the Fund is calculated by making an initial
investment of $1,000 at the beginning of the period, in the Fund's shares at
net asset value (without sales charges) and reinvesting all ordinary income
dividends and capital gain distributions paid during the period in additional
shares at net asset value per share on the reinvestment dates. Prior to 1991
and 1998 the Fund had a maximum sales charge of 6% and 3%, respectively,
based upon amount of shares purchased. The illustration includes recurring
expenses incurred by all shareholder accounts and not those incurred for
specific shareholder purposes such as bank fees for wire transfers,
Individual Retirement Accounts, or Profit-Sharing Trusts.
Total return performance also includes the composite performance of the
Fund's current sub-adviser, Ark Asset Management Company, who has been the
Fund's sub-adviser since May 1, 1995. The composite performance sets forth the
returns of the institutional private accounts managed by the sub-adviser which
have substantially similar investment objectives and policies as the Fund. The
data is provided to illustrate the past performance of the sub-adviser in
managing substantially similar accounts and does not represent the performance
of the Fund.
Shareholders should not consider the composite performance data as an
indication of future performance of the sub-adviser. The investment results
of the sub-adviser composite presented is unaudited and calculated in
accordance with the recommended standards of the Association for Investment
Management and Research retroactively applied to all time periods. All
composite returns presented were calculated on a total return basis and
included all dividends and interest, accrued income and realized and
unrealized gains and losses, and deductions for brokerage commissions and
execution costs. Composite returns are adjusted to assume that the Fund's
operating charges, expenses, and fees (the Fund's historical expense ratio)
were deducted during such periods. No adjustment has been made for the
impact on the expense ratio due to growth in the Fund's assets, shareholder
approval of changes to Management fees, or the adoption of a 12b-1
Distribution Plan.
10
<PAGE>
AMWAY MUTUAL FUND
The average annual total return for the Fund and Ark Composite for a
specific period is found by dividing the ending total value by the cost of
the initial investment for the period and taking this quotient to the Nth
root, then subtracting 1 (N represents the number of years in the period).
The average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. Such calculation
is with all ordinary income dividends and capital gain distributions
reinvested at net asset value. No adjustment has been made for any income
taxes payable by shareholders on ordinary income dividends and capital gain
distributions accepted in shares which are payable by shareholders in the tax
year received.
Average annual total return percentages of the Fund will vary and the
publication of performance results is not a representation as to future
investment performance. Factors affecting the Fund's performance include general
market conditions, operating expenses and investment management. Net asset
values of the Fund will fluctuate. Additional information about the performance
of the Fund is contained in the Annual Shareholders Report which can be obtained
without charge.
11
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
ADA, MI
PERMIT 100
AMWAY
MUTUAL
FUND
PROSPECTUS
April 22, 1998
AMWAY MUTUAL FUND
7575 Fulton Street East
Ada, Michigan 49355-7150
AMWAY MUTUAL FUND LOGO
12
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART B
Information Required in a Statement of Additional Information
<PAGE>
AMWAY MUTUAL FUND LOGO
STATEMENT OF ADDITIONAL INFORMATION
AMWAY MUTUAL FUND
7575 Fulton Street East
Ada, Michigan 49355-7150
(616) 787-6288
(800) 346-2670
This Statement of Additional Information is not a prospectus and,
therefore, should be read only in conjunction with the Prospectus, which can be
requested from the Fund by writing or telephoning as indicated above. This
Statement Of Additional Information relates to the Prospectus for the Fund dated
April 22, 1998.
The date of this Statement of Additional Information is April 22, 1998.
- -C-1998, AMWAY CORPORATION, U.S.A. 795057 L-2597-SAL
1
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
2
<PAGE>
AMWAY MUTUAL FUND
OBJECTIVES, POLICIES AND RESTRICTIONS ON THE FUND'S INVESTMENTS
The primary investment objective of the Fund is capital appreciation,
through the ownership of common stock of companies in various industries which
offer growth potential. Income, while a factor in portfolio selection, is
secondary to the Fund's principal objective. In addition to the discussion found
in the Prospectus, following is additional information concerning the Fund's
investments.
The Fund has the right to invest up to 10% of its total assets in
securities which are not readily marketable, including "restricted securities"
(securities which have not been registered with the Securities and Exchange
Commission or which are subject to contractual restrictions on resale).
The Fund is subject to certain investment restrictions. In brief, these provide
that the Fund may not:
1. Underwrite securities of other issuers, except that it may acquire
portfolio securities under circumstances where, if sold publicly, it
might be deemed to be an underwriter for purposes of the Securities
Act of 1933, but no more than 10% of the value of the Fund's total
assets will at any time be invested in such securities.
2. Invest more than 5% of its total assets in the securities of any one
issuer other than the United States Government or purchase more than
10% of any class of securities, including voting securities, of any
one issuer.
3. Purchase interests in real estate as an investment, other than readily
marketable securities of companies which may have interests in real
estate.
4. Engage in the purchase and sale of commodities or commodity contracts.
5. Invest in companies for the purpose of exercising control or
management.
6. Make loans to others, although it may purchase a portion of an issue
of publicly distributed bonds, debentures, or other debt securities.
7. Engage in margin transactions or short sales.
8. Write, purchase, or sell puts, calls, or combinations thereof.
9. Participate in joint trading account.
10. Mortgage, pledge, hypothecate, or in any manner transfer as security
for indebtedness any securities owned or held by the Fund, except as
permitted in the following Item 11.
11. Borrow money, except that as a temporary measure and not for
investment purposes, it may borrow from banks up to 5% of the value of
its total assets taken at cost, which may be secured by up to 10% of
such assets taken at cost. (It should be noted that some states have
laws which are even more restrictive than the Fund's fundamental
policy with respect to this matter. As a result of these laws, it is
the Fund's present operating policy not to mortgage, pledge, or
hypothecate its portfolio securities to the extent that at any time
the percentage of pledged securities plus the sales load will exceed
10% of the offering price of the Fund's shares.)
12. Invest in securities of other investment companies, except in
connection with a merger with another investment company.
13. Invest more than 5% of its total assets in securities of companies
having a record of less than three years' continuous operation.
14. Retain, in the Fund's portfolio, securities of an issuer any of whose
officers, directors, or security holders is an officer or director of
the Fund or of the fund's investment advisor, if after the purchase of
such securities one or more of such officers or directors of the Fund
or of the Fund's investment advisor owns beneficially more than 1/2%
of the outstanding securities of such issuer and such officers and
directors owning beneficially more than 1/2% of such outstanding
securities together own beneficially more than 5% of such outstanding
securities.
3
<PAGE>
AMWAY MUTUAL FUND
15. Invest more than 5% of its total assets in securities of a foreign
issuer, the purchase of whose securities is subject to the Federal
Interest Equalization Tax, which tax is not in effect at the date of
this Statement of Additional Information.
16. Invest in interests in oil, gas, or other mineral explorations or
development programs, other than readily marketable securities of
corporations which may have interests in such exploration or
development programs.
The Fund's investment objective, policy and restrictions as described above
are fundamental and may not be changed without shareholder approval, as
indicated in the Fund's Prospectus. The Fund is permitted to invest in foreign
issuers to the extent that the investments meet the Fund's primary investment
objective. The Fund does not currently own any warrants and does not intend to
own any warrants in excess of 5% of the Fund's net asset value.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In purchasing and selling portfolio securities for the Fund, it is the
policy of the Fund to obtain the highest possible price on sales and the lowest
possible price on purchases of securities, consistent with the best execution of
portfolio transactions. Amway Management Company, the ("Investment Advisor"),
or Ark Asset Management Co., Inc. ("Sub-Advisor") will select the brokers and
resulting allocation of brokerage commission; but, the Investment Advisor's
practice is subject to review by the Board of Directors of the Fund, which has
the primary responsibility in this regard, and must be consistent with the
policies stated above.
The Investment Advisor and Sub-Advisor, in effecting purchases and sales of
portfolio securities for the account of the Fund, will implement the Fund's
policy of seeking best execution of orders, which includes best net prices.
Consistent with this policy, orders for portfolio transactions are placed with
broker-dealer firms giving consideration to the quality, quantity, and nature of
each firm's professional services which include execution, clearance procedures,
wire service quotations, research information, statistical, and other services
provided to the Fund, Advisor, and the Sub-Advisor. Any research benefits
derived by the Sub-Advisor are available to all clients of the Sub-Advisor.
Since research information, statistical, and other services are only
supplementary to the research efforts of the Sub-Advisor and still must be
analyzed and reviewed by its staff, the receipt of research information is not
expected to materially reduce expenses. Also, subject to the policy of seeking
best price and execution of orders, certain Fund expenses may be paid through
the use of directed brokerage commissions. While the Sub-Advisor will be
primarily responsible for the placement of the Fund's business, the policies and
practices in this regard must be consistent with the foregoing and will at all
times be subject to review by the Directors of the Fund.
The Sub-Advisor furnishes investment advice to other clients. The other
accounts may also make investments in the same investment securities and at the
same time as the Fund. When two or more of such clients are simultaneously
engaged in the purchase or sale of the same security, the transactions are
allocated as to amount and price in a manner considered equitable to each and so
that each receives to the extent practicable the average price of such
transactions, which may or may not be beneficial to the Fund. The Board of
Directors of the Fund believes that the benefits of the Sub-Advisor's
organization outweigh any limitations that may arise from simultaneous
transactions.
The Fund may acquire securities of brokers who execute the Fund's portfolio
transactions. As of December 31, 1997, the Fund owned no such securities.
During the years ended December 31, 1997, 1996, and 1995, the Fund paid
total brokerage commissions on purchase and sale of portfolio securities of
$301,990, $250,136, and $333,077, respectively. Transactions in the amount of
$235,081,998, involving commissions of $268,072, were directed to brokers
because of research services provided during 1997.
4
<PAGE>
AMWAY MUTUAL FUND
PRINCIPAL SHAREHOLDERS
Amway Corporation indirectly, as of December 31, 1997, owned 981,389
shares, or 5.5% of the outstanding shares of the Fund. Jay Van Andel owns all
the outstanding securities of JVA Properties Corporation, the General Partner
for JVA Enterprises Limited Partnership, which owns, as of December 31, 1997,
2,615,030 shares, or 14.5% of the outstanding shares of the Fund. No other
person is known by the Fund to own of record or beneficially 5% or more of the
Fund's shares.
OFFICERS AND DIRECTORS OF THE FUND
The following are the Officers and Directors of the Fund or the Advisor or both,
together with their principal occupations during the past five years:
<TABLE>
<CAPTION>
Director's
Name and Address Age Office Held Principal Occupation Compensation
<S> <C> <C> <C> <C>
Richard A. DeWitt 84 Director of the Fund President, DeWitt Land and Cattle $5,000
720 Goldenrod Company (investments in land and
Holland, Michigan cattle); Chairman of the Board, Maes
49423 Board; Maes Incorporated manufacturers
(manufacturers of agricultural
equipment).
Allan D. Engel* 46 Director, Vice President, Sr. Manager, Investments $5,000
7575 Fulton Street East Secretary and Assistant and Real Estate
Ada, Michigan Treasurer of the Fund; Amway Corporation
49355-7150 Director, President,
and Secretary of the Investment
Advisor; and Director, Vice
President, Secretary and
Assistant Treasurer of the
Transfer Agent.
Donald H. Johnson 67 Director of the Fund Retired Vice President-Treasurer, SPX $5,000
609 Second Street Corporation (Designs, manufactures and
No. Muskegon, Michigan markets products and services for the
49445 motor vehicle industry, 1986 to
present; Vice President and Director
Owatonna Tool, 1984 to 1986 (Owatonna
Tool acquired by SPX in 1985);
Secretary-Treasurer, Director Owatonna
Tool, Director Owatonna Tool, 1969 to
1984.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AMWAY MUTUAL FUND, INC.
Director's
Name and Address Age Office Held Principal Occupation Compensation
<S> <C> <C> <C> <C>
Walter T. Jones 55 Director of the Fund Retired Senior Vice President-Chief $5,000
936 Sycamore Ave. Financial Officer, Prince Corporation
Holland, Michigan (Automotive interior trim and interior
49424 systems; automotive designer,
manufacturer and supplier; and designer
and manufacturer of die casting
machines.)
James J. Rosloniec* 53 Director, President and Vice President-Audit and Control, Amway $5,000
7575 Fulton Street East Treasurer of the Fund; and Corporation, 1991 to present; Vice
Ada, Michigan Director, Vice-President and President-Finance and Treasurer, Amway
49355-7150 Treasurer of the Investment Corporation, 1979 to 1991.
Advisor; and Director,
President and Treasurer of the
Transfer Agent.
Richard E. Wayman 63 Director of the Fund Former Finance Director, Amway $5,000
7575 Fulton Street East Corporation, 1976 to 1996
Ada, Michigan
49355-7150
</TABLE>
*These Directors are interested persons under the Investment Company Act of
1940, as amended.
All Officers and certain Directors of the Fund and the Investment Advisor
are affiliated with Amway Corporation. The Officers serve without compensation
from the Fund. Fees paid to all Directors during the year ended December 31,
1997, amounted to $25,000. Under the Advisory Contracts, the Investment Advisor
pays the fees of the Directors of the Fund. The Directors and Officers of the
Fund owned, as a group, less than 1% of the outstanding shares of the Fund. The
advisor also serves as the Fund's principal underwriter (see "Distribution of
Shares").
INVESTMENT ADVISOR AND OTHER SERVICES
The Fund has entered into an Advisory and Service Contract ("Contract") with
Amway Management Company (the "Investment Advisor"). Under the Contract, the
Fund employs the Investment Advisor to furnish investment advice and manage on a
regular basis the investment portfolio of the Fund, subject to the direction of
the Board of Directors of the Fund, and to provisions of the Fund's current
Prospectus; to furnish for the use of the Fund, office space and all necessary
office facilities, equipment, and personnel for servicing the investments of the
Fund; and (with certain specific exceptions) administering its affairs and to
pay the salaries and fees of all Officers and Directors of the Fund. Amway
Corporation provides the Investment Advisor with such employee services on a
contractual basis. The Investment Advisor has served the Fund in that capacity
since 1971. The Investment Advisor will, from time to time, discuss with the
Fund economic investment developments which may affect the Fund's portfolio and
furnish such information as the Investment Advisor may believe appropriate for
this purpose. The Investment Advisor will maintain such statistical and
analytical information with respect to the Fund's portfolio securities as the
Investment Advisor may believe appropriate and shall make such materials
available for inspection by the Fund as may be reasonable. Except when otherwise
specifically directed by the Fund, the Investment Advisor will make investment
decisions on behalf of the Fund and place all orders for the purchase and sale
of portfolio securities for the Fund's account.
6
<PAGE>
AMWAY MUTUAL FUND
The Investment Advisor shall be permitted to enter into an agreement with
another advisory organization (sub-advisor) whereby the sub-advisor will provide
the investment advice and services required to manage the Fund's investment
portfolio as provided for in the Contract.
Under the Contract, the Fund will pay all its expenses other than those
expressly stated to be payable by the Investment Advisor, which expenses payable
by the Fund include, without implied limitation, (i) registration of the Fund
under the Investment Company Act of 1940; (ii) commissions, fees, and other
expenses connected with the purchase or sale of securities; (iii) auditing,
accounting, and legal expenses; (iv) taxes and interest; (v) government fees;
(vi) expenses of issue, sale, repurchase, and redemption of shares; (vii)
expenses of registering and qualifying the Fund and its shares under federal and
state securities laws and of preparing and printing prospectuses for such
purposes and for distributing the same to shareholders and investors; (viii)
expenses of reports and notices to shareholders and of meetings of shareholders
and proxy solicitations therefore; (ix) fees and expenses related to the
determination of the Fund's net asset value; (x) insurance expenses; (xi)
association membership dues; (xii) fees, expenses, and disbursements of
custodians and sub-custodians for all services to the Fund (including without
limitation safekeeping of funds and securities, and keeping of books and
accounts); (xiii) fees, expenses, and disbursement of transfer agents, dividend
disbursing agents, shareholder servicing agents, and registrars for all services
to the Fund; and (xiv) such non-recurring items as may arise, including expenses
incurred in connection with litigation, proceedings and claims, and the
obligation of the Fund to indemnify its Directors and Officers with respect
thereto.
In return for its management and investment advisory services, the Fund
pays the Advisor, pursuant to the Contract, a fee amounting on an annual basis
to approximately 0.55% on the first $100 million of average daily net assets of
the fund, 0.50% on the next $50 million in assets, and 0.45% on the next $50
million in assets. When the fund's assets reach $200 million the rate would be
0.50% on assets up to $200 million and 0.45% on assets in excess of $200
million, so long as the fund continued to have at least $200 million in assets.
The fee is computed daily and paid quarterly. The advisory fees paid by the Fund
to the Investment Advisor during the years ended December 31, 1997, 1996, and
1995, were $727,102, $524,637, and $378,693, respectively.
Jay Van Andel and Richard M. DeVos are controlling persons of the
Investment Advisor and Transfer Agent (see "Transfer Agent"), since they own,
together with their spouses, substantially all of the outstanding securities of
Amway Corporation, which in turn indirectly owns all of the outstanding
securities of each entity.
A Sub-Advisory Agreement has been entered into between the Investment
Advisor and Ark Asset Management Co., Inc., One New York Plaza, 29th Floor, New
York, NY 10004 (Sub-Advisor). Under the Sub-Advisory Agreement, the Advisor
employs the Sub-Advisor to furnish investment advice and manage on a regular
basis the investment portfolio of the Fund, subject to the direction of the
Advisor, the Board of Directors of the Fund, and to the provisions of the Fund's
current Prospectus. Except when otherwise specifically directed by the Fund or
the Advisor, the Sub-Advisor will make investment decisions on behalf of the
Fund and place all orders for the purchase or sale of portfolio securities for
the Fund's account. For services rendered, the Investment Advisor, not the Fund,
pays the Sub-Advisor a fee amounting on an annual basis to approximately
0.45% on the first $100 million of average daily net assets of the fund, 0.40%
on the next $50 million in assets, and 0.35% on the next $50 million in assets.
When the fund's assets reach $200 million the rate would be 0.40% on assets up
to $200 million and 0.35% on assets in excess of $200 million, so long as the
fund continued to have at least $200 million in assets.
The Contract and Sub-Advisory Agreement continue in effect indefinitely
from year to year so long as their continuance after the initial two-year period
is specifically approved at least annually by vote of the Board of Directors, or
by vote of a majority of the outstanding shares of the Fund. In addition, and in
either event, the Contract and Sub-Advisory Agreement and their terms must be
approved at least annually by a vote of a majority of the Directors of the Fund
who are not parties to the Contract or Sub-Advisory Agreement, or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The Contract and Sub-Advisory Agreement were approved
by vote of a majority
7
<PAGE>
AMWAY MUTUAL FUND
of the outstanding shares at the Annual Meeting of Shareholders on April 22,
1998. The Contract and Sub-Advisory Agreement provide that they will terminate
automatically in the event of their assignment. In addition, the Contract and
Sub-Advisory Agreement are terminable at any time without penalty by the Board
of Directors or by vote of a majority of the Fund's outstanding shares on 60
days' written notice to the Investment Advisor or Sub-Advisor, and by the
Investment Advisor or Sub-Advisor on 60 days' written notice to the Fund.
The Fund has entered into an agreement with DST Systems, Inc. ("DSTS")
whereby DSTS provides a portfolio accounting and information system for
portfolio management for the maintenance of records and processing of
information which is needed daily in the determination of the net asset value of
the Fund. Currently, this expense amounts to approximately $2,500 per month.
PLAN OF DISTRIBUTION
The Trust has adopted a Plan and Agreement of Distribution ("Distribution
Plan"). Under the Distribution Plan, which became effective on April 22, 1998,
the Adviser will provide services in connection with distributing the Fund's
shares, and will be compensated at a maximum annual rate of 0.25 of 1% of the
average daily net assets of the Fund.
Amounts received by the Adviser may be retained by the Adviser as
compensation for its services, or paid to other investment professionals who
provide services in connection with the distribution of Fund shares. the
Trustees will review the services provided and compensation paid pursuant to the
Distribution Plan no less often than quarterly.
The Adviser acts as the exclusive agent for sales of shares of the Fund
pursuant to a Principal Underwriting Agreement. Prior to April 22, 1998, the
Adviser received a sales commission of 3% of the offering price of the Fund's
shares. The sales commission was eliminated when the Fund adopted the
Distribution Plan.
During the years ended December 31, 1997, 1996, and 1995, the Adviser
received sales commissions of $513,417, $475,319, and $406,631, respectively,
pursuant to the Principal Underwriting Agreement. The only compensation
currently received by the Adviser in connection with the sale of Fund shares is
pursuant to the Distribution Plan.
TRANSFER AGENT
Under a separate contract, the functions of the Transfer Agent and Dividend
Disbursing Agent are performed by Amway Management Company, Ada, Michigan, which
acts as the Fund's agent for transfer of the Fund's shares and for payment of
dividends and capital gain distributions to shareholders.
In return for its services, the Fund pays the Transfer Agent, pursuant to
the contract, a fee of $1.167 per account in existence during the month, payable
monthly, less earnings in the redemption liquidity account after deducting bank
fees, if any. The fee schedule is reviewed annually by the Board of Directors.
8
<PAGE>
AMWAY MUTUAL FUND
CUSTODIAN
The portfolio securities of the Fund are held, pursuant to a Custodian
Agreement, by Michigan National Bank, 77 Monroe Avenue, Grand Rapids, Michigan,
as Custodian. The Custodian performs no managerial or policymaking functions for
the Fund.
AUDITORS
BDO Seidman, LLP, 99 Monroe Avenue, N.W., Suite 800, Grand Rapids,
Michigan, are the independent certified public accountants for the Fund.
Services include an annual audit of the Fund's financial statements, tax return
preparation, and review of certain filings with the SEC.
ORGANIZATION OF THE FUND
The Fund is a series of Amway Mutual Fund Trust, an open-end management
investment company which was organized as a Delaware business trust on February
2, 1998. The Fund is the successor of Amway Mutual Fund, Inc., which was
organized as a Delaware corporation on February 13, 1970.
The Fund is presently the only series of the Trust. The Declaration of
Trust authorizes the Trustees to create additional series and to issue an
unlimited number of units of beneficial interest, or "shares." The Trustees are
also authorized to issue different classes of shares of any series. No series
which may be issued by the Trust is entitled to share in the assets of any other
series or is liable for the expenses or liabilities of any such series.
When issued, shares of beneficial interest ("Shares") in the Fund will
be fully paid and non-assessable. Shares are freely transferable and have no
preemptive, subscription or conversion rights. Each share has a par value of
$1.00.
The Trust is not required to hold annual meetings of shareholders and does
not intend to hold such meetings. Shareholders of the Trust will have voting
rights only with respect to the limited number of matters specified in the
Declaration of Trust, and such other matters as may be determined by the
Trustees or as may be required by law. A meeting will be called for the purpose
of voting on the removal of a Trustee at the written request of holders of 10%
of the Trust's outstanding shares. In the event a meeting of shareholders is
held, each share will be entitled to one vote on all matters presented to
shareholders, including the election of Trustees. In the event that Amway
Management Company ceases to be the investment advisor for the Fund or the
Trust, the right of the Fund and the Trust or the Fund to use the identifying
name "Amway" may be withdrawn.
PURCHASE OF SHARES
Pursuant to a Principal Underwriter Agreement, the Investment Advisor acts
as exclusive agent for the sale of shares of the Fund. The minimum initial
investment required to establish an account is $500. An additional investment in
the minimum amount of $50 can be made in your account at any time. Investments
are made at the offering price, which includes a sales charge (see
"Determination of Net Asset Value and Offering Price of the Fund's Shares"),
next determined after the Fund receives your purchase application and
investment.
You may open a new account with the Fund by completing the enclosed
application, submitting your check made payable to Amway Management Company and
mailing the required information to Amway Management Company, 7575 Fulton Street
East, Ada, Michigan 49355-7150.
You may make additional investments to existing accounts by mail, wire, or
by the use of the pre-authorized check privilege. When making an additional
investment by check, please tear-off the stub from your statement of account, or
enclose a letter of instructions including your account number and your check
made payable to Amway Management Company. Wire transfers would normally be used
for large purchases. You may also arrange to make periodic investments through
automatic deductions from your checking account by completing the appropriate
form and providing the necessary documentation to establish this privilege.
Please contact the Fund for additional information for utilizing either of these
two options.
9
<PAGE>
AMWAY MUTUAL FUND
When your first investment is received, the Fund will open an investment
account for you which will remain open as long as you are a shareholder. This
account offers you a simple means of purchasing shares of the Fund whenever you
choose without submitting any additional application forms. This account is also
designed to encourage you to make investments regularly towards your financial
goals, but you have no obligation to purchase any specified amount of shares and
you may terminate your account at any time. When the Investment Advisor receives
your investment, it will purchase for your account the corresponding number of
the Fund's shares, and any fraction of a share carried out to three decimal
places, at the offering price next computed after your investment is received by
the Investment Advisor.
Each time you purchase shares or sell shares, you will receive a Statement
of Account showing the number of shares then in your investment account.
Under this arrangement, stock certificates will not be delivered to you
unless you so request in writing, in which cases a certificate will promptly
be delivered to you or your bank for the number of shares, not including
fractional shares, which you own. It will generally be for your convenience
not to receive stock certificates, as you are spared the trouble and expense
of safeguarding stock certificates and the cost of a lost instrument bond in
case of loss or destruction. Since stock certificates are unnecessary except
for certain purposes, such as collateral for a loan, we recommend that you
leave your shares on deposit until you need a certificate. If certificates
have been issued for shares, they must be surrendered for redemption or
transfer of those shares.
DETERMINATION OF NET ASSET VALUE AND OFFERING PRICE
OF THE FUND'S SHARES
The net asset value of the Fund's shares is determined by dividing the
total current value of the assets of the Fund, less its liabilities, by the
number of shares outstanding at that time. This determination is made as of the
close of business on the New York Stock Exchange, 4:00 P.M. Eastern time, on
each business day on which that Exchange is open or on any other day in which
there is a sufficient degree of trading in the Fund's portfolio, except no
computation will be made on a day in which no order to purchase or redeem was
received. National holidays on which the New York Stock Exchange and the Fund
will be closed are: New Year's Day, Washington's Birthday, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
In determining the current value of the Fund's assets, securities listed or
admitted to trading on a national securities exchange are valued at their last
reported sale price on the market where principally traded, before the time of
valuation. If a security is traded only in the over-the-counter market or if no
sales have been reported for a listed security on that day, it will be valued at
the mean between the current closing bid and asked prices. Securities for which
market quotations are not readily available, including any restricted
securities, and other assets of the Fund are valued at fair market value as
determined in good faith by the Fund's Board of Trustees. The offering price
is the net asset value per share at the next determined value after the order
is placed, as determined above.
10
<PAGE>
AMWAY MUTUAL FUND
HOW SHARES ARE REDEEMED
The Fund will redeem your shares upon receiving a proper request, as
described in the Prospectus.
Payment for redeemed shares is normally made in cash and mailed within
seven days thereafter. However, under the Investment Company Act of 1940, the
right of redemption may be suspended or the date of payment postponed for more
than seven days: (1) for any period during which the New York Stock Exchange is
closed, other than for customary weekend and holiday closings; (2) when trading
on the New York Stock Exchange is restricted, as determined by the SEC; (3) when
an emergency exists, as determined by the SEC, as a result of which it is not
reasonably practicable for the Fund to dispose of its securities or determine
the value of its nets assets; or (4) for such other period as the SEC may by
order permit for the protection of the shareholders. During such a period, a
shareholder may withdraw his request for redemption or receive the net asset
value next computed when regular trading resumes.
The Fund has filed with the SEC an election to pay for all redeemed shares
in cash up to a limit, as to any one shareholder during any 90-day period, of
$250,000 or 1% of the net asset value of the Fund, whichever is less. Beyond
that limit, the Fund is permitted to pay the redemption price wholly or partly
"in kind," that is, by distribution of portfolio securities held by the Fund.
This would occur only upon specific authorization by the Board of Directors
when, in their judgment, unusual circumstances make it advisable. It is unlikely
that this will ever happen, but if it does, you will incur a brokerage charge in
converting the securities received in this manner into cash. Portfolio
securities distributed "in kind" will be valued as they are valued for the
determination of the net asset value of the Fund's shares.
MONEY MARKET FUND EXCHANGE PRIVILEGE
The Underwriter for Amway Mutual Fund, Inc. ("Fund") has arranged for
shares of the three money market portfolios of Cash Equivalent Fund, an open-end
money market mutual fund ("Money Market Fund") to be available in exchange for
shares of the Fund for shareholders resident in the U.S. Also, clients of the
Underwriter can exchange shares in the Money Market Fund for shares of the Fund.
Shares of the Money Market Fund so acquired (including any reinvested dividends
thereon) may be re-exchanged for shares of the Fund without sales charge. All
other shares will be subject to the sales charge (see "Determination of Net
Asset Value and Offering Price of the Fund's shares"). The Underwriter receives
a maximum fee from Kemper Financial Services, Inc., the distributor and
administrator for the Money Market Fund, of .38 of 1% per year of the average
daily net asset value of shares of the Money Market and Government Securities
Portfolios, and of .33 of 1% per year of the average daily net asset value of
shares of Tax-Exempt Portfolio, acquired through this exchange privilege. This
exchange privilege does not constitute an offering or recommendation by the Fund
of the Money Market Fund. The Money Market Fund is separately managed.
11
<PAGE>
AMWAY MUTUAL FUND
The above described Exchange Privilege may be exercised by sending written
instruction to the Transfer Agent. See "How Shares Are Redeemed" for
applicable signatures and signature guarantee requirements. Shareholders may
authorize telephone or telegram exchanges or redemptions by making an election
on your application. Procedures required by the Fund to ensure that a
shareholder's requested telephone or telegram transaction is genuine include
identification by the shareholder of the account by number, recording of the
requested transaction and sending a written confirmation to shareholders
reporting the requested transaction. The Fund is not responsible for
unauthorized telephone or telegram exchanges unless the Fund fails to follow
these procedures. Shares must be owned for 15 days before exchanging and cannot
be in certificate form unless the certificate is tendered with the request for
exchange. An exchange requires the purchase of shares of the particular
portfolio of the Money Market Fund with a value of at least $1,000 to establish
a new account or $100 to add to an existing account. Exchanges will be accepted
only if the registration of the two accounts is identical. Exchange redemptions
and purchases are effected on the basis of the net asset value next determined
after receipt of the request in proper order by the Fund. In the case of
exchanges into the Money Market Fund, dividends generally commence on the
following business day. For federal and state income tax purposes, an exchange
is treated as a sale and may result in a capital gain or loss, although if the
shares exchanged have been held less than 91 days, the sales charge paid on such
shares is not included in the tax basis of the exchanged shares, but is carried
over and included in the tax basis of the shares acquired.
A prospectus for the Money Market Fund which contains information
concerning charges and expenses may be obtained from the Underwriter. A
shareholder should read the prospectus carefully and consider differences in
objectives and policies before making any exchange. The Fund or the Underwriter
can change or discontinue this privilege, although shareholders generally would
be given 60 days advance notice of any termination or material amendment of the
Fund Exchange Privilege and shareholders who had exchanged into the Money Market
Fund generally would be permitted to reacquire shares of the Fund without sales
charge for at least 60 days after notice of termination of the Exchange
Privilege with the Money Market Fund.
12
<PAGE>
AMWAY MUTUAL FUND
FEDERAL INCOME TAX
The Fund intends to continue to comply with the provisions of Subchapter M
of the Internal Revenue Code applicable to investment companies. Accordingly, as
the result of paying to its shareholders as dividends and distributions
substantially all net investment income and realized capital gains, if any, the
Fund will be relieved of substantially all Federal income tax.
For Federal income tax purposes, distributions of net investment income and
any capital gains will be taxable to shareholders. Distributions of net
investment income will normally qualify for the 70% deduction for dividends
received by corporations. After the last dividend and capital gains distribution
in each year, the Fund will send you a statement of the amount of the income and
capital gains which you should report on your Federal income tax return.
Dividends derived from net investment income and net short-term capital gains
are taxable to shareholders as ordinary income and long-term capital gain
dividends are taxable to shareholders as long-term capital gain regardless of
how long the shares have been held and whether received in cash or reinvested in
additional shares of the Fund. Qualified long-term capital gain dividends
received by individual shareholders are taxed a maximum rate of 28%.
In addition, shareholders may realize a capital gain or loss when shares
are redeemed. For most types of accounts, the Fund will report the proceeds of
redemptions to shareholders and the IRS annually. However, because the tax
treatment also depends on the purchase price and a shareholder's personal tax
position, you should also keep your regular account statements to use in
determining your tax.
On the record date for a distribution, the Fund's share value is reduced by
the amount of the distribution. If a shareholder buys shares just before the
record date ("buying a dividend"), they will pay the full price for the
shares, and then receive a portion of the price back as a taxable distribution.
Also, under the 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. 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 one-year period ended December 31, plus any undistributed net investment
income from the prior calendar year, plus any undistributed capital gain net
income from the prior calendar year, minus any overdistribution in the prior
calendar year. The Fund intends to declare or distribute dividends during the
appropriate periods of an amount sufficient to prevent imposition of the 4%
excise tax.
Under certain circumstances, the Fund will be required to withhold 31% of a
shareholder's distribution or redemption from the Fund. These circumstances
include failure by the shareholder to furnish the Fund with a proper taxpayer
identification number; notification of the Fund by the Secretary of the Treasury
that a taxpayer identification number is incorrect, or that withholding should
commence as a result of the shareholder's failure to report interest and
dividends; and failure of the shareholder to certify, under penalties of
perjury, that he is not subject to withholding. In this regard, failure of a
shareholder who is a foreign resident to certify that he is a nonresident alien
may result in 31% of his redemption proceeds and 31% of his capital gain
distribution being withheld. In addition, such a foreign resident may be subject
to a 30% or less, as prescribed by an applicable tax treaty, withholding tax on
ordinary income dividends distributed unless he qualifies for relief under an
applicable tax treaty.
13
<PAGE>
Trustees of qualified retirement plans are required by law to withhold 20%
of the taxable portion of any distribution that is eligible to be "rolled
over." The 20% withholding requirement does not apply to distributions from
IRA's or any part of a distribution that is transferred directly to another
qualified retirement plan, 403(b)(7) account or IRA. Shareholders should consult
their tax advisor regarding the 20% withholding requirement.
Prior to purchasing shares of the Fund, the impact of any dividends or
capital gain distributions which are about to be declared should be carefully
considered. Any such dividends and capital gain distributions declared shortly
after you purchase shares will have the effect of reducing the per share net
asset value of your shares by the amount of dividends or distributions on the
ex-dividend date. All or a portion of such dividends or distributions, although
in effect a return of capital, are subject to taxes which may be at ordinary
income tax rates.
Each shareholder is advised to consult with his tax advisor regarding the
treatment of distributions to him under various state and local income tax laws.
INVESTMENT PERFORMANCE INFORMATION
Following is a table illustrating the Fund's performance for annual periods
ended December 31, 1997, and its average annual total return percentages for
one, five and ten years.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Accumulative Accumulative
Value of Shares Value of Shares
Calendar Years Cost of Value of Accepted As Accepted As
Ended Initial Initial Capital Gain Ordinary Income Total
December 31 Investment Investment Distributions Dividends Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1988 $1,000 825 226 18 1,069
1989 922 451 46 1,419
1990 867 509 58 1,434
1991 1,031 921 82 2,034
1992 962 1,026 82 2,070
1993 980 1,225 89 2,294
1994 874 1,196 89 2,159
1995 944 1,746 129 2,819
1996 968 2,336 168 3,472
1997 982 3,057 214 4,253
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return For
The Periods Ended December 31, 1997
Amway Ark Composite
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
One Year 22.47% 22.67%
Five Years 15.51% 19.56%
Ten Years 15.58% 17.48%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
AMWAY MUTUAL FUND
Total return performance for the Fund is calculated by making an initial
investment of $1,000 at the beginning of the period, in the Fund's shares at the
asking price and reinvesting all ordinary income dividends and capital gain
distributions paid during the period in additional shares at net asset value per
share on the reinvestment dates. Prior to 1991 and 1998 the Fund had a maximum
sales charge of 6% and 3%, respectively, based upon amount of shares purchased.
The illustration includes recurring expenses incurred by all shareholder
accounts and not those incurred for specific shareholder purposes such as bank
fees for wire transfers, Individual Retirement Accounts, or Profit-Sharing
Trusts.
Total return performance also includes the composite performance of the
Fund's current sub-adviser, ARK Asset Management Company, who has been the
Fund's sub-adviser since May 1, 1995. The composite performance sets forth the
returns of the institutional private accounts managed by the sub-adviser which
have substantially similar investment objectives and policies as the Fund. The
data is provided to illustrate the past performance of the sub-adviser in
managing substantially similar accounts and does not represent the performance
of the Fund.
Shareholders should not consider the composite performance data as an
indication of future performance of the sub-adviser. the investment results of
the sub-adviser composite presented is unaudited and calculated in accordance
with the recommended standards of the Association for Investment Management and
Research retroactively applied to all time periods. All composite returns
presented were calculated on a total return basis and included all dividends and
interest, accrued income and realized and unrealized gains and losses, and
deductions for brokerage commissions and execution costs. Composite returns are
adjusted to assume that the Fund's operating charges, expenses, and fees (the
Fund's historical expense ratio) were deducted during such periods. No
adjustment has been made for the impact on the expense ratio due to growth in
the Fund's assets, shareholder approval of changes to management fees or the
adoption of a 12b-1 Distribution Plan.
The average annual total return for the Fund and Ark Composite for a
specific period is found by dividing the ending total value by the cost of
the initial investment for the period and taking this quotient to the Nth
root, then subtracting 1 (N represents the number of years in the period).
The average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the Fund's
performance had been constant over the entire period. Such calculation is
with all ordinary income dividends and capital gain distributions reinvested
at net asset value exclusive of sales charges. No adjustment has been made
for any income taxes payable by shareholders on ordinary income dividends and
capital gains distributions accepted in shares which are payable by
shareholders in the tax year received.
Average annual total return percentages of the Fund will vary and the
publication of performance results is not a representation as to future
investment performance. Factors affecting the Fund's performance include
general market conditions, operating expenses and investment management. Net
asset values of the Fund will fluctuate. Additional information about the
performance of the Fund is contained in the Annual Shareholders Report which
can be obtained without charge.
REPORTS TO SHAREHOLDERS AND ANNUAL AUDIT
The Fund's year begins on January 1 and ends on December 31. At least
semiannually, the shareholders of the Fund receive reports, pursuant to
applicable laws and regulations, containing financial information. The annual
shareholders report is incorporated by reference into the Statement of
Additional Information. The cost of printing and distribution of such reports to
shareholders is borne by the Fund.
At least once during each year, the Fund is audited by independent
certified public accountants appointed by resolution of the Board and approved
by the shareholders. The fees and expenses of the auditors are paid by the Fund.
The financial statements for the Fund are contained in the Fund's 1997
Annual Report to Shareholders along with additional information about the
performance of the Fund, which is incorporated herein by reference and may be
obtained by writing or calling the Fund.
15
<PAGE>
AMWAY MUTUAL FUND
7575 Fulton Street East
Ada, Michigan, 49355-7150
(616) 787-6288
(800) 346-2670
<TABLE>
<CAPTION>
Contents Page
<S> <C>
Objectives, Policies, and
Restrictions on the Fund's
Investments 3
Portfolio Transactions and
Brokerages 4
Principal Shareholders 5
Officers and Directors of the Fund 5
Investment Advisor and Other Services 6
Distribution of Shares 8
Transfer Agent 9
Custodian 9
Auditors 9
Voting Rights of Common Shareholders 9
Purchase of Shares 9
Determination of Net Asset Value
and Offering Price of the Fund's
Shares 10
How Shares are Redeemed 11
Reinvestment Privilege 11
Money Market Fund Exchange Privilege 12
Federal Income Tax 13
Investment Performance Information 14
Reports to Shareholders and
Annual Audit 15
</TABLE>
Printed in U.S.A.
AMWAY
MUTUAL
FUND,
STATEMENT OF
ADDITIONAL INFORMATION
April 22, 1998
AMWAY MUTUAL FUND LOGO
16
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
The financial statements listed below are filed as part
of the registration statement:
LOCATION IN REGISTRATION STATEMENT
<TABLE>
Part A Part B Part C
(Prospectus) (Statement of
Additional
Information)
Page No. Page No. Page No.
------------ ----------------------- -------------
<S> <C> <C> <C>
Independent Auditors'
Report C-
Assets and Liabilities
Year Ended December C-
31, 1997
Statement of Operations
Year Ended December C-
31, 1997
Schedule of Investments
Year Ended December C-
31, 1997
Changes in Net Assets
Years Ended December C-
31, 1997 and 1996
Consent of Independent
Certified Public
Accountants C-
</TABLE>
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits (Continued)
(a) Exhibits:
i. DECLARATION OF TRUST
The Declaration Of Trust for Amway Mutual Fund Trust is
included on, Pages C-__ through C-__.
ii. BY-LAWS
The By-Laws of Amway Mutual Fund Trust (A Delaware
Trust), is included on Pages C-__ through C-__.
iii. CERTIFICATE OF OWNERSHIP INTERESTS
The Certificate Of Ownership Interests will be filed in
a subsequent Amendment to the Registration Statement.
iv. ADVISORY AND SERVICE CONTRACT BETWEEN AMWAY MUTUAL FUND AND
AMWAY MANAGEMENT COMPANY
The Amended Advisory and Service Contract between Amway
Mutual Fund and Amway Management Company is included on
Pages C-__ through C-__, and a substantially identical
restated agreement will be filed in a subsequent amendment
to this registration statement.
v. SUB-ADVISORY AGREEMENT
The Sub-Advisory Agreement between Amway Management
Company and ARK Asset Management Company, Inc., with
amendments, is included on Pages C-__ through C-__, and a
substantially identical restated agreement will be filed
in a subsequent amendment to this registration statement.
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits (Continued)
(b) Exhibits:
vi. PRINCIPAL UNDERWRITER AGREEMENT BETWEEN AMWAY MUTUAL FUND
AND AMWAY MANAGEMENT COMPANY
The Amended Principal Underwriter Agreement between
Amway Mutual Fund and Amway Management Company is included
on Pages C-__ through C-__, and a substantially identical
restated agreement will be filed in a subsequent amendment
to this registration statement.
vii. CUSTODIAN AGREEMENT
The Amended Custodian Agreement is incorporated by
reference to the Registration Statement under the Securities
Act of 1933, Post-Effective Amendment No. 41, Part C, Pages
C-100 through C-112, as filed on March 1, 1996.
viii. TRANSFER AGENCY AND DIVIDEND DISBURSING AGENCY AGREEMENT
BETWEEN AMWAY MUTUAL FUND AND AMWAY MANAGEMENT COMPANY
The Transfer Agency and Dividend Disbursing Agency
Agreement between Amway Mutual Fund and Amway Management
Company is included on Pages C-__ through C-__.
ix. COMMON-RECORDS AGREEMENT AMONG AMWAY MUTUAL FUND AND AMWAY
MANAGEMENT COMPANY
The Common-Records Agreement between Amway Mutual Fund and
Amway Management Company is included on Pages C-__ through
C___.
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits (Continued)
(b) Exhibits
x. PORTFOLIO ACCOUNTING AND RESEARCH INFORMATION SYSTEM
The Portfolio Accounting and Research Information
System Agreement between Amway Management Company and DST
Securities, Inc. is incorporated by reference to the
Registration Statement under the Securities Act of 1933,
Post Effective Amendment No. 41, Part C, Pages C-122 through
C-147, as filed on March 1, 1996.
xi. LEGAL OPINION
The legal opinion is included on page C-___.
xii. FINANCIAL STATEMENT
The Annual Report for Amway Mutual Fund, Inc. is
included on Pages C-_ through C-__.
xiii. TRUST AGREEMENT ESTABLISHING THE AMWAY MUTUAL FUND MASTER
PROFIT-SHARING TRUST AND RELATED DOCUMENTS
The Trust Agreement establishing the Amway Management
Company Master Profit-Sharing Trust and related documents
is included on Pages C-___ through C-___.
xiv. TRUST AGREEMENT ESTABLISHING THE AMWAY MUTUAL FUND
INDIVIDUAL RETIREMENT ACCOUNT AND RELATED DOCUMENTS
The Trust Agreement establishing the Amway Management
Company Individual Retirement Account and related documents,
as amended, are included on, Pages C-___ through C-___.
xv. 12b-1 PLAN FOR DISTRIBUTION
The 12b-1 Plan for Distribution is included on Pages
C-___ through C-______.
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statement and Exhibits (Continued)
(b) Exhibits
xvi. APPLICATION ESTABLISHING AN AMWAY MUTUAL FUND INVESTMENT
The Application establishing an investment with Amway
Mutual Fund is incorporated by reference to the Registration
Statement under the Securities Act of 1933, Post Effective
Amendment No. 42, Part C, Pages C-20 and C-21.
xvii.. EXHIBIT OF PERFORMANCE CALCULATIONS
The schedules for computation of each performance
quotation provided in the Registration Statement in response
to Item 22 are included on Pages C-__ through C-__.
xviii. POWER OF ATTORNEY
The Power of Attorney authorizing the signer of the
Registration Statement to sign as Attorney-In-Fact for
certain Directors is included on Page C-__.
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
<TABLE>
<CAPTION>
LOCATION IN REGISTRATION STATEMENT
Part A Part B Part C
(Prospectus) (Statement of
Additional
Information)
Page No. Page No. Page No.
------------ -------------- ----------
<S> <C> <C> <C>
ITEM 25. Persons Controlled
by or under Common
Control with C-
Registrant
ITEM 26. Number of Holders of
Securities C-
ITEM 27. Indemnification C-
ITEM 28. Business and Other
Connections of C-
Investment Adviser
ITEM 29. Principal Underwriter C-
ITEM 30. Location of Accounts
and Records C-
ITEM 31. Management Services C-
ITEM 32. Undertakings C-
</TABLE>
<PAGE>
AMWAY MUTUAL FUND, INC.
FORM N-1A
PART C
OTHER INFORMATION
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Amway Mutual Fund, Inc.
Ada, Michigan
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting a part of this Registration Statement of our
report dated January 16, 1998, relating to the financial statements, schedules
and selected per share data and ratios of Amway Mutual Fund, Inc. appearing in
the Company's Annual Shareholders Report for the year ended December 31, 1997.
We also consent to the reference to us under the captions "Financial
Highlights" in the Prospectus and "Auditors" in the Statement of Additional
Information.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
February 23, 1998
<PAGE>
AMWAY
MUTUAL
FUND,
ANNUAL
REPORT
1997
Printed in U.S.A. 795058 L-6882-SAD
BULK RATE
U.S. POSTAGE
PAID
ADA, MI
PERMIT 100
AMWAY MUTUAL FUND
7575 Fulton Street East
Ada, Michigan 49355-7150
<PAGE>
AMWAY MUTUAL FUND, INC.
Dear Shareholders:
I am pleased to provide you with the Annual Report to Shareholders for
Amway Mutual Fund, Inc. for the period ended December 31, 1997.
1997 continued as another extraordinarily successful year for investments
in stocks, with performance well surpassing historical norms for the third
straight year. Your Fund continued to participate in that performance during
1997 with a total return of 22.47%. In addition, the net assets held in the Fund
increased from 113,327,402 to 139,165,575 at the close. The number of accounts
rose from 17,481 to 18,694 during the year.
We anticipate continued volatility in the equity markets during 1998;
however, we expect that our large cap value style positions us to continue to
participate in up markets and cushion the impact of down markets. Also, you may
help to temper the effects of this market volatility on your investments and
reduce the risk of market-timing decisions through a systematic program of
investing on a regular basis-commonly referred to as dollar cost averaging. Such
a program does not assure a profit and does not protect against loss in a
declining market; however, it should help you lower the average cost of your
purchases.
Please take a moment to review the following pages which report how well
your fund has done over various time periods. Also included is a discussion of
the market factors and conditions, and investment strategies and techniques that
impacted our Fund's performance during 1997. We remain committed to investments
in stocks that represent very good values. In a market in which valuations have
become extended, this should provide a defense going forward. Also, we believe
that we are well positioned to participate in any future market appreciation.
Thank you for your continued trust in Amway Mutual Fund, Inc. All of us
associated with the Fund will continue in our best efforts to provide you with
the high level of performance and customer service you have come to expect.
Sincerely,
/s/ James J. Rosloniec
James J. Rosloniec
President
2
<PAGE>
AMWAY MUTUAL FUND, INC
INVESTMENT MANAGER REVIEW
At the beginning of 1997, there was great concern about rising interest
rates (the Federal Reserve actually raised short rates early in the year), too
strong an economy and inflation. These concerns melted away as the year
progressed, and investors discovered themselves to be in the ultimate Goldilocks
economy, i.e. a period of low inflation, falling long-term bond rates and solid
earnings growth. This resulted in a continued increase in stock prices in 1997
as investors enthusiastically bought stocks in response to the strong underlying
economic and financial fundamentals. The market began 1997 by staging an early
rally and then declining in the face of rising interest rates, to a level in
April below its January opening price. The S&P 500 rose from 759.64 in April to
954.29 by the end of July for a 25.6% increase which was virtually straight up
over four months. After a period of market fluctuation, stock prices then had a
larger correction of about 11% in October and then rallied strongly into year
end but failed to make new highs in the market indices.
Areas of stock leadership in 1997 were concentrated in health care,
financials, consumer staples, communication services, and consumer cyclicals.
The worst performing groups were basic materials, energy, and electric and gas
utilities, although electric started to do better in the fourth quarter. Your
Fund gained 22.47%, which is above the historical average return on the S&P 500,
but below the return of the S&P 500 for 1997.
The Fund's performance as compared to the S&P 500 was primarily due to
three factors. The first relates to the narrow advance in the equities market
and the price/earnings multiples of those stocks. Industry weightings is the
second factor to impact the portfolio. For example, the strong performance of
the bank stocks, where we had reduced our exposure due to concerns about
valuation and high earnings levels, negatively impacted our relative
performance. Finally, in a few instances individual stock selection negatively
impacted the portfolio when the fundamentals of the companies deteriorated.
We remain committed to our philosophy to invest in securities that sell at
reasonable prices. We believe this will permit us to participate in up markets
and our valuation discipline (high price/earnings multiples are generally
avoided) will cushion portfolios in a downturn. Thus, we expect to outperform
the S&P 500 over the long term. Although the Fund experienced a gain of 22.47%,
it did not outperform the S&P 500 last year. The Fund's comparative results
reflect the Fund's value-oriented investment policies and the unusually strong
performance of the S&P 500 during 1997.
Your Fund, as always, is positioned in stocks where we believe there is
good value versus the market as measured by the price-earnings ratio versus that
of the S&P 500 on one year forward earnings estimates. We continue to believe
that the market will eventually favor and reward us for our investment in the
undervalued stocks that we typically own.
We believe that factors exist that could potentially lead to a positive
year for 1998, including continued economic growth and continued growth in
earnings of about 5% in the aggregate. It is our belief that these factors will
remain positive even after adjustments for the problems in the Pacific Rim
countries. With lower interest rates being widely predicted, it would appear
that the valuation level of the market may be sustained and supported by
estimated earnings growth of 5% and by the dividend yield of about 1.6%. While
the economic expectations appear to remain positive, we do not anticipate the
market returns achieved during the prior three years. The management of the Fund
will continue to monitor all relevant market factors and be ready to respond in
an efficient manner that is consistent with the Fund's investment policy.
3
<PAGE>
AMWAY MUTUAL FUND, INC
AVERAGE ANNUAL TOTAL RETURN*
Periods ended December 31, 1997
<TABLE>
<CAPTION>
One Year Five Year Ten Year
-------- --------- --------
<S> <C> <C> <C>
Amway Mutual Fund
(inclusive of 3% sales charge) 18.97% 14.82% 15.22%
Amway Mutual Fund
(exclusive of 3% sales charge) 22.47% 15.51% 15.58%
S&P 500** 33.36% 20.25% 18.04%
</TABLE>
Growth of an assumed $10,000 investment in Amway Mutual Fund from 12/31/87
through 12/31/97*
[GRAPH]
*The illustrations include recurring expenses incurred by all shareholder
accounts, and all ordinary income dividends and capital gain distributions
reinvested at net asset value. No adjustments have been made for any income
taxes payable by shareholders on ordinary income dividends and capital gain
distributions accepted in shares which are payable by shareholders in the tax
year received. Past performance is not predictive of future performance. Returns
and net asset value fluctuate and an investor's shares, when redeemed, may be
worth more or less than their original investment. For additional information,
see the prospectus, Statement of Additional Information and the Financial
Highlights at the end of this report.
**The Standard and Poor's 500 Stock Index represents an unmanaged index
generally representative of the U.S. stock market and is not impacted by the
Fund's sales charge or operating expenses.
4
<PAGE>
AMWAY MUTUAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Shares or Market
Investments Par Value Value
----------- --------- -----
<S> <C> <C> <C>
BANKING 1.85%
Chase Manhattan Corp. (New) 10,400 1,138,800
NationsBank Corp. 22,100 1,343,956
----------
2,482,756
----------
BUILDING MATERIALS AND GARDEN SUPPLIES 0.39%
Lowe's Companies, Inc. 11,000 524,563
----------
BUSINESS SERVICES 2.75%
Bell Atlantic Corp. 15,332 1,395,212
Xerox Corp. 31,000 2,288,188
----------
3,683,400
----------
CHEMICALS & ALLIED PRODUCTS 4.79%
Abbott Laboratories 15,500 1,016,219
American Home Products 38,100 2,914,650
Dupont (E.I.) De Nemours & Co. 28,900 1,735,806
Hercules, Inc. 15,000 750,938
----------
6,417,613
----------
COMMUNICATION 5.81%
GTE Corp. 55,900 2,920,775
SBC Communications, Inc. 10,500 769,125
TCI Series-A TCI Group *37,768 1,053,963
US West Media Group *13,300 384,038
Viacom, Inc. Class B *64,300 2,664,431
----------
7,792,332
----------
EATING AND DRINKING PLACES 1.42%
McDonald's Corp. 39,800 1,900,450
----------
ELECTRIC & ELECTRONIC EQUIPMENT 8.06%
Alliedsignal, Inc. 82,000 3,192,870
AMP Inc. 28,200 1,184,400
Emerson Electric Co. 39,900 2,251,856
Nat'l Semiconductor Corp. *45,300 1,174,969
Raytheon Co. Class B 32,300 1,631,150
Rockwell International Corp. (NEW) 26,300 1,374,175
----------
10,809,420
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
AMWAY MUTUAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
% of Shares or Market
Investments Par Value Value
----------- --------- -----
<S> <C> <C> <C>
ELECTRIC, GAS, & SANITARY SERVICES 5.97%
Consolidated Edison of New York 11,600 475,600
Enron Corp. 55,300 2,298,406
FPL Group, Inc. 2,900 171,644
Pacificorp 38,900 1,062,456
Southern Co. 32,700 846,113
Texas Utilities Co. 67,000 2,784,688
Waste Management, Inc. 13,200 363,000
----------
8,001,906
----------
FABRICATED METAL PRODUCTS 2.25%
Crown Cork & Seal Company 27,000 1,353,375
Masco Corp. 32,700 1,663,613
----------
3,016,988
----------
FOOD AND KINDRED PRODUCTS 3.97%
Anheuser-Busch Cos., Inc. 61,800 2,719,200
Archer-Daniels-Midland 120,229 2,607,466
----------
5,326,666
----------
FOOD STORES 0.66%
Albertson's, Inc. 9,700 459,538
American Stores Co. 20,800 427,700
----------
887,238
----------
FURNITURE AND FIXTURES 1.20%
Sun Microsystems, Inc. *40,200 1,605,488
----------
GENERAL MERCHANDISE STORES 6.36%
Dillards, Inc. 40,500 1,427,625
Federated Department Stores *34,900 1,502,881
May Dept. Stores Co. 22,000 1,159,125
Sears, Roebuck & Company 66,100 2,991,025
Woolworth Corp. *71,300 1,452,738
----------
8,533,394
----------
HEALTH SERVICES 1.53%
Columbia/HCA Healthcare Corp. 32,600 965,775
Humana, Inc. *52,500 1,089,375
----------
2,055,150
----------
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
AMWAY MUTUAL FUND, INC.
<TABLE>
<CAPTION>
% of Shares or Market
Investments Par Value Value
----------- --------- -----
<S> <C> <C> <C>
HOLDING AND OTHER INVESTMENT OFFICES 1.04%
American General Corp. 25,700 1,389,406
----------
INSTRUMENTS AND RELATED PRODUCTS 0.95%
Baxter International, Inc. 15,300 77,694
Johnson & Johnson 7,700 507,238
----------
1,278,931
----------
INSURANCE AGENTS, BROKERS, & SERVICE 2.23%
Cigna Corp. 17,300 2,993,981
----------
INSURANCE CARRIERS 10.09%
Aetna Inc. 36,900 2,603,756
Allstate Corp. 27,900 2,535,413
Chubb Corp. 39,500 2,987,188
General RE Corporation 14,800 3,137,600
Loews Corp. 15,400 1,634,325
Unum Corp. 11,500 625,313
----------
13,523,594
----------
LUMBER AND WOOD PRODUCTS 0.30%
Weyerhaeuser Co. 8,300 407,219
----------
MACHINERY, EXCEPT ELECTRICAL 6.71%
Deere & Co. 20,900 1,218,731
Dresser Industries, Inc. 4,600 192,913
Hewlett-Packard Co. 34,600 2,162,500
International Business Machines 41,900 4,381,169
Seagate Technology *54,200 1,043,350
----------
8,998,663
----------
METAL MINING 1.17%
Newmont Mining Corp. 53,500 1,571,563
----------
MISCELLANEOUS MANUFACTURING INDUSTRIES 0.00%
Jan Bell Marketing Warrants *762 8
OIL AND GAS EXTRACTION 8.61%
Burlington Resources 18,200 815,588
Occidental Petroleum Corp. 97,400 2,855,038
Praxair, Inc. 64,700 2,911,500
Tenneco, Inc. 23,200 916,400
Union Pacific Resources 55,700 1,350,725
Unocal Corp. 69,600 2,701,350
----------
11,550,600
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
AMWAY MUTUAL FUND, INC.
<TABLE>
<CAPTION>
% of Shares or Market
Investments Par Value Value
----------- --------- -----
<S> <C> <C> <C>
PAPER & ALLIED PRODUCTS 4.04%
Champion International Corp. 26,300 1,191,719
Fort James Corp. 58,200 2,226,150
International Paper Co. 3,800 163,875
Kimberly-Clark Corp. 37,200 1,834,425
----------
5,416,169
PETROLEUM & COAL PRODUCTS 4.26%
Amerada Hess Corp. 31,000 1,701,125
Amoco Corporation 11,300 961,913
Atlantic Richfield Company 14,400 1,153,800
Texaco, Inc. 15,100 821,063
Union Pacific Corp. 15,300 955,294
Williams companies, Inc. 4,000 113,500
----------
5,706,694
----------
PRIMARY METAL INDUSTRIES 1.13%
Aluminum Co. of America 21,500 1,513,063
----------
PRINTING AND PUBLISHING 0.48%
Gannett Co. 10,500 649,031
----------
RAILROAD TRANSPORTATION 3.53%
Burlington Northern Santa Fe 20,600 1,914,513
CSX Corp. 52,300 2,824,200
----------
4,738,713
----------
RUBBER AND MISC. PLASTICS PRODUCTS 1.03%
Goodyear Tire & Rubber Co. 21,800 1,387,025
----------
STONE, CLAY & GLASS PRODUCTS 1.70%
PPG Industries 39,800 2,273,575
----------
TRANSPORTATION EQUIPMENT 5.72%
Boeing Company 43,700 2,138,569
Chrysler Corp. 82,400 2,899,450
Lockheed Martin Corp. 26,600 2,620,100
----------
7,658,119
----------
Total Common Stock (Cost $121,276,701) 100.00% $134,093,718
------------
------------
</TABLE>
*Non-dividend producing as of December 31, 1997
The accompanying notes are an integral part of these financial statements
8
<PAGE>
AMWAY MUTUAL FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at market
(identified cost $121,276,701)
(Notes 1-A and 4) $134,093,718
Cash 5,080,780
Receivables:
Dividends 242,680
Interest 10,931
Prepaid insurance 2,583
------------
TOTAL ASSETS 139,430,692
------------
LIABILITIES:
Accounts payable:
Advisery fee (Note 5) 191,045
Transfer agent fee (Note 5) 65,672
Accrued expenses 10,400
------------
TOTAL LIABILITIES 267,117
------------
NET ASSETS:
Capital stock (20,000,000
shares of $1.00 par value
authorized), amount
paid in on 17,999,216
shares outstanding
(Note 3) $126,635,867
Undistributed
net investment
income 5,862
Distributions in excess
of net realized gain
on investments (295,171)
Net unrealized
appreciation on
investments 12,817,017
------------
Net assets (equivalent
to $7.62 per share) $139,163,575
------------
COMPUTATION OF MAXIMUM
OFFERING PRICE OF THE
FUND'S SHARES-as of
December 31, 1997:
Net asset value per share
($139,163,575 DIVIDED BY
17,999,216 shares) $7.73
Offering price per share (net asset
value plus sales commission)
(1000/970 x $7.73) $7.97
</TABLE>
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $2,417,373
Interest 177,572
Security litigation settlement 32,616
------------
Total income 2,627,561
Expenses:
Advisery fee (Note 5) 727,102
Transfer agent fee (Note 5) 257,577
Shareholder
communications 52,026
Custodian fee 48,166
Data processing service (Note 6) 30,725
Taxes 25,041
Audit fees 23,612
Registration fees 21,399
Insurance 17,884
Legal services 9,568
------------
Total expenses 1,213,100
Fees paid indirectly (Note 6) (30,725)
------------
Net expenses 1,182,375
------------
NET INVESTMENT INCOME 1,445,186
------------
------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain (Note 4) 22,171,305
Unrealized appreciation on
investments:
Beginning of year $9,913,786
End of year 12,817,017
------------
Net change in unrealized
appreciation on investments 2,903,231
------------
NET GAIN ON INVESTMENTS 25,074,536
------------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS 26,519,722
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements
9
<PAGE>
AMWAY MUTUAL FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
---------------------------
<S> <C> <C>
NET ASSETS FROM OPERATIONS:
Net investment income $ 1,445,186 $ 1,146,351
Net realized gain on investments 22,171,305 17,657,371
Net increase (decrease) in unrealized appreciation 2,903,231 1,783,552
------------ ------------
Net increase (decrease) in net assets resulting from operations 26,519,722 20,587,274
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS: (Note 2)
Net investment income (1,415,589) (1,149,246)
Net realized gain from investment transactions (22,425,859) (17,613,452)
------------ ------------
Total distributions to shareholders (23,841,448) (18,762,698)
------------ ------------
CAPITAL SHARE TRANSACTIONS (Notes 3 and 5):
Net proceeds from sale of shares 18,823,240 31,252,559
Net asset value of shares issued to shareholders in reinvestments of
investment income and realized gain from security transactions 23,180,330 18,195,824
------------ ------------
42,003,570 49,448,383
Payment for shares redeemed (18,845,671) (15,193,852)
------------ ------------
Net increase in net assets derived from capital share transactions 23,157,899 34,254,531
------------ ------------
Net increase in net assets 25,836,173 36,079,107)
NET ASSETS:
Beginning of year 113,327,402 77,248,295
------------ ------------
End of year (includes undistributed (overdistributed)
net investment income of $5,862 and ($23,735), respectively) $139,163,575 $113,327,402
------------ ------------
------------ ------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company.
(A) Security Valuation-Investments in securities listed or admitted to
trading on a national securities exchange are valued at their last reported
sale price before the time of valuation. If a security is traded only in the
over-the-counter market, or if no sales have been reported for a listed
security on that day, it is valued at the mean between the current closing
bid and ask prices. Securities for which market quotations are not readily
available, including any restricted securities (none at December 31, 1997),
and other assets of the Fund are valued at fair market value as determined in
good faith by the Fund's Board of Directors.
(B) Federal Income Taxes-It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to make distributions of income and capital gains sufficient to
relieve it from substantially all federal income taxes.
(C) Security Transactions and Related Investment Income-Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Realized
gains and losses from security transactions and unrealized appreciation and
depreciation of investments are reported on a specific identification basis.
Dividends and distributions to shareholders are recorded by the Fund on the
ex-dividend date.
NOTE 2-DISTRIBUTION TO SHAREHOLDERS
On December 16, 1997, a distribution of $1.60 aggregating $23,841,448 was
declared from ordinary income and net realized gains from investment
transactions (including $.73 applicable to short-term gains that are taxable to
shareholders as ordinary income dividends and .775 applicable to long-term
gains) during 1997. The dividend was paid on December 22, 1997 to shareholders
of record on December 16, 1997.
10
<PAGE>
AMWAY MUTUAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3-CAPITAL STOCK
At December 31, 1997, there were 20,000,000 shares of $1.00 par value
capital stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
---------------------------
<S> <C> <C>
Shares:
Outstanding, beginning of year 14,871,253 10,399,006
---------- ----------
Sold 2,394,827 3,924,168
Issued in payment of dividends 3,006,527 2,435,854
---------- ----------
5,401,354 6,360,022
Redeemed 2,273,391 1,887,775
---------- ----------
Net increase for the year 3,127,963 4,472,247
---------- ----------
Outstanding, end of year 17,999,216 14,871,253
---------- ----------
---------- ----------
</TABLE>
NOTE 4-INVESTMENT TRANSACTIONS
At December 31, 1997, the cost of investments owned was $121,510,999 for
federal income tax purposes. Aggregate gross unrealized gains on securities in
which there was an excess of market value over tax cost were $16,469,799.
Aggregate gross unrealized losses on securities in which there was an excess of
tax cost over market value were $3,887,080. Net unrealized gains for tax
purposes were $12,582,719 at December 31, 1997.
Realized gains from sales of investments were determined on the basis of
specific identification. For tax purposes, gains of $22,389,810 were realized on
investments.
For the year ended December 31, 1997, cost of purchases and proceeds from
sales of investments, other than corporate short-term notes, aggregated
$131,111,532 and $133,859,517, respectively.
NOTE 5-INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Advisory and Service Contract (Contract) with
Amway Management Company (Investment Advisor). Under the Contract, the Fund
employs the Investment Advisor to furnish investment advice and manage on a
regular basis the investment portfolio of the Fund; to furnish for the use of
the Fund, office space and all necessary office facilities, equipment and
personnel for servicing the investments of the Fund, and (with certain specific
exceptions) administering its affairs; and to pay the salaries and fees of all
Officers and Directors of the Fund. Except when otherwise specifically directed
by the Fund, the Investment Advisor will make investment decisions on behalf of
the Fund and place all orders for the purchase and sale of portfolio securities
for the Fund's account. The Investment Advisor shall be permitted to enter into
an agreement with another advisory organization (sub-advisor), whereby the
sub-advisor will provide all or part of the investment advice and services
required to manage the Fund's investment portfolio as provided for in this
agreement. In return for its Investment Advisor services, the Fund pays the
Investment Advisor quarterly, pursuant to the Contract, a fee amounting on an
annual basis to approximately .55 of 1% of the average daily net asset value of
the Fund. The advisory fee incurred by the Fund amounted to $727,102 in 1997.
Under the Principal Underwriter Agreement between the Fund and Amway Management
Company, the Investment Advisor receives a net commission for the distribution
of the Fund's shares. This commission, paid by the shareholder upon purchase,
amounted to $513, 417 in 1997.
The Investment Advisor had entered into a Sub-Advisory Agreement with Ark
Asset Management Co., Inc. (Sub-Advisor). Under the Sub-Advisory Agreement, the
Advisor employs the Sub-Advisor to furnish investment advice and manage on a
regular basis the investment portfolio of the Fund, subject to the direction of
the Advisor, the Board of Directors of the Fund, and to the provisions of the
Fund's current Prospectus. Except when otherwise specifically directed by the
Fund or the Advisor, the Sub-Advisor will make investment decisions on behalf of
the Fund and place all orders for the purchase or sale of portfolio securities
for the Fund's account. For services rendered, the Investment Advisor, not the
Fund, will pay the Sub-Advisor a fee amounting on an annual basis to
approximately .45 of 1% of the average daily net asset value of the Fund.
11
<PAGE>
AMWAY MUTUAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Concluded)
NOTE 6-DATA PROCESSING SERVICE
Portfolio accounting services for the Fund in the amount of $30,725 are
paid for through the use of directed brokerage commissions.
NOTE 7-EVENT SUBSEQUENT TO DECEMBER 31, 1996
A certain class of distributors of Amway Corporation and Amway of Canada,
Ltd. (Corporations) received from each Corporation part of its distributor's
profit-sharing bonus in Amway Mutual Fund, Inc. common stock shares. On January
8, 1998, the Corporations purchased 1,854,165 Amway Mutual Fund shares valued at
$14,073,116 (based on the net asset value of $7.59 per share) and transferred
the shares to these distributors.
FINANCIAL HIGHLIGHTS
(Selected data for each share of capital stock outstanding
throughout each period.)
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995* 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $7.62 $7.43 $6.88 $7.71 $7.57 $8.11 $6.82 $7.26 $6.49 $7.87
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .09 .10 .10 .03 .02 .02 .06 .08 .16 .16
Net gain (loss) on securities 1.62 1.59 1.98 (.49) .78 .10 2.65 (.01) 1.93 .36
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 1.71 1.69 2.08 (.46) .80 .12 2.71 .07 2.09 .52
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net
investment income .10 .09 .11 .03 .02 .02 .06 .08 .16 .15
Distributions from
capital gains 1.50 1.41 1.42 .34 .64 .64 1.36 .43 1.16 1.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions 1.60 1.50 1.53 .37 .66 .66 1.42 .51 1.32 1.90
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $7.73 $7.62 $7.43 $6.88 $7.71 $7.57 $8.11 $6.82 $7.26 $6.49
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return** 22.47% 23.18% 30.55% (5.87%) 10.85% 1.77% 41.81% 1.01% 32.83% 6.89%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $139,164 $113,327 $77,248 $58,921 $61,741 $55,342 $53,238 $38,286 $39,029 $31,274
Ratio of expenses to
average net assets*** .9% 1.0% 1.1% 1.1% 1.1% 1.1% 1.1% 1.2% 1.2% 1.3%
Ratio of net income (loss)
to average net assets 1.1% 1.2% 1.2% .4% .2% .3% .7% 1.1% 2.0% 1.9%
Portfolio turnover rate 103.1% 100.4% 173.3% 78.1% 91.5% 136.5% 160.4% 171.1% 14.6% 135.5%
Average commission
rate per share $.0574 $.0600 $.0598 $.0597 $.0682 $.0691 $.0697 $.0708 $.0684 $.0672
</TABLE>
* Effective May 1, 1995 Ark Asset Management Co., Inc. entered into a
Sub-Advisory Agreement with the Fund. Kemper Financial Services previously
served as the Fund's sub-advisor.
** Total return does not reflect the effect of the sales charge.
*** The Fund's base portfolio accounting services expense in the amount of
$2,500 per month ($30,000 annual base fee) was paid through the use of directed
brokerage commissions. Ratio includes fees paid with brokerage commissions for
fiscal years ending after September 1, 1995.
12
<PAGE>
AMWAY MUTUAL FUND, INC.
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors
Amway Mutual Fund, Inc.
Ada, Michigan
We have audited the accompanying statement of assets and liabilities of
Amway Mutual Fund, Inc., including the schedule of investments, as of December
31, 1997, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the selected per share data and ratios for each of the ten years in
the period then ended. These financial statements and per share data and ratios
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and per share data and ratios
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 per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and selected per share data and ratios. Our procedures included
confirmation of securities owned as of December 31, 1997 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement and selected per share data and
ratios presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the financial
position of Amway Mutual Fund, Inc. as of December 31, l997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the selected per share data and
ratios for each of the ten years in the period then ended in conformity with
generally accepted accounting principles.
BDO SEIDMAN, LLP
Certified Public Accountants
Grand Rapids, Michigan
January 16, 1998
13
<PAGE>
AMWAY MUTUAL FUND, INC.
ANNUAL SHAREHOLDER MEETING RESULTS
At the Annual Stockholder's Meeting of the Fund, held on August 5, 1997, in
Grand Rapids, Michigan, the Advisory and Service Center Contract between the
Fund and Amway Management Company, the Sub-Advisory Agreement between Amway
Management Company and Ark Asset Management Co., Inc., and the selection of BDO
Seidman, LLP as auditors for the Fund for the calendar year l997, were approved.
An Amendment to the Fund's Certificate of Incorporation to increase the
authorized capital from 20,000,000 shares to 100,000,000 shares of common stock
was also approved. In addition, elected as Directors for the ensuing year were
James J. Rosloniec, Allan D. Engel, Richard A. DeWitt, Donald H. Johnson, and
Walter T. Jones. The following is a tabulation of the proxy vote:
<TABLE>
<CAPTION>
PROPOSALS SHARES FOR SHARES AGAINST SHARES ABSTAIN
<S> <C> <C> <C>
1) Election of Directors:
R.A. DeWitt 7,718,555.955 (49.88%) 0 140,611.096 (0.91%)
Allan D. Engel 7,731,139.505 (49.96%) 0 128,027.546 (0.83%)
Donald H. Johnson 7,730,710.977 (49.96%) 0 128,456.076 (0.83%)
Walter T. Jones 7,731,829.928 (49.97%) 0 127,337.123 (0.82%)
J.J. Rosloneic 7,733,542.917 (49.98%) 0 125,624.134 (0.81%)
2) Approval of the Investment 7,670,032.174 (49.57%) 15,544.459 (0.10%) 173,590.418 (1.12%)
Advisory and Service Contract
Between the Fund and Amway
Management Co.
3) Approval of the Sub-Advisory 7,609,498.149 (49.18%) 29,252.102 (0.19%) 220,416.800 (1.42%)
Contract Between Amway Mgt.
Co. and Ark Asset Mgt. Co.
4) Ratification of the Selection 7,625,957.129 (49.28%) 16,609.521 (0.11%) 216,600.401 (1.40%)
of BDO Seidman, LLP as Auditors
5) Approval for an Amendment 7,539,004.044 (48.72%) 90,902.527 (0.59%) 229,260.480 (1.48%)
to the Fund's Certificate of
Incorporation to Increase the
Authorized Capital from 20,000,000
shares to 100,000,000 shares of
common stock, $1 Par Value
</TABLE>
Total Record date shares were 15,473,899, total shares voted were 7,859,167,
representing 50.79% of the record date shares voted.
14
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
of
AMWAY MUTUAL FUND
a Delaware Business Trust
Principal Place of Business:
7575 Fulton Street East
Ada, Michigan 49355
Agent for Service of
Process in Delaware:
Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
AMWAY MUTUAL FUND TRUST
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 Name and Definitions. . . . . . . . . . . . . . . . . . . 1
Section 1 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Adviser(s). . . . . . . . . . . . . . . . . . . . . . 1
(b) By-Laws . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Certificate of Trust. . . . . . . . . . . . . . . . . 1
(d) Class . . . . . . . . . . . . . . . . . . . . . . . . 1
(e) Commission. . . . . . . . . . . . . . . . . . . . . . 1
(f) Declaration of Trust. . . . . . . . . . . . . . . . . 1
(g) Delaware Act. . . . . . . . . . . . . . . . . . . . . 2
(h) Interested Person . . . . . . . . . . . . . . . . . . 2
(i) 1940 Act. . . . . . . . . . . . . . . . . . . . . . . 2
(j) Person. . . . . . . . . . . . . . . . . . . . . . . . 2
(k) Principal Underwriter . . . . . . . . . . . . . . . . 2
(l) Series. . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Shareholders. . . . . . . . . . . . . . . . . . . . . 2
(n) Shares. . . . . . . . . . . . . . . . . . . . . . . . 2
(o) Trust . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Trust Property. . . . . . . . . . . . . . . . . . . . 2
(q) Trustees. . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Purpose of Trust. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1 Division of Beneficial Interest . . . . . . . . . . . . . 3
Section 2 Ownership of Shares . . . . . . . . . . . . . . . . . . . 4
Section 3 Transfer of Shares. . . . . . . . . . . . . . . . . . . . 4
Section 4 Investments in the Trust. . . . . . . . . . . . . . . . . 4
Section 5 Status of Shares and Limitation of Personal Liability . . 4
Section 6 Establishment, Designation, Abolition or Termination,
etc. of Series or Class . . . . . . . . . . . . . . . . . 5
(a) Assets held with Respect to a Particular Series . . . 5
(b) Liabilities Held with Respect to a Particular
Series. . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Dividends, Distributions, Redemptions and
Repurchases . . . . . . . . . . . . . . . . . . . . . 6
<PAGE>
(d) Equality. . . . . . . . . . . . . . . . . . . . . . . 6
(e) Fractions . . . . . . . . . . . . . . . . . . . . . . 7
(f) Exchange Privilege. . . . . . . . . . . . . . . . . . 7
(g) Combination of Series . . . . . . . . . . . . . . . . 7
ARTICLE IV Trustees. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1 Number, Election and Tenure . . . . . . . . . . . . . . . 7
Section 2 Effect of Death, Resignation, etc. of a Trustee . . . . . 8
Section 3 Powers. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4 Payment of Expenses by the Trust. . . . . . . . . . . . . 10
Section 5 Payment of Expenses by Shareholders . . . . . . . . . . . 12
Section 6 Ownership of Assets of the Trust. . . . . . . . . . . . . 12
Section 7 Services Contracts. . . . . . . . . . . . . . . . . . . . 12
Section 8 Trustees and Officers as Shareholders . . . . . . . . . . 13
Section 9 Compensation. . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V Shareholders' Voting Powers and Meetings. . . . . . . . . 14
Section 1 Voting Powers, Meetings, Notice and Record Dates. . . . . 14
Section 2 Quorum and Required Vote. . . . . . . . . . . . . . . . . 14
Section 3 Record Dates. . . . . . . . . . . . . . . . . . . . . . . 14
Section 4 Additional Provisions . . . . . . . . . . . . . . . . . . 15
ARTICLE VI Net Asset Value, Distributions and Redemptions. . . . . . 15
Section 1 Determination of Net Asset Value, Net Income and
Distributions . . . . . . . . . . . . . . . . . . . . . . 15
Section 2 Redemptions and Repurchases . . . . . . . . . . . . . . . 15
ARTICLE VII Limitation of Liability; Indemnification. . . . . . . . . 16
Section 1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2 Trustees' Good Faith Action; Expert Advice; No
Bond or Surety. . . . . . . . . . . . . . . . . . . . . . 17
Section 3 Indemnification of Shareholders . . . . . . . . . . . . . 17
Section 4 Indemnification of Trustees, Officers, etc. . . . . . . . 18
Section 5 Compromise Payment. . . . . . . . . . . . . . . . . . . . 19
Section 6 Indemnification Not Exclusive, etc. . . . . . . . . . . . 19
Section 7 Liability of Third Persons Dealing with Trustees. . . . . 19
Section 8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 19
Section 1 Termination of the Trust or Any Series or Class . . . . . 19
Section 2 Reorganization. . . . . . . . . . . . . . . . . . . . . . 20
Section 3 Amendments. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4 Filing of Copies; References; Headings. . . . . . . . . . 21
Section 5 Applicable Law. . . . . . . . . . . . . . . . . . . . . . 22
Section 6 Provisions in Conflict with Law or Regulations. . . . . . 22
Section 7 Business Trust Only . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
AMWAY MUTUAL FUND TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of the
date set forth below by the Trustees named hereunder for the purpose of forming
a Delaware business trust in accordance with the provisions hereinafter set
forth.
NOW, THEREFORE, the Trustees hereby direct that the Certificate of Trust be
filed with the Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities, and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the benefit of the holders of Shares of this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as Amway Mutual Fund Trust and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) "Adviser(s)" means a party or parties furnishing services to the Trust
pursuant to any investment advisory or investment management contract described
in Article IV, Section 6(a) hereof;
(b) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time, which By-Laws are expressly herein incorporated by reference as part
of the "governing instrument" within the meaning of the Delaware Act;
(c) "Certificate of Trust" means the certificate of trust, as amended or
restated from time to time, filed by the Trustees in the Office of the Secretary
of State of the State of Delaware in accordance with the Delaware Act;
(d) "Class" means a class of Shares of a Series of the Trust established in
accordance with the provisions of Article III hereof;
(e) "Commission" shall have the meaning given such term in the 1940 Act;
(f) "Declaration of Trust" means this Agreement and Declaration of
Trust, as amended or restated from time to time;
<PAGE>
(g) "Delaware Act" means the Delaware Business Trust Act, 12 Del. C. ss.ss.
3801 et seq., as amended from time to time;
(h) "Interested Person" shall have the meaning given it in Section
2(a)(19) of the 1940 Act;
(i) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates, and other entities, whether or
not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given such term in
the 1940 Act;
(l) "Series" means each Series of Shares established and designated
under or in accordance with the provisions of Article III hereof; and where
the context requires or where appropriate, shall be deemed to include "Class"
or "Classes";
(m) "Shareholder" means a record owner of outstanding shares;
(n) "Shares" means the units of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and
includes fractions of Shares as well as whole Shares;
(o) "Trust" means the Delaware Business Trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate
of Trust in the Office of the Secretary of State of the State of Delaware;
(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is from time to time owned or held by or for
the account of the Trust; and
(q) "Trustees" means the Person or Persons who have signed this
Declaration of Trust and all other Persons who may from time to time be duly
elected or appointed to serve as Trustees in accordance with the provisions
hereof, in each case so long as such Person shall continue in office in
accordance with the terms of this Declaration of Trust, and reference herein
to a Trustee or the Trustees shall refer to such Person or Persons in his or
her or their capacity as Trustees hereunder.
<PAGE>
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of an investment company registered under the 1940 Act through one or more
Series and to carry on such other business as the Trustees may from time to time
determine. The Trustees shall not be limited by any law limiting the investments
which may be made by fiduciaries.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust shall be divided into one or more Series. The Trustees may divide each
Series into Classes. Subject to the further provisions of this Article III and
any applicable requirements of the 1940 Act, the Trustees shall have full power
and authority, in their sole discretion, and without obtaining any authorization
or vote of the Shareholders of any Series or Class thereof, (i) to divide the
beneficial interest in each Series or Class thereof into Shares, with or without
par value as the Trustees shall determine, (ii) to issue Shares without
limitation as to number (including fractional Shares) to such Persons and for
such amount and type of consideration, including cash or securities, subject to
any restriction set forth in the By-Laws, at such time or times and on such
terms as the Trustees may deem appropriate, (iii) to establish and designate and
to change in any manner any Series or Class thereof and to fix such preferences,
voting powers, rights, duties and privileges and business purpose of each Series
or Class thereof as the Trustees may from time to time determine, which
preferences, voting powers, rights, duties and privileges may be senior or
subordinate to (or in the case of business purpose, different from) any existing
Series or Class thereof and may be limited to specified property or obligations
of the Trust or profits and losses associated with specified property or
obligations of the Trust, (iv) to divide or combine the Shares of any Series or
Class thereof into a greater or lesser number without thereby materially
changing the proportionate beneficial interest of the Shares of such Series or
Class thereof in the assets held with respect to that Series, (v) to classify or
reclassify any issued Shares of any Series or Class thereof into shares of one
or more Series or Classes thereof; (vi) to change the name of any Series or
Class thereof; (vii) to abolish or terminate any one or more Series or Classes
thereof; (viii) to refuse to issue Shares to any Person or class of Persons; and
(ix) to take such other action with respect to the Shares as the Trustees may
deem desirable.
Subject to the distinctions permitted among Classes of the same Series as
established by the Trustees, consistent with the requirements of the 1940 Act,
each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series, and each holder of Shares of a Series shall be
entitled to receive
<PAGE>
such Shareholder's pro rata share of distributions of income and capital gains,
if any, made with respect to such Series and upon redemption of the Shares of
any Series, such Shareholder shall be paid solely out of the funds and property
of such Series of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued
in connection with a dividend or other distribution in Shares or a split or
reverse split of Shares, shall be fully paid and nonassessable. Except as
otherwise provided by the Trustees, Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or those of a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series or
Class of the Trust. No certificates certifying the ownership of Shares shall be
issued except as the Trustees may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the transfer of Shares of each Series or Class of the Trust
and similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to the
identity of the Shareholders of each Series or Class of the Trust and as to the
number of Shares of each Series or Class of the Trust held from time to time by
each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his or her duly authorized agent upon delivery to
the Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the By-Laws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the holder of record of Shares shall be deemed to be
the holder of such Shares for all purposes hereunder and neither the Trustees
nor the Trust, nor any transfer agent or registrar or any officer, employee, or
agent of the Trust, shall be affected by any notice of a proposed transfer.
Section 4. Investments in the Trust. Investments may be accepted by the
Trust from Persons, at such times, on such terms, and for such consideration as
the Trustees from time to time may authorize.
<PAGE>
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof. The death,
incapacity, dissolution, termination, or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but shall entitle such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or any right to call for a participation
or division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. No Shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to, the Trust or any Series.
Neither the Trust nor the Trustees, nor any officer, employee, or agent of the
Trust shall have any power to bind personally any Shareholder, nor, except as
specifically provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
Section 6. Establishment, Designation, Abolition or Termination etc. of
Series or Class. The establishment and designation of any Series or Class of
Shares of the Trust shall be effective upon the adoption by a majority of the
Trustees then in office of a resolution that sets forth such establishment and
designation and the relative rights and preferences of such Series or Class of
the Trust, whether directly in such resolution or by reference to another
document including, without limitation, any registration statement of the Trust,
or as otherwise provided in such resolution. The abolition or termination of any
Series or Class of Shares of the Trust shall be effective upon the adoption by a
majority of the Trustees then in office of a resolution that abolishes or
terminates such Series or Class.
Shares of each Series or Class of the Trust established pursuant to this
Article III, unless otherwise provided in the resolution establishing such
Series or Class, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof from whatever
source derived (including, without limitation, any proceeds derived from the
sale, exchange or liquidation of such assets and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be) shall irrevocably be held separate with respect to that Series for all
purposes, and shall be so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits and proceeds thereof,
from whatever source derived, (including, without limitation, any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any
<PAGE>
reinvestment of such proceeds), in whatever form the same may be, are herein
referred to as "assets held with respect to" that Series. In the event that
there are any assets, income, earnings, profits and proceeds thereof, funds or
payments which are not readily identifiable as assets held with respect to any
particular Series (collectively "General Assets"), the Trustees shall allocate
such General Assets to, between or among any one or more of the Series in such
manner and on such basis as the Trustees, in their sole discretion, deem fair
and equitable, and any General Assets so allocated to a particular Series shall
be held with respect to that Series. Each such allocation by the Trustees shall
be conclusive and binding upon the Shareholders of all Series for all purposes.
Separate and distinct records shall be maintained for each Series and the assets
held with respect to each Series shall be held and accounted for separately from
the assets held with respect to all other Series and the General Assets of the
Trust not allocated to such Series.
(b) Liabilities Held with Respect to a Particular Series. The assets of the
Trust held with respect to each particular Series shall be charged against the
liabilities of the Trust held with respect to that Series and all expenses,
costs, charges, and reserves attributable to that Series, except that
liabilities and expenses allocated solely to a particular Class shall be borne
by that Class. Any general liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or more of the
Series or Classes in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs, charges,
and reserves so charged to a Series or Class are herein referred to as
"liabilities held with respect to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series or Classes for all
purposes. Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets held with respect to such Series only and not
against the assets of the Trust generally or against the assets held with
respect to any other Series. Notice of this contractual limitation on
liabilities among Series may, in the Trustees' discretion, be set forth in the
Certificate of Trust and upon the giving of such notice in the Certificate of
Trust, the statutory provisions of Section 3804 of the Delaware Act relating to
limitations on liabilities among Series (and the statutory effect under Section
3804 of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other Series.
<PAGE>
(c) Dividends, Distributions, Redemptions, and Repurchases. Notwithstanding
any other provisions of this Declaration of Trust, including, without
limitation, Article Vl, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any Series
or Class with respect to, nor any redemption or repurchase of, the Shares of any
Series or Class, shall be effected by the Trust other than from the assets held
with respect to such Series, nor shall any Shareholder or any particular Series
or Class otherwise have any right or claim against the assets held with respect
to any other Series except to the extent that such Shareholder has such a right
or claim hereunder as a Shareholder of such other Series. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital, and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Equality. All the Shares of each particular Series shall represent an
equal proportionate interest in the assets held with respect to that Series
(subject to the liabilities held with respect to that Series or Class thereof
and such rights and preferences as may have been established and designated with
respect to any Class within such Series), and each Share of any particular
Series shall be equal to each other Share of that Series. With respect to any
Class of a Series, each such Class shall represent interests in the assets held
with respect to that Series and shall have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that
expenses allocated to a Class may be borne solely by such Class as determined by
the Trustees and a Class may have exclusive voting rights with respect to
matters affecting only that Class.
(e) Fractions. Any fractional Share of a Series or Class thereof shall
carry proportionately all the rights and obligations of a whole Share of that
Series or Class, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.
(f) Exchange Privilege. The Trustees shall have the authority to provide
that the holders of Shares of any Series or Class shall have the right to
exchange said Shares for Shares of one or more other Series of Shares or Class
of Shares of the Trust or of other investment companies registered under the
1940 Act in accordance with such requirements and procedures as may be
established by the Trustees.
(g) Combination of Series. The Trustees shall have the authority, without
the approval of the Shareholders of any Series or Class unless otherwise
required by applicable law, to combine the assets and liabilities held with
respect to any two or more Series or Classes into assets and liabilities held
with respect to a single Series or Class.
<PAGE>
ARTICLE IV
Trustees
Section 1. Number, Election and Tenure. The number of Trustees shall
initially be 5 who shall be Richard A. DeWitt, Allan D. Engel, Donald H.
Johnson, Walter T. Jones, and James J. Rosloniec. Thereafter, the number of
Trustees shall at all times be at least one and no more than such number as
determined, from time to time, by the Trustees pursuant to Section 3 of this
Article IV. Each Trustee shall serve during the lifetime of the Trust until he
or she dies, resigns, has reached any mandatory retirement age as set by the
Trustees, is declared bankrupt or incompetent by a court of appropriate
jurisdiction, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of his or her successor. In the event that less than a
majority of the Trustees holding office have been elected by the Shareholders,
the Trustees then in office shall take such actions as may be necessary under
applicable law for the election of Trustees. Any Trustee may resign at any time
by written instrument signed by him or her and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no Trustee
resigning and no Trustee removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
on account of such removal. The Shareholders may elect Trustees at any meeting
of Shareholders called by the Trustees for that purpose. Any Trustee may be
removed (a) at any meeting of Shareholders by a vote of two-thirds of the
outstanding Shares of the Trust, or (b) by a written instrument signed by at
least two-thirds of the number of Trustees prior to such removal.
Section 2. Effect of Death. Resignation. etc. of a Trustee. The death,
declination to serve, resignation, retirement, removal or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever there shall be fewer than the designated number of Trustees, until
additional Trustees are elected or appointed as provided herein to bring the
total number of Trustees equal to the designated number, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Trustees. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to replace those no longer serving,
the Trust's Adviser(s) are empowered to appoint new Trustees subject to the
provisions of the 1940 Act.
<PAGE>
Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and the
Trustees shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in transactions of all kinds on
behalf of the Trust as described in this Declaration of Trust. Without
limiting the foregoing, the Trustees may: adopt By-Laws not inconsistent with
this Declaration of Trust providing for the management of the affairs of the
Trust and may amend and repeal such By-Laws to the extent that such By-Laws
do not reserve that right to the Shareholders; enlarge or reduce the number
of Trustees; remove any Trustee with or without cause at any time by written
instrument signed by at least two-thirds of the number of Trustees prior to
such removal, specifying the date when such removal shall become effective,
and fill vacancies caused by enlargement of their number or by the death,
resignation, retirement or removal of a Trustee; elect and remove, with or
without cause, such officers and appoint and terminate such agents as they
consider appropriate; appoint from their own number and establish and
terminate one or more committees, consisting of two or more Trustees, that
may exercise the powers and authority of the Board of Trustees to the extent
that the Trustees so determine; employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ sub-custodians and
to deposit all or any part of such assets in a system or systems for the
central handling of securities or with a Federal Reserve Bank; employ an
administrator for the Trust and may authorize such administrator to employ
sub-administrators; employ an investment adviser or investment advisers to
the Trust and may authorize such Advisers to employ sub-advisers; retain a
transfer agent or a shareholder servicing agent, or both; provide for the
issuance and distribution of Shares by the Trust directly or through one or
more Principal Underwriters or otherwise; redeem, repurchase and transfer
Shares pursuant to applicable law; set record dates for the determination of
Shareholders with respect to various matters; declare and pay dividends and
distributions to Shareholders of each Series from the assets of such Series;
and in general delegate such authority as they consider desirable to any
officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian, transfer or shareholder
servicing agent, or Principal Underwriter. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Declaration of Trust, the
presumption shall be in favor of a grant of power to the Trustees. Unless
otherwise specified herein or in the By-Laws or required by law, any action
by the Trustees shall be deemed effective if approved or taken by a majority
of the Trustees present at a meeting of Trustees at which a quorum of
Trustees is present, within or without the State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust (or to act on behalf of the Trust):
(a) To invest and reinvest cash, to hold cash uninvested, and to subscribe
for, invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge,
sell, assign, transfer, exchange, distribute, write options on, lend or
otherwise deal in or dispose of contracts for the future acquisition or delivery
of fixed income or other securities, and
<PAGE>
securities of every nature and kind, including, without limitation, all types of
bonds, debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial papers, repurchase agreements, bankers' acceptances, and other
securities of any kind, issued, created, guaranteed, or sponsored by any and all
Persons, including without limitation, states, territories, and possessions of
the United States and the District of Columbia and any political subdivision,
agency, or instrumentality thereof, any foreign government or any political
subdivision of the United States Government or any foreign government, or any
international instrumentality, or by any bank or savings institution, or by any
corporation or organization organized under the laws of the United States or of
any state, territory, or possession thereof, or by any corporation or
organization organized under any foreign law, or in "when issued" contracts for
any such securities, to change the investments of the assets of the Trust; and
to exercise any and all rights, powers, and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write
options (including, options on futures contracts) with respect to or otherwise
deal in any property rights relating to any or all of the assets of the Trust or
any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such Person or Persons as the Trustees shall
deem proper, granting to such Person or Persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own name or
in the name of a custodian or sub-custodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depository, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depository or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and
<PAGE>
to pay, such portion of the expenses and compensation of such committee,
depository or trustee as the Trustees shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited to,
claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(j) To borrow funds or other property in the name of the Trust exclusively
for Trust purposes and in connection therewith to issue notes or other evidences
of indebtedness; and to mortgage and pledge the Trust Property or any part
thereof to secure any or all of such indebtedness;
(k) To endorse or guarantee the payment of any notes or other obligations
of any Person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust Property or
any part thereof to secure any of or all of such obligations;
(l) To purchase and pay for entirely out of Trust Property such insurance
as the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust or payment of distributions and principal on its portfolio
investments, and insurance polices insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such Person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person against
liability;
(m) To adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and benefit
plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust;
(n) To operate as and carry out the business of an investment company, and
exercise all the powers necessary or appropriate to the conduct of such
operations;
(o) To enter into contracts of any kind and description;
<PAGE>
(p) To employ as custodian of any assets of the Trust one or more banks,
trust companies or companies that are members of a national securities exchange
or such other entities as the Commission may permit as custodians of the Trust,
subject to any conditions set forth in this Declaration of Trust or in the
By-Laws;
(q) To employ auditors, counsel or other agents of the Trust, subject to
any conditions set forth in this Declaration of Trust or in the By-Laws;
(r) To interpret the investment policies, practices, or limitations of any
Series or Class;
(s) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article
III;
(t) To the full extent permitted by the Delaware Act, to allocate assets,
liabilities and expenses of the Trust to a particular Series and Class or to
apportion the same between or among two or more Series or Classes, provided that
any liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series or Class as provided
for in Article III;
(u) To invest all of the assets of the Trust, or any Series or any Class
thereof in a single investment company;
(v) Subject to the 1940 Act, to engage in any other lawful act or activity
in which a business trust organized under the Delaware Act may engage.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, Advisers, Principal Underwriter, auditors,
counsel, custodian, transfer agent, shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur, which expenses, fees, charges,
taxes and liabilities shall be allocated in accordance with Article III, Section
6 hereof.
<PAGE>
Section 5. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
expenses of the Trust as described in Section 4 of this Article IV ("Expenses"),
in an amount fixed from time to time by the Trustees, by setting off such
Expenses due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such Expenses due from such Shareholder, provided that the
direct payment of such Expenses by Shareholders is permitted under applicable
law.
Section 6. Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trust, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. The right, title and interest of the Trustees in the
Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee, he or she shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth under
federal and/or state law and in the By-Laws, including, without limitation, the
requirements of Section 15 of the 1940 Act, the Trustees may, at any time and
from time to time, contract for exclusive or nonexclusive advisory, management
and/or administrative services for the Trust or for any Series (or Class
thereof) with any Person and any such contract may contain such other terms as
the Trustees may determine, including, without limitation, authority for the
Adviser(s) or administrator to delegate certain or all of its duties under such
contracts to other qualified investment advisers and administrators and to
determine from time to time without prior consultation with the Trustees what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments, or such other activities as may specifically be
delegated to such party.
(b) The Trustees may also, at any time and from time to time, contract with
any Person, appointing such Person exclusive or nonexclusive distributor or
Principal Underwriter for the Shares of one or more of the Series (or Classes)
or other securities to be issued by the Trust.
<PAGE>
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any Person, appointing such Person or Persons the custodian,
transfer agent and/or shareholder servicing agent for the Trust or one or more
of its Series.
(d) The Trustees are further empowered, at any time and from time to time,
to contract with any Person to provide such other services to the Trust or one
or more of the Series, as the Trustees determine to be in the best interests of
the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, Adviser, Principal
Underwriter, distributor, or affiliate or agent of or for any Person, or for any
parent or affiliate of any Person with which an advisory, management, or
administration contract, or Principal Underwriter's or distributor's contract,
or transfer agent, shareholder servicing agent or other type of service contract
may have been or may hereafter be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder or has an interest in the Trust;
or that
(ii) any Person with which an advisory, management, or administration
contract or Principal Underwriter's or distributor's contract, or transfer agent
or shareholder servicing agent contract may have been or may hereafter be made
also has an advisory, management, or administration contract, or Principal
Underwriter's or distributor's or other service contract with one or more other
Persons, or has other business or interests, shall not affect the validity of
any such contract or disqualify any Shareholder, Trustee or officer of the Trust
from voting upon or executing the same, or create any liability or
accountability to the Trust or its shareholders.
Section 8. Trustees and Officers as Shareholders. Any Trustee, officer or
agent of the Trust may acquire, own and dispose of Shares to the same extent as
if he or she were not a Trustee, officer or agent; and the Trustees may issue
and sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the By-Laws
relating to the sale and redemption of such Shares.
Section 9. Compensation. The Trustees in such capacity shall be entitled to
reasonable compensation from the Trust and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for such services by the Trust.
<PAGE>
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Meetings. Notice. and Record Dates. The
Shareholders shall have power to vote only: (i) for the election or removal of
Trustees as provided in Article IV, Section 1 hereof, and (ii) with respect to
such additional matters relating to the Trust as may be required by applicable
law, this Declaration of Trust, the By-Laws or any registration statement of the
Trust with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. Shareholders shall be entitled to one vote for
each Share held, and a fractional vote for each fraction of a Share held, as to
any matter on which the Share is entitled to vote. Notwithstanding any other
provision of this Declaration of Trust, on any matters submitted to a vote of
the Shareholders, all shares of the Trust then entitled to vote shall be voted
in aggregate, except: (i) when required by the 1940 Act, Shares shall be voted
by individual Series; (ii) when the matter involves any action that the Trustees
have determined will affect only the interests of one or more Series, then only
Shareholders of such Series shall be entitled to vote thereon; and (iii) when
the matter involves any action that the Trustees have determined will affect
only the interests of one or more Classes, then only the Shareholders of such
Class or Classes shall be entitled to vote thereon. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy. A
proxy may be given in writing. The By-Laws may provide that proxies may also, or
may instead, be given by an electronic or telecommunications device or in any
other manner. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by the Shareholders. Meetings of the Shareholders
shall be called and notice thereof and record dates therefor shall be given and
set as provided in the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
twenty-five percent (25%) of the Shares issued and outstanding shall constitute
a quorum at a Shareholders' meeting but any lesser number shall be sufficient
for adjourned sessions. When any one or more Series (or Classes) is to vote as a
single Series (or Class) separate from any other Shares, twenty-five percent
(25%) of the Shares of each such Series (or Class) issued and outstanding shall
constitute a quorum at a Shareholders' meeting of that Series (or Class). Except
when a larger vote is required by any provision of this Declaration of Trust or
the By-Laws or by applicable law, when a quorum is present at any meeting, a
majority of the Shares voted shall decide any questions and a plurality of the
Shares voted shall elect a Trustee, provided that where any provision of law or
of this Declaration of Trust requires that the holders of any Series shall vote
as a Series (or that holders of a Class shall vote as a Class), then a majority
of the Shares of that Series (or Class) voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter insofar as that
Series (or Class) is concerned.
<PAGE>
Section 3. Record Dates. For the purpose of determining the Shareholders of
any Series (or Class) who are entitled to receive payment of any dividend or of
any other distribution, the Trustees may from time to time fix a date, which
shall be before the date for the payment of such dividend or such other payment,
as the record date for determining the Shareholders of such Series (or Class)
having the right to receive such dividend or distribution. Without fixing a
record date, the Trustees may for distribution purposes close the register or
transfer books for one or more Series (or Classes) at any time prior to the
payment of a distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different Series
(or Classes).
Section 4. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and Distributions.
Subject to applicable law and Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the By-Laws or
in a duly adopted vote of the Trustees such bases and time for determining the
per Share or net asset value of the Shares of any Series or Class or net income
attributable to the Shares of any Series or Class, or the declaration and
payment of dividends and distributions on the Shares of any Series or Class, as
they may deem necessary or desirable.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any Shareholder
for redemption, upon the presentation of a proper instrument of transfer
together with a request directed to the Trust, or a Person designated by the
Trust, that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws, any registration statement of the Trust and applicable law. Unless
extraordinary circumstances exist, payment for said Shares shall be made by the
Trust to the Shareholder in accordance with the 1940 Act and any rules and
regulations thereunder or as otherwise required by the Commission. The
obligation set forth in this Section 2(a) is subject to the provision that,
during any emergency which makes it impracticable for the Trust to dispose of
the investments of the applicable Series or to determine fairly the value of the
net assets held with respect to such Series, such obligation may be suspended or
postponed by the Trustees. In the case of a suspension of the right of
redemption as provided herein, a Shareholder may
<PAGE>
either withdraw the request for redemption or receive payment based on the net
asset value per share next determined after the termination of such suspension.
(b) The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the interest
of the remaining Shareholders of the Series or Class thereof for which the
Shares are being redeemed. Subject to the foregoing, the fair value, selection
and quantity of securities or other property so paid or delivered as all or part
of the redemption price may be determined by or under authority of the Trustees.
In no case shall the Trust be liable for any delay of any Adviser or other
Person in transferring securities selected for delivery as all or part of any
payment-in-kind.
(c) If the Trustees shall, at any time and in good faith, determine that
direct or indirect ownership of Shares of any Series or Class thereof has or may
become concentrated in any Person to an extent that would disqualify any Series
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (or any successor statute thereof), then the Trustees shall have the
power (but not the obligation) by such means as they deem equitable (i) to call
for the redemption by any such Person of a number, or principal amount, of
Shares sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification, (ii) to
refuse to transfer or issue Shares of any Series or Class thereof to such Person
whose acquisition of the Shares in question would result in such
disqualification, or (iii) to take such other actions as they deem necessary and
appropriate to avoid such disqualification. Any such redemption shall be
effected at the redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other taxing authority.
ARTICLE VII
Limitation of Liability; Indemnification
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice. The
Trustees, officers, employees and agents of the Trust, in incurring any debts,
liabilities or obligations, or in taking or omitting any other actions for or in
connection with the Trust, are or shall be deemed to be acting as Trustees,
officers, employees or agents of the Trust and not in their own capacities. No
Shareholder shall be subject to any personal liability whatsoever in tort,
contract or otherwise to any other Person or Persons in connection with the
assets or the affairs of the Trust or of any Series, and subject to Section 4 of
this Article VII, no Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever in tort, contract, or otherwise,
<PAGE>
to any other Person or Persons in connection with the assets or affairs of the
Trust or of any Series, save only that arising from his or her own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office or the discharge of his or her
functions. The Trust (or if the matter relates only to a particular Series, that
Series) shall be solely liable for any and all debts, claims, demands,
judgments, decrees, liabilities or obligations of any and every kind, against or
with respect to the Trust or such Series in tort, contract or otherwise in
connection with the assets or the affairs of the Trust or such Series, and all
Persons dealing with the Trust or any Series shall be deemed to have agreed that
resort shall be had solely to the Trust Property of the Trust (or if the matter
relates only to a particular Series, that of such Series), for the payment or
performance thereof.
The Trustees may provide that every note, bond, contract, instrument,
certificate or undertaking made or issued by the Trustees or by any officers or
officer shall give notice that a Certificate of Trust in respect of the Trust is
on file with the Secretary of State of the State of Delaware and may recite to
the effect that the same was executed or made by or on behalf of the Trust or by
them as Trustees or Trustee or as officers or officer, and not individually, and
that the obligations of any instrument made or issued by the Trustees or by any
officer of officers of the Trust are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, or the particular Series in question, as the case may be. The
omission of any statement to such effect from such instrument shall not operate
to bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually, or to subject the assets of any Series to the
obligations of any other Series.
Section 2. Trustees' Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. Subject to Section 4 of this Article VII, a
Trustee shall be liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (i) the Trustees
shall not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, Adviser, administrator, distributor or
Principal Underwriter, custodian or transfer agent, dividend disbursing agent,
shareholder servicing agent or accounting agent of the Trust, nor shall any
Trustee be responsible for the act or omission of any other Trustee; (ii) the
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice; and (iii) in discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of a contracting party employed by the Trust. The
<PAGE>
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties.
Section 3. Indemnification of Shareholders. If any Shareholder (or former
Shareholder) of the Trust shall be charged or held to be personally liable for
any obligation or liability of the Trust solely by reason of being or having
been a Shareholder and not because of such Shareholder's acts or omissions or
for some other reason, the Trust (upon proper and timely request by the
Shareholder) may assume the defense against such charge and satisfy any judgment
thereon or may reimburse the Shareholders for expenses, and the Shareholder or
former Shareholder (or the heirs, executors, administrators or other legal
representatives thereof, or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled (but solely out of the
assets of the Series of which such Shareholder or former Shareholder is or was
the holder of Shares) to be held harmless from and indemnified against all loss
and expense arising from such liability.
Section 4. Indemnification of Trustees, Officers, etc. Subject to the
limitations, if applicable, hereinafter set forth in this Section 4, the Trust
shall indemnify (from the assets of one or more Series to which the conduct in
question relates) each of its Trustees, officers, employees and agents
(including Persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter, together with such Person's
heirs, executors, administrators or personal representative, referred to as a
"Covered Persons") against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such Covered Person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of the Trust; or
(ii) had acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office;
and (iii) for a criminal proceeding, had reasonable cause to believe that his or
her conduct was unlawful (the conduct described in (i), (ii) and (iii) being
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
Covered Person to be indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that the indemnitee
was not liable by reason of Disabling Conduct by (a) a vote of a majority of a
quorum of the
<PAGE>
Trustees who are neither "interested persons" of the Trust as defined in the
1940 Act nor parties to the proceeding (the "Disinterested Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including accountants'
and counsel fees so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines or penalties), may
be paid from time to time by one or more Series to which the conduct in question
related in advance of the final disposition of any such action, suit or
proceeding; provided that the Covered Person shall have undertaken to repay the
amounts so paid to such Series if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VII and
(i) the Covered Person shall have provided security for such undertaking, (ii)
the Trust shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the Disinterested Trustees, or an
independent legal counsel in a written opinion, shall have determined, based on
a review of readily available facts (as opposed to a full trial type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
Section 5. Compromise Payment. As to any matter disposed of by a compromise
payment by any such Covered Person referred to in Section 4 of this Article VII,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of a quorum of the
Disinterested Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to clause (i) or by independent legal
counsel pursuant to clause (ii) shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance with either of
such clauses as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in or not opposed
to the best interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the Covered Person's
office.
Section 6. Indemnification Not Exclusive, etc. The right of indemnification
provided by this Article VII shall not be exclusive of or affect any other
rights to which any such Covered Person or shareholder may be entitled. As used
in this Article VII, a "disinterested" Person is one against whom none of the
actions, suits or other proceedings in question, and no other action, suit or
other proceeding on the same or similar grounds is then or has been pending or
threatened. Nothing contained in this Article VII shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other Persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such Person.
<PAGE>
Section 7. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 8. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he or she may become involved by
virtue of his or her capacity or former capacity as a Trustee of the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Termination of the Trust or Any Series or Class.
(a) Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trustees in their sole discretion may terminate the
Trust.
(b) Upon the requisite action by the Trustees to terminate the Trust or any
one or more Series of Shares or any Class thereof, after paying or otherwise
providing for all charges, taxes, expenses, and liabilities, whether due or
accrued or anticipated, of the Trust or of the particular Series or any Class
thereof as may be determined by the Trustees, the Trust shall in accordance with
such procedures as the Trustees may consider appropriate reduce the remaining
assets of the Trust or of the affected Series or Class to distributable form in
cash or Shares (if any Series remain) or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series or
Classes involved, ratably according to the number of Shares of such Series or
Class held by the Shareholders of such Series or Class on the date of
distribution. Thereupon, the Trust or any affected Series or Class shall
terminate and the Trustees and the Trust shall be discharged from any and all
further liabilities and duties relating thereto or arising therefrom, and the
right, title, and interest of all parties with respect to the Trust or such
Series or Class shall be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
<PAGE>
Section 2. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by applicable law, (i)
cause the Trust to merge or consolidate with or into or transfer its assets and
any liabilities to one or more trusts (or series thereof to the extent permitted
by law), partnerships, associations, corporations or other business entities
(including trusts, partnerships, associations, corporations or other business
entities created by the Trustees to accomplish such merger or consolidation or
transfer of assets and any liabilities) so long as the surviving or resulting
entity is an investment company as defined in the 1940 Act, or is a series
thereof, that will succeed to or assume the Trust's registration under the 1940
Act and that is formed, organized, or existing under the laws of the United
States or of a state, commonwealth, possession or colony of the United States,
unless otherwise permitted under the 1940 Act, (ii) cause any one or more Series
(or Classes) of the Trust to merge or consolidate with or into or transfer its
assets and any liabilities to any one or more other Series (or Classes) of the
Trust, one or more trusts (or series or classes thereof to the extent permitted
by law), partnerships, associations, corporations, (iii) cause the Shares to be
exchanged under or pursuant to any state or federal statute to the extent
permitted by law or (iv) cause the Trust to reorganize as a corporation, limited
liability company or limited liability partnership under the laws of Delaware or
any other state or jurisdiction.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Declaration of Trust, an agreement of merger or consolidation or exchange or
transfer of assets and liabilities approved by the Trustees in accordance with
this Section 2 may (i) effect any amendment to the governing instrument of the
Trust or (ii) effect the adoption of a new governing instrument of the Trust if
the Trust is the surviving or resulting trust in the merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or
any part of the assets, liabilities, profits, or losses of the Trust or any
Series or Class thereof may be transferred and may provide for the conversion
of Shares in the Trust or any Series or Class thereof into beneficial
interests in any such newly created trust or trusts or any series or classes
thereof.
Section 3. Amendments. Except as specifically provided in this Section 3,
the Trustees may, without Shareholder vote, restate, amend, or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
on (i) any amendment that would affect their right to vote granted in Article V,
Section 1 hereof, (ii) any amendment to this Section 3 of Article VIII; (iii)
any amendment that may require their vote under applicable law or by the Trust's
registration statement, as filed with the Commission, and (iv) any amendment
submitted to them for their vote by the Trustees. Any amendment required or
permitted to be submitted to the Shareholders that, as the Trustees determine,
shall affect the Shareholders of one or more Series shall be
<PAGE>
authorized by a vote of the Shareholders of each Series affected and no vote of
Shareholders of a Series not affected shall be required. Notwithstanding
anything else herein, no amendment hereof shall limit the rights to insurance
provided by Article VII hereof with respect to any acts or omissions of Persons
covered thereby prior to such amendment nor shall any such amendment limit the
rights to indemnification referenced in Article VII hereof as provided in the
By-Laws with respect to any actions or omissions of Persons covered thereby
prior to such amendment. The Trustees may, without Shareholder vote, restate,
amend, or otherwise supplement the Certificate of Trust as they deem necessary
or desirable.
Section 4. Filing of Copies; References; Headings. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendments,
references to this instrument, and all expressions such as "herein," "hereof,"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 5. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 5(a) of this Article
VIII, there shall not be applicable to the Trust, the Trustees, or this
Declaration of Trust either the provisions of Section 3540 of Title 12 of the
Delaware Code or any provisions of the laws (statutory or common) of the State
of Delaware (other than the Delaware Act) pertaining to trusts that relate to or
regulate: (i) the filing with any court or governmental body or agency of
Trustee accounts or schedules of trustee fees and charges; (ii)
<PAGE>
affirmative requirements to post bonds for trustees, officers, agents, or
employees of a trust; (iii) the necessity for obtaining a court or other
governmental approval concerning the acquisition, holding, or disposition of
real or personal property; (iv) fees or other sums applicable to trustees,
officers, agents or employees of a trust; (v) the allocation of receipts and
expenditures to income or principal; (vi) restrictions or limitations on the
permissible nature, amount, or concentration of trust investments or
requirements relating to the titling, storage, or other manner of holding of
trust assets; or (vii) the establishment of fiduciary or other standards or
responsibilities or limitations on the acts or powers or liabilities or
authorities and powers of trustees that are inconsistent with the limitations or
liabilities or authorities and powers of the Trustees set forth or referenced in
this Declaration of Trust; or (viii) activities similar to those referenced in
the foregoing items (i) through (vii).
Section 6. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any such provision is
in conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), and the regulations thereunder, the Delaware Act or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such decision shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall, not in any MANNER
affect such provision in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 7. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Delaware Act. It is not the intention of
the Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, or any form of legal relationship other than
a business trust pursuant to the Delaware Act. Nothing in this Declaration of
Trust shall be construed to make the Shareholders, either by themselves or with
the Trustees, partners, or members of a joint stock association.
<PAGE>
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Agreement and Declaration of Trust as of the __ day of February, 1998.
/s/ Richard A. DeWitt /s/ James J. Rosloniec
- ------------------------------ ---------------------------------
Richard A. DeWitt James J. Rosloniec
Trustee and not individually Trustee and not individually
/s/ Allan D. Engel /s/ Walter T. Jones
- ------------------------------ ---------------------------------
Allan D. Engel Walter T. Jones
Trustee and not individually Trustee and not individually
/s/ Donald H. Johnson
- -----------------------------
Donald H. Johnson
Trustee and not individually
THE PRINCIPAL PLACE OF BUSINESS
OF THE TRUST IS:
7575 Fulton Street East,
Ada, Michigan 49355
<PAGE>
BY-LAWS
of
AMWAY MUTUAL FUND TRUST
a Delaware Business Trust
Principal Place of Business:
7575 Fulton Street East
Ada, Michigan 49355
Agent for Service of
Process in Delaware:
Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
<PAGE>
BY-LAWS
OF
AMWAY MUTUAL FUND TRUST
a Delaware Business Trust
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agreement and Declaration of Trust. . . . . . . . . . . . . . . . . 1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Principal Office. . . . . . . . . . . . . . . . . . . . 1
Section 2. Delaware Office . . . . . . . . . . . . . . . . . . . 1
Section 3. Other Offices . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . 2
Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . 2
Section 2. Call of Meetings. . . . . . . . . . . . . . . . . . . . 2
Section 3. Notice of Meetings of Shareholders. . . . . . . . . . . 2
Section 4. Manner of Ginving Notice: Affidavit of Notice . . . . . 2
Section 5. Adjourned Meeting: Notice . . . . . . . . . . . . . . . 3
Section 6. Voting. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Waiver of Notice; Consent of Absent Shareholder . . . . 3
Section 8. Shareholder Action by Written Consent Without a
Meeting . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. Record Date for Shareholder Notice; Voting and Giving
Consents. . . . . . . . . . . . . . . . . . . . . . . . 4
Section 10. Proxies . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 11. Inspectors of Election. . . . . . . . . . . . . . . . . 5
ARTICLE III TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1. Powers. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2. Number of Trustees. . . . . . . . . . . . . . . . . . . 6
Section 3. Vacancies . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Chair . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Place of Meetings and Meetings by Telephone . . . . . . 7
Section 6. Regular Meetings. . . . . . . . . . . . . . . . . . . . 7
Section 7. Special Meetings. . . . . . . . . . . . . . . . . . . . 7
Section 8. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. Waiver of Notice. . . . . . . . . . . . . . . . . . . . 8
<PAGE>
Section 10. Adjournment . . . . . . . . . . . . . . . . . . . . . . 8
Section 11. Notice of Adjournment . . . . . . . . . . . . . . . . . 8
Section 12. Action Without a Meeting. . . . . . . . . . . . . . . . 8
Section 13. Fees and Compensation of Trustees . . . . . . . . . . . 8
Section 14. Delegation of Power to Other Trustees . . . . . . . . . 8
ARTICLE IV COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1. Committees of Trustees. . . . . . . . . . . . . . . . . 9
Section 2. Meetings and Action of Committees . . . . . . . . . . . 9
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. Officers. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Election of Officers. . . . . . . . . . . . . . . . . . 10
Section 3. Subordinate Officers. . . . . . . . . . . . . . . . . . 10
Section 4. Removal and Resignation of Officers . . . . . . . . . . 10
Section 5. Vacancies in Offices. . . . . . . . . . . . . . . . . . 10
Section 6. President . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. Vice Presidents . . . . . . . . . . . . . . . . . . . . 11
Section 8. Secretary . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9. Treasurer . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI INSPECTION OF RECORDS AND REPORTS. . . . . . . . . . . . . 12
Section 1. Inspection by Shareholders. . . . . . . . . . . . . . . 12
Section 2. Inspection by Trustees. . . . . . . . . . . . . . . . . 12
ARTICLE VII GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Checks, Drafts, Evidences of Indebtedness . . . . . . . 12
Section 2. Contracts and Instruments: How Executed . . . . . . . . 12
Section 3. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Seal. . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1. Amendment . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE>
BY-LAWS
OF
AMWAY MUTUAL FUND TRUST
a Delaware Business Trust
INTRODUCTION
A. Agreement and Declaration of Trust. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Amway Mutual Fund Trust, a Delaware business trust
(the "Trust"). In the event of any inconsistency between the terms hereof and
the terms of the Declaration of Trust, the terms of the Declaration of Trust
shall control.
B. Definitions. Capitalized terms used herein and not herein defined are
used as defined in the Declaration of Trust.
ARTICLE I OFFICES
Section 1. Principal Office. The Trustees shall fix and, from time to
time, may change the location of the principal executive office of the Trust at
any place within or outside the State of Delaware.
Section 2. Delaware Office. The Trustee shall establish a registered
office in the State of Delaware and shall appoint as the Trust's registered
agent for service of process in the State of Delaware an individual who is a
resident of the State of Delaware or a Delaware corporation or a corporation
authorized to transact business in the State of Delaware; in each case the
business office of such registered agent for service of process shall be
identical with the registered Delaware office of the Trust.
Section 3. Other Offices. The Trustees may at any time establish branch
or subordinate offices at any place or places within or outside the State of
Delaware where the Trust intends to do business.
ARTICLE II MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. Meetings of Shareholders shall be held at
any place designated by the Trustees. In the absence of any such designation,
Shareholders' meetings shall be held at the principal executive office of the
Trust.
<PAGE>
Section 2. Call of Meetings. There shall be no annual Shareholders'
meetings. Special meetings of the Shareholders may be called at any time by the
Trustees, the President or any other officer designated for the purpose by the
Trustees, for the purpose of seeking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or provided in the
Declaration of Trust or upon any other matter as to which such vote or authority
is deemed by the Trustees or the President to be necessary or desirable. To the
extent required by the Investment Company Act of 1940, as amended ("1940 Act"),
meetings of the Shareholders for the purpose of voting on the removal of any
Trustee shall be called promptly by the Trustees.
Section 3. Notice of Meetings of Shareholders. All notices of meetings of
Shareholders shall be sent or otherwise given to Shareholders in accordance with
Section 4 of this Article II not less than ten (10) nor more than ninety (90)
days before the date of the meeting. The notice shall specify (i) the place,
date and hour of the meeting, and (ii) the general nature of the business to be
transacted.
Section 4. Manner of Giving Notice: Affidavit of Notice. Notice of any
meeting of Shareholders shall be (i) given either by hand delivery, first-class
mail, telegraphic or other written communication, charges prepaid, and (ii)
addressed to the Shareholder at the address of that Shareholder appearing on the
books of the Trust or its transfer agent or given by the Shareholders to the
Trust for the purpose of notice. If no such address appears on the Trust's
books or is not given to the Trust, notice shall be deemed to have been given if
sent to that shareholder by first class mail or telegraphic or other written
communication to the Trust's principal executive office, or if published at
least once in a newspaper of general circulation in the county where that office
is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication or, where notice is given by publication, on the date
of publication.
An Affidavit of the mailing or other means of giving any notice of any
meeting of Shareholders shall be filed and maintained in the minute book of the
Trust.
Section 5. Adjourned Meeting; Notice. Any meetings of Shareholders,
whether or not a quorum is present, may be adjourned from time to time by: (a)
the vote of the majority of the Shares represented at that meeting, either in
person or by proxy; or (b) in his or her discretion by the chair of the meeting.
When any meeting of Shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed. Notice of
any such adjourned meeting shall be given to each Shareholder of record entitled
to vote at the adjourned meeting in accordance with the provisions of Sections 3
and 4 of this Article II. At any adjourned meeting, any business may be
transacted which might have been transacted at the original meeting.
<PAGE>
Section 6. Voting. The Shareholders entitled to vote at any meeting of
Shareholders shall be determined in accordance with the provisions of the
Declaration of Trust, as in effect at such time. The Shareholders' vote may be
by voice vote or by ballot, provided, however, that any election for Trustees
must be by ballot if demanded by any Shareholder before the voting has begun.
Section 7. Waiver of Notice; Consent of Absent Shareholders. The
transaction of business and any actions taken at a meeting of Shareholders,
however called and noticed and wherever held, shall be as valid as though taken
at a meeting duly held after regular call and notice provided a quorum is
present either in person or by proxy at the meeting of Shareholders and if
either before or after the meeting, each Shareholder entitled to vote who was
not present in person or by proxy at the meeting of the Shareholders signs a
written waiver of notice or a consent to a holding of the meeting or an approval
of the minutes. The waiver of notice or consent need not specify either the
business to be transacted or the purpose of any meeting of Shareholders.
Attendance by a Shareholder at a meeting of Shareholders shall constitute a
waiver of notice of that meeting, except if the Shareholder objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting of
Shareholders is not a waiver of any right to object to the consideration of
matters not included in the notice of the meeting of Shareholders if that
objection is expressly made at the beginning at the meeting.
Section 8. Shareholder Action by Written Consent With a Meeting. Except as
provided in the Declaration of Trust, any action that may be taken at any
meeting of Shareholders may be taken without a meeting and without prior notice
if a consent in writing setting forth the action to be taken is signed by the
holders of outstanding Shares having not less than the minimum number of votes
that would be necessary to authorize or take that action at a meeting at which
all Shares entitled to vote on that action were present and voted, provided,
however, that the Shareholders receive any necessary Information Statement or
other necessary documentation in conformity with the requirements of the
Securities Exchange Act of 1934 or the rules or regulations thereunder. All
such consents shall be filed with the Secretary of the Trust and shall be
maintained in the Trust's records. Any Shareholder giving a written consent or
the Shareholder's proxy holders or a transferee of the Shares or a personal
representative of the Shareholder or their respective proxy holders may revoke
the Shareholder's written consent by a writing received by the Secretary of the
Trust before written consents of the number of Shares required to authorize the
proposed action have been filed with the Secretary.
<PAGE>
If the consents of all Shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
Shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the Shareholders without a meeting. This
notice shall be given in the manner specified in Section 4 of this Article II.
Section 9. Record Date for Shareholder Notice; Voting and Giving Consents.
(a) For purposes of determining the Shareholders entitled to vote or act at
any meeting or adjournment thereof, the Trustees may fix in advance a record
date which shall not be more than ninety (90) days nor less than ten (10) days
before the date of any such meeting. Without fixing a record date for a
meeting, the Trustees may for voting and notice purposes close the register or
transfer books for one or more Series (or Classes) for all or any part of the
period between the earliest date on which a record date for such meeting could
be set in accordance herewith and the date of such meeting.
If the Trustees do not so fix a record date or close the register or
transfer books of the affected Series or Classes, the record date for
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be the close of business on the business day next preceding
the day on which notice is given or if notice is waived, at the close of
business on the business day next preceding the day on which the meeting is
held.
(b) The record date for determining Shareholders entitled to give consent
to action in writing without a meeting, (a) when no prior action of the Trustees
has been taken, shall be the day on which the first written consent is given, or
(b) when prior action of the Trustees has been taken, shall be (i) such date as
determined for that purpose by the Trustees, which record date shall not precede
the date upon which the resolution fixing it is adopted by the Trustees and
shall not be more than twenty (20) days after the date of such resolution, or
(ii) if no record date is fixed by the Trustees, the record date shall be the
close of business on the day on which the Trustees adopt the resolution relating
to that action. Nothing in this Section shall be constituted as precluding the
Trustees from setting different record dates for different Series or Classes.
Only Shareholders of record on the record date as herein determined shall have
any right to vote or to act at any meeting or give consent to any action
relating to such record date, notwithstanding any transfer of Shares on the
books of the Trust after such record date.
Section 10. Proxies. Subject to the provisions of the Declaration of
Trust, every Person entitled to vote for Trustees or on any other matter shall
have the right to do so either in person or by proxy, provided that either (i)
an instrument authorizing such a proxy to act is executed by the Shareholder in
writing and dated not more than eleven (11) months before the meeting, unless
the instrument specifically provides for a longer
<PAGE>
period or (ii) the Trustees adopt an electronic, telephonic, computerized or
other alternative to the execution of a written instrument authorizing the proxy
to act, and such authorization is received not more than eleven (11) months
before the meeting. A proxy shall be deemed executed by a Shareholder if the
Shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the Shareholder or the
Shareholder's attorney-in-fact. A valid proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i) revoked by the
Person executing it before the vote pursuant to that proxy is taken, (a) by a
writing delivered to the Trust stating that the proxy is revoked, or (b) by a
subsequent proxy executed by such Person, or (c) attendance at the meeting and
voting in person by the Person executing that proxy, or (d) revocation by such
Person using any electronic, telephonic, computerized or other alternative means
authorized by the Trustee for authorizing the proxy to act; or (ii) written
notice of the death or incapacity of the maker of that proxy is received by the
Trust before the vote pursuant to that proxy is counted. A proxy with respect
to Shares held in the name of two or more Persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of the two or more Persons.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger.
Section 11. Inspectors of Election. Before any meeting of Shareholders,
the Trustees may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournments. If no inspectors of
election are so appointed, the Chairman of the meeting may appoint inspectors of
election at the meeting. The number of inspectors shall be two (2). If any
person appointed as inspector fails to appear or fails or refuses to act, the
Chairman of the meeting may appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of Shares outstanding and the voting power of
each, the Shares represented at the meeting, the existence of a quorum
and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
<PAGE>
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or vote
with fairness to all Shareholders.
ARTICLE III TRUSTEES
Section 1. Powers. Subject to the applicable provisions of the 1940 Act,
the Declaration of Trust and these By-Laws relating to action required to be
approved by the Shareholders, the business and affairs of the Trust shall be
managed and all powers shall be exercised by or under the direction of the
Trustees.
Section 2. Number of Trustees. The exact number of Trustees within the
limits specified in the Declaration of Trust shall be fixed from time to time by
a resolution of the Trustees.
Section 3. Vacancies. Vacancies in the authorized number of Trustees may
be filled as provided in the Declaration of Trust.
Section 4. Chair. The Trustees shall have the power to appoint from among
the members of the Board of Trustees a Chair. Such appointment shall be by
majority vote of the Trustees. Such Chair shall serve until his or her
successor is appointed or until his or her earlier death, resignation or
removal. The Chair shall preside at meetings of the Trustees and shall, subject
to the control of the Trustees, perform such other powers and duties as may be
from time to time assigned to him or her by the Trustees or prescribed by the
Declaration of Trust or these By-Laws, consistent with his or her position. The
Chair need not be a Shareholder.
Section 5. Place of Meetings and Meetings by Telephone. All meetings of
the Trustees may be held at any place that has been selected from time to time
by the Trustees. In the absence of such an election, regular meetings shall be
held at the principal executive office of the Trust. Subject to any applicable
requirements of the 1940 Act, any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all Trustees
participating in the meeting can hear one another and all such Trustees shall be
deemed to be present in person at the meeting.
Section 6. Regular Meetings. Regular meetings of the Trustees shall be
held without call at such time as shall from time to time be fixed by the
Trustees. Such meetings may be held without notice.
Section 7. Special Meetings. Special meeting of the Trustees for any
purpose or purposes may be called at any time by the Chair, the President or the
Secretary or any two (2) Trustees.
<PAGE>
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail, by
telegram or telecopy (or similar electronic means) or, by nationally recognized
overnight courier, charges prepaid, addressed to each Trustee at the Trustee's
address as it is shown on the records of the Trust. If the notice is mailed, it
shall be deposited in the United States mail at least seven (7) calendar days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone or by telegram, telecopy (or similar electronic
means), or overnight courier, it shall be given at least forty eight (48) hours
before the time of the holding of the meeting. Any oral notice given personally
or by telephone must be communicated only to the Trustee. The notice need not
specify the purpose of the meeting or the place of the meeting, if the meeting
is to be held at the principal executive office of the Trust. Notice of a
meeting need not be given to any Trustee if a written waiver of notice, executed
by such Trustee before or after the meeting, is filed with the records of the
meeting, or to any Trustee who attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to such Trustee.
Section 8. Quorum. Twenty-five percent (25%) of the Trustees shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 10 of this Article III. Every act or decision done or made
by a majority of the Trustees present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Trustees, subject to the
provisions of the Declaration of Trust. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of Trustees if any action taken is approved by at least a majority of
the required quorum for that meeting.
Section 9. Waiver of Notice. Notice of any meeting need not be given to
any Trustee who either before or after the meeting signs a written waiver of
notice, a consent to holding the meeting, or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents, and approvals shall be filed with the records of the
Trust or made a part of the minutes of the meeting. Notice of a meeting shall
also be deemed given to any Trustee who attends the meeting without protesting,
prior to or at its commencement, the lack of notice to that Trustee.
Section 10. Adjournment. A majority of the Trustees present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.
Section 11. Notice of Adjournment. Notice of the time and place of
holding an adjourned meeting need not be given.
Section 12. Action Without a Meeting. Unless the 1940 Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person, any action to be taken by the Trustees at a meeting may be taken
without such meeting by the written consent of a majority of the Trustees then
in office. Any such
<PAGE>
written consent may be executed and given by telecopy or similar electronic
means. Such written consents shall be filed with the minutes of the proceedings
of the Trustees. If any action is so taken by the Trustees by the written
consent of less than all of the Trustees, prompt notice of the taking of such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
Section 13. Fees and Compensation of Trustees. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Trustees. This Section 13 of Article III shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation for those services.
Section 14. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his or her power for a period not exceeding one (1)
month at any one time to any other Trustee. Except where applicable law may
require a Trustee to be present in person, a Trustee represented by another
Trustee, pursuant to such power of attorney, shall be deemed to be present for
purpose of establishing a quorum and satisfying the required majority vote.
ARTICLE IV COMMITTEES
Section 1. Committees of Trustees. The Trustees may by resolution
designate one or more committees, each consisting of two (2) or more Trustees,
to serve at the pleasure of the Trustees. The Trustees may designate one or
more Trustees as alternate members of any committee who may replace any absent
member at any meeting of the committee. Any committee, to the extent provided
for by resolution of the Trustees, shall have the authority of the Trustees,
except with respect to:
(a) the approval of any action which under applicable law requires
approval by a majority of the Trustees or certain Trustees;
(b) the filling of vacancies of Trustees;
(c) the fixing of compensation of the Trustees for services generally or
as a member of any committee;
(d) the amendment or termination of the Declaration of Trust or any Series
or Class or the amendment of the By-Laws or the adoption of new By-
Laws;
(e) the amendment or repeal of any resolution of the Trustees which by its
express terms is not so amendable or repealable;
<PAGE>
(f) a distribution to the Shareholders of the Trust, except at a rate or
in a periodic amount or within a designated range determined by the
Trustees; or
(g) the appointment of any other committees of the Trustees or the members
of such new committees.
Section 2. Meetings and Action of Committees. Meetings and action of
committees shall be governed by, held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Trustees generally, except that the time of regular meetings of committees may
be determined either by resolution of the Trustees or by resolution of the
committee. Special meetings of committees may also be called by resolution of
the Trustees. Alternate members shall be given notice of meetings of committees
and shall have the right to attend all meetings of committees. The Trustees may
adopt rules for the governance of any committee not inconsistent with the
provisions of these By-Laws.
ARTICLE V OFFICERS
Section 1. Officers. The officers of the Trust shall be a President, a
Secretary, and a Treasurer. The Trust may also have, at the discretion of the
Trustees, one or more Vice Presidents, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. Any number of
offices may be held by the same person. Any officer may be, but need not be, a
Trustee or Shareholder.
Section 2. Election of Officers. The officers of the Trust, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen by the Trustees, and each shall
serve at the pleasure of the Trustees, subject to the rights, if any, of an
officer under any contract of employment.
Section 3. Subordinate Officers. The Trustees may appoint and may empower
the President to appoint such other officers as the business of the Trust may
require, each of whom shall hold office for such period, have such authority and
perform such duties as are provided in these By-Laws or as the Trustees may from
time to time determine.
Section 4. Removal and Resignation of Officers. Subject to the rights, if
any, of an officer under any contract or employment, any officer may be removed,
either with or without cause, by the Trustees at any regular or special meeting
of the Trustees or by such officer upon whom such power of removal may be
conferred by the Trustees.
<PAGE>
Any officer may resign at any time by giving written notice to the Trust.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice; and unless otherwise specified in
that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Trust under any contract to which the officer is a party.
Section 5. Vacancies in Offices. A vacancy in any office because of
death, resignation, removal, disqualification or other cause shall be filled in
the manner prescribed in these By-Laws for regular appointment to the office.
The President may make temporary appointments to a vacant office pending action
by the Trustees.
Section 6. President. The President shall be the chief operating and
chief executive officer of the Trust and shall, subject to the control of the
Trustees, have general supervision, direction and control of the business and
the officers of the Trust. He or she or his or her designee, shall preside at
all meetings of the Shareholders. He or she shall have the general powers and
duties of a president of a corporation and shall have such other powers and
duties as may be prescribed by the Trustees, the Declaration of Trust or these
By-Laws.
Section 7. Vice Presidents. In the absence or disability of the
President, any Vice President, unless there is an Executive Vice President,
shall perform all the duties of the President and when so acting shall have all
powers of and be subject to all the restrictions upon the President. The
Executive Vice President or Vice Presidents, whichever the case may be, shall
have such other powers and shall perform such other duties as from time to time
may be prescribed for them respectively by the Trustees or the President or by
these By-Laws.
Section 8. Secretary. The Secretary shall keep or cause to be kept at the
principal executive office of the Trust, or such other place as the Trustees may
direct, a book of minutes of all meetings and actions of Trustees, committees of
Trustees and Shareholders with the time and place of holding, whether regular or
special, and if special, how authorized, the notice given, the names of those
present at Trustees' meetings or committee meetings, the number of Shares
present or represented at meetings of Shareholders and the proceedings of the
meetings.
The Secretary shall keep or cause to be kept at the principal executive
office of the Trust or at the office of the Trust's transfer agent or registrar,
a share register or a duplicate share register showing the names of all
Shareholders and their addresses, the number and classes of Shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
<PAGE>
The Secretary shall give or cause to be given notice of all meetings of the
Shareholders and of the Trustees (or committees thereof) required to be given by
these By-Laws or by applicable law and shall have such other powers and perform
such other duties as may be prescribed by the Trustees or by these By-Laws.
Section 9. Treasurer. The Treasurer shall be the chief financial officer
and chief accounting officer of the Trust and shall keep and maintain or cause
to be kept and maintained adequate and correct books and records of accounts of
the properties and business transactions of the Trust and each Series or Class
thereof, including accounts of the assets, liabilities, receipts, disbursements,
gains, losses, capital and retained earnings of all Series or Classes thereof.
The books of account shall at all reasonable times be open to inspection by any
Trustee.
The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Trust with such depositories as may be designated by the
Board of Trustees. He or she shall disburse the funds of the Trust as may be
ordered by the Trustees, shall render to the President and Trustees, whenever
they request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the Trust and shall have other powers
and perform such other duties as may be prescribed by the Trustees or these By-
Laws.
ARTICLE VI INSPECTION OF RECORDS AND REPORTS
Section 1. Inspection by Shareholders. The Trustees shall from time to
time determine whether and to what extent, and at what times and places, and
under what conditions and regulations the accounts and books of the Trust or any
of them shall be open to the inspection of the Shareholders; and no Shareholder
shall have any right to inspect any account or book or document of the Trust
except as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
Section 2. Inspection by Trustees. Every Trustee shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the Trust. This inspection by a
Trustee may be made in person or by an agent or attorney and the right of
inspection includes the right to copy and make extracts of documents.
ARTICLE VII GENERAL MATTERS
Section 1. Checks, Drafts, Evidences of Indebtedness. All checks, drafts,
or other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
<PAGE>
Section 2. Contracts and Instruments: How Executed. The Trustees, except
as otherwise provided in these By-Laws, may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Trust and this authority may be general or confined
to specific instances; and unless so authorized or ratified by the Trustees or
within the agency power of an officer, no officer, agent, or employee shall have
any power or authority to bind the Trust by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
Section 3. Fiscal Year. The fiscal year of each series of the Trust shall
be fixed and refixed or changed from time to time by the Trustees.
Section 4. Seal. The Seal of the Trust shall consist of a flat-faced dye
with the name of the Trust cut or engraved thereon. However, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE VIII AMENDMENTS
Section 1. Amendment. Except as otherwise provided by applicable law or
by the Declaration of Trust, these By-Laws may be restated, amended,
supplemented or repealed by a majority vote of the Trustees.
<PAGE>
AMENDMENT TO ADVISORY AGREEMENT
Amway Management Company and Amway Mutual Fund, Inc. hereby agree that,
effective May 1, 1998, subject to approval by the Fund's stockholders at the
Annual Meeting scheduled for April 22, 1998, the first paragraph of Section 2 of
the Advisory and Service Contract between them, dated May 1, 1995, shall be
revised to read as follows:
2. FEES AND EXPENSES. For the services and facilities to be rendered, as
provided herein, during any fiscal quarter by the Adviser hereunder, the Fund
shall pay the Adviser a fee, payable quarterly, at the annual rate of 0.55% on
the first $100 million of average daily net assets of the Fund, 0.50% on the
next $50 million in assets, and 0.45% on the next $50 million in assets. When
the Fund's assets reach $200 million, the rate shall be 0.50% on assets up to
$200 million and 0.45% on assets in excess of $200 million, so long as the Fund
continues to have at least $200 million in assets. The Fund's assets shall be
determined as of the close of each business day throughout the quarter. For the
month and year in which this agreement becomes effective or terminates, there
shall be an appropriate proration on the basis of the number of days that the
agreement is in effect during the month and year, respectively.
AMWAY MUTUAL FUND, INC.
By: /s/ James J. Rosloniec
------------------------------
James J. Rosloniec
President
AMWAY MANAGEMENT COMPANY
By: /s/ Allan D. Engel
------------------------------
Allan D. Engel
President
Date: February 9, 1998
<PAGE>
ADVISORY AND SERVICE CONTRACT
BETWEEN
AMWAY MUTUAL FUND, INC.
AND
AMWAY MANAGEMENT COMPANY
AGREEMENT made as of the 9th day of June, 1995, between AMWAY MUTUAL FUND,
INC., a Delaware corporation (hereinafter called the "Fund"), and AMWAY
MANAGEMENT COMPANY, a Michigan corporation (hereinafter called the "Adviser");
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by the parties hereto as follows:
1. DUTIES OF THE ADVISER. The Fund hereby employs the Adviser to furnish
investment advice and manage on a regular basis the investment portfolio of the
Fund, subject to the direction of the Board of Directors of the Fund, and to
provisions of the Fund's current Prospectus; to furnish for the use of the Fund,
office space and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund and administering its affairs subject to
the provisions of Section 2 herein; and to pay the salaries and fees of all
officers and directors of the Fund. The Adviser will, from time to time,
discuss with the Fund economic investment developments which may affect the
Fund's portfolio and furnish such information as the Adviser may believe
appropriate for this purpose. The Adviser will maintain such statistical and
analytical information with respect to the Fund's portfolio securities as the
Adviser may believe appropriate, and shall make such materials available for
inspection by the Fund, as may be reasonable. Except when otherwise
specifically directed by the Fund, the Adviser will make investment decisions on
behalf of the Fund and place all orders for the purchase and sale of portfolio
securities for the Fund's account. The Adviser, 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. 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. The Adviser shall
be permitted to
<PAGE>
enter into an agreement with another advisory organization whereby the other
organization will provide all or a part of the investment advice and the
services required to manage the Fund's investment portfolio as provided for in
this agreement. Any such agreement will be subject to approval, as required in
Section 5 herein.
2. FEES AND EXPENSES. For the services and facilities to be rendered, as
provided herein, during any fiscal quarter by the Adviser hereunder, the Fund
shall pay the Adviser a fee, payable quarterly, at an annual rate of .55 of 1%
of the average of the daily aggregate net asset value of the Fund (computed in
the manner provided for in the Certificate of Incorporation of the Fund),
determined as of the close of business of each business day throughout the
quarter. For the month and year in which this agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the agreement is in effect during the month and year, respectively.
It is understood that the Fund will pay all its expenses other than those
expressly stated to be payable by the Adviser hereunder, which expenses payable
by the Fund shall include, without implied limitation, (i) registration of the
Fund under the Investment Company Act of 1940; (ii) commissions, fees and other
expenses connected with the purchase or sale of securities; (iii) auditing,
accounting and legal expenses; (iv) taxes and interest; (v) governmental fees;
(vi) expenses of issue, sale, repurchase and redemption of shares; (vii)
expenses of registering and qualifying the Fund and its shares under federal and
state securities laws and of preparing and printing prospectuses for such
purposes and for distributing the same to stockholders and investors; (viii)
expenses of reports and notices to stockholders and of meetings of stockholders
and proxy solicitations therefore; (ix) fees and expenses related to the
determination of the Fund's net asset value; (x) insurance expenses; (xi)
association membership dues; (xii) fees, expenses and disbursements of
custodians and sub-custodians for all services to the Fund (including without
limitation safekeeping of funds and securities, and keeping of books and
accounts); (xiii) fees, expenses and disbursement of transfer agents, dividend
disbursing agents, stockholder servicing agents and registrars for all services
to the Fund; and (xiv) such non-recurring items as may arise, including expenses
incurred in connection with litigation, proceedings and claims and the
obligation of the Fund to indemnify its Directors and officers with respect
thereto.
<PAGE>
3. MUTUAL INTERESTS. Subject to applicable statutes and regulations, it
is understood that directors, officers, stockholders, or agents of the Fund may
be interested in the Adviser as directors, officers, stockholders, agents, or
otherwise; and that the directors, officers, stockholders, and agents of the
Adviser may be interested in the Fund otherwise than as directors, officers, or
agents.
4. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable for any error of judgment or of law, or for any loss suffered by the Fund
or to any stockholder 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.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This agreement shall
become effective upon execution and shall remain in force for two years, unless
sooner terminated as hereinafter provided and shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved, at least annually, by a majority vote of the Fund directors, including
a majority of the directors who are not parties to the agreement or interested
persons of any such party (other than as directors of the Fund) or by a vote of
a majority of the Fund's outstanding shares, but in either case by the
disinterested directors, in the manner required by the Investment Company Act of
1940.
This agreement shall automatically terminate on June 9, 1995, unless this
agreement is approved by the Fund's stockholders. This agreement may be
terminated by the Fund or by the Adviser at any time without payment of any
penalty by vote of the Board of Directors of the Fund or Adviser or by vote of
the holders of a majority of the outstanding shares of the Fund on sixty (60)
days' written notice to the other parties hereto.
Termination of this agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
2 earned prior to such termination.
If any provision of this agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
<PAGE>
This agreement shall automatically terminate in the event of its
assignment. The term "assignment" for this purpose has the meaning defined in
Section 2(a)4 of the Investment Company Act of 1940.
6. WRITTEN NOTICE. Any notice under this agreement shall be in writing
addressed and delivered or mailed postage prepaid, to the other parties at such
address as such other parties may designate for the receipt of such notices.
7. REPLACEMENT OF PRIOR CONTRACT. This agreement replaces the Advisory
and Service Contract between Amway Mutual Fund, Inc. and Amway Management
Company, dated May 8, 1984, said agreement being terminated effective with the
execution of this agreement.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this agreement to
be signed, as of the day and year first above written.
AMWAY MUTUAL FUND, INC.
By: /s/ James J. Rosloniec
--------------------------------
James J. Rosloniec
President
AMWAY MANAGEMENT COMPANY
By: /s/ Allan D. Engel
--------------------------------
Allan D. Engel
President
<PAGE>
AMENDMENT TO SUB-ADVISORY AGREEMENT
Amway Management Company and ARK Asset Management Co., Inc. ("ARK") hereby
agree that, effective May 1, 1998, subject to approval by the Fund's
stockholders at the Annual Meeting scheduled for April 22, 1998, paragraph 2 of
the Sub-Advisory Agreement between them, dated May 1, 1995, shall be revised to
read as follows:
2. For the services to be rendered by ARK, as provided herein, AMC shall
pay to ARK a fee, payable quarterly, at the annual rate of 0.45% on the first
$100 million of average daily net assets of the Fund, 0.40% on the next $50
million in assets, and 0.35% on the next $50 million in assets. When the Fund's
assets reach $200 million, the rate shall be 0.40% on assets up to $200 million
and 0.35% on assets in excess of $200 million, so long as the Fund continues to
have at least $200 million in assets. The Fund's assets shall be determined as
of the close of each business day throughout the quarter. For the month and
year in which the agreement becomes effective or terminates, there shall be an
appropriate proration of fees on the basis of the number of days that the
agreement is in effect during the month and year, respectively.
AMWAY MANAGEMENT COMPANY
By: /s/ Allan D. Engel
-------------------------------
Allan D. Engel
President
ARK ASSET MANAGEMENT CO., INC.
By:
-------------------------------
Date: February 9, 1998
This Amendment is accepted and approved as of the day and year written
above.
AMWAY MUTUAL FUND, INC.
By: /s/ James J. Rosloniec
-------------------------------
James J. Rosloniec
President
<PAGE>
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of May, 1995 between AMWAY MANAGEMENT
COMPANY, a Michigan corporation having its principal place of business in Ada,
Michigan (hereinafter called "AMC"), and ARK Asset Management Co., Inc., having
its principal place of business in New York, New York (hereinafter called
"ARK");
WHEREAS, AMC is the investment adviser to Amway Mutual Fund, Inc., a
Delaware corporation, (hereinafter called the "Fund"), an open-end, diversified,
management investment company registered under the Investment Company Act of
1940, as amended (hereinafter called "1940 Act"); and
WHEREAS, AMC wishes to retain ARK to furnish it with investment advice in
connection with AMC's advisory activities on behalf of the Fund, and ARK is
willing to furnish such services to AMC.
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by the parties hereto as follows:
1. AMC hereby employs ARK to furnish investment advice and manage on a
regular basis the investment portfolio of the Fund, subject always to the
direction of AMC, the Board of Directors of the Fund, and to the provisions of
the Fund's current Prospectus. ARK shall provide administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
investment management of the Fund's portfolio of investments (excluding
determination of net asset value and shareholder accounting services). ARK
shall advise and assist AMC and the officers of the Fund in taking such steps as
are necessary or appropriate to carry out the decisions
<PAGE>
of the Fund's Board of Directors, in regard to the foregoing matters and the
supervision of the Fund's investment portfolio.
ARK will, from time to time, discuss with AMC economic and investment
developments which may affect the Fund's portfolio and furnish such information
as ARK may believe appropriate for this purpose. ARK will maintain such
statistical and analytical information with respect to the Fund's portfolio
securities as ARK may believe appropriate and shall make such material available
for inspection by AMC as may be reasonable from time to time.
Except when otherwise specifically directed by the Fund or AMC, ARK will
make investment decisions on behalf of the Fund and place all orders for the
purchase or sale of portfolio securities for the Fund's account. ARK agrees
that upon request from time to time one of its representatives will attend as
mutually agreed upon meetings of the Board of Directors or shareholders of the
Fund in order to make reports on investment strategy and results. ARK accepts
such employment and agrees at its own expense to render the services and to
assume the obligations herein set forth for the compensation herein provided.
ARK 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 AMC or the Fund in any way or otherwise be
deemed an agent of AMC or the Fund. ARK shall be free to render similar
services or other services to others so long as its services hereunder shall not
be impaired thereby. Likewise, AMC shall be free to utilize other persons to
perform similar or unrelated services.
<PAGE>
2. For the services to be rendered by ARK, as provided herein, AMC shall
pay to ARK a fee, payable quarterly, at the annual rate of .45 of 1% of the
average of the daily aggregate net asset value of the Fund (computed in the
manner provided for in the Certificate of Incorporation of the Fund), determined
as of the close of business of each business day throughout the quarter. For
the month and year in which this agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the agreement is in effect during the month and year, respectively.
3. Subject to applicable statutes and regulations, it is understood that
directors, officers, stockholders, or agents of AMC or the Fund may be
interested in ARK as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of ARK may be interested
in AMC or the Fund otherwise than as a director, officer or agent.
4. ARK shall not be liable for any error of judgment or of law, or for
any loss suffered by the Fund 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 ARK in the performance of its obligations and
duties, or by reason of its reckless disregard of its obligations and duties
under this agreement. ARK shall not be liable for any action undertaken at
AMC's direction.
5. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
ARK hereby agrees that all records which it maintains for the Fund, as
specifically agreed upon by ARK and AMC, are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. ARK further agrees to preserve such records
<PAGE>
for the periods prescribed by Rule 31a-2 under the 1940 Act and to make such
records available as requested by regulatory agencies for inspection.
6. This agreement shall become effective upon execution and shall remain
in force for two years, unless sooner terminated as hereinafter provided and
shall continue in force from year to year thereafter, but only so long as such
continuance is specifically approved, at least annually, by a majority of the
Fund directors, including a majority of the directors who are not parties to the
agreement or interested persons of any such party (other than as directors of
the Fund) of by a vote of a majority of the Fund's outstanding shares, but in
either case by the disinterested directors, in the manner required by the 1940
Act.
This agreement shall automatically terminate on June 9, 1995, unless this
agreement is approved by the Fund's stockholders. This agreement may be
terminated by AMC or by ARK at any time without the payment of any penalty on
sixty (60) day's written notice to the other party, and may also be terminated
at any time without payment of any penalty by vote of the Board of Directors of
the Fund or by vote of the holders of a majority of the outstanding shares of
the Fund on sixty (60) days' written notice to the other parties hereto.
Termination of this agreement shall not affect the right of ARK to receive
payments on any unpaid balance of the compensation described in Section 2 earned
prior to such termination.
If any provision of this agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
This agreement shall automatically terminate in the event of its
assignment. The term "assignment" for this purpose has the meaning defined in
Section 2(a)4 of the 1940 Act.
Not withstanding anything in this agreement to the contrary, until this
agreement shall have been approved by the Fund's Shareholders ARK shall receive,
in lieu of the fee provided in
<PAGE>
paragraph 2 hereof, a fee at the annual rate of .40 of 1% of the average daily
net asset of the Fund. This agreement shall terminate if such approval has not
been obtained by June 30, 1995.
7. Any notice under this agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other parties at such address as
such other parties may designate for the receipt of such notices.
IN WITNESS WHEREOF, AMC and ARK have caused this agreement to be signed, as
of the day and year first above written.
AMWAY MANAGEMENT COMPANY
By: /s/ Allan D. Engel
------------------------------
Allan D. Engel
President
ARK ASSET MANAGEMENT CO., INC.
By: /s/ S. Joy Mermelstein
------------------------------
S. Joy Mermelstein
Chief Operating Officer
This Agreement is hereby accepted and approved as of this day and year
first above written.
AMWAY MUTUAL FUND, INC.
By: /s/ James J. Rosloniec
------------------------------
James J. Rosloniec
President
<PAGE>
AMENDMENT TO PRINCIPAL UNDERWRITER AGREEMENT
Amway Management Company and Amway Mutual Fund, Inc. hereby agree that
effective immediately (a) a new Section 14 shall be added to the amended
Principal Underwriter Agreement between them dated June 4, 1982, and (b)
existing Sections 14 and 15 shall be renumbered as Sections 15 and 16,
respectively. New Section 14 shall read as follows:
SECTION 14. DISTRIBUTION PLAN. If the Fund adopts a distribution plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Principal Underwriter shall be entitled to receive, in addition to the
amounts specified in Sections 1 and 2 of this Agreement, such amounts as
may be authorized by the Fund's Board of Directors pursuant to such plan.
AMWAY MUTUAL FUND, INC.
By: /s/ James J. Rosloniec
-----------------------------
James J. Rosloniec
President
AMWAY MANAGEMENT COMPANY
By: /s/ Allan D. Engel
-----------------------------
Allan D. Engel
President
Date: February 9, 1998
<PAGE>
AMENDED
PRINCIPAL UNDERWRITER AGREEMENT
between
AMWAY MUTUAL FUND, INC.
and
AMWAY MANAGEMENT COMPANY
AMENDED AGREEMENT, dated June 4, 1982, amending agreements made the 30th
day of August, 1971 and the 10th day of February, 1971, between AMWAY MUTUAL
FUND, INC., a Delaware corporation (hereinafter called the "Fund"), and AMWAY
MANAGEMENT COMPANY, a Michigan corporation (hereinafter called the "Principal
Underwriter").
In consideration of the mutual promises and undertakings herein contained
the parties hereto agree as follows:
SECTION 1. GENERAL. The Fund hereby grants to Principal Underwriter the
right, during the term of this Agreement and subject to registration
requirements of the Securities Act of 1933 as amended (herein called the "1933
Act"), to purchase shares of the Fund and to resell such shares upon the terms
and conditions hereinafter set forth. Principal Underwriter shall have the
right to purchase from the Fund as principal at a price equal to the net asset
value during each period determined as described in the current prospectus the
shares needed, but no more than the shares needed (except for clerical errors
and errors of transmission), to fill unconditional orders for shares of the Fund
received during such period by Principal Underwriter from dealers or investors.
Principal Underwriter shall resell such shares purchased at a price equal to the
public offering price determined as described in the current prospectus less, in
the case of a sale to a dealer, the discount allowed the dealer, if any.
<PAGE>
The foregoing right granted to Principal Underwriter to purchase shares
from the Fund shall be exclusive, except that shares may be issued by the Fund
(a) in connection with any merger or consolidated of the Fund with any other
investment company or trust or any personal holding company or the acquisitions
by the fund, by purchase or otherwise, of any other investment company or trust
or any personal holding company or of the assets of any such entity, (b) in
connection with offers of exchange exempted from Section 22(d) of the Investment
Company Act of 1940 by reason of the fact that said offers are permitted by
Sections 11 of said Act, (c) in connection with others to reinvest, at the net
asset value per share, proceeds from redeemed shares as defined in the
prospectus for the Fund under "Reinvestment Privilege" and governed by the
regulations covering Section 22(d) of the Investment Company Act of 1940, (d) in
connection with the reinvestment of any dividends paid or capital gains
distributed to shareholders in additional shares of the Fund at the net asset
value per share, and (e) for cash at net asset value to depositors, underwriters
or sponsors of unit investment trusts or any similar legal entities which
acquires shares of the Fund.
SECTION 2. PUBLIC OFFERING PRICE; SALES CHARGE. The net asset value and
the public offering price and the decision of whether or not to impose a sales
charge upon a public offering of the shares of the Fund shall be determined by
the Fund. The net asset value and the public offering price shall be computed
in accordance with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and the current prospectus of the Fund and Principal
Underwriter shall be notified promptly thereof. The public offering price
(being the price at which Principal Underwriter or dealers may sell shares to
the public) shall be an amount equal to such net asset value plus a sales
charge, if any, varying with the size of the investment as described in the
currently effective offering prospectus of the Fund; and so long as this
Agreement remains in effect the sales charge, if any, and the method of
determining net asset value and the public offering price shall not be changed
without the written consent of Principal
<PAGE>
Underwriter. The net asset value and the offering price based thereon shall be
subject to adjustment in the event of wide fluctuations in market prices, in
accordance with the provisions of the Fund's Certificate of Incorporation, as
amended from time to time, and subject to the provisions of the Investment
Company Act of 1940 and state laws regulating the sales of securities, and any
regulations of the Securities and Exchange Commission, the National Association
of Securities Dealers, Inc. and state blue sky commissioners having
jurisdiction.
SECTION 3. DEALER AGREEMENTS. If a sales charge is in effect, Principal
Underwriter shall have the right to enter into uniform sales agreements with
dealers of its choice for the sale of shares of the Fund and fix thereon the
portion of the sales charge which may be retained by dealers, provided that the
Fund shall approve the form of the dealer agreement and the dealer discounts set
forth therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
registration statement on Form S-5 filed under the 1933 Act.
SECTION 4. PAYMENT AND DELIVERY OF SHARES. Upon receipt by the Fund at
its principal place of business, or by the Custodian of the Fund at such place
as the Custodian shall designate, of a written order from Principal Underwriter,
together with delivery instructions, the Fund shall, as promptly as practicable,
cause certificates for the shares called for in such written order to be
delivered in such amounts and in such names as shall be specified by Principal
Underwriter, against payment thereof in such manner as may be acceptable to the
Fund, provided that Principal Underwriter shall pay for such shares as soon as
conveniently possible, but in no event later than the tenth business day
following the date on which Principal Underwriters shall have contracted to
purchase the shares.
SECTION 5. TREASURY SHARES. This Agreement shall apply to both unissued
shares of the Fund and shares of the Fund held in its treasury in the event that
in the discretion of the Fund treasury shares shall be sold.
<PAGE>
SECTION 6. TAXES. The Fund shall pay for and affix any stock issue stamps
(or in the case of treasury shares transfer stamps) required for the issue (or
transfer) of shares sold to Principal Underwriter as principal. Principal
Underwriter shall pay for and affix any stock transfer stamps required in
connection with the sale of shares by Principal Underwriter as principal to
dealers or to investors.
SECTION 7. INFORMATION; PROSPECTUS. The Fund shall furnish to Principal
Underwriter copies of all information, financial statements and other papers
which Principal Underwriter may reasonably request for use in connection with
the distribution of shares of the Fund, and this shall include, but shall not be
limited to, one certified copy, upon request by Principal Underwriter, of all
financial statements prepared for the Fund by independent public accountants.
The Fund shall make available to Principal Underwriter such number of copies of
its currently effective prospectus as Principal Underwriter shall request.
SECTION 8. INDEMNIFICATION BY FUND. The Fund agrees to indemnify and hold
harmless Principal Underwriter and each person, if any, who controls Principal
Underwriter within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expenses (including reasonable cost of
investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any shares, which may be based upon the 1933
Act or on any other statute or at common law, on the ground that the
registration statement or prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund in
connection therewith by or on behalf of Principal Underwriter; provided,
however, that in no case (i) is the indemnity of the Fund in favor of Principal
Underwriter and any such controlling person to be deemed to protect
<PAGE>
Principal Underwriter or any such controlling person against any liability to
the Fund or its security holders to which Principal Underwriter or any such
controlling person would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Fund to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against Principal Underwriter or any
such controlling person unless Principal Underwriter or such controlling person,
as the case may be, shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon Principal Underwriter or such
controlling person (or after Principal Underwriter or such controlling person
shall have received notice of such service on any designated agent), but failure
to notify the Fund of any such claim shall not relieve it from any liability
which it may have to the person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph.
The Fund will be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, but if the Fund elects to assume the defense, such defense shall
be conducted by counsel chosen by it and satisfactory to Principal Underwriter
or such controlling person or persons, defendant or defendants in the suit. In
the event the Fund elects to assume the defense of any such suit and retain such
counsel, Principal Underwriter or such controlling person or persons, defendant
or defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them, but, in case the Fund does not elect to assume the
defense of any such suite, it will reimburse Principal Underwriter or such
controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. The Fund agrees
promptly to notify Principal Underwriter of the commencement of any litigation
or
<PAGE>
proceedings against it or any of its officers or directors, employees or agents
in connection with the issuance or sale of the shares.
SECTION 9. INDEMNIFICATION BY PRINCIPAL UNDERWRITER. Principal
Underwriter covenants and agrees that it will indemnify and hold harmless the
Fund and each of its directors, officers, employees or agents and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 Act, against any loss, liability, damages, claim or expense (including
the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
which may be based upon the 1933 Act or any other statute or at common law,
on account of any wrongful act of Principal Underwriter or any of its
employees or on the ground that the registration statement or prospectus, as
from time to time amended, included an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, insofar as any such
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund in connection therewith by or on behalf of
Principal Underwriter, provided, however, that in no case (i) is the
indemnity of Principal Underwriter in favor of the Fund or any person
indemnified to be deemed to protect the Fund or any such person against any
liability to which the Fund or any such person would otherwise be subject by
reason or willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is Principal Underwriter
to be liable under its indemnity agreement contained in this paragraph with
respect to any claim made against the fund or any person indemnified unless
the Fund or such person, as the case may be, shall have notified Principal
Underwriter in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Fund or upon such
<PAGE>
person (or after the Fund or such person shall have received notice
of such service on any designated agent), but failure to notify Principal
Underwriter of any such claim shall not receive it from any liability which it
may have to the Fund of any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph.
In the case of any such notice to Principal Underwriter, it shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but, if Principal Underwriter elects to assume the defense, such defense shall
be conducted by counsel chosen by it and satisfactory to the Fund, to its
officers, directors, employees and agents, and to any controlling person or
persons, defendant or defendants in the suit. In the event that Principal
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Fund or such controlling persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, but in case Principal Underwriter does not elect to assume the defense of
any such suit, it will reimburse the Fund, such officers and directors or
controlling person or persons, defendant or defendants in such suit, for the
reasonable fees and expenses of any counsel retained by them. Principal
Underwriter agrees promptly to notify the Fund of the commencement of any
litigation or proceedings against it in connection with the issue and sale of
any of the shares.
SECTION 10. OTHER ACTIVITIES OF PRINCIPAL UNDERWRITER. Principal
Underwriter agrees to devote reasonable time and effort to effecting sales of
shares of the Fund, but, so long as it does so, nothing herein contained shall
prevent Principal Underwriter from entering into like arrangements with other
Funds.
SECTION 11. AUTHORIZED INFORMATION; NO AGENCY. Principal Underwriter is
not authorized by the Fund to give any information, or to make any
representations, other than those contained in the registration statement or
prospectus filed with the Securities and Exchange
<PAGE>
Commission under the 1933 Act, as amended (as said registration statement and
prospectus may be amended from time to time), covering the shares of the Fund or
such sales literature as may be prepared by or on behalf of the Fund for
Principal Underwriter's use. No person is authorized to act as agent for the
Fund in connection with the offering or sale of shares of the Fund to the public
or otherwise.
SECTION 12. OTHER LIMITATIONS ON PRINCIPAL UNDERWRITER. Principal
Underwriter shall not take any long or short positions in shares of the Fund
except as permitted by paragraph 1 hereof, and, so far as it can reasonably
control the situation, Principal Underwriter will prevent any persons
financially interested in Principal Underwriter from taking any long or short
positions in shares of the Fund, except as permitted by the policy of the Fund
now or hereafter declared in the Certificate of Incorporation of the Fund as
amended and in any registration statement and amendments thereto filed under the
1933 Act or the Investment Company Act of 1940. No portfolio securities of the
Fund will be bought or sold by or through Principal Underwriter, nor will
Principal Underwriter participate in brokerage commissions or "spread" in
respect of such transactions.
SECTION 13. EXPENSES. Principal Underwriter agrees to bear all expenses
(a) of printing and distributing any prospectuses or reports, prepared for its
use other than (i) the expense of preparing and setting up in type any
prospectuses required under Federal law to be filed with the Securities and
Exchange Commission or (ii) the expense of preparing and setting up in type and
distributing any report or other communication to shareholders of the Fund in
their capacity as such, (b) of preparing, printing and distributing any other
literature used by Principal Underwriter or its dealers in connection with the
offering of the shares for sale to the public, (c) of advertising in connection
with such offering, and (d) of qualifications (other than auditing expenses) of
the shares for the sale in such states as shall be selected by Principal
Underwriter
<PAGE>
and the fees payable to each such state for maintaining the qualification
therein until Principal Underwriter notifies the Fund that it does not wish such
qualification maintained.
SECTION 14. TERMINATION. This Agreement shall be effective upon the
execution hereof, and, unless terminated as hereinafter provided, this Agreement
shall continue in force for two years from the date hereof and thereafter from
year to year, provided such continuance for each successive year after such two
year period is approved in writing by Principal Underwriter and the Fund at
least three months before the beginning of the year for which this Agreement is
to be continued (unless a shorter period is agreed upon), and provided, further,
that such continuance is specifically approved by the Board of Directors, or by
the vote of the holders of a majority of the outstanding voting securities (as
defined in Section 2(a)(4) of said Act), of the Fund. In additional, and in
either event, the contract and its terms must be approved at least annually by
vote of a majority of the directors of the Fund and who are not parties to the
contract or interested persons (as defined in Section 2(a)(19) of said Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement shall automatically terminate in the event of its assignment
by Principal Underwriter. As used in the preceding sentence, the word
"assignment" shall have the meaning defined in Section 2(a)(4) of the Investment
Company Act of 1940.
In additional to termination by failure to approve continuance, this
Agreement may at any time be terminated by either party hereto upon not less
than six months' previous written notice to the other party. In the event of
such notice being given, this Agreement shall terminate exactly six months
therefrom regardless of any other provisions herein regarding termination or
continuance hereof if and only if (a) any necessary director approval for
continuance during said period as required by Section 15 of the Investment
Company Act of 1940 is obtained and (b) the Agreement is not otherwise
terminated by "assignment" as that word is defined in Section 2(a)(4) of said
Act.
<PAGE>
SECTION 15. NOTICE. Any notice required or permitted to be given
hereunder by either party to the other shall be deemed sufficiently given if
sent by registered or certified mail, postage prepaid, addressed by the party
giving such notice to the other party at the last address furnished by such
other party to the party giving notice, and unless and until changed pursuant to
the foregoing provisions hereof, addressed, if to the Fund, at 7575 East Fulton
Road, Ada, Michigan 49355, and if to Principal Underwriter, at 7575 East Fulton
Road, Ada, Michigan 49355.
IN WITNESS WHEREOF, the Fund has caused this instrument to be executed in
its name and behalf, and its corporate seal to be hereunto affixed, by one of
its officers thereunto duly authorized, and Principal Underwriter has caused
this instrument to be executed in its name and behalf, and its corporate seal to
be hereunto affixed, by one of its officers thereunto duly authorized, as of the
day and year first above written.
AMWAY MUTUAL FUND, INC.
By /s/ C. Dale Discher
--------------------------------------
C. Dale Discher, President
AMWAY MANAGEMENT COMPANY
By /s/James J. Rosloniec
--------------------------------------
James J. Rosloniec, Vice President
<PAGE>
TRANSFER AGENCY AND DIVIDEND
DISBURSING AGENCY AGREEMENT
between
AMWAY MUTUAL FUND, INC.
and
AMWAY MANAGEMENT COMPANY
AGREEMENT made this 5th day of August, 1997, between AMWAY MUTUAL
FUND, INC., a Delaware corporation (hereinafter called the "Fund") and AMWAY
MANAGEMENT COMPANY, a Michigan corporation (hereinafter called the "Agent").
In consideration of the mutual promises and undertakings herein contained,
the parties hereto agree as follows:
SECTION 1. STOCK TRANSFER AGENT. The Agent shall be the stock transfer
agent for the Fund and as such shall:
(a) keep the stock transfer books and records of the Fund, including the
names and addresses of all stockholders, the number and date of
issuance of shares and fractional shares held by each stockholder, the
number and date of certificates issued for such shares, the number and
date of cancellation of redeemed shares, and the number and date of
cancellation of each certificate surrendered for cancellation;
(b) be responsible for the issuance and redemption of shares of the Fund;
(c) effect and record transfers of ownership of shares and changes in the
registration of shares;
(d) cause all stockholder reports and proxies for stockholders' meetings
to be properly addressed and mailed;
(e) tabulate all proxies; and
(f) prepare and mail all required federal, state and other income tax
information to stockholders.
<PAGE>
SECTION 2. DIVIDEND DISBURSING AGENT. The Agent shall be the dividend
disbursing agent of the Fund and as such shall, in accordance with stockholders'
instructions, disburse to stockholders the ordinary dividends and capital gains
distributions allocable to their shares or, alternatively, cause such
distributions to be reinvested in additional shares of the Fund for
stockholders.
SECTION 3. STAFF. The Agent shall at all times maintain a staff of
trained personnel for the purpose of performing its obligations under this
Agreement. The Agent assumes no responsibility under this Agreement other than
the services agreed to herein.
SECTION 4. FEES. For the services of the Agent agreed herein to be
rendered, the Fund shall pay to the Agent, quarterly, the fees provided in the
schedule attached hereto as Exhibit A and by this reference made a part hereof.
SECTION 5. CONFORMITY TO CORPORATE INSTRUMENTS AND STATUTES. The Agent
agrees that in all matters relating to the services to be performed by it
herein, it will use its best efforts to act in conformity with the terms of the
Certificate of Incorporation, By-Laws, Registration Statements and current
Prospectus of the Fund. Each of the parties agrees that in all matters relating
to the performance of this Agreement, it will use its best efforts to comply
with the requirements of the Investment Company Act of 1940 and all other
applicable laws and regulations. Nothing herein contained shall be deemed to
relieve or deprive the Board of Directors of the Fund of its responsibility for
the conduct of the affairs of the Fund.
SECTION 6. SERVICES TO OTHERS. The Agent shall be free to render
services of this or any other kind to any other person or organization,
including other investment companies, and to engage in any other business or
activity.
SECTION 7. AMENDMENT. This Agreement, including the schedule
attached hereto as Exhibit A, may be amended at any time by mutual written
consent of the parties.
<PAGE>
SECTION 8. EFFECTIVE DATE; TERMINATION. This Agreement shall be
effective as of the date of execution, and may be terminated by either party
hereto upon sixty (60) days' written notice to the other, provided that no such
notice of termination given by the Agent to the Fund shall be effective unless
and until a substitute person or entity has been engaged by the Fund to perform
the services required hereunder for the Fund, or the Fund has certified to the
Agent that other arrangements have been made by it to provide such services.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date first
above written.
AMWAY MUTUAL FUND, INC.
By /s/ James J. Rosloniec
-------------------------------------
James J. Rosloniec, President
AMWAY MANAGEMENT COMPANY
By /s/ Allan D. Engel
-------------------------------------
Allan D. Engel, President
<PAGE>
COMMON - RECORDS CONTRACT
between
AMWAY MUTUAL FUND, INC.
and
AMWAY MANAGEMENT COMPANY
THIS AGREEMENT, made as of the 31st day of August, 1997 by and between
AMWAY MUTUAL FUND, INC., a Delaware corporation, of Ada, Michigan (hereinafter
called the "Fund"), and AMWAY MANAGEMENT COMPANY, a Michigan corporation, of
Ada, Michigan (hereinafter called the "Adviser"), WITNESSETH as follows:
WHEREAS, it is considered advisable and desirable to avoid the keeping of
certain identical, or nearly identical, accounts, journals, ledgers, files and
other records by or for each of the parties to this Agreement.
Now, therefore, in consideration of the mutual promises and undertakings
herein contained, the parties hereto AGREE as follows:
(1) The Adviser shall keep, or cause to be kept, such accounts,
journals, ledgers, files and other records as it deems appropriate or needed, or
as requested by the Fund, pertaining to any of its undertakings for or on behalf
of the Fund under any of the several contracts or agreements between the Fund
and the Adviser.
(2) Any of such accounts, journals, ledgers, files and other records
so kept by or for the Adviser in accordance with (1) above shall be considered
to be, and are hereby agreed by the parties hereto to be, the separate and legal
records of each of the parties to this Agreement and/or of both of such parties,
as the case may be.
(3) Included in such accounts, journals, ledgers, files and other
records mentioned in (1) and (2) above, but not limited to the following, are
the records pertaining to the stock portfolio of the Fund, and the computation
and use of the daily net asset value per share of the common stock of the Fund,
the customer accounting as to shareholders of the Fund, and any other records
that are required, pertinent, or desired by either of the parties.
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date first
above written.
AMWAY MUTUAL FUND, INC.
/s/ James J. Rosloniec
-----------------------------------
James J. Rosloniec, President
AMWAY MANAGEMENT COMPANY
/s/ Allan D. Engel
-----------------------------------
Allan D. Engel, President
<PAGE>
[LETTERHEAD]
Amway Mutual Fund Trust
7575 East Fulton Road
Ada, Michigan 49355
Re: 1933 Act Registration Statement
No. 2-39663
Dear Sirs:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of beneficial interest, $1.00 par value per share
(the "Shares"), of Amway Mutual Fund (the "Fund"), which is a series of Amway
Mutual Fund Trust (the "Trust"), I have reviewed the actions taken by the
Trustees of the Trust to organize the Trust and to authorize the issuance and
sale of the Shares. In addition, I have examined the Trust's Certificate of
Trust and Agreement and Declaration of Trust, the above captioned Registration
Statement, certificates of public officials and officers of the Fund, and such
other documents as I have considered necessary for the purposes of this opinion.
Based upon the foregoing, and having regard for legal considerations which
I deem relevant, it is my opinion that the Shares have been duly authorized and,
when issued and paid for as described in the Registration Statement, will be
validly issued, fully paid and non-assessable by the Trust.
Very truly yours,
/s/ John Dougherty
John Dougherty
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
QUESTION AND ANSWER BROCHURE
1. WHAT IS THE AMWAY MANAGEMENT COMPANY MASTER PROFIT-SHARING PLAN (MASTER
PLAN)?
The Master Plan is a tax-exempt retirement plan which can be adopted by any
business (sole proprietorship, partnership or corporation) for the benefit
of the employees and owners of the business. Subject to certain
limitations, contributions to the Master Plan for the benefit of the
employees and owners of the business are deductible on the business'
federal income tax return. Most states provide for a similar deduction.
You should consult your tax adviser and/or legal counsel concerning the law
in your state.
2. WHO IS CONSIDERED AN OWNER OF THE BUSINESS FOR PARTICIPATION PURPOSES?
A sole proprietor or a partner in a partnership may participate in the
Master Plan, provided the proprietor or partner receives income for
personal services on behalf of the business. A shareholder of a regular or
S corporation may also participate in the Master Plan if the shareholder is
an employee of the corporation.
3. MAY THE MASTER PLAN BE ADOPTED EVEN IF THE OWNER OF THE BUSINESS ADOPTING
THE PLAN ALSO WORKS FOR ANOTHER EMPLOYER?
Yes. The Master Plan may be adopted even if the owner of the business is
covered by another employer's retirement plan. For example, an Amway
distributor may adopt the Master Plan with regard to his distributorship
business, in addition to being covered by another employer's retirement
plan.
However, if the business adopting the Master Plan is under common control
with one or more other businesses, the employees of all the commonly owned
businesses must be covered. See also question and answer 10.
4. HOW CAN I PARTICIPATE IN THE MASTER PLAN?
The owners and employees of a business can participate in the Master Plan
if the business completes a Joinder Agreement. The Joinder Agreement must
be executed by an authorized representative of the business adopting the
Master Plan. It must also be signed by Michigan National Bank, the trustee
of the Master Plan.
The Joinder Agreement must be executed by the parties no later than the
last day of the tax year (December 31, in the case of a calendar year
taxpayer) for which the initial contribution is being made. As a practical
matter, it is much better for the Joinder
<PAGE>
Agreement to be completed, executed and mailed to the Amway Management
Company well in advance of this deadline. The Amway Management Company
will then have the Joinder Agreement signed by Michigan National Bank.
The initial contribution must be a minimum of $100 (for amounts invested in
the Amway Mutual Fund) and $1,000 (for amounts invested in the Cash
Equivalent Fund). The contributions should be sent in with the Joinder
Agreement and should specify the initial investment direction in dollar
amounts (e.g., $100 to be invested in the Amway Mutual Fund and $1,000 to
be invested in the Cash Equivalent Fund). In addition, if the business
adopting the Master Plan is a corporation, the corporation must include
with its Joinder Agreement, a copy of the board of directors' resolution
approving the adoption of the Master Plan. The resolution must also
approve the corporation's annual contribution and authorize the
corporation's officers to perform all acts necessary to adopt the Master
Plan.
If you are interested in adopting the Master Plan, you can obtain a copy of
the Joinder Agreement and the other adoption documents either by sending in
the coupon at the end of this question and answer brochure or by writing or
calling the Amway Management Company at 7575 East Fulton Road, S.E., Ada,
Michigan 49355-7150, telephone number (616) 676-6288.
5. HOW DOES A PARTICIPATING BUSINESS DETERMINE THE AMOUNT OF ITS ANNUAL
CONTRIBUTION TO THE MASTER PLAN?
A participating business' annual contribution is discretionary. The
business may decide the amount, if any, that it will contribute to the
Master Plan each year. However, the business' annual contribution may not
exceed the maximum deductible contribution permitted under the Internal
Revenue Code. Generally, this amount is 15% of all of the participants'
annual compensation. Further, the annual amount added to each
participant's account in the Master Plan and all other defined contribution
plans maintained by the business may not exceed the lesser of 25% of the
participant's compensation or $30,000. In general, the business may deduct
the amount of the annual contribution on its federal and state income tax
returns and the benefits are not taxable to the participants until
distributed.
6. WHAT CONSTITUTES COMPENSATION FOR PURPOSES OF THE MASTER PLAN?
For participants who are regular employees, compensation generally means
wages, salary, overtime, incentive pay, bonuses and commissions. For
participants who are partners in or proprietors of the business adopting
the Master Plan, compensation generally means net earnings with respect to
the business adopting the Master Plan. For this purpose, net earnings are
determined after the deduction of all annual contributions made to the
Master Plan by the business.
For purposes of contributions made on behalf of participants, annual
compensation is
2
<PAGE>
subject to a dollar limit. The dollar limit is $150,000 per participant.
The $150,000 limit will be adjusted in $10,000 increments for increases in
the cost of living. (The limit for 1997 is $160,000.)
7. WHAT HAPPENS TO A BUSINESS' ANNUAL CONTRIBUTION?
A business' annual contribution is allocated to each participant based on
the ratio that the participant's compensation for the year bears to the
total compensation of all eligible participants of the business for the
year. The contributions are credited to individual accounts in the
participants' names.
The entire amount allocated to each participant's individual account will
be invested by the trustee in Amway Mutual Fund, Inc. common stock or in
the Cash Equivalent Fund, or in a combination of both. The Amway Mutual
Fund and the Cash Equivalent Fund are valued each business day. The value
of a participant's account as of any business day will be the number of
shares of common stock in the Amway Mutual Fund credited to the
participant's individual account as of that date, multiplied by the market
value per share, plus the amount in the Cash Equivalent Fund credited to
the participant's individual account as of that date. The trustee will
provide each participant with a statement regarding the value of his
account as of the last day of each plan year. The amount eventually
distributed to a participant will be the value of his individual account as
of the date or dates his interest in the Amway Mutual Fund and the Cash
Equivalent Fund is sold.
8. TO WHOM SHOULD THE BUSINESS' ANNUAL CONTRIBUTION CHECK BE MADE PAYABLE?
Michigan National Bank, Trustee.
9. WHEN MUST A BUSINESS MAKE A CONTRIBUTION TO THE MASTER PLAN IN ORDER TO
QUALIFY FOR A TAX DEDUCTION?
If a business adopted the Master Plan as described in question and answer
4, its contributions may be made at any time before the time prescribed by
federal law for the business to file its income tax return (including
extensions).
For example, in the case of an unincorporated sole proprietorship which
files on a calendar year basis and which executes a Joinder Agreement by
December 31 of the current year, any contributions for the current year
normally would have to be made by April 15 of the following year, assuming
the sole proprietorship has not obtained any extensions. However, to
insure that the contribution in this example was timely made, we would have
recommended that it be mailed prior to April 15 so that the transaction
would have been completed by that date. However, if the Joinder Agreement
had not been executed by December 31 of the prior calendar year, then no
contribution could have been made for the prior year.
3
<PAGE>
10. WHEN MUST AN EMPLOYEE BE INCLUDED AS A PARTICIPANT?
Any employee who has completed one year of service with the business or any
other commonly owned business must be included as a participant. The
employee will become a participant on the date he completes one year of
service. In the Joinder Agreement, you must select one of two possible
definitions of year of service for this purpose. The first definition is
the completion of 12 months of employment, whether or not consecutive.
This would allow an employee who works for you on a part-time basis to
become eligible to participate. The second definition is a
12-consecutive-month period where the employee has 1,000 hours of service
and is employed on the last day of the period. This definition tends to
limit participation to full-time employees.
If your business has any employees, you should notify the Amway Management
Company. You should also consult with your tax adviser and/or legal
counsel because there are several special rules that apply to a business
which has one or more employees.
11. WHEN MAY FUNDS BE WITHDRAWN BY A PARTICIPANT?
Generally, a participant may request distribution of his benefits at any
time following the date the participant:
(a) Becomes totally disabled. A participant is "totally disabled" if
the participant has a permanent inability to perform the usual
duties of his job due to a physical or mental impairment (as
determined by the written opinion of a physician selected by the
plan administrator, unless the plan administrator determines that
a physician's examination is unnecessary);
(b) Attains normal retirement age. A participant will attain normal
retirement age on the earlier of the date the participant attains
age 65 or attains 59 1/2 and has participated in the Plan for at
least five years; or
(c) Terminates employment.
If your business terminates the Plan, the participant will receive a
distribution of benefits. Further, federal law requires that a
participant's benefit payments begin by the April 1 after the calendar year
in which he attains age 70 1/2, regardless of whether he has terminated
employment, if the Participant is a 5% owner (owns at least 5% of the
business). If the participant is not a 5% owner, benefit payments must
begin by the April 1 after the later of the calendar year in which he
attains age 70 1/2 or the calendar year in which he terminates employment.
12. HOW MAY BENEFITS BE RECEIVED?
4
<PAGE>
There are three forms in which payments may be made. A participant may
elect the form of payment he prefers. The forms of payment are as follows:
(a) A lump sum payment of the entire amount in the participant's
account;
(b) Payments in roughly equal monthly, quarterly or annual
installments for a specific number of years. The specific number
of years for which the payments will last can not exceed either
the participant's life expectancy or the joint life expectancy of
the participant and his beneficiary; or
(c) A combination of a lump sum payment and installment payments.
However, if the amount in the participant's account is less than $3,500,
the participant does not have a choice as to the form of distribution.
This amount will be paid to the participant in a lump sum.
13. WHAT HAPPENS IF A PARTICIPANT DIES BEFORE RECEIVING HIS BENEFITS?
If a participant dies before receiving all or any portion of his benefits,
the participant's interest will be paid to the participant's beneficiary or
beneficiaries named in the participant's Beneficiary Designation form.
However, if the participant is married, the participant's spouse will be
the sole primary beneficiary unless the spouse consents in writing to the
naming of an additional or different beneficiary. If the participant fails
to designate a beneficiary or if no beneficiary survives the participant,
distribution will be made to the participant's surviving spouse. If there
is no surviving spouse, distribution will be made to the participant's
estate.
Benefits will generally be distributed in the form elected by the
participant in his Distribution Election Form. However, the beneficiary
may elect a more rapid form of distribution. Further, if the participant
fails to complete a Distribution Election form, the beneficiary may choose
the form of distribution from the methods described in question and answer
12.
14. WHAT ARE THE TAX CONSEQUENCES OF A DISTRIBUTION?
Distributions are generally taxable income. Most distributions are subject
to a mandatory 20% income tax withholding unless the distribution is paid
in a direct rollover to an IRA or other employer retirement plan that
accepts rollovers. When you becomes eligible to receive a distribution of
your benefits, the Amway Management Company will provide you with more
detailed information concerning the mandatory 20% income tax withholding
requirements and the mechanics of a direct rollover.
5
<PAGE>
Further, if the participant receives a distribution before age 59 1/2, the
participant will also be subject to an excise tax equal to 10% of the
amount of the distribution. The 10% excise tax is in addition to regular
income tax. The 10% excise tax is generally imposed unless one of the
following exceptions applies:
(a) The distribution is rolled over to an IRA or other qualified
retirement plan within 60 days after the participant receives it;
(b) The distribution is made as a result of the participant's
termination of employment after attaining at least age 55;
(c) The distribution is made as a result of the participant's death
or disability;
(d) The distribution is used to pay deductible medical expenses
(medical expenses which exceed 7 1/2% of the participant's
adjusted gross income); or
(e) The distribution is made under a qualified domestic relations
order.
A participant should consult with his tax adviser and/or legal counsel for
more information about the taxation of the distribution of his benefits.
15. MAY A PARTICIPANT BORROW AGAINST THE MASTER PLAN?
No. No loans are permitted from the Master Plan. Further, participant's
benefits may not be used as collateral for loans.
16. IF I AM ALREADY PARTICIPATING IN ANOTHER QUALIFIED RETIREMENT PLAN, MAY I
TRANSFER MY INTEREST IN THAT PLAN TO THE MASTER PLAN?
Yes. The Master Plan will accept rollovers and transfers from certain
other qualified retirement plans and IRAs containing only the distributions
from those plans and any earnings on the distributions. More information
regarding rollovers and transfers is available from the Amway Management
Company. Any amount you roll over or transfer is placed in your "rollover
account."
17. MAY I TRANSFER THE SHARES IN MY AMWAY MUTUAL FUND ACCOUNT TO THE MASTER
PLAN?
No. It is the current position of the IRS that the transfer of property
other than cash to a qualified retirement plan is a prohibited transaction.
However, by the use of the "reinvestment privilege" you may, if certain
requirements are met, redeem shares of the Amway Mutual Fund and contribute
the proceeds to the Master Plan and avoid the sales
6
<PAGE>
commission. The tax status of a gain realized on a redemption will not be
affected by the exercise of this "reinvestment privilege," but a taxable
loss may be nullified by such exercise.
18. WHAT ARE SOME OF THE ADVANTAGES OF THE MASTER PLAN?
One of the primary advantages of the Master Plan is that less income tax is
ordinarily paid during a taxpayer's lifetime. This results because the
annual contribution is tax deductible and is not subject to federal income
tax until paid to the participant in the form of retirement benefits which
typically then occurs at lower income tax rates.
A second advantage is that ordinary income dividends and capital gain
distributions, if any, earned on the amounts contributed are not subject to
tax until paid to the participant as retirement benefits. This deferral of
income tax has a compounding effect (i.e., there are dividends on
reinvested dividends on reinvested dividends, etc.) over the years without
any income taxes to reduce this compounding effect until benefits are paid
after retirement.
Based on these advantages, it is in the best interest of all employers to give
serious consideration to the Master Plan as a means of developing or
supplementing their retirement programs. We strongly urge you to discuss this
matter with your tax adviser and/or legal counsel.
The purpose of this brochure is to explain the major provisions under the Master
Plan. However, in the event of any differences between this brochure and the
Master Plan, the terms of the Master Plan document will control. If you are
interested in adopting the Master Plan and would like a copy of the Joinder
Agreement and the other adoption documents, please complete and return the
coupon on page eight.
7
<PAGE>
AMWAY MANAGEMENT COMPANY
7575 East Fulton Road, S.E.
Ada, Michigan 49355-7150 Date:
-----------------------------------
Please send me the Joinder Agreement and the other adoption documents for the
Amway Management Company Master Profit-Sharing Plan. I would also like a copy
of the Master Plan document.
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Telephone:
---------------------------------------------------------------------
8
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
JOINDER AGREEMENT
(STANDARDIZED FORM)
-----------------
EMPLOYER:
------------------------------------------------------------
ADDRESS:
------------------------------------------------------------
------------------------------------------------------------
TELEPHONE NUMBER:
------------------------------------------------------------
AUTHORIZED REPRESENTATIVE (to instruct Trustee):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX YEAR END: PLAN NUMBER:
---------------------- ----------------------------
TAXPAYER IDENTIFICATION NUMBER:
-------------------------------------------------
FORM OF BUSINESS (check one):
Sole Proprietorship Regular Corporation
---- ----
Partnership S Corporation
---- ----
Limited Liability Company Other
---- ----
TRUSTEE: Michigan National Bank
27777 Inkster Road
P.O. Box 9065
<PAGE>
Farmington Hills, MI 48333
(313) 473-3555
SPONSOR: Amway Management Company
7575 East Fulton Road
Ada, MI 49355
(616) 676-6288
This Joinder Agreement, when signed by Employer and Michigan National
Bank ("Trustee"), shall establish or amend Employer's retirement plan for the
benefit of its eligible employees and the employees of any Related Employer.
The terms of the Amway Management Company Master Profit-Sharing Plan ("Master
Plan") for Plan Years beginning on or after January 1, 1989, are incorporated by
reference into this document.
The terms of the Master Plan and provisions elected in this Joinder
Agreement will constitute the terms and conditions of Employer's retirement
plan. This Joinder Agreement may only be used in conjunction with the Master
Plan (Master Plan 01). Employer's failure to properly complete this Joinder
Agreement may result in the disqualification of Employer's retirement plan.
1. NEW PLAN OR AMENDMENT. This Adoption Agreement constitutes:
(a) A new plan established by Employer.
----
(b) An amendment of a plan maintained by Employer.
----
Effective date of former plan: .
------------------
Note: If the Adoption Agreement is intended as an amendment of a prior
plan (other than a plan established using this Master Plan), Employer may
not use the Master Plan if the prior plan permitted benefit distributions
in a form other than lump sum payments and installment payments.
2. EFFECTIVE DATE. The Plan or this amendment of the Plan shall be effective
as of _______________________.
3. PLAN YEAR. The Plan Year and any other limitation year of the Plan is the
calendar year, unless the Employer has a different taxable year. In that
event, the Plan Year and any other limitation year shall begin on
_______________ (must be the first day of a calendar month) and end on
_________________.
4. COVERED EMPLOYEES. The Plan shall cover all employees of Employer and any
Related Employer who have completed at least one year of service, as
defined in the Master Plan and in this Joinder Agreement.
-2-
<PAGE>
A Related Employer includes any other business entity, whether or not
incorporated, that is commonly-owned with Employer. A commonly-owned
business exists if, for example:
-- The Employer owns more than 80% of another business.
-- The owners or shareholders of Employer, individually or together
with less than five individuals, own or control another business.
Note: These are only two examples of commonly-owned businesses. An
Employer should consult its legal counsel regarding this issue.
5. YEAR OF SERVICE. For purposes of eligibility to participate in the Plan, a
year of service means (check one):
(a) 12 months of employment with Employer or a Related Employer
---- (while related). An Employee shall be credited with service
based on the time between the Employee's date of employment
(i.e., the date on which the Employee performs his first hour of
service for Employer) and the Employee's severance from service
(i.e, the date as of which the Employee quits, retires, is
discharged or dies; or, if earlier, the date on which the
Employee has not performed an hour of service for one year).
However, if an Employee has a severance from service and is
rehired before incurring a break in service (i.e., a period of 12
continuous months beginning as of an Employee's severance from
service and during which the Employee is not employed by
Employer), the period in which the Employee is not employed shall
be included in his service for this purpose.
(b) An eligibility computation period where the Employee is employed
---- on the last day of the eligibility computation period and has at
least 1,000 hours of service during the eligibility computation
period. The initial eligibility computation period is the
12-consecutive-month period beginning on the Employee's date of
employment. After the initial eligibility period, the
eligibility computation period is each Plan Year beginning after
the Employee's date of employment.
6. OTHER QUALIFIED PLAN. If an Employer also maintains another Qualified
Plan, Employer may not adopt the Master Plan unless the other Qualified
Plan provides the minimum benefit accrual or minimum contribution required
under Section 416 of the Code. Note: If an Employer maintains another
Qualified Plan, the Employer should consult its legal counsel regarding
this issue.
7. TRUSTEE'S FEES AND EXPENSES. Employer agrees that Trustee shall be
entitled to, and may charge and receive from the Trust, such reasonable
fees and expenses agreed to by Trustee and Sponsor.
-3-
<PAGE>
8. LIMITATIONS ON ANNUAL ADDITIONS. If Employer maintains, or ever has
maintained, another qualified plan in which any Participant in this Plan is
(or was) a Participant or could possibly become a Participant, Employer
must complete this section.
(a) If the Participant is covered under another qualified defined
contribution plan maintained by Employer, other than a Master or
Prototype plan:
(i) The provisions of Section 9.2(a) through Section 9.2(f)
---- of the Master Plan will apply, as if the other plan was
a Master or Prototype plan.
(ii) (Provide the method under which the plans will limit total
---- Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that
precludes Employer discretion. This should be done on
attached Exhibit A.)
(b) If the Participant is, or ever has been, a Participant in a defined
benefit plan maintained by Employer:
(i) In any Limitation Year, the Annual Additions credited to
---- the Participant under this Plan may not cause the sum of the
Defined Benefit Plan Fraction and the Defined Contribution
Plan Fraction to exceed 1.0. If the Employer contributions
that would otherwise be allocated to the Participant's
Employer Contribution Account during such year would cause
the 1.0 limitation to be exceeded, the allocation will be
reduced so that the sum of the fractions equals 1.0. Any
contributions not allocated because of the preceding
sentence will be allocated to the remaining Participants
under the allocation formula under the Plan. If the 1.0
limitation is exceeded because of an Excess Amount, such
Excess Amount will be reduced in accordance with Section
9.1(d) of the Master Plan.
(ii) (Provide the method under which the plan involved will
---- satisfy the 1.0 limitation in a manner that precludes
Employer discretion. This should be done on attached Exhibit
A.)
9. INFORMATION TO TRUSTEE. Employer agrees to furnish to Trustee all
information it reasonably may require for the proper operation of the Plan.
10. CONTRIBUTIONS HELD IN TRUST. Trustee agrees to hold all contributions made
to the Trust Fund by Employer in trust, in accordance with the terms and
provisions of the Plan and to distribute the same only as provided in the
Plan.
11. AMENDMENT OR TERMINATION BY SPONSOR. Sponsor shall inform Employer of any
-4-
<PAGE>
amendments made to the Master Plan or of the discontinuance or abandonment
of the Master Plan.
12. AMENDMENT OR TERMINATION BY EMPLOYER. Employer reserves the right to amend
or terminate the Plan at any time, subject to the requirements of Article
XIV of the Master Plan.
13. RELIANCE ON OPINION LETTER. An Employer who has ever maintained or later
adopts any plan in addition to this Plan may not rely on an opinion letter
issued by the National Office of the Internal Revenue Service ("IRS")
regarding the Master Plan as evidence that the Plan is qualified under
Section 401 of the Code. For this purpose, a Welfare Benefit Fund and an
Individual Medical Benefit Account, as defined in the Master Plan, shall be
treated as an additional plan. If an Employer who adopts or maintains
multiple plans wishes to obtain reliance that its plan(s) are qualified,
the Employer must apply to the appropriate key district office of the IRS
for a determination letter.
An Employer may not rely on the opinion letter issued by the National
Office of the IRS as evidence that this Plan is qualified under Section 401
of the Code unless the terms of the Plan, as herein adopted or amended,
that pertain to the requirements of Sections 401(a)(4), 401(a)(17), 401(l),
401(a)(5), 410(b) and 414(s) of the Code are either made effective
retroactively to the first day of the first Plan Year beginning after
December 31, 1988 (or such other date on which these requirements first
become effective with respect to this Plan) or are made effective no later
than the first day on which Employer is no longer entitled, under
regulations, to rely on a reasonable, good faith interpretation of these
requirements, and the prior provisions of the Plan constitutes such an
interpretation.
IN WITNESS OF WHICH, Employer and Trustee have signed this Joinder
Agreement this ______ day of _____________, 199__.
EMPLOYER
------------------------------
By
-------------------------------------
Its
------------------------------------
-5-
<PAGE>
MICHIGAN NATIONAL BANK
By
-------------------------------------
Its
------------------------------------
Note: Before signing the Joinder Agreement, an Employer should have its
legal counsel review the Master Plan and Joinder Agreement to determine if
they are appropriate in the Employer's circumstances and to insure that
Employer understands its responsibilities.
-6-
<PAGE>
DISCLOSURE OF PLAN INFORMATION UNDER ERISA
Attached is a copy of the most recent IRS Form 5500-C/R for the
profit-sharing plan of which you are a participant or beneficiary. This form
contains information about the plan and has been filed with the Internal Revenue
Service under the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
This form is being furnished to you in compliance with Department of
Labor regulations which require it to be furnished to you in lieu of the summary
annual report for the plan years for which the 5500-R portion of an IRS Form
5500-C/R has been filed.
You also have the legally protected right to examine pertinent plan
documents at the employer's principal office or at the United States
Department of Labor. You may also obtain a copy of the pertinent plan
documents from any of these entities upon paying reasonable copying costs.
Requests to the Department of Labor should be addressed to the Public
Disclosure Room, N-4677, Pension and Welfare Benefit Programs, Frances
Perkins Department of Labor Building, 200 Constitution Avenue, N.W.,
Washington, D.C. 20216.
<PAGE>
SUMMARY ANNUAL REPORT
This is a summary of the annual report for the
____________________________ PLAN (__-_______-00_) for the period of _________,
199_ through ___________, 199_. The Employer established the Plan by adopting
the Amway Management Company Master Profit-Sharing Plan (38-1913611-001). The
annual report has been filed with the Internal Revenue Service, as required
under the Employee Retirement Income Security Act of 1974 ("ERISA").
BASIC FINANCIAL STATEMENT
Benefits under the Plan are provided by employer contributions [and
participant pay deferral contributions] to a trust fund. Plan expenses were
$___________. These expenses included $___________ in administrative expenses,
$___________ in benefits paid to participants and beneficiaries, and
$___________ in other expenses. A total of _______ persons were participants in
or beneficiaries of the Plan at the end of the plan year, although not all of
these persons had yet earned the right to receive benefits.
The value of Plan assets, after subtracting liabilities of the Plan,
was $___________ as of ___________, 19__ [the end of the plan year], compared to
$___________ as of _________, 19__ [the beginning of the plan year]. During the
plan year, the Plan experienced [an increase] [a decrease] in its net assets of
$___________. This [increase] [decrease] includes unrealized appreciation or
depreciation in the value of Plan assets; that is, the difference between the
value of the Plan's assets at the end of the year and the value of the assets at
the beginning of the year or the cost of assets acquired during the year. The
Plan had a total income of $___________, including employer contributions of
$__________, [participant pay deferral contributions of $__________,] [gains]
[losses] of $___________ from the sale of assets, and earnings from investments
of $___________.
YOUR RIGHTS TO ADDITIONAL INFORMATION
You have the right to receive a copy of the full annual report, or any
part thereof, on request. The items listed below are included in that report:
[List only those items which are actually included in the latest annual report.]
1. Assets held for investment.
2. Fiduciary information, including transactions between the
Plan and parties-in-interest (that is, persons who have certain
relationships with the Plan).
3. Loans or other obligations in default.
<PAGE>
4. Leases in default.
5. Transactions in excess of 3% [5%] of Plan assets.
6. Accountant's report.
7. Insurance information including sales commissions paid by
insurance carriers.
To obtain a copy of the full annual report, or any part thereof, write
or call the office of _____________________, who is ____________________________
of _________________________. Mr./Ms. _______________________ can be contacted
at __________________________________, Michigan _____________, and can be
telephoned at (____) _____________. The charge to cover copying costs will be
$___________ for the full annual report, or $.________ per page for any part
thereof.
You also have the right to receive from the plan administrator, on
request and at no charge, a statement of the assets and liabilities of the Plan
and accompanying notes, or a statement of income and expenses of the Plan and
accompanying notes, or both.
If you request a copy of the full annual report from the plan
administrator, these two statements and accompanying notes will be included as
part of that report. The charge to cover copying costs given above does not
include a charge for the copying of these portions of the report, because these
portions are furnished without charge.
You also have the legally protected right to examine the annual report
at the main office of the Plan
(___________________________________________________________) and at the U.S.
Department of Labor in Washington, D.C., or to obtain a copy from the U.S.
Department of Labor upon payment of copying costs. Requests to the Department
of Labor should be addressed to: Public Disclosure Room, N-4677, Pension and
Welfare Benefit Programs, Department of Labor, 200 Constitution Avenue, N.W.,
Washington, D.C. 20216.
2/27/98
2
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
________________________________
DISTRIBUTION ELECTION FORM
Employer: ______________________________________________________
Participant: ___________________________________________________
Participant's Address: _________________________________________
__________________________________________
Participant's Social Security No.: _____________________________
Participant's Date of Birth: ___________________________________
Plan Account No.: ______________________________________________
REQUEST FOR DISTRIBUTION
By signing this document, I request that my benefits in the Plan the
above-named employer has established by adopting the Amway Management Company
Master Profit-Sharing Plan ("Plan") be distributed to me in the following
manner:
_____ 1. Lump sum payment to:
_____ Me
_____ The IRA indicated below.
_____ Me in the amount of $__________ with a direct
rollover of the remainder to the IRA indicated
below.
_____ 2. Installment payments over a period of ______ years (not
exceeding my life expectancy or the joint life expectancy of
my beneficiary and me).
_____ 3. A lump sum payment of $__________ with the remaining portion
in installment payments over a period of _______ years (not
exceeding my life expectancy or the joint life expectancy of
my beneficiary and me).
a. Please distribute the lump sum payment to:
_____ Me
_____ The IRA indicated below.
<PAGE>
b. Please distribute the installment payments to:
_____ Me
_____ The IRA indicated below.
_____ 4. Annual installment payments to me necessary to satisfy the
required minimum distribution rules. I will provide Amway
Management Company with written instructions from me and/or
my tax advisor each year which indicates the amount of the
required minimum distribution as well as the life expectancy
calculation method which I have selected.
IF YOU ELECTED A DIRECT ROLLOVER OF YOUR DISTRIBUTION TO AN IRA, THE FOLLOWING
INFORMATION MUST BE PROVIDED. (FAILURE TO ACCURATELY COMPLETE THIS SECTION MAY
PREVENT A DIRECT ROLLOVER FROM OCCURRING.)
Name and address of the IRA custodian or trustee:__________________
___________________________________________________________________
___________________________________________________________________
Account Number of the IRA: _______________________________________
TIME OF DISTRIBUTION
I understand that my lump sum payment will be made and/or my
installment payments will begin as soon as administratively feasible after I
request distribution.
ACKNOWLEDGEMENT OF DISTRIBUTION
In making this request for distribution, I acknowledge that I
understand the following:
1. If I have benefits of at least $3,500, I understand that I
do NOT have to receive distribution of my benefits before I attain
retirement age. However, even though I may not yet be retirement age, I
elect to receive my benefits now rather than wait until retirement age.
2. I understand that the amount of my benefits will be based
upon the value of my accounts as of the date or dates my interest in the
Amway Mutual Fund and/or Cash Equivalent Fund are sold.
3. I have read the Special Tax Notice Regarding Plan Payments
and
2
<PAGE>
understand the tax consequences of my election above.
4. If I elected a direct rollover of my benefits to an IRA, I
certify that the IRA is eligible to receive the rollover.
ELECTION FOR INCOME TAX WITHHOLDING
I received a Notice of Income Tax Withholding on my distribution
payment(s) from the Amway Management Company Master Profit-Sharing Plan along
with this Distribution Election form. As stated in that notice, I understand
that I have the right to elect to have no income tax withheld from my
distribution payment(s) from the Plan. However, I also understand that if I
elect not to have federal income tax withheld, I will be liable for payment of
federal income tax on the taxable portion of my distribution payment(s). I
further understand that I may incur penalties under the estimated tax payment
rules if my withholding and estimated tax payments, if any, are not sufficient.
Therefore, I direct the Trustee, Michigan National Bank, to withhold federal
income taxes from my distribution payment(s) as follows (check one):
_____ I do NOT want federal income tax withheld from my
distribution payment(s), in accordance with the attached IRS
Form W-4P.
_____ I do want federal income tax withheld from my distribution
payment(s) and I direct the Trustee, Michigan National Bank,
to withhold from my distribution payment(s) in accordance
with the attached IRS Form W-4P.
Dated: __________________, 199_ __________________________________________
Signature of Participant
Return this completed Distribution Election form to:
Amway Management Company
7575 East Fulton Road, S.E.
Ada, MI 49355-0001
3
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
-------------------------------------
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS
This notice contains important information you will need before you
decide how to receive your benefits from the AMWAY MANAGEMENT COMPANY MASTER
PROFIT-SHARING PLAN (the "Plan").
This notice must be provided to you no less than 30 days and no more
than 90 days before a distribution is scheduled to occur. You have no less
than 30 days after this notice is provided to you to decide how your Plan
payment is to be paid. Notwithstanding this right, you may elect to begin
receiving your Plan payment within 30 days after this notice is provided
to you.
PLAN PAYMENTS
A payment from the Plan that is eligible for "rollover" (see below)
can be paid in a "direct rollover" or it can be paid to you. You can have ALL
OR ANY PORTION of your payment paid in either method. A rollover is a payment
of your Plan benefits to your individual retirement arrangement ("IRA") or to
another employer plan that accepts rollovers. The method of payment you choose
will affect the tax you owe.
I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER
The plan administrator should be able to tell you what portion of your
payment is an eligible rollover distribution.
The following types of payments CANNOT be rolled over:
A. PAYMENTS SPREAD OVER LONG PERIODS. You cannot roll over a payment
if it is part of a series of equal (or almost equal) payments that are made at
least once a year and that will last for:
1. Your lifetime (or your life expectancy);
2. Your lifetime and your beneficiary's lifetime (or
life expectancies); or
3. A period of ten years or more.
B. REQUIRED MINIMUM PAYMENTS. Beginning in the year you reach age
701/2, a certain portion of your payment cannot be rolled over because it is
a "required minimum payment" that must be paid to you.
II. TAX CONSEQUENCES OF DIRECT ROLLOVERS
A. DIRECT ROLLOVERS GENERALLY. You can choose a direct rollover of
all or any portion of your payment that is an "eligible rollover distribution,"
as described above. In a direct rollover, the eligible rollover distribution
is paid directly from the Plan to an IRA or another employer plan that accepts
rollovers.
If you choose a direct rollover, you are not taxed on a payment until
you later take it out of the IRA or the employer plan. If you choose a direct
rollover, your payment:
1. Will not be taxed in the current year and no income tax
will be withheld.
2. Will be made directly to your IRA or, if you choose, to another
employer plan that accepts your rollover.
3. Will be taxed later when you take it out of the IRA or
the employer plan.
B. DIRECT ROLLOVER TO AN IRA. You can open an IRA to receive the
direct rollover. (The term "IRA," as used in this notice, includes individual
retirement accounts and individual retirement annuities.) If you choose to have
your payment made directly to an IRA, contact an IRA sponsor (usually a
financial institution) to find out how to have your payment made in a direct
rollover to an IRA at that institution.
If you are unsure of how to invest your money, you can temporarily
establish an IRA to receive the payment. However, in choosing an IRA, you may
wish to consider whether the IRA you choose will allow you to move all or part
of your payment to another IRA at a later date without penalties or other
limitations. See IRS Publication 590, INDIVIDUAL RETIREMENT ARRANGEMENTS, for
more information on IRAs (including limits on how often you can roll over
between IRAs).
C. DIRECT ROLLOVER TO A PLAN. If you are employed by a new employer
that has a plan, and you want a direct rollover to that plan, ask the
administrator of that plan whether it will accept your rollover. If your new
employer's plan does not accept a rollover, you can choose a direct rollover
to an IRA.
D. DIRECT ROLLOVER OF A SERIES OF PAYMENTS. If you receive eligible
rollover distributions that are paid in a series for less than ten years, your
choice to make or not make a direct rollover for a payment will apply to all
later payments in the series until you change your election. You are free to
change your election for any later payment in the series.
III. TAX CONSEQUENCES IF PAID TO YOU
A. PAYMENTS TO YOU IN GENERAL. If you have the payment made to you,
it is subject to a 20% income tax withholding. The payment is taxed in the
year you receive it unless, within 60 days, you roll it over to an IRA or
another plan that accepts rollovers. If you do not roll it over, special tax
rules may apply. If you choose to receive the payment:
1. You will receive only 80% of the payment because the plan \
administrator is required to withhold 20% of the payment and send it to the
IRS as income tax withholding to be credited against your taxes.
2. Your payment will be taxed in the current year unless you roll
it over. You may be able to use special tax rules that could reduce the tax
you owe. However, if you receive the payment before age 591/2, you also may
have to pay an additional 10% tax.
3. You can roll over the payment by paying it to your IRA or to
another employer plan that accepts your rollover within 60 days of receiving
the payment. The amount rolled over will not be taxed until you take it out
of the IRA or employer plan.
4. If you want to roll over 100% of the payment to an IRA or an
employer plan, YOU MUST FIND OTHER MONEY TO REPLACE THE 20% THAT WAS WITHHELD.
If you roll over only the 80% that you received, you will be taxed on the 20%
that was withheld and that is not rolled over.
B. INCOME TAX WITHHOLDING.
1. MANDATORY WITHHOLDING. If any portion of the payment to you is
an eligible rollover distribution, the Plan is required by law to withhold 20%
of that amount. This amount is sent to the IRS as income tax withholding. For
example, if your eligible rollover distribution is $10,000, only $8,000 will
be paid to you because the Plan must withhold $2,000 as income tax. However,
when you prepare your income tax return for the year, you will report the full
$10,000 as a payment from the Plan. You will report the $2,000 as tax withheld,
and it will be credited against any income tax you owe for the year.
2. VOLUNTARY WITHHOLDING. If any portion of your payment is not an
eligible rollover distribution but is taxable, the mandatory withholding rules
described above do not apply. In this case, you may elect not to have
withholding apply to that portion. To elect out of withholding, ask the plan
administrator for the election form and related information.
3. SIXTY-DAY ROLLOVER OPTION. If you have an eligible rollover
distribution paid to you, you can still decide to roll over all or part of it
to an IRA or another employer plan that accepts rollovers. If you decide to
roll over, YOU MUST MAKE THE ROLLOVER WITHIN 60 DAYS AFTER YOU RECEIVE THE
PAYMENT. The portion of your payment that is rolled over will not be taxed
until you take it out of the IRA or the employer plan.
You can roll over up to 100% of the eligible rollover distribution,
including an amount equal to the 20% that was withheld. If you choose to roll
over 100%, you must find other money within the 60-day period to contribute
to the IRA or the employer plan to replace the 20% that was withheld. On the
other hand, if you roll over only the 80% that you received, you will be taxed
on the 20% that was withheld.
EXAMPLE: Your eligible rollover distribution is $10,000, and you
choose to have it paid to you. You will receive $8,000, and $2,000 will be
sent to the IRS as income tax withholding. Within 60 days after receiving
the $8,000, you may roll over the entire $10,000 to an IRA or employer plan.
To do this, you roll over the $8,000 you received from the Plan, and you will
have to find $2,000 from other sources (your savings, a loan, etc.). In this
case, the entire $10,000 is not taxed until you take it out of the IRA or
employer plan. If you roll over the entire $10,000, when you file your income
tax return you may get a refund of the $2,000 withheld.
If, on the other hand, you roll over only $8,000, the $2,000 you did
not roll over is taxed in the year it was withheld. When you file your income
tax return you may get a refund of part of the $2,000 withheld. (However, any
refund is likely to be larger if you roll over the entire $10,000.)
4. ADDITIONAL 10% TAX IF YOU ARE UNDER AGE 591/2. If you receive a
payment before you reach age 591/2 and you do not roll it over, then, in
addition to the regular income tax, you may have to pay an extra tax equal
to 10% of the taxable portion of the payment. The additional 10% tax does
not apply to your payment if it is:
A. Paid to you because you separate from service with your employer
during or after the year you reach age 55;
B. Paid to you because you retire due to disability;
C. Paid to you as equal (or almost equal) payments over your life
or life expectancy (or your and your beneficiary's lives or life expectancies);
or
D. Used to pay certain medical expenses.
See IRS Form 5329 for more information on the additional 10% tax.
5. SPECIAL TAX TREATMENT. If your eligible rollover distribu tion
is not rolled over, it will be taxed in the year you receive it. However, if
it qualifies as a "lump sum distribution," it may be eligible for special tax
treatment.
A lump sum distribution is a payment, within one year, of your entire
balance under the Plan (and certain other similar plans of the employer) that
is payable to you because you have reached age 591/2 or have separated from
service with your employer [(or, in the case of a self-employed individual,
because you have reached age 591/2 or have become disabled)]. For a payment to
qualify as a lump sum distribution, you must have been a participant in the
Plan for at least five years.
The special tax treatment for lump sum distributions is described below:
A. FIVE-YEAR AVERAGING. If you receive a lump sum distribution after
you are age 591/2, you may be able to make a one-time election to figure the
tax on the payment by using "five-year averaging." Five-year averaging often
reduces the tax you owe because it treats the payment as if it were paid over
five years.
B. TEN-YEAR AVERAGING IF YOU WERE BORN BEFORE JANUARY 1, 1936. If
you receive a lump sum distribution and you were born before January 1, 1936,
you can make a one-time election to figure the tax on the payment by using
"ten-year averaging" (using 1986 tax rates) instead of five-year averaging
(using current tax rates). Like the five-year averaging rules, ten-year
averaging often reduces the tax you owe.
There are other limits on the special tax treatment for lump sum
distributions. For example, you can generally elect this special tax
treatment only once in your lifetime, and the election applies to all lump
sum distribu tions that you receive in that same year. If you have previously
rolled over a payment from the Plan (or certain other similar plans of the
employer), you cannot use this special tax treatment for later payments from
the Plan. If you roll over your payment to an IRA, you will not be able to
use this special tax treatment for later payments from the IRA. Also, if you
roll over only a portion of your payment to an IRA, this special tax
treatment is not available for the rest of the payment. Additional
restrictions are described in IRS Form 4972, which has more information
on lump sum distributions and how you elect the special tax treatment.
IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES
In general, the rules summarized above that apply to payments to
employees also apply to payments to surviving spouses of employees and to
spouses or former spouses who are "alternate payees." You are an alternate
payee if your interest in the Plan results from a "qualified domestic
relations order," which is an order issued by a court in connection with a
divorce or legal separation. Some of the rules summarized above also apply
to a deceased employee's beneficiary who is not a spouse. However, there are
some exceptions for payments to surviving spouses, alternate payees, and other
beneficiaries that should be mentioned.
If you are a surviving spouse, you may choose to have an eligible
rollover distribution paid in a direct rollover to an IRA or paid to you. If
you have the payment paid to you, you can keep it or roll it over yourself to
an IRA but you CANNOT roll it over to an employer plan. If you are an alternate
payee, you have the same choices as the employee. Thus, you can have the payment
paid as a direct rollover or paid to you. If you have it paid to you, you can
keep it or roll it over yourself to an IRA or to another employer plan that
accepts rollovers. If you are a beneficiary other than the surviving spouse,
you CANNOT choose a direct rollover, and you CANNOT roll over the payment
yourself.
If you are a surviving spouse, an alternate payee, or another
beneficiary, your payment is not subject to the additional 10% tax described
in item 4 of the "Income Tax Withholding" section above, even if you are younger
than age 591/2.
If you are a surviving spouse, an alternate payee, or another
beneficiary, you may be able to use the special tax treatment for lump sum
distributions. If you receive a payment because of the employee's death, you
may be able to treat the payment as a lump sum distribution if the employee
met the appropriate age requirements, whether or not the employee had five
years of participation in the Plan.
HOW TO OBTAIN ADDITIONAL INFORMATION
This notice summarizes only the federal (not state or local) tax rules
that might apply to your payment. The rules described above are complex and
contain many conditions and exceptions that are not included in this notice.
Therefore, you may want to consult with a professional tax advisor BEFORE you
take a payment of your benefits from the Plan. Also, you can find more
specific information on the tax treatment of payments from qualified
retirement plans in IRS Publication 575, PENSION AND ANNUITY INCOME, and IRS
Publication 590, INDIVIDUAL RETIREMENT ARRANGEMENTS. These publications are
available from your local IRS office or by calling 1-800-TAX-FORMS.
<PAGE>
NOTICE OF INCOME TAX WITHHOLDING
ON CERTAIN DISTRIBUTIONS FROM
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
Most payments from the Plan you or your employer have established by
adopting the Amway Management Company Master Profit-Sharing Plan are "eligible
rollover distributions." If a payment is an eligible rollover distribution, it
is subject to a mandatory 20% income tax withholding unless it is paid in a
direct rollover to an IRA or another employer plan that accepts rollovers.
Certain payments cannot be rolled over (e.g., payments spread over long periods
or required minimum payments). See the Special Tax Notice Regarding Plan
Payments for more information. If a payment cannot be rolled over, the
remaining portion of this notice applies.
The distribution payment(s) you receive from the Plan which cannot be
rolled over are subject to federal income tax withholding unless you elect not
to have withholding apply. Withholding will only apply to the portion of your
distribution payment(s) that are included in your income subject to federal
income tax. Thus, for example, there will be no withholding on the return of
your own employee after-tax contributions which you may have previously made to
the Plan.
You may elect not to have withholding apply to your distribution
payment(s) or you may elect to have federal income tax withheld from the taxable
portion of your distribution payment(s). You must make your election by signing
and dating the attached Distribution Election form and by completing an IRS Form
W-4P. These documents should be returned by mail to: Amway Management Company,
7575 East Fulton Road, S.E., Ada, Michigan 49355-0001.
IF YOUR DISTRIBUTION ELECTION FORM AND IRS FORM W-4P ARE NOT RECEIVED
BY THE TIME THE FIRST DISTRIBUTION PAYMENT IS ACTUALLY MADE, THEN INCOME TAX
WILL BE WITHHELD. YOU MAY WISH TO CONSULT YOUR TAX ADVISER AND/OR LEGAL COUNSEL
WITH RESPECT TO ANY WITHHOLDING QUESTIONS WHICH YOU MIGHT HAVE.
If you elect not to have withholding apply to your distribution
payment(s), or if you do not have enough federal income tax withheld from your
distribution payment(s), you may be responsible for the payment of estimated
income tax. You may incur penalties under the estimated tax rules if your
withholding and estimated tax payments are not sufficient.
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
_____________________________________
BENEFICIARY DESIGNATION FORM
NOTE: The employer and each employee who has completed at least one year of
service, as defined in the Master Plan, should complete this Beneficiary
Designation form.
Employer: ____________________________________________________
Participant: _________________________________________________
Participant's Address: _______________________________________
________________________________________
Participant's Social Security No.: __________________________
Participant's Date of Birth: _________________________________
I, _____________________________, am a participant in the Plan the
above-named employer has established by adopting the Amway Management Company
Master Profit-Sharing Plan ("Plan"). I ______________________ (am or am not)
married and my spouse's name is ____________________. I understand that if I am
married and I do not name my spouse as my sole primary beneficiary, my
beneficiary designation will not be effective without the consent of my spouse.
NOTE: YOUR CHOICE OF BENEFICIARY WILL HAVE AN IMPACT ON YOUR LIFE EXPECTANCY
CALCULATIONS FOR DETERMINING YOUR REQUIRED MINIMUM DISTRIBUTIONS UPON ATTAINING
AGE 70 1/2 (SEE THE LIFE EXPECTANCY CALCULATIONS OPTIONS HANDOUT FOR
INFORMATION).
PRIMARY BENEFICIARY(IES)
As a Plan participant, I designate the following as my primary
beneficiary(ies) to receive any benefits payable under the Plan by reason of my
death:
<TABLE>
<CAPTION>
Name and Address of Date of % of
Primary Beneficiary(ies) Relationship Birth Benefit
------------------------ ------------ ----- -------
<S> <C> <C> <C>
_______________________________ ____________ _______ ______%
_______________________________ ____________ _______ ______%
_______________________________ ____________ _______ ______%
</TABLE>
I understand that, if a primary beneficiary dies before my benefits
are distributed among all primary beneficiaries, the beneficiary's share shall
be distributed among the remaining primary beneficiaries in proportion to their
respective shares.
SUCCESSOR BENEFICIARY(IES)
If all of my primary beneficiaries predecease me, then I designate the
following as my successor beneficiary(ies) under the Plan:
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Date of % of
Primary Beneficiary(ies) Relationship Birth Benefit
------------------------ ------------ ----- -------
<S> <C> <C> <C>
_______________________________ ____________ _______ ______%
_______________________________ ____________ _______ ______%
_______________________________ ____________ _______ ______%
</TABLE>
I understand that, if a successor beneficiary dies before my benefits
are distributed among all successor beneficiaries, the deceased beneficiary's
share shall be distributed among the remaining successor beneficiaries in
proportion to their respective shares.
I understand that I may change the above designations at any time by
filing a new beneficiary designation form with the plan administrator.
Dated: ___________________, 199_ __________________________________________
Signature of Participant
- --------------------------------------------------------------------------------
NOTE TO PARTICIPANT: If you have named a primary beneficiary in addition to, or
other than, your spouse, your designation will not be effective unless your
spouse consents as follows to the designation:
SPOUSE'S CONSENT
I am the current spouse of the participant who has completed this
Beneficiary Designation form. I understand that in the event of the
participant's death, all of the participant's benefits will be paid to me as
provided in the Plan, unless the participant names an additional or different
beneficiary and I consent in writing to the designation. I understand that I am
under no obligation to give my written consent to such a designation. I further
understand that the participant has named a primary beneficiary other than me,
and I consent to that designation.
Dated: ___________________, 199__ __________________________________________
Signature of Participant's Spouse
Signed and sworn to before me this
______ day of ____________, 199__.
___________________________________
Notary Public, __________ County,____
My Commission Expires:_____________
<PAGE>
Return a copy of this completed Beneficiary Designation form to:
Amway Management Company
7575 East Fulton Road, S.E.
Ada, MI 49355-0001
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
--------------------------------------------
APPLICATION FOR ROLLOVER OF LUMP SUM DISTRIBUTION
Employer:
------------------------------------------------------------
Participant:
---------------------------------------------------------
Participant's Address:
-----------------------------------------------
-----------------------------------------------
Participant's Social Security No.:
-----------------------------------
Participant's Date of Birth:
-----------------------------------------
Plan Account No.:
----------------------------------------------------
I am a participant in the AMWAY MANAGEMENT COMPANY MASTER
PROFIT-SHARING PLAN ("Plan") or will be eligible to participate in the Plan upon
completing the service requirement of the Plan.
By signing this document, I am requesting the right to roll over into
the Plan a lump sum distribution I received from a qualified retirement plan in
which I was previously a participant. I understand that the Plan requires that
the rollover meet certain legal requirements. As a result, I promise the plan
administrator that all of the following statements are true:
1. The retirement plan from which I received this lump sum
distribution is a "qualified plan" under the requirements of the Internal
Revenue Code;*
2. I received a lump sum distribution of my entire vested
benefit from the plan;
3. I am rolling over part or all of the lump sum distribution
within 60 days after I received the distribution, or I am rolling over the
distribution within 60 days after I received the distribution from an
individual retirement account that contains only the lump sum distribution
and investment earnings;** and
- -------------------------
*L This can be demonstrated by supplying the plan administrator with one of
the following:
- A letter from the administrator of the prior employer's plan verifying
that the prior plan has received an approval letter from the IRS.
- A copy of the most recent IRS approval letter regarding the prior
employer's plan.
** This can be verified by supplying the plan administrator with a copy of the
distribution statement received with your lump sum distribution, and if
applicable, a copy of an IRA statement which shows when the IRA was established
and the initial amount deposited in the IRA.
<PAGE>
4. No portion of the amount I am rolling over consists of my
after-tax contributions to my prior employer's retirement plan.
I also agree to supply any additional information that the plan administrator
believes is necessary to process my application.
Dated: , 199_
-----------------------
--------------------------------------------------
Signature of Applicant
FOR ADMINISTRATIVE USE ONLY
The following items have been submitted with this application (check all that
apply):
_____ Statement from prior employer's plan administrator verifying the
plan's "qualified" status.
_____ Copy of the IRS approval letter regarding the prior employer's
plan.
_____ Copy of the distribution statement received with the lump sum
distribution. This statement should verify the amount
distributed from the prior employer's plan to the applicant, the
gross amount of the lump sum distribution and the amount withheld
as federal income tax (20% of gross). The statement should also
not be dated more than 60 days prior to the date of this
application.
_____ Copy of an IRA statement into which the lump sum distribution was
placed. This statement should verify when the IRA was
established (within 60 days from the date the prior employer
informed the applicant that the amount was distributed from the
prior plan), the beginning account balance and that no other
contributions have been made to the IRA since it was
established. Also, the date on the check from the IRA should be
less than 60 days prior to the date of this application.
_____ Other (please specify):
------------------------------------------
-----------------------------------------------------------------
Based on the information supplied by the applicant indicated above, this
application is:
_____ Accepted _____ Denied
2
<PAGE>
Dated: , 199_ AMWAY MANAGEMENT COMPANY
-----------------------
By
-------------------------------------
3
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING PLAN
-----------------------------------
AUTHORIZATION FOR DIRECT ROLLOVER
Employer:
------------------------------------------------------------
Participant:
----------------------------------------------------------
Participant's Address:
-----------------------------------------------
-----------------------------------------------
Participant's Social Security No.:
------------------------------------
Participant's Date of Birth:
------------------------------------------
Plan Account No.:
-----------------------------------------------------
I am a participant in the AMWAY MANAGEMENT COMPANY MASTER
PROFIT-SHARING PLAN ("Plan") or will be eligible to participate in the Plan upon
completing the service requirement of the Plan.
By signing this document, I am requesting the right to have my
benefits in my prior employer's qualified plan directly rolled over into the
Plan. I understand that the Plan requires that the direct rollover meet certain
legal requirements. As a result, I promise the plan administrator that all of
the following statements are true:
1. The retirement plan from which my benefits are to be rolled
over is a "qualified plan" under the requirements of the Internal Revenue
Code.*
2. No portion of the amount to be directly rolled over consists
of my after-tax contributions to my prior employer's retirement plan.
3. No portion of the amount to be directly rolled over consists
of the following:
a. Periodic payments that are made at least once a year
and last for the life or life expectancy of me and/or my beneficiary;
or
b. Periodic payments that last for a period of ten years
or more.
4. No portion of the amount to be directly rolled over consists
of
- -------------------------
This can be demonstrated by supplying the plan administrator with one of the
following:
- - A letter from the administrator of the prior employer's plan verifying that
the prior plan has received an approval letter from the IRS.
- - A copy of the most recent IRS approval letter regarding the prior
employer's plan.
<PAGE>
payments I have received as a "required minimum payment" upon reaching age
70 1/2.
I also agree to supply any additional reasonable information that the plan
administrator believes is necessary to process my application. By my signature
below, I request and authorize the trustee of my prior employer's plan (as
indicated below) to directly rollover my benefits to the trustee of the Plan.
Dated: _______________, 199_ _______________________________________
Signature of Applicant
Name of Retirement Plan:
-------------------------------------------------------
Name and Address of Trustee:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
FOR ADMINISTRATIVE USE ONLY
The following items have been submitted with this application (need only check
one):
Statement from prior employer's plan administrator verifying
----- the plan's "qualified" status.
Copy of the IRS approval letter regarding the prior
----- employer's plan.
Other (please specify):
----- ------------------------------------
------------------------------------------------------------
Based on the information supplied by the applicant indicated above, this
application is:
Accepted
-----
Denied
-----
2
<PAGE>
Dated: _______________, 199_ AMWAY MANAGEMENT COMPANY
By
-------------------------------
3
<PAGE>
___________________, 1997
TO: ALL EMPLOYERS ADOPTING THE AMWAY MANAGEMENT COMPANY MASTER PROFIT-SHARING
PLAN
The Small Business Job Protection Act of 1996 made certain law changes
which affect the Amway Management Company Master Profit-Sharing Plan. Here is a
summary of the changes which become effective in 1997:
1. ELIMINATION OF FAMILY AGGREGATION RULES. Employer contributions
to your Plan are allocated in proportion to each participant's compensation.
For this purpose, your annual compensation is limited to a dollar limit. For
1996, the dollar limit was $150,000. For 1997, the dollar limit is $160,000.
Previously, if your spouse and/or any of your minor children also
participated in the Plan, your family's total compensation was required to be
aggregated for purposes of the dollar limit. Beginning in 1997 this family
aggregation rule has been eliminated. If your family's total compensation
exceeds the dollar limit, the elimination of the family aggregation rule will
allow you and your family to receive a greater share of the employer
contribution for future plan years.
2. REQUIRED MINIMUM DISTRIBUTIONS. Previously, federal law required
that your benefit payments from the Plan must begin by April 1 after the
calendar year in which you attain age 70 1/2, regardless of whether or not you
have retired. Beginning in 1997, this rule continues to apply for participants
who are 5% owners (own at least 5% of the business). However, for participants
who are not 5% owners, the required minimum distribution rules have been
liberalized. Beginning in 1997, for non-5% owners, benefit payments must begin
by the April 1 after the later of the calendar year in which the participant
attains age 70 1/2 or the calendar year in which the participant retires.
3. HOLIDAY ON EXCESS DISTRIBUTIONS TAX. An excess distribution from
the Plan is an installment distribution that exceeds, for any given year, the
greater of $150,000, or $112,500, indexed for inflation. All distributions
which you receive from the Plan, from an IRA or any other tax-favored
arrangement are added together to determine if your distributions in a given
year exceed this limit. If you receive an excess distribution, an excise tax of
15% of the amount of the excess is assessed. However, the 15% excise tax is
waived for distributions that are made during 1997, 1998 and 1999.
Other changes from the Small Business Job Protection Act become
effective in 1998 and later years. We will inform you of those changes as their
effective dates approach. In the meantime, if you have any questions, please
contact us.
Sincerely,
AMWAY MANAGEMENT COMPANY
By
------------------------------
Its
-----------------------------
<PAGE>
AMWAY MANAGEMENT COMPANY
MASTER PROFIT-SHARING RETIREMENT PLAN
LIFE EXPECTANCY CALCULATION OPTIONS
If your are a 5% owner (own at least 5% of your business), your
Plan benefit payments must begin by the April 1 following the calendar year
in which you attain age 70 1/2, regardless of whether or not you have
retired. If you are not a 5% owner, benefit payments must begin by the April 1
after the later of the calendar year in which you attain age 70 1/2 or the
calendar year in which you retire. The applicable April 1 is known as your
"required beginning date." Your required minimum distributions must be made
each year. For the year in which you attain age 70 1/2 (or retire, if
applicable), the minimum distribution must be made by your required beginning
date. For each subsequent year, your required minimum distribution must be
made by December 31 of that year.
You have certain options available to you in calculating your
required minimum distributions. However, these elections must be made by your
required beginning date and are generally irrevocable once made. Specifically,
you have the following choices:
1. You can calculate your required minimum distributions
based upon your life expectancy only or the joint life expectancy of you
and a beneficiary who qualifies as a "designated beneficiary" under IRS
rules. An individual, such as your spouse, would qualify as a designated
beneficiary for this purpose.
2. Regardless of whether you calculate your required
minimum distributions based upon your life expectancy only or the joint
life expectancy of you and your designated beneficiary, you can
"recalculate" your life expectancy annually. Recalculation is done in
accordance with IRS rules and tends to have the effect of stretching out
your required minimum distributions over a greater number of years than
if there is no recalculation.
In addition, if your designated beneficiary is your spouse,
your spouse's life expectancy can also be recalculated annually. Thus,
where you elect a required minimum distribution calculation method based
upon the joint life expectancy of you and your spouse, you may elect to
only recalculate your life expectancy annually; you may elect to only
recalculate your spouse's life expectancy annually; you may elect to
recalculate both the life expectancy of you and your spouse annually; or
you may elect to not recalculate at all.
There are advantages and disadvantages to a life expectancy
calculation method using a single life expectancy as opposed to joint life
expectancy. There are also advantages and disadvantages to utilizing annual
recalculation as opposed to not utilizing annual recalculation. You should
consult with your tax advisor regarding these various options. Once you make an
election with respect to these life expectancy calculation options, you should
provide it, in writing, to Amway Management Company.
<PAGE>
If you do not choose these various life expectancy calculation
options by your required beginning date, you will be considered to have
elected to calculate your required minimum distributions over the joint life
expectancy of you and your designated beneficiary (assuming you have a
designated beneficiary upon your required beginning date). Further, you will
be considered to have elected to annually recalculate your life expectancy
(but not your spouse's life expectancy).
2
<PAGE>
__________________, 199__
TO: ALL EMPLOYERS ADOPTING THE AMWAY MASTER PROFIT-SHARING PLAN
The Amway Master Profit-Sharing Plan has recently been amended.
A copy of the Amendment is enclosed. The Amendment makes the following changes:
1. The Master Plan was required to be amended, as of January 1,
1993, to incorporate a new mandatory 20% income tax withholding rule for most
distributions. However, withholding can be avoided under the new law by
requesting that your benefits be distributed in a direct rollover to another
qualified retirement plan or an IRA. If you want more information regarding
these new tax rules, you should contact Amway Management Company.
2. The Master Plan is also being amended, as of January 1,
1993, to receive direct rollovers of your benefits from other qualified
retirement plans and IRAs.
3. Previously, your benefits could be distributed to you in a
lump sum and/or monthly installments. Effective as of January 1, 1993, the
Master Plan is being amended to add quarterly and annual installments as
permitted distribution forms.
4. The Master Plan is being amended to change the Plan sponsor
and Plan name. Previously, the Plan sponsor was Amway Mutual Fund. Effective
as of September 1, 1993, the Plan sponsor will be Amway Management Company.
Previously, the Plan name was the Amway Mutual Fund Master Profit-Sharing Plan.
Effective as of September 1, 1993, the Plan name will be the Amway Management
Company Master Profit-Sharing Plan.
5. Previously, your benefits were invested in the Amway Mutual
Fund. Effective as of September 1, 1993, the Master Plan is being amended to
add the Cash Equivalent Fund (a money market fund) as an additional investment
option. Now your benefits may be invested in the Amway Mutual Fund, the Cash
Equivalent Fund, or a combination of both. Amway Management Company will
provide you with investment election instructions. Your benefits will continue
to be invested in the Amway Mutual Fund if you do not provide us with any new
investment direction.
6. Previously, if your business had any employees, the
employees must become eligible to participate after completing one year of
service. For this purpose, a year of service was defined as 12 months of
employment, whether or not consecutive. Part-time employees can generally
satisfy this eligibility requirement. Effective as of January 1, 1994, the
Master Plan is being amended to add an alternative definition of year of service
which will be a 12-consecutive-month period where the employee has 1,000 hours
of service and is employed on the
<PAGE>
last day of the period. This alternative definition tends to limit
participation to full-time employees. If you are interested in using this
alternative definition, you should contact Amway Management Company to complete
a new Joinder Agreement.
7. The IRS has adopted new rules limiting the amount of
compensation which may be included for purposes of the Master Plan. Presently,
the limit is $200,000, adjusted each year for increases in the cost of living.
Effective as of January 1, 1994, the dollar limit is being decreased to $150,000
per year. The $150,000 limit will be adjusted in $10,000 increments for
increases in the cost of living.
The Amendment will be considered to be approved by you if you do
not object to it by written notice to Amway Management Company within 30 days.
If you have any questions, please contact us.
Sincerely,
AMWAY MANAGEMENT COMPANY
By
Allan D. Engel
President and Secretary
<PAGE>
_____________________
_____________________
_____________________
Dear IRA Owner:
This letter is to inform you that significant changes have been made to the
tax laws regarding individual retirement accounts ("IRAs"). This letter will
serve as a brief overview of the most significant of these changes. For further
information, you should consult the Amway Management Company Individual
Retirement Accounts Disclosure Statement and the Amway Management Company
Education Individual Retirement Trust Accounts Disclosure Statement and contact
your personal tax adviser.
1. CREATION OF ROTH IRA. Effective for the 1998 calendar year, you may
be eligible to contribute to a new type of IRA called a Roth IRA. Unlike a
traditional IRA whereby contributions made may be tax deductible, contributions
to a Roth IRA are never tax deductible. However, assuming certain holding
periods are satisfied, the distribution of principal and earnings from a Roth
IRA will be exempt from federal income taxes. In order to receive this
favorable tax treatment, contributions made to the Roth IRA must generally
remain in the account for at least five years and must only be distributed after
you attain age 59 1/2, die or become disabled (or used to pay up to $10,000 of
first-time homebuyer expenses).
You may be eligible to contribute to a Roth IRA even though you are not
eligible to make tax deductible contributions to a traditional IRA. Whether or
not you participate in a qualified retirement plan sponsored by your employer,
you are generally permitted to contribute up to $2,000 per year ($4,000 for a
married couple filing a joint federal income tax return) to a Roth IRA assuming
your adjusted gross income is less than $150,000 if you are married filing
jointly and $95,000 if you are single. Note that the maximum annual
contribution that may be made by any individual to all retirement IRAs (Roth
IRAs and traditional IRAs) may not exceed $2,000.
Amway Management Company is pleased to provide you with the opportunity to
contribute to either a Roth IRA or a traditional IRA for the 1998 calendar year.
The contributions to a Roth IRA will be held in a separate trust account from
contributions to a traditional IRA. Therefore, a $10 annual trustee fee will be
payable with respect to each separate account, though many of the same
requirements apply to both.
<PAGE>
Also note that if your adjusted gross income is less than $100,000 (and you
are not married filing separate federal income tax returns), you may roll your
existing IRA into a Roth IRA (or convert an existing IRA to a Roth IRA). While
there may be benefits to rolling an existing IRA to a Roth IRA (or converting),
the amount rolled over or converted will be immediately taxable to you (although
not subject to the 10% penalty tax for premature distribution). Whether it is
advisable to rollover or convert a traditional IRA to a Roth IRA will depend on
a number of factors, including your current and projected income tax brackets.
If you are considering rolling over or converting an existing IRA to a Roth IRA,
we strongly encourage you to discuss the matter with your personal tax adviser.
2. CHANGES TO TRADITIONAL IRAS. Several changes have also been made to
the rules regarding traditional IRAs. First of all, the maximum income level in
order to be eligible to make tax deductible contributions to a traditional IRA
for individuals who are active participants in qualified retirement plans has
increased to $30,000 for single individuals and $50,000 for married couples.
Second, if you are not an active participant in a qualified retirement plan but
your spouse is, you may now make a fully tax deductible contribution to a
traditional IRA provided that you and your spouse file a joint federal income
tax return and your combined adjusted gross income does not exceed $150,000.
Finally, you are permitted to withdraw amounts from your traditional IRA for
qualified higher education expenses (such as college expenses) or to withdraw up
to $10,000 for a first-time home purchase free of the 10% penalty tax applicable
to premature distributions.
3. CREATION OF EDUCATION IRA. Effective for the 1998 calendar year, you
may be eligible to contribute to another new type of IRA called an Education
IRA. Though called an IRA, the Education IRA has nothing to do with retirement.
The Education IRA allows individuals to save for the future expenses of higher
education of a beneficiary (who can be a child, grandchild or any other minor
under age 18). Like a Roth IRA, contributions are never tax deductible, but
distributions are exempt from federal income tax provided they are used to pay
higher education expenses, including tuition and room and board. If the assets
in the Education IRA are not distributed by the time the beneficiary reaches age
30, the assets must be distributed and the earnings are subject to federal
income tax and a 10% penalty tax. However, Education IRA assets not used by one
family member may be transferred to another family member tax free prior to the
time the original beneficiary attains age 30.
The maximum annual contribution that may be made to an Education IRA is
$500 for each beneficiary. In other words, if two different individuals wish to
contribute to an Education IRA for a particular beneficiary, they must not
contribute more than $500 between the two of them to all Education IRAs for that
beneficiary. You are eligible to contribute the $500 maximum annual amount to
an Education IRA if your modified adjusted gross income is less than $95,000 if
you are single or $150,000 if you are married filing jointly. Note that the
$500 maximum annual contribution is in addition to the $2,000 maximum annual
contribution to retirement IRAs.
<PAGE>
Amway Management Company is pleased to provide you with the opportunity to
contribute to an Education IRA for the 1998 calendar year. The contributions to
an Education IRA will be held in a separate trust account from contributions to
a traditional or Roth IRA. Therefore, a $10 annual trustee fee will be payable
with respect to each separate account.
As you can see, the recent changes to the tax laws applicable to IRAs have
made IRA contributions more appealing than ever and the ability of individuals
to contribute to both Roth IRAs and traditional IRAs has been greatly expanded.
Because of the complexity of the new rules, we urge you to consult your
financial or tax adviser to determine the most favorable savings device for you.
However, we will be happy to attempt to answer any questions you may have.
Sincerely,
AMWAY MANAGEMENT COMPANY
By
Kathy Vogelsang
<PAGE>
AMWAY MANAGEMENT COMPANY
INDIVIDUAL RETIREMENT ACCOUNTS
<PAGE>
AMWAY MANAGEMENT COMPANY
INDIVIDUAL RETIREMENT ACCOUNTS
DISCLOSURE STATEMENT
I. REVOCATION
Revocation must be given in writing and delivered or mailed to Amway
Management Company, 7575 East Fulton Road, Ada, Michigan 49355-7150
(Telephone No. (616) 787-6288), by the close of the seventh day after your
Individual Retirement Account ("IRA") is established. The notice shall be
deemed mailed on the date of the postmark (or if sent by certified or
registered mail, the date of certification or registration) if it is
deposited in the mail in the United States in an envelope, or other
appropriate wrapper, first-class postage prepaid, properly addressed. If you
effectively revoke your IRA, the amount you contribute to your account will
be refunded to you without adjustment for such items as sales commissions,
administrative expenses, or fluctuations in market value.
II. STATUTORY REQUIREMENTS
An IRA is a trust created or organized in the United States for the
exclusive benefit of an individual or his beneficiary by a written agreement
that meets the following requirements:
A. Except in the case of certain rollover contributions, only cash
contributions not in excess of $2,000 on behalf of any individual will be
accepted for a taxable year;
B. The Trustee must be a bank or other person or entity eligible to
act as Trustee;
C. Assets of the account cannot be invested in life insurance
contracts;
D. The interest of an individual in the balance in his account is
nonforfeitable; and
E. Assets of the trust cannot be commingled with other property
except in a common trust fund or common investment fund.
<PAGE>
III. TRADITIONAL IRA OR ROTH IRA
Effective January 1, 1998, you may be eligible to contribute to a new
type of IRA called a Roth IRA. Unlike the tax deductible contributions that
may be made to a traditional IRA if certain criteria are met, contributions
to a Roth IRA are never tax deductible. However, all of the earnings on Roth
IRA contributions will accumulate and can be distributed tax-free provided
certain holding periods are satisfied. The remainder of this Disclosure
Statement will discuss the rules that apply to traditional and Roth IRAs and
will attempt to point out the differences between the two. If the acronym
IRA is not preceded by the word "traditional" or "Roth," the language is
intended to apply to both types of IRAs.
IV. CONTRIBUTIONS
A. FORM OF CONTRIBUTIONS
Contributions to your IRA for a taxable year must be made in cash and
may be made at any time, either periodically or in a lump sum, during the
taxable year, or following the close of the taxable year, up to the due date
(not including extensions) for filing your federal income tax return for the
taxable year. You do not have to contribute to your account every year.
If you wish to use shares in a previously established account with Amway
Mutual Fund, Inc. for your IRA contribution, you must redeem the amount of
shares you wish to invest and use the proceeds as a contribution to your IRA.
By use of the "reinvestment privilege" you may, if certain requirements are
met, avoid any additional sales commission on the redemption and repurchase
of shares. The tax status of a gain realized on a redemption will not be
affected by exercise of the reinvestment privilege, but a taxable loss may be
nullified by such exercise.
B. LIMITS ON CONTRIBUTIONS
The maximum amount of contributions to all IRAs (both traditional and
Roth) established on your behalf is the lesser of $2,000 or 100% of your
compensation (but see special rules below regarding a spousal IRA).
Compensation includes wages, salaries, professional fees, income from
self-employment, and other amounts you earn for personal services that you
provide. The amount of your salary and wages is not reduced by the amount of
a net loss from self-employment. However, when you have a salary and wages
and net income from self-employment, compensation is equal to the total of
both. Compensation does not include earnings from property such as interest,
rent and dividends. Your IRA can be established and a contribution made for
a taxable year at any time up to the due date for filing your tax return (not
including extensions) for that year.
<PAGE>
C. ELIGIBILITY TO MAKE CONTRIBUTIONS
There are three different types of contributions that may be made to your
IRA. One type is a deductible contribution to a traditional IRA. Another
type is a designated nondeductible contribution to a traditional IRA. The
third type is a contribution to a Roth IRA, which is always nondeductible.
Depending upon your own personal situation, your contribution to a
traditional IRA may be entirely deductible, entirely a designated
nondeductible contribution, or a portion of both. The Internal Revenue Code
requires you to determine what portion of your contribution to a traditional
IRA is deductible and/or nondeductible. You are not required to inform the
Trustee and the Trustee is not obligated to check whether you are correct or
not. However, there are penalties for overstating the amount of your
deductible and/or nondeductible contributions.
1. DEDUCTIBLE CONTRIBUTION TO TRADITIONAL IRA
To the extent you are allowed to make a deductible contribution
to a traditional IRA, you may subtract the actual amount contributed,
up to the maximum allowable contribution amount, from your gross
income in computing your tax liability for the year. This is true
whether or not you itemize deductions. Generally, if neither you nor
your spouse are an active participant in an employer-sponsored
retirement plan and you will not attain age 70 1/2 by the end of the
year, you can make a deductible contribution to a traditional IRA.
However, if either you or your spouse are covered by an
employer-sponsored retirement plan and you will not attain age 70 1/2
by the end of the year, you may be eligible to make a deductible
contribution depending on your adjusted gross income (please see chart
below). We encourage you to talk to your tax adviser about your
personal situation.
- -------------------------------------------------------------------------------
1997 ADJUSTED GROSS INCOME TAX DEDUCTIBILITY
- -------------------------------------------------------------------------------
Under $40,000, married, filing jointly Full tax deduction for 1997
Under $25,000, unmarried
- -------------------------------------------------------------------------------
$40,000-$50,000, married, filing jointly Partial deduction for 1997,
$25,000-$35,000, unmarried reduced proportionately
$0-$10,000, married, filing separately
- -------------------------------------------------------------------------------
Over $50,000, married, filing jointly Contributions not tax deductible
Over $35,000, unmarried for 1997
Over $10,000, married, filing separately
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
1998 ADJUSTED GROSS INCOME TAX DEDUCTIBILITY
- -------------------------------------------------------------------------------
Under $50,000, married, filing jointly Full tax deduction for 1998 whether
Under $30,000, unmarried you or your spouse are active
participants in a retirement plan
- -------------------------------------------------------------------------------
$50,000-$150,000, married, filing jointly Full tax deduction for 1998 if your
spouse is an active participant in
a retirement plan but you are not
- -------------------------------------------------------------------------------
$50,000-$60,000, married, filing jointly Partial deduction, reduced
$30,000-$40,000, unmarried proportionately for 1998 if you are
$0-$10,000, married, filing separately an active participant in a
retirement plan
- -------------------------------------------------------------------------------
$150,000-$160,000, married, filing jointly Partial deduction, reduced
proportionately for 1998 if your
spouse is an active participant in
a retirement plan but you are not
- -------------------------------------------------------------------------------
Over $60,000, married, filing jointly Contributions not tax deductible
Over $40,000, unmarried for 1998 if you are an active
Over $10,000, married, filing separately participant in a retirement plan
- -------------------------------------------------------------------------------
Over $160,000 Contributions not tax deductible
for 1998 if your spouse is an
active participant in a retirement
plan
- -------------------------------------------------------------------------------
2. ROTH IRAS
For calendar years beginning on or after January 1, 1998, you may be
eligible to contribute to a Roth IRA depending on your adjusted gross
income (please see chart below). We encourage you to talk to your tax
adviser about your personal situation.
<PAGE>
- -------------------------------------------------------------------------------
ADJUSTED GROSS INCOME ROTH CONTRIBUTION AVAILABILITY
- -------------------------------------------------------------------------------
Under $150,000, married, filing jointly Full contribution
Under $95,000, unmarried
- -------------------------------------------------------------------------------
$150,000-$160,000, married, filing jointly Partial contribution, reduced
$95,000-$110,000, unmarried proportionately
$0-$10,000, married, filing separately
- -------------------------------------------------------------------------------
Over $160,000, married, filing jointly No contribution may be made
Over $110,000, unmarried
Over $10,000, married, filing separately
- -------------------------------------------------------------------------------
3. NONDEDUCTIBLE CONTRIBUTION TO TRADITIONAL IRA
Finally, you may also contribute an amount to a traditional IRA
and designate it as a nondeductible contribution. You may designate
your entire traditional IRA contribution as a nondeductible
contribution, if you so choose. Or, if your otherwise allowable and
deductible traditional IRA contribution and/or Roth IRA contribution
is limited, as discussed above, you may make a designated
nondeductible contribution to the extent your otherwise allowable and
deductible contribution or Roth IRA contribution amount was limited.
You have the responsibility of determining and reporting how much you
contributed and what portion of the contributions you made were
deductible and what were designated nondeductible contributions.
Once contributed, the deductible and designated nondeductible
contributions made to your traditional IRA are treated the same,
meaning, each type receives tax free accumulation of income. You need
to know how much of your account is made up of deductible and
designated nondeductible contributions in order to determine the
taxable portion of any distributions you receive.
With the availability of the Roth IRA for 1998 and later years,
there is little reason for making nondeductible contributions to a
traditional IRA unless you are not eligible to make deductible
contributions to a traditional IRA or nondeductible contributions to a
Roth IRA.
<PAGE>
D. EXCESS CONTRIBUTIONS
An excess contribution to your IRA is one that when added to all other
IRA contributions you have made for the year (including Roth IRAs) exceeds
the lesser of $2,000 or 100% of your compensation. Rollover contributions
will not be treated as excess contributions. In general, you must pay a
nondeductible 6% excise tax each year on excess amounts that are contributed
to your IRA. You will not have to pay the 6% excise tax if you withdraw the
excess amount, and any earnings on the excess amount, before the due date
(including extensions) of your tax return, for the year for which the
contribution was made. The excess contribution can also be eliminated by
applying the excess amount as a contribution in a following year. However,
the excise tax applies each year until the excess amount is eliminated. You
may designate any contributions which are allowable, but not deductible, as
designated nondeductible contributions on your tax return. These
contributions will not be subject to the 6% excise tax. If you overstate the
amount of a designated nondeductible contribution, you will be subject to a
$100 penalty for each overstatement, unless you can demonstrate that the
overstatement was due to reasonable cause.
E. INVESTMENT OF CONTRIBUTIONS
Your contributions may be invested in Amway Mutual Fund, Inc. common
stock or in the Cash Equivalent Fund, or in a combination of both. You can
make your investment election by completing a written investment election
form and returning it to Amway Management Company. If you do not make an
investment election, your contributions will be invested in Amway Mutual
Fund, Inc. common stock. You may change your investment election at any
time. To make a change, you must submit a new written investment election
form to Amway Management Company before you want to make the change. Your
change in investment election may apply to future contributions, amounts
already invested, or both.
V. DISTRIBUTIONS
A. TAX TREATMENT
1. TRADITIONAL IRAS
Distributions are generally taxed as ordinary income in the
year they are received. Distributions are non-taxable to the extent they
represent a return of nondeductible contributions. The non-taxable
percentage of such a distribution is determined by dividing (a)
undistributed nondeductible contributions to all traditional IRAs by
(b) the total value of all traditional IRAs, including traditional
rollover IRAs. If you withdraw only a part of your contributions and
earnings in a taxable year, only the part withdrawn will be taxable
for that year. Taxable withdrawals from your traditional IRA will be
taxed at ordinary income tax rates.
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The favorable income tax treatment for certain lump-sum distributions
from employer-sponsored retirement plans does not apply to distributions
from your traditional IRA account. This is true regardless of the type of
distribution you receive from your IRA and regardless of the source of your
contribution to the traditional IRA. Federal law requires withholding of
federal tax at the following rates made from your traditional IRA accounts
unless you elect not to have federal income tax withheld at the time of the
distribution request.
(a) For nonperiodic distributions - 10%;
(b) For periodic distributions - the withholding rate for a
married individual claiming three withholding allowances.
2. ROTH IRA
Qualified distributions from your Roth IRA are not
included in your gross income and are not subject to the additional
10% premature distribution tax. To be a qualified distribution, the
distribution must satisfy a five-year holding period and must meet one
of four requirements (see below).
To satisfy the five-year holding period, the Roth IRA
distribution (including distributions allocable to rollover
contributions (see below)) may not be made before the end of the
five-tax-year period beginning with the first tax year for which you
made a contribution to the Roth IRA. The five-year holding period
begins to run with the tax year to which the contribution relates, not
the year in which the contribution is actually made.
In addition to satisfying the five-year holding period, a
qualified distribution must be:
(a) Made on or after the date on which you attain age
59 1/2;
(b) Made to a beneficiary (or your estate) on or after
your death;
(c) Attributable to your being disabled; or
(d) A qualified first-time home buyer distribution (see
C.3. below).
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A portion of any nonqualified distribution will be includable in
income. Distributions are treated as made from contributions first. Thus,
no portion of a distribution is treated as attributable to earnings, or
includable in gross income, until the total of all distributions from the
Roth IRA exceeds the amount of contributions.
B. METHOD OF DISTRIBUTION
You may elect to receive your benefits as follows:
1. A single sum payment;
2. An annuity contract providing equal or substantially equal
monthly, quarterly, or annual payments covering your life;
3. An annuity contract providing equal or substantially equal
monthly, quarterly, or annual payments covering the joint and last survivor
lives of you and your beneficiary;
4. Equal or substantially equal annual payments over a period
certain not extending beyond your life expectancy;
5. Equal or substantially annual payments covering a period certain
not extending beyond the joint life and last survivor expectancy of you and
your beneficiary; or
6. Any other periodic payments, provided the payments satisfy the
applicable required distribution rules and incidental death benefit
requirements.
C. PREMATURE DISTRIBUTION
There is an additional tax equal to 10% of the taxable amount of
distribution before age 59 1/2, unless:
1. You are disabled;
2. You use the distribution to pay "qualified higher education
expenses" for you, your spouse or your or your spouse's child or
grandchild. For this purpose, "qualified higher education expenses"
include tuition, fees, books, supplies and equipment required for the
enrollment or attendance of the student at a post-secondary educational
institution for undergraduate and graduate level courses. For this
purpose, the courses must begin on or after January 1, 1998;
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3. The distribution is a qualified first-time home buyer
distribution. For this purpose, a qualified first-time home buyer
distribution is an IRA distribution of up to $10,000 during your lifetime
which is used within 120 days of withdrawal to acquire, build or rebuild a
"first" home that is the principal residence of you, your spouse, or any
child, grandchild or ancestor of you or your spouse. For this purpose,
acquisition costs include any usual or reasonable settlement, financing or
other closing costs;
4. You use the distribution to pay certain excess medical expenses;
5. You use the distribution to purchase health insurance for an
unemployed individual (including yourself); or
6. You take your distributions as a series of substantially equal
periodic payments over your life or life expectancy or the joint lives or
life expectancy of you and your beneficiary. The amount of such periodic
payments may not be changed before the later of five years or attainment of
age 59 1/2. Also, under the IRA Trust Agreement, you may not borrow funds
from your IRA or use IRA funds as collateral for a loan. Borrowing from
your IRA or pledging your IRA as collateral for a loan is viewed as a
withdrawal from your IRA under the Internal Revenue Code and it will
destroy the tax exempt status of your IRA.
D. PRE-DEATH DISTRIBUTIONS
1. TRADITIONAL IRA
The minimum distribution rules require that for your "70 1/2 year,"
and each year thereafter, you must make withdrawals from your
traditional IRA that are at least equal to the "minimum distribution."
Your 70 1/2 year is the calendar year that contains the date six months
after your 70th birthday. The amount of the minimum distribution is
usually determined by dividing the account balance of your traditional
IRA, as of December 31 of the prior year, by a divisor that is based on
your life expectancy or the joint life expectancy for you and your
beneficiary. There are, however, a number of rules that determine how
the calculation of your minimum distribution should be made, including
special exceptions that may apply to you. These are discussed in the
Amway Management Company handout, LIFE EXPECTANCY CALCULATION OPTIONS
and in IRS Publication 590, INDIVIDUAL RETIREMENT ARRANGEMENTS, which
you should consult.
Generally, you must withdraw an amount at least equal to the
minimum distribution by December 31 of each year. However, for your
70 1/2 year, you may wait to withdraw the minimum distribution until
April 1 of the following year. This means that if you wait to make your
withdrawal for the 70 1/2 year until
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April 1 of the following year, your total withdrawal in that year must
equal the minimum distributions for two years -- a withdrawal by April 1
that is equal to the minimum distribution for the 70 1/2 year and a
second withdrawal by December 31 that is equal to the minimum distribution
for that year. In each year thereafter, you must withdraw the minimum
distribution for the year by December 31.
If you have more than one traditional IRA, you can satisfy the
minimum distribution rules by withdrawing from one traditional IRA the
amount required to satisfy the minimum distribution requirement for all
of your traditional IRAs.
2. ROTH IRA
There are no minimum distribution rules that apply to Roth IRAs prior
to your death.
E. DISTRIBUTIONS AFTER DEATH
The post-death distribution rules are generally the same for traditional
IRAs and Roth IRAs. If you are the beneficiary of a deceased IRA owner, the
minimum distribution rules also apply to you. Specific information on how
the minimum distribution rules apply to beneficiaries of an IRA is contained
in IRS Publication 590, INDIVIDUAL RETIREMENT ARRANGEMENTS. In general,
however, the amount that you must withdraw each year depends upon whether the
IRA owner had begun receiving required minimum distributions before death and
whether you are the surviving spouse of the IRA owner.
If the IRA owner had begun receiving required minimum distributions
before death, then regardless of your age you must withdraw an amount each
year that is at least equal to the amount that the IRA owner would have been
required to withdraw. This rule also applies if you are the surviving spouse
of the IRA owner, but additional options are available to you for satisfying
the minimum distribution requirements.
If the IRA owner had not begun to receive required minimum distributions
before death and you are NOT the surviving spouse, there are two possible
options. Under the first option, you must withdraw the entire IRA account by
December 31 of the fifth year following the year of the IRA owner's death.
Under the second option, you must, by December 31 of the year following the
year of the IRA owner's death and in each year thereafter, withdraw an amount
that is at least equal to the IRA account balance divided by your life
expectancy. If you are the surviving spouse, the same two options apply, but
additional options are available to you for satisfying the minimum
distribution requirements.
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VI. EARNINGS ON THE ACCOUNT
Ordinary income dividends and capital gain distributions, if any, on the
assets in the account are reinvested on a proportional basis (depending upon
your current investment election) in Amway Mutual Fund, Inc. common stock and
the Cash Equivalent Fund, without any sales charge, and taxes are deferred
until distribution. Therefore, earnings are permitted to accumulate tax-free
on both deductible and nondeductible contributions until distributed to you.
Neither the future growth of nor the current value of your account can be
guaranteed or projected.
VII. TRANSFER/ROLLOVER IRA
A. TAX-FREE TRANSFER FROM EXISTING TRADITIONAL IRA TO AN AMWAY
MANAGEMENT COMPANY TRADITIONAL IRA
You may authorize the trustee of an existing traditional IRA to transfer
money directly to Michigan National Bank, Trustee for the Amway Management
Company traditional IRA. You may make such a transfer as often as you wish.
Such a transfer of cash is not tax-deductible.
B. ROLLOVER FROM EXISTING TRADITIONAL IRA TO AN AMWAY MANAGEMENT
COMPANY TRADITIONAL IRA
If you withdraw assets from an existing traditional IRA, you may
rollover all or part of the amount you receive tax-free to an Amway
Management Company traditional IRA. The rollover must be completed within 60
days after you receive the assets from your existing traditional IRA. You
are limited to one such tax-free rollover every 12 months. Such rollovers
will not be subject to the 10% premature distribution tax.
C. ROLLOVER FROM EXISTING TRADITIONAL IRA TO AMWAY MANAGEMENT COMPANY
ROTH IRA
If your adjusted gross income for the taxable year does not exceed
$100,000, you are not a married taxpayer filing a separate return and you
withdraw assets from an existing traditional IRA, you may rollover all or
part of the amount to an Amway Management Company Roth IRA. The rollover
must be completed within 60 days after you receive the assets from your
existing traditional IRA. Such rollovers will be taxed as ordinary income in
the year of the rollover but will not be subject to the 10% premature
distribution tax. In addition, if the rollover occurs during the 1998
calendar year, the amount included in your income will be spread evenly over
the 1998, 1999, 2000 and 2001 calendar years.
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You may also elect to convert an existing traditional Amway Management
Company IRA into an Amway Management Company Roth IRA under the same rules as
are described in the preceding paragraph.
D. DIRECT ROLLOVER FROM TAX-QUALIFIED PLAN TO AN AMWAY MANAGEMENT
COMPANY TRADITIONAL IRA
An eligible rollover distribution from a tax-qualified retirement plan
can be transferred in a direct rollover to an Amway Management Company
traditional IRA. Most distributions from tax-qualified plans are eligible
rollover distributions (except nondeductible employee contributions, certain
payments spread over long periods and required minimum payments). Under new
federal tax laws, all eligible rollover distributions are subject to
mandatory 20% income tax withholding unless the amount is transferred to a
traditional IRA or another tax-qualified plan in a direct rollover.
A direct rollover from a qualified plan of an eligible rollover
distribution may be maintained in a separate Amway Management Company
traditional IRA in which no additional contributions are made. This will
permit you to roll out the assets to a new employer's plan that you may later
join.
E. ROLLOVER FROM TAX-QUALIFIED PLAN TO AN AMWAY MANAGEMENT COMPANY
TRADITIONAL IRA
If an eligible rollover distribution is not directly rolled over to a
traditional IRA or another tax-qualified plan and is distributed to you, the
amount is subject to mandatory 20% income tax withholding. If, however, you
receive from a tax-qualified plan an eligible rollover distribution (as
discussed briefly in Section D. above), you may roll over, tax-free, within
60 days of receipt of the distribution, all or part of the distribution
(minus any nondeductible employee contributions you made to the plan) to an
Amway Management Company traditional IRA. However, because of the mandatory
20% income tax withholding rule, you will only receive 80% of the payment.
Therefore, if you want to roll over 100% of the payment to your Amway
Management Company traditional IRA, you must find other money to replace the
20% that was withheld. If you roll over only the 80% that you received, you
will be taxed (and possibly subject to the 10% penalty tax) on the 20% that
was withheld and that is not rolled over.
A rollover from a qualified plan may be maintained in a separate Amway
Management Company traditional IRA in which no additional contributions are
made. This will permit you to roll out the assets to a new employer's plan
that you may later join.
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F. ROLLOVERS OF INHERITED IRAS
If you are the surviving spouse of an IRA owner and receive a qualifying
payout from your spouse's IRA because of his or her death, you can roll the
payout over to an IRA of your own. Distributions from IRAs inherited by
someone other than a surviving spouse cannot be rolled over and no rollover
contribution may be made to such an inherited IRA.
G. ROLLOVERS FROM AN AMWAY MANAGEMENT COMPANY TRADITIONAL IRA
If you withdraw assets from your Amway Management Company traditional
IRA, you may roll over all or part of the amount you receive within 60 days
to a new traditional IRA on a tax-free basis. You are limited to one such
tax-free rollover every 12 months. You may also roll over all or part of the
amount you receive within 60 days to a new Roth IRA on a fully-taxable basis
(though free of the 10% premature distribution penalty tax). In some cases,
you may also roll over all or part of the amount you receive from your Amway
Management Company traditional IRA within 60 days to a tax-qualified
retirement plan on a tax-free basis if you receive the entire amount in your
Amway Management Company traditional IRA and that amount is fully
attributable to a prior direct rollover of an eligible rollover distribution
from a tax-qualified plan of a former employer.
VIII. PROHIBITED TRANSACTIONS
Generally, a prohibited transaction is any improper use of your IRA, as
described in Section 4975 of the Internal Revenue Code. Examples of
prohibited transactions with an IRA include borrowing money from the account
or selling property to the account.
If you or your beneficiary engage in a prohibited transaction, your IRA
will lose its tax-exempt status and you must include the entire value of the
account in your gross income in the year during which the prohibited
transaction occurs.
Pledging your IRA as security for a loan will cause the portion pledged
to be treated as a distribution to you, includable in your gross income, and
subject to certain excise taxes and the premature distribution 10% tax if you
are under age 59 1/2.
IX. OTHER INFORMATION
A. A SPOUSAL IRA
A spousal IRA allows you to make an additional contribution for your
spouse, even if your spouse has no eligible compensation. A separate account
is established for your spouse. The contribution to all IRAs for you and
your spouse cannot exceed the lesser of $4,000 or 100% of your combined
compensation. The contribution
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can be allocated in any manner desired, provided the maximum contribution
that may be allocated to either account is $2,000.
To qualify, you must satisfy the following requirements:
1. You must be married as of the end of the taxable year;
2. You and your spouse must file a joint income tax return for the
taxable year;
3. You must earn compensation that is included in your income for
the taxable year;
4. The amount of compensation (if any) includable in your spouse's
income for the taxable year must be less than the amount of compensation
includable in your income for the taxable year; and
5. To make a deductible contribution to a traditional IRA for your
spouse, your spouse must not attain age 70 1/2 before the end of the
taxable year.
Any contributions to a spousal traditional IRA are also subject to the
tax deductibility of contributions rules described in Section IV.C.1.
B. INCOME TAX RETURNS
An allowable deduction for your IRA contribution is reported on your
regular Form 1040 tax return every year. However, if you owe penalty taxes
for excess contributions, an early withdrawal, or for "underdistributions,"
you must file Form 5329.
If you make a designated nondeductible contribution to your IRA or if
you receive a distribution from your IRA, you are required to provide certain
information on your tax return for the year in which the designated
nondeductible contribution was made or the distribution was received.
The information you supply must include (as applicable):
1. The amount of any designated nondeductible contribution for the
year;
2. The amount of any distributions you receive from your IRA during
the year;
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3. The excess, if any, of the aggregate amount of designated
nondeductible contributions for all preceding taxable years over the
aggregate amount of distributions from all your IRAs which were
excludable from your gross income for the taxable year;
4. The total balance of all your IRAs as of the close of the
calendar year with or within which your taxable year ends; and
5. Such other information as the Secretary of the Treasury may
require.
For more information about tax filing requirements or general
information about IRAs, contact any IRS district office and/or your tax
adviser.
C. INTERNAL REVENUE SERVICE APPROVAL
The form for your Amway Management Company IRA has been approved for use
by the Internal Revenue Service, but that approval is not a determination of
the merits of entering into the IRA. Further information regarding IRAs can
be obtained from any Internal Revenue Service district office.
D. TRUSTEE FEE
The Trustee, Michigan National Bank, charges an annual trustee fee of
$10 per year per account. In the case of a spousal IRA, separate accounts
are established for each spouse. Roth IRAs and traditional IRAs for the same
individual also constitute separate accounts. You may pay the fee(s)
annually by check, or, if you prefer, the Trustee will redeem sufficient
shares from your account(s) to pay the fee(s).
E. PROSPECTUS
For complete information about advisory fees, other expenses, method of
calculating price per share, etc., of Amway Mutual Fund, Inc., and
applicable sales charges, you should read the Prospectuses for Amway Mutual
Fund, Inc. and the Cash Equivalent Fund. As explained above, all of your
contributions and earnings on those contributions will be invested in Amway
Mutual Fund, Inc. common stock and/or the Cash Equivalent Fund. The minimum
initial contribution which must be made to the Amway Mutual Fund, Inc. is
$100 and the Cash Equivalent Fund is $1,000. Additional contributions must
be made in amounts of $50 or more.
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AMWAY MANAGEMENT COMPANY
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT
The Grantor whose name appears on the Amway Management Company
Individual Retirement Account Application is establishing an individual
retirement account (under Section 408(a) of the Internal Revenue Code
("Code")) to provide for his or her retirement and for the support of his or
her beneficiaries after death.
Michigan National Bank, 77 Monroe Center, Grand Rapids, Michigan 49503,
the Trustee, has given the Grantor the disclosure statement required under
the Income Tax Regulations under Section 408(i) of the Code.
The Grantor has assigned the trust a contribution as indicated on the
Amway Management Company Individual Retirement Account Application.
The Grantor and Trustee make the following agreement.
ARTICLE I
The Trustee may accept additional cash contributions on behalf of the
Grantor for a tax year of the Grantor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), or 408(d)(3) of the Code or an employer contribution to
a simplified employee pension plan as described in Section 408(k) of the
Code. Rollover contributions before January 1, 1993, include rollovers
described in Sections 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8),
and 403(d)(3) of the Code, or an employer contribution to a simplified
employee pension plan described in Section 408(k) of the Code.
ARTICLE II
The Grantor's interest in the balance in the trust account is
nonforfeitable.
ARTICLE III
1. No part of the trust funds may be invested in life insurance
contracts, nor may the assets of the trust 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 Code).
2. No part of the trust funds may be invested in collectibles (within
the meaning of Section 408(m) of the Code), except as otherwise permitted by
Section 408(m)(3) of the Code which provides an exception for certain gold
and silver coins issued under the laws of any state.
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ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary,
the distribution of the Grantor's interest in the trust account shall be made
in accordance with the following requirements and shall otherwise comply with
Section 408(a)(6) of the Code and Proposed Income Tax Regulations Section
1.408-8, including the incidental death benefit provisions of Proposed Income
Tax Regulations Section 1.401(a)(9)-2, the provisions of which are herein
incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Grantor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies
shall be recalculated annually. Such elections shall be irrevocable as to
the Grantor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Grantor's entire interest in the trust account must be, or
begin to be, distributed by the Grantor's required beginning date, the April
1 following the calendar year end in which the Grantor reaches age 70 1/2. By
that date, the Grantor may elect, in a manner acceptable to the Trustee, to
have the balance in the trust account distributed in:
(a) A single sum payment;
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Grantor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor
lives of the Grantor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Grantor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor
expectancy of the Grantor and his or her designated beneficiary.
(f) Other periodic payments which satisfy the requirements under
paragraph 1.
4. If the Grantor dies before his or her entire interest is
distributed to him or her, the entire remaining interest will be distributed
as follows:
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(a) If the Grantor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance
with paragraph 3.
(b) If the Grantor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
beneficiary or beneficiaries, either:
(i) Be distributed by the December 31 of the year
containing the fifth anniversary of the Grantor's death; or
(ii) Be distributed in equal or substantially equal payments
over the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year
of the Grantor's death. If, however, the beneficiary is the Grantor's
surviving spouse, then this distribution is not required to begin
before December 31 of the year in which the Grantor would have turned
age 70 1/2.
(c) Except where a distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) of the Code and its related regulations
has irrevocably commenced, distributions are treated as having begun on the
Grantor's required beginning date, even though payments may actually have
been made before that date.
(d) If the Grantor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the account.
5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the Grantor's entire interest in the trust as of the
close of business on December 31 of the preceding year by the life expectancy
of the Grantor (or the joint life and last survivor expectancy of the Grantor
and the Grantor's designated beneficiary, or the life expectancy of the
designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and
last survivor expectancy) using the attained ages of the Grantor and
designated beneficiary as of their birthdays in the year the Grantor reaches
age 70 1/2. In the case of distributions in accordance with paragraph
4(b)(ii), determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits
an individual to satisfy these requirements by taking from one individual
retirement account the amount required
<PAGE>
to satisfy the requirements for another.
ARTICLE V
1. The Grantor agrees to provide the Trustee with information necessary
for the Trustee to prepare any reports required under Section 408(i) of the
Code and Income Tax Regulations Sections 1.408-5 and 1.408-6.
2. The Trustee agrees to submit reports to the Internal Revenue
Service and the Grantor as prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through III and this sentence will be
controlling. Any additional articles that are not consistent with Section
408(a) of the Code and related regulations will be invalid.
ARTICLE VII
This Agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear in the Application.
ARTICLE VIII
The Trustee shall invest all assets of the trust in shares of Amway
Mutual Fund, Inc. or in the Cash Equivalent Fund. If the Grantor fails to
make an investment election, the Trustee shall invest all assets of the Trust
in shares of Amway Mutual Fund, Inc. Any investment election made by the
Grantor shall continue in effect until changed by the Grantor. The Grantor
may change his investment election by delivering a new written investment
election form to Amway Management Company before the Grantor wants to make a
change. The change in investment election may apply to future contributions,
amounts already invested, or both. The terms and conditions of making and
changing investment elections shall also be subject to any requirements
imposed by Amway Mutual Fund, Inc. and the Cash Equivalent Fund.
ARTICLE IX
1. If the Grantor becomes aware that any part or all of the
contributions to this Trust for any taxable year will not be deductible by
the Grantor under Section 219 of the Code, the Grantor may notify the Trustee
in writing and may request that the Trustee refund the amount of
contributions received by the Trustee for such taxable year which is not
deductible. Upon receiving such notification, the Trustee shall make such
refund.
<PAGE>
2. Any refunds made under paragraph 1 shall, if the Grantor requests,
be accompanied by the amount of net income which the Trustee determines to be
reasonably attributable to the contributions being refunded.
3. Paragraph 1 hereof shall not apply to rollover contributions
described in Sections 402(c) (but only after December 31, 1992), 403(a)(4),
403(b)(8), or 408(d)(3) of the Code. Rollover contributions before January
1, 1993, include rollovers described in Sections 402(a)(5), 402(a)(6),
402(a)(7), 403(a)(4), 403(b)(8), and 403(d)(3) of the Code.
ARTICLE X
The Trustee shall be entitled to reasonable compensation for all
services rendered hereunder as shall be agreed upon between the Grantor and
the Trustee.
ARTICLE XI
1. The Trustee may resign at any time upon giving at least 45 days'
prior written notice to the Grantor or, if the Grantor is then deceased, to
the beneficiary hereunder.
2. The Grantor may remove the Trustee at any time upon at least 45
days' prior written notice to the Trustee. The Grantor shall fill any
vacancy in the office of the Trustee howsoever caused by written instrument
delivered to the retiring Trustee with the acceptance of the successor
Trustee endorsed thereon; provided that such successor Trustee is a bank or a
person approved by the Secretary of the Treasury to hold assets of individual
retirement accounts.
3. Each successor Trustee shall succeed to the title of the Trust
vested in its predecessor without the signing or filing of any further
instruments, but any resigning or removed Trustee shall execute all documents
and do all acts necessary to vest such title in any successor Trustee, and
shall turn over to the successor Trustee copies of all such records
pertaining to the Trust which such successor Trustee may properly need to
administer the Trust. Each successor Trustee shall have and enjoy all
powers, both discretionary and ministerial, herein conferred upon its
predecessor. No successor Trustee shall be personally liable for any act or
failure to act of any predecessor Trustee, and, with the approval of the
Grantor, a successor Trustee may accept the account rendered and the property
delivered to it by the predecessor Trustee as a full and complete discharge
to the predecessor Trustee without incurring any liability or responsibility
for so doing.
ARTICLE XII
1. Any provision herein to the contrary notwithstanding, the Trust
created by this Agreement shall terminate:
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(a) When the Trustee receives written instructions from the Grantor
to transfer all of the assets of the Trust to the trustee or custodian
of another retirement plan or trust, or directly to the Grantor; or
(b) Upon the distribution of all of the assets of the Trust in
accordance with Article IV.
2. Unless one of the events described in paragraph 1 occurs, this
Trust shall continue even though no contributions are made to the trust for
any particular year or years.
3. Upon termination of this Trust, the Trustee shall continue to have
all of the powers provided in this Agreement as are necessary or desirable
for the orderly liquidation and distribution of the Trust assets, and shall
be entitled to reserve such reasonable amounts as it may deem necessary to
provide for the payment of any expenses then or thereafter chargeable to the
Trust.
ARTICLE XIII
1. Notwithstanding Article IV, paragraph 2, no later than the date as
of which distributions are required to begin, the Grantor may elect a life
expectancy calculation method for determining the Grantor's annual required
minimum distributions. The life expectancy calculation method may be based
upon the Grantor's life expectancy only or upon the joint life expectancy of
the Grantor and the Grantor's beneficiary, provided that the beneficiary
constitutes a designated beneficiary as defined in Section 401(a)(9) of the
Code and Income Tax Regulations issued pursuant to Section 401(a)(9) of the
Code. The Grantor may make a further election with respect to his life
expectancy calculation method to annually recalculate his life expectancy
and/or to annually recalculate the life expectancy of his beneficiary
(provided that the Grantor's beneficiary is his spouse). If the Grantor's
beneficiary is not his spouse, annual recalculation is not available with
respect to the beneficiary's life expectancy. If the Grantor makes no life
expectancy calculation method election by the time distributions are required
to begin, the provisions of Article IV, paragraph 2 shall apply.
2. The Grantor shall file with the Trustee a written designation of
his beneficiary or beneficiaries, and such designation may be changed from
time to time by filing a new designation with the Trustee without the consent
of any party. Such designation may include contingent or successive
beneficiaries. Each such election and designation shall be on a form provided
by or acceptable to the Trustee. The interest of any beneficiary shall cease
upon his death, unless the Grantor directed otherwise. The designation on
file with the Trustee at the date of the death of the Grantor shall be
controlling. If there is no designated beneficiary to receive any amount
which becomes payable to a beneficiary, such amount shall be payable to the
executor or administrator of the estate of the last to die of the Grantor and
the last survivor of his designated beneficiaries.
<PAGE>
3. Neither the Grantor nor any beneficiary of the Grantor shall have
any right to pledge, hypothecate, anticipate, or in any way create a lien
upon any assets or part of the Trust. Distributions to the Grantor, his
beneficiaries, spouse, heirs-at-law, or legal representatives, excepting
minors and persons under legal disability, shall be made only to them and
upon their personal receipts or endorsements and no interest in the Trust, or
any part thereof, shall be assignable in anticipation of payment either by
voluntary or involuntary act, or by operation of law, or be liable in any way
for the debts or defaults of such Grantor, his beneficiaries, spouse, or
heirs-at-law. The provisions of this paragraph shall not apply to the extent
that they violate any applicable law.
4. No amendments or modification or termination of this Trust shall
cause any part of the Trust to be used or diverted to or for the benefit of
anyone other than the Grantor and his designated beneficiaries; provided that
the rights, duties, or responsibilities of the Trustee shall not be changed
without its written consent.
5. In interpreting this Agreement, words in the masculine gender shall
include the feminine, words in the singular shall include the plural, and
vice versa, as may be appropriate. The word "person" shall include natural
and legal persons.
6. Any notice or statement which the Trustee is required to give
hereunder shall be deemed given when mailed to the intended recipient at his
last known address. Any notice or statement to be given to the Trustee shall
be deemed given only when actually received by the Trustee.
7. The powers and duties of the Trustee and all questions of
interpretation of this Declaration of Trust shall be governed by the laws of
the state of Michigan except to the extent that such laws are preempted by
the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
8. This Agreement may be executed by completing and signing the Amway
Management Company Traditional Individual Retirement Account Application,
which application incorporates by reference this Agreement.
This material is not authorized for distribution to prospective
investors in Amway Mutual Fund, Inc. or the Cash Equivalent Fund, unless
preceded or accompanied by an effective Prospectus which includes information
regarding the Fund's investment objectives, management, sales commission, and
other information. All written questions should be directed to Amway
Management Company, 7575 East Fulton Road, Ada, Michigan 49355-7150 or
questions by telephone to (616) 787-6288 or (800) 346-2670.
<PAGE>
AMWAY MANAGEMENT COMPANY
ROTH INDIVIDUAL RETIREMENT ACCOUNT
_______________________________________
The Grantor whose name appears on the Amway Management Company Roth
Individual Retirement Account application is establishing a Roth individual
retirement account ("Roth IRA") under Section 408A of the Internal Revenue
Code ("Code") to provide for his or her retirement and for the support of his
or her beneficiaries after death.
Michigan National Bank, 77 Monroe Center, Grand Rapids, MI 49503, the
Trustee, has given the Grantor the disclosure statement required under Income
Tax Regulations Section 1.408-6.
The Grantor has assigned the trust a contribution as indicated on the
Amway Management Company Roth Individual Retirement Account application.
The Grantor and the Trustee make the following agreement:
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in Section 408A(e) of
the Code, the Trustee will accept only cash contributions and only up to a
maximum amount of $2,000 for any tax year of the Grantor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same
tax year will be accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0
between certain levels of adjusted gross income ("AGI"). For a single
Grantor, the $2,000 annual contribution is phased out between AGI of $95,000
and $110,000; for a married Grantor who files jointly, between AGI of
$150,000 and $160,000; and for a married Grantor who files separately,
between $0 and $10,000. In the case of a conversion, the Trustee will not
accept IRA Conversion Contributions in a tax year if the Grantor's AGI for
that tax year exceeds $100,000 or if the Grantor is married and files a
separate return. Adjusted gross income is defined in Code Section 408A(c)(3)
and does not include IRA Conversion Contributions.
ARTICLE III
The Grantor's interest in the balance in the trust account is
nonforfeitable.
<PAGE>
ARTICLE IV
1. No part of the trust funds may be invested in life insurance
contracts, nor may the assets of the trust 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 Code).
2. No part of the trust funds may be invested in collectibles (within
the meaning of Code Section 408(m)) except as otherwise permitted by Code
Section 408(m)(3), which provides an exception for certain gold, silver, and
platinum coins, coins issued under the laws of any state, and certain bullion.
ARTICLE V
1. If the Grantor dies before his or her entire interest is
distributed to him or her and the Grantor's surviving spouse is not the sole
beneficiary, the entire remaining interest will, at the election of the
Grantor or, if the Grantor has not so elected, at the election of the
beneficiary or beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the Grantor's death; or
(b) Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the year following the
year of the Grantor's death.
If distributions do not begin by the date described in paragraph (b),
the distribution method in paragraph (a) will apply.
2. In the case of the distribution method in paragraph 1.(b) above, to
determine the minimum annual payment for each year, divide the Grantor's
entire interest in the trust as of the close of business on December 31 of
the preceding year by the life expectancy of the designated beneficiary using
the attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence and subtract 1
for each subsequent year.
3. If the Grantor's spouse is the sole beneficiary on the Grantor's
date of death, such spouse will then be treated as the Grantor.
ARTICLE VI
1. The Grantor agrees to provide the Trustee with information
necessary for the Trustee to prepare any reports required under Code Sections
408(i) and
<PAGE>
408A(d)(3)(E), and Income Tax Regulations Sections 1.408-5 and 1.408-6, and
under guidance published by the Internal Revenue Service.
2. The Trustee agrees to submit reports to the Internal Revenue
Service and the Grantor as prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV and this sentence will be
controlling. Any additional articles that are not consistent with Code
Section 408A, the related regulations, and other published guidance will be
invalid.
ARTICLE VIII
This Agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance.
Other amendments may be made with the consent of the persons whose signatures
appear below.
ARTICLE IX
The Trustee shall invest all assets of the trust in shares of Amway
Mutual Fund, Inc. or in the Cash Equivalent Fund. If the Grantor fails to
make an investment election, the Trustee shall invest all assets of the Trust
in shares of Amway Mutual Fund, Inc. Any investment election made by the
Grantor shall continue in effect until changed by the Grantor. The Grantor
may change his investment election by delivering a new written investment
election form to Amway Management Company before the Grantor wants to make a
change. The change in investment election may apply to future contributions,
amounts already invested, or both. The terms and conditions of making and
changing investment elections shall also be subject to any requirements
imposed by Amway Mutual Fund, Inc. and the Cash Equivalent Fund.
ARTICLE X
The Trustee shall be entitled to reasonable compensation for all
services rendered hereunder as shall be agreed upon between the Grantor and
the Trustee.
ARTICLE XI
1. The Trustee may resign at any time upon giving at least 45 days'
prior written notice to the Grantor or, if the Grantor is then deceased, to
the beneficiary hereunder.
<PAGE>
2. The Grantor may remove the Trustee at any time upon giving at least
45 days' prior written notice to the Trustee. The Grantor shall fill any
vacancy in the office of the Trustee howsoever caused by written instrument
delivered to the retiring Trustee with the acceptance of the successor
Trustee endorsed thereon; provided that such successor Trustee is a bank or a
person approved by the Secretary of the Treasury to hold assets of individual
retirement accounts.
3. Each successor Trustee shall succeed to the title of the Trust
vested in its predecessor without the signing or filing of any further
instruments, but any resigning or removed Trustee shall execute all documents
and do all acts necessary to vest such title in any successor Trustee, and
shall turn over to the successor Trustee copies of all such records
pertaining to the Trust which such successor Trustee may properly need to
administer the Trust. Each successor Trustee shall have and enjoy all
powers, both discretionary and ministerial, herein conferred upon its
predecessor. No successor Trustee shall be personally liable for any act or
failure to act of any predecessor Trustee, and, with the approval of the
Grantor, a successor Trustee may accept the account rendered and the property
delivered to it by the predecessor Trustee as a full and complete discharge
to the predecessor Trustee without incurring any liability or responsibility
for so doing.
ARTICLE XII
1. Any provision herein to the contrary notwithstanding, the Trust
created by this Agreement shall terminate:
(a) When the Trustee receives written instructions from the
Grantor to transfer all of the assets of the Trust to the trustee or
custodian of another retirement plan or trust, or directly to the
Grantor; or
(b) Upon the distribution of all of the assets of the Trust in
accordance with Article V.
2. Unless one of the events described in paragraph 1 occurs, this
Trust shall continue even though no contributions are made to the trust for
any particular year or years.
3. Upon termination of this Trust, the Trustee shall continue to have
all of the powers provided in this Agreement as are necessary or desirable
for the orderly liquidation and distribution of the Trust assets, and shall
be entitled to reserve such reasonable amounts as it may deem necessary to
provide for the payment of any expenses then or thereafter chargeable to the
Trust.
<PAGE>
ARTICLE XIII
1. The Grantor shall file with the Trustee a written designation of
his beneficiary or beneficiaries, and such designation may be changed from
time to time by filing a new designation with the Trustee without the consent
of any party. Such designation may include contingent or successive
beneficiaries. Each such election and designation shall be on a form provided
by or acceptable to the Trustee. The interest of any beneficiary shall cease
upon his death, unless the Grantor directed otherwise. The designation on
file with the Trustee at the date of the death of the Grantor shall be
controlling. If there is no designated beneficiary to receive any amount
which becomes payable to a beneficiary, such amount shall be payable to the
executor or administrator of the estate of the last to die of the Grantor and
the last survivor of his designated beneficiaries.
2. Neither the Grantor nor any beneficiary of the Grantor shall have
any right to pledge, hypothecate, anticipate, or in any way create a lien
upon any assets or part of the Trust. Distributions to the Grantor, his
beneficiaries, spouse, heirs-at-law, or legal representatives, excepting
minors and persons under legal disability, shall be made only to them and
upon their personal receipts or endorsements and no interest in the Trust, or
any part thereof, shall be assignable in anticipation of payment either by
voluntary or involuntary act, or by operation of law, or be liable in any way
for the debts or defaults of such Grantor, his beneficiaries, spouse, or
heirs-at-law. The provisions of this paragraph shall not apply to the extent
that they violate any applicable law.
3. No amendments or modification or termination of this Trust shall
cause any part of the Trust to be used or diverted to or for the benefit of
anyone other than the Grantor and his designated beneficiaries; provided that
the rights, duties, or responsibilities of the Trustee shall not be changed
without its written consent.
4. In interpreting this Agreement, words in the masculine gender shall
include the feminine, words in the singular shall include the plural, and
vice versa, as may be appropriate. The word "person" shall include natural
and legal persons.
5. Any notice or statement which the Trustee is required to give
hereunder shall be deemed given when mailed to the intended recipient at his
last known address. Any notice or statement to be given to the Trustee shall
be deemed given only when actually received by the Trustee.
6. The powers and duties of the Trustee and all questions of
interpretation of this Declaration of Trust shall be governed by the laws of
the state of Michigan except to the extent that such laws are pre-empted by
the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
<PAGE>
7. This Agreement may be executed by completing and signing the Amway
Management Company Roth Individual Retirement Account application, which
application incorporates by reference this Agreement.
This material is not authorized for distribution to prospective
investors in Amway Mutual Fund, Inc. or the Cash Equivalent Fund, unless
preceded or accompanied by an effective Prospectus which includes information
regarding the Fund's investment objectives, management, sales commission, and
other information. All written questions should be directed to Amway
Management Company, 7575 East Fulton Road, Ada, Michigan 49355-7150 or
questions by telephone to (616) 787-6288 or (800) 346-2670.
<PAGE>
AMWAY MANAGEMENT COMPANY
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT
APPLICATION
<TABLE>
<S><C>
____________________________________________________________________________________________________
REGISTRATION INFORMATION COMPLETE FOR SPOUSAL ACCOUNTS ONLY:
Name ___________________________________________ Name ____________________________________________
Address ________________________________________ Address _________________________________________
Zip ____________________________________________ Zip _____________________________________________
Social Security No. ___/__ /_____ Social Security No. ___/__ /____
Birth Date __/__/__ Tel. _________________ Birth Date __/__/__ Tel. _____________________
Work/Home Work/Home
(1) Beneficiary*________________________________ (1) Beneficiary*_________________________________
Relationship ___________________________________ Relationship ____________________________________
Proportion (%) _________________________________ Proportion (%) __________________________________
Address ________________________________________ Address _________________________________________
Zip ____________________________________________ Zip _____________________________________________
(2) Beneficiary*________________________________ (2) Beneficiary*_________________________________
Relationship ___________________________________ Relationship ____________________________________
Proportion (%) _________________________________ Proportion (%) __________________________________
Address ________________________________________ Address _________________________________________
Zip ____________________________________________ Zip _____________________________________________
If you wish to name additional primary If you wish to name additional primary
beneficiaries or secondary beneficiaries, please beneficiaries or secondary beneficiaries, please
list information on a separate sheet of paper list information on a separate sheet of paper
and attach to this application. and attach to this application.
*Note: Your choice of a beneficiary will have an impact on your life expectancy calculation options
for determining your annual required minimum distributions upon attaining age 70 1/2 (see the Life
Expectancy Calculation Options handout for information).
TYPE OF ACCOUNT
Indicate one:
_____ Individual Account-($2,000 annual limit).
_____ Spousal Accounts for individual working and non-working spouse-($4,000 annual combined limit,
but no more than $2,000 in either account).
_____ Transfer/Rollover Account-No limit, see Disclosure Statement.
INITIAL CONTRIBUTION AND INVESTMENT
Checks should be made payable to Michigan National Bank, Trustee. The minimum initial contribution
to the Amway Mutual Fund, Inc. is $100. The minimum initial contribution to the Cash Equivalent
Fund is $1,000.
Please indicate if any portion of this contribution is a transfer/rollover of a lump-sum distribution
from a qualified plan or tax-sheltered annuity: ___Yes ____No If yes, amount $
Individual Account Contribution for Tax Year 19__ Amount $
Spouse Contribution for Tax Year 19__ Amount $
My contributions should be invested as follows (indicate dollar amount):
$__________ Amway Mutual Fund, Inc. $__________ Cash Equivalent Fund
SIGNATURES
The individual (or individual and spouse) hereby (i) acknowledges receipt of the IRA Agreement and
Disclosure Statement on the date of this application; (ii) acknowledges receipt of the current
Prospectus for Amway Mutual Fund, Inc. and the Cash Equivalent Fund and agree to its terms;
(iii) consents to the trustee fee specified in the Disclosure Statement; and (iv) has read and
agrees to the provisions of the IRA Agreement, which together with this application, represents
the entire agreement.
Individual's Signature Spouse's Signature
Date of Application (Spousal accounts only)
Application Accepted by Michigan National Bank, Trustee Date of Application
By
Date
Return completed Application to: Amway Management Company, 7575 East Fulton Road, Ada,
Michigan 49355-7150. A copy of the accepted Application will be returned to you.
</TABLE>
<PAGE>
AMWAY MANAGEMENT COMPANY
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT
____________________________________
APPLICATION FOR ROLLOVER OR TRANSFER
Grantor: _____________________________________________________________
Grantor's Address: ___________________________________________________
___________________________________________________
Grantor's Social Security No.: _______________________________________
Grantor's Date of Birth: ______________________________________________
IRA Account No.: ___________________________________________________
ROLLOVER OR TRANSFER
By signing this document, I am requesting the right to rollover or
transfer into my AMWAY MANAGEMENT COMPANY TRADITIONAL INDIVIDUAL RETIREMENT
ACCOUNT ("IRA") certain benefits, as indicated below:
_____ 1. Rollover from:
_____ (a) An IRA.
_____ (b) An employer retirement plan.
_____ (c) Tax sheltered annuity.
_____ 2. Direct rollover from:
_____ (a) An employer retirement plan.
_____ (b) Tax sheltered annuity.
_____ 3. Trustee-to-trustee transfer from an IRA.
REPRESENTATIONS REGARDING ROLLOVER OR TRANSFER
I understand that the IRA requires that the rollover or transfer meet
certain legal requirements. As a result, I promise that all of the following
applicable statements are true in connection with my election:
<PAGE>
1. If I elect a rollover from an IRA:
(a) The IRA from which I received this distribution satisfies the
requirements of Section 408 of the Internal Revenue Code;
(b) I am rolling over the distribution within 60 days after I
receive the distribution; and
(c) I have made no other tax-free rollovers from the IRA within
the past 12 months.
2. If I elect a rollover or direct rollover from an employer
retirement plan or tax sheltered annuity:
(a) The employer retirement plan is a "qualified plan" under the
requirements of the Internal Revenue Code or the tax-sheltered annuity
satisfies the requirements of Section 403(b) of the Internal Revenue
Code;
(b) I am rolling over part or all of the distribution within 60
days after I receive the distribution, I am rolling over the
distribution within 60 days after I receive the distribution from an IRA
that contains only the qualified plan distribution and investment
earnings or I am having my qualified plan distribution rolled directly
over to the IRA; and
(c) No portion of the amount I am rolling over or having directly
rolled over consists of my after-tax contributions to the employer
retirement plan or tax sheltered annuity.
(d) No portion of the amount I am rolling over or having directly
rolled over consists of the following:
(i) Periodic payments that are made at least once a year
and last for the life or life expectancy of me and/or my
beneficiary; or
(ii) Periodic payments that last for a period of ten
years or more.
(e) No portion of the amount I am rolling over or having directly
rolled over consists of payments I have received as a "required minimum
payment" upon reaching age 70 1/2.
3. If I elect a trustee-to-trustee transfer from an IRA, the
transferor IRA satisfies the requirements of Section 408 of the Internal
Revenue Code.
<PAGE>
I agree to supply any additional reasonable information that the plan
administrator believes is necessary to process my application. By my
signature below, I request and authorize the trustee or custodian of the IRA,
employer retirement plan or tax sheltered annuity to rollover or transfer my
benefits to the Amway IRA.
Dated: ___________________, 199_ __________________________________________
Signature of Applicant
Name of IRA, Retirement Plan
or Tax Sheltered Annuity: __________________________________________
Name and Address of the
custodian or trustee: __________________________________________
__________________________________________
__________________________________________
Account Number (if any): __________________________________________
Accepted By:
AMWAY MANAGEMENT COMPANY
By _______________________________
Its _________________________
Dated: ____________________, 199__
<PAGE>
AMWAY MANAGEMENT COMPANY
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT
LIFE EXPECTANCY CALCULATION OPTIONS
Once you attain age 70 1/2, the IRS requires you to receive a minimum
distribution from your traditional IRA each year. For the year you turn age
70 1/2, the minimum distribution must be made by your "required beginning
date." Your required beginning date is the April 1 of the calendar year
following the calendar year in which you attain age 70 1/2. For each
subsequent year, the distribution must be made by December 31 of that year.
You have certain options available to you in calculating your required
minimum distributions. However, these elections must be made by your
required beginning date and are generally irrevocable once made.
Specifically, you have the following choices:
1. You can calculate your required minimum distributions based
upon your life expectancy only or the joint life expectancies of you and
a beneficiary who qualifies as a "designated beneficiary" under IRS
rules. An individual, such as your spouse, would qualify as a designated
beneficiary for this purpose.
2. Regardless of whether you calculate your required minimum
distributions based upon your life expectancy only or the joint life
expectancies of you and your designated beneficiary, you can
"recalculate" your life expectancy annually. Recalculation is done in
accordance with IRS rules and tends to have the effect of stretching out
your required minimum distributions over a greater number of years than
if there is no recalculation.
In addition, if your designated beneficiary is your spouse, your
spouse's life expectancy can also be recalculated annually. Thus, where
you elect a required minimum distribution calculation method based upon
the joint life expectancies of you and your spouse, you may elect to
only recalculate your life expectancy annually; you may elect to only
recalculate your spouse's life expectancy annually; you may elect to
recalculate both the life expectancies of you and your spouse annually;
or you may elect to not recalculate at all.
There are advantages and disadvantages to a life expectancy calculation
method using a single life expectancy as opposed to joint life expectancies.
There are also advantages and disadvantages to utilizing annual recalculation
as opposed to not utilizing annual recalculation. You should consult with
your tax advisor regarding these various options. Once you make an election
with respect to these life expectancy calculation options, you should provide
it, in writing, to Amway Management Company.
<PAGE>
If you do not choose these various life expectancy calculation options
by your required beginning date, you will be considered to have elected to
calculate your required minimum distributions over the joint life
expectancies of you and your designated beneficiary (assuming you have a
designated beneficiary upon your required beginning date). Further, you will
be considered to have elected to annually recalculate your life expectancy,
and if your designated beneficiary is your spouse, to have elected to
annually recalculate your spouse's life expectancy.
<PAGE>
AMWAY MANAGEMENT COMPANY
ROTH INDIVIDUAL RETIREMENT ACCOUNT
____________________________________
APPLICATION FOR ROLLOVER OR TRANSFER
Grantor: _________________________________________________________
Grantor's Address: _______________________________________________
_______________________________________________
Grantor's Social Security No.: ________________________________
Grantor's Date of Birth: __________________________________________
IRA Account No.: _______________________________________________
ROLLOVER OR TRANSFER
By signing this document, I am requesting the right to rollover or
transfer into my AMWAY MANAGEMENT COMPANY ROTH INDIVIDUAL RETIREMENT ACCOUNT
("IRA") a rollover from another IRA (either traditional or Roth).
REPRESENTATIONS REGARDING ROLLOVER OR TRANSFER
I understand that the IRA requires that the rollover or transfer meet
certain legal requirements. As a result, I promise that all of the following
applicable statements are true in connection with my election:
1. If I elect a rollover from another IRA:
(a) The IRA from which I received this distribution satisfies the
requirements of Section 408 of the Internal Revenue Code; and
(b) I am rolling over the distribution within 60 days after I
receive the distribution.
2. If I elect a trustee-to-trustee transfer from another IRA, the
transferor IRA satisfies the requirements of Section 408 of the Internal
Revenue Code.
<PAGE>
I agree to supply any additional reasonable information that the plan
administrator believes is necessary to process my application. By my
signature below, I request and authorize the trustee or custodian of the
other IRA to rollover or transfer my benefits to the Amway IRA.
Dated: ___________________, 199_ ___________________________________________
Signature of Applicant
Name of IRA: ___________________________________________
Name and Address of the
custodian or trustee:
___________________________________________
___________________________________________
___________________________________________
Account Number (if any):
___________________________________________
Accepted By:
AMWAY MANAGEMENT COMPANY
By ________________________________
Its __________________________
Dated: _____________________, 199__
<PAGE>
AMWAY MANAGEMENT COMPANY
ROTH INDIVIDUAL RETIREMENT ACCOUNT
------------------------------------
APPLICATION FOR ROLLOVER OR TRANSFER
Grantor: ____________________________________________________________________
Grantor's Address: __________________________________________________________
__________________________________________________________
Grantor's Social Security No.: ___________________________________________
Grantor's Date of Birth: _____________________________________________________
IRA Account No.: __________________________________________________________
ROLLOVER OR TRANSFER
By signing this document, I am requesting the right to rollover or
transfer into my AMWAY MANAGEMENT COMPANY ROTH INDIVIDUAL RETIREMENT ACCOUNT
("IRA") a rollover from another IRA (either traditional or Roth).
REPRESENTATIONS REGARDING ROLLOVER OR TRANSFER
I understand that the IRA requires that the rollover or transfer meet
certain legal requirements. As a result, I promise that all of the following
applicable statements are true in connection with my election:
1. If I elect a rollover from another IRA:
(a) The IRA from which I received this distribution satisfies the
requirements of Section 408 of the Internal Revenue Code; and
(b) I am rolling over the distribution within 60 days after I receive
the distribution.
2. If I elect a trustee-to-trustee transfer from another IRA, the
transferor IRA satisfies the requirements of Section 408 of the Internal
Revenue Code.
<PAGE>
I agree to supply any additional reasonable information that the plan
administrator believes is necessary to process my application. By my
signature below, I request and authorize the trustee or custodian of the
other IRA to rollover or transfer my benefits to the Amway IRA.
Dated: ___________________, 199_ __________________________________________
Signature of Applicant
Name of IRA: _______________________________________________
Name and Address of the
custodian or trustee: _______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
Account Number (if any):
_______________________________________________
Accepted By:
AMWAY MANAGEMENT COMPANY
By ________________________________
Its __________________________
Dated: _____________________, 199__
<PAGE>
AMWAY MANAGEMENT COMPANY
EDUCATION INDIVIDUAL RETIREMENT TRUST ACCOUNTS
_________________________
DISCLOSURE STATEMENT
Beginning January 1, 1998, taxpayers may deposit up to $500 per year
into an education individual retirement trust account ("Education IRA") for a
child under age 18. Parents, grandparents, other family members, friends,
and a child him/herself may contribute to the child's Education IRA, provided
that the total contributions for the child during the taxable year do not
exceed the $500 limit. Amounts deposited in the account grow tax-free until
distributed, and the child will not owe tax on any withdrawal from the
account if the child's qualified higher education expenses at an eligible
educational institution for the year equal or exceed the amount of the
withdrawal. If the child does not need the money for postsecondary
education, the account balance can be rolled over to the Education IRA of
certain family members who can use it for their higher education. Amounts
withdrawn from an Education IRA that exceed the child's qualified higher
education expenses in a taxable year are generally subject to income tax and
to an additional tax of 10%. The Hope Scholarship Credit and Lifetime
Learning Credit may not be claimed for a student's expenses in a taxable year
in which the student takes a tax-free withdrawal from an Education IRA.
Q1: How do I revoke an Amway Management Company Education IRA?
A1: Revocation must be given in writing and delivered or mailed to
Amway Management Company, 7575 East Fulton Road, Ada, Michigan 49355-7150
(Telephone No. (616) 787-6288), by the close of the seventh day after your
Education IRA is established. The notice shall be deemed mailed on the date
of the postmark (or if sent by certified or registered mail, the date of
certification or registration) if it is deposited in the mail in the United
States in an envelope, or other appropriate wrapper, first-class postage
prepaid, properly addressed. If you effectively revoke your Education IRA,
the amount you contribute to your account will be refunded to you without
adjustment for such items as sales commissions, administrative expenses, or
fluctuations in market value.
Q2: What is an Education IRA?
A2: An Education IRA is a trust or custodial account that is created or
organized in the United States exclusively for the purpose of paying the
qualified higher education expenses of the designated beneficiary of the
account. The account must be designated as an Education IRA when it is
created in order to be treated as an Education IRA for tax purposes.
<PAGE>
Q3: For whom may an Education IRA be established?
A3: An Education IRA may be established for the benefit of any child
under age 18. Contributions to the Education IRA will not be accepted after
the designated beneficiary reaches his/her 18th birthday.
Q4: Where may an individual open an Education IRA?
A4: An individual may open an Education IRA with any bank or other
entity that has been approved to serve as a nonbank trustee or custodian of
an individual retirement account (IRA) and the bank or entity is offering
Education IRAs. Other entities that wish to offer Education IRAs but are not
approved to serve as IRA trustees or custodians may seek approval by
following the same IRS procedures used for approval of other IRA nonbank
trustees.
Q5: When may a taxpayer start contributing to an Education IRA for a
child?
A5: A taxpayer may start making contributions on January 1, 1998, or at
any time thereafter.
Q6: How much may be contributed to a child's Education IRA?
A6: Up to $500 per year in aggregate contributions may be made for the
benefit of any child. The contributions may be placed in a single Education
IRA or in multiple Education IRAs.
Q7: What happens if more than $500 is contributed to an Education IRA
on behalf of a child in a calendar year?
A7: Aggregate contributions for the benefit of a particular child in
excess of $500 for a calendar year are treated as excess contributions. If
the excess contributions (and any earnings attributable to them) are not
withdrawn from the child's account (or accounts) before the tax return for
the year is due, the excess contributions are subject to a 6% excise tax for
each year the excess amount remains in the account.
Q8: May contributions other than cash be made to a child's Education
IRA?
A8: No. Education IRAs are permitted to accept contributions made in
cash only.
<PAGE>
Q9: May contributors take a deduction for contributions made to an
Education IRA?
A9: No.
Q10: Are there any restrictions on who can contribute to an Education
IRA?
A10: Any individual may contribute up to $500 to a child's Education IRA
if the individual's modified adjusted gross income ("AGI") for the taxable
year is no more than $95,000 ($150,000 for married taxpayers filing jointly).
The $500 maximum contribution per child is gradually reduced for individuals
with AGI between $95,000 and $110,000 (between $150,000 and $160,000 for
married taxpayers filing jointly). For example, an unmarried taxpayer with
AGI of $96,500 in a taxable year could make a maximum contribution per child
of $450 for that year. Taxpayers with AGI above $110,000 ($160,000 for
married taxpayers filing jointly) cannot make contributions to anyone's
Education IRA.
Q11: May a child contribute to his/her own Education IRA?
A11: Yes.
Q12: Does a taxpayer have to be related to the designated beneficiary in
order to contribute to the designated beneficiary's Education IRA?
A12: No.
Q13: How many Education IRAs may a child have?
A13: There is no limit on the number of Education IRAs that may be
established designating a particular child as beneficiary. However, in any
given taxable year the total aggregate contributions to all the accounts
designating a particular child as beneficiary may not exceed $500.
Q14: May a designated beneficiary take a tax-free withdrawal from an
Education IRA to pay qualified higher education expenses if the designated
beneficiary is enrolled less than full-time at an eligible educational
institution?
A14: Yes. Whether the designated beneficiary is enrolled full-time,
half-time, or less than half-time, he/she may take a tax-free withdrawal to
pay qualified higher education expenses.
<PAGE>
Q15: What happens when a designated beneficiary withdraws assets from an
Education IRA to pay for college?
A15: Generally, the withdrawal is tax-free to the designated beneficiary
to the extent the amount of the withdrawal does not exceed the designated
beneficiary's qualified higher education expenses.
Q16: What are "qualified higher education expenses"?
A16: "Qualified higher education expenses" mean expenses for tuition,
fees, books, supplies and equipment required for the enrollment or attendance
of the designated beneficiary at an eligible educational institution.
Qualified higher education expenses also include amounts contributed to a
qualified state tuition program. Qualified higher education expenses also
include room and board (generally the school's posted room and board charge,
or $2,500 per year for students living off-campus and not at home) if the
designated beneficiary is at least a half-time student at an eligible
educational institution. The standards for determining whether a student is
enrolled at least half-time are the same as those used for the Hope
Scholarship Credit.
Q17: What is an "eligible educational institution"?
A17: An "eligible educational institution" is any college, university,
vocational school, or other postsecondary educational institution that is
described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088)
and, therefore, eligible to participate in the student aid programs
administered by the Department of Education. This category includes
virtually all accredited public, nonprofit, and proprietary postsecondary
institutions. (The same eligibility requirements for institutions apply for
the Hope Scholarship Credit, the Lifetime Learning Credit and early
withdrawals from IRAs for qualified higher education expenses.)
Q18: What happens if a designated beneficiary withdraws an amount from
an Education IRA but does not have any qualified higher education expenses to
pay in the taxable year he/she makes the withdrawal?
A18: Generally, if a designated beneficiary withdraws an amount from an
Education IRA and does not have any qualified higher education expenses
during the taxable year, a portion of the distribution is taxable. The
taxable portion is the portion that represents earnings that have accumulated
tax-free in the account. The taxable portion of the distribution is also
subject to a 10% additional tax unless an exception applies.
<PAGE>
Q19: Is a distribution from an Education IRA taxable if the distribution
is contributed to another Education IRA?
A19: Any amount distributed from an Education IRA and rolled over to
another Education IRA for the benefit of the same designated beneficiary or
certain members of the designated beneficiary's family is not taxable. An
amount is rolled over if it is paid to another Education IRA on a date within
60 days after the date of the distribution. Members of the designated
beneficiary's family include the designated beneficiary's children and their
descendants, stepchildren and their descendants, siblings and their children,
parents and grandparents, stepparents and spouses of all the foregoing. The
$500 annual contribution limit to Education IRAs does not apply to these
rollover contributions. For example, an older brother who has $2,000 left in
his Education IRA after he graduates from college can roll over the full
$2,000 balance to an Education IRA for his younger sister who is still in
high school without paying any tax on the transfer.
Q20: What happens to the assets remaining in an Education IRA after the
designated beneficiary finishes his/her postsecondary education?
A20: There are two options. The amount remaining in the account may be
withdrawn for the designated beneficiary. The designated beneficiary will be
subject to both income tax and the additional 10% tax on the portion of the
amount withdrawn that represents earnings if the designated beneficiary does
not have any qualified higher education expenses in the same taxable year
he/she makes the withdrawal. Alternatively, if the amount in the designated
beneficiary's Education IRA is withdrawn and rolled over (as described in
Q&A19) to another Education IRA for the benefit of a member of the designated
beneficiary's family, the amount rolled over will not be taxable.
Q21: Rather than rolling over money from one Education IRA to another,
may the designated beneficiary of the account be changed from one child to
another without triggering a tax?
A21: Yes, provided: (1) the terms of the particular trust or custodial
account permit a change in designated beneficiaries (each trustee or
custodian will control whether options like this one are available in the
accounts they offer), and (2) the new designated beneficiary is a member of
the previous designated beneficiary's family. (See Q&A19.)
Q22: May a student or the student's parents claim the Hope Scholarship
Credit or Lifetime Learning Credit for the student's expenses in a taxable
year in which the student receives money from an Education IRA on a tax-free
basis?
<PAGE>
A22: No. If a student is receiving a tax-free distribution from an
Education IRA in a particular taxable year, none of that student's expenses
may be claimed as the basis for a Hope Scholarship Credit or Lifetime
Learning Credit for that year. However, the student may waive the tax-free
treatment of the Education IRA distribution and elect to pay any tax that
would otherwise be owed on an Education IRA distribution so that the student
or the student's parents may claim a Hope Scholarship Credit or Lifetime
Learning Credit for expenses paid in the same year the Education IRA
distributions are received.
Q23: May contributions be made to both a qualified state tuition program
and an Education IRA on behalf of the same designated beneficiary in the same
taxable year?
A23: No. Any amount contributed to an Education IRA on behalf of a
designated beneficiary during any taxable year in which an amount is also
contributed to a qualified state tuition program on behalf of the same
beneficiary will be treated as an excess contribution to the Education IRA.
(See Q&A7 for the treatment of excess contributions.)
Q24: Has the Amway Management Company Education IRA been approved by the
IRS?
A24: The form for your Amway Management Company Education IRA has been
approved for use by the Internal Revenue Service, but that approval is not a
determination of the merits of entering into the IRA. Further information
regarding IRAs can be obtained from any Internal Revenue Service district
office.
Q25: What is the trustee fee for the Amway Management Company Education
IRA?
A25: The Trustee, Michigan National Bank, charges an annual trustee
fee of $10 per year per account. You may pay the fee annually by check, or,
if you prefer, the Trustee will redeem sufficient shares from your account(s)
to pay the fee.
Q26: How are my contributions and earnings on those contributions
invested under the Amway Management Company Education IRA?
A26: All of your contributions and earnings on those contributions will
be invested in Amway Mutual Fund, Inc. common stock and/or the Cash
Equivalent Fund. The minimum initial contribution which must be made to the
Amway Mutual Fund, Inc. is $100 and to the Cash Equivalent Fund is $500.
Additional contributions must be made in amounts of $50 or more.
<PAGE>
Q27: How do I obtain more information about Amway Mutual Fund, Inc. and
the Cash Equivalent Fund?
A27: For complete information about advisory fees, other expenses,
method of calculating price per share, etc., of Amway Mutual Fund, Inc., and
applicable sales charges, you should read the Prospectuses for Amway Mutual
Fund, Inc. and the Cash Equivalent Fund.
<PAGE>
AMWAY MANAGEMENT COMPANY
EDUCATION INDIVIDUAL RETIREMENT TRUST ACCOUNTS
_________________________
AGREEMENT
The Grantor whose name appears on the Amway Management Company Education
Individual Retirement Trust Account application is establishing an Education
Individual Retirement Trust Account under Internal Revenue Code ("Code")
Section 530 for the benefit of the Designated Beneficiary exclusively to pay
for the qualified higher education expenses, within the meaning of Code
Section 530(b)(2), of such Designated Beneficiary.
Michigan National Bank, 77 Monroe Center, Grand Rapids, MI 49503, the
Trustee, has provided the Grantor with a concise statement disclosing the
provisions governing Code Section 530. This disclosure statement includes an
explanation of the statutory requirements applicable to, and the income tax
consequences of, establishing and maintaining an account under Code Section
530. Michigan National Bank also will provide a copy of this form and the
disclosure statement to the Responsible Individual, as defined in Article VI
below, if the Responsible Individual is not the same person as the Grantor.
The Grantor has assigned the trust a contribution as indicated on the
Amway Management Company Education Individual Retirement Trust Account
Application.
The Grantor and the Trustee make the following agreement:
ARTICLE I
The Trustee may accept additional cash contributions. These
contributions may be from the Grantor, or from any other individual, for the
benefit of the Designated Beneficiary, provided the Designated Beneficiary
has not attained the age of 18 as of the date such contributions are made.
Total contributions that are not rollover contributions described in Code
Section 530(d)(5) are limited to a maximum amount of $500 for the taxable
year.
ARTICLE II
The maximum aggregate contribution that an individual may make to the
trust in any year may not exceed the $500 in total contributions that the
trust can receive. In addition, the maximum aggregate contribution that an
individual may make to the trust in any year is phased out for unmarried
individuals who have modified adjusted gross
<PAGE>
income ("AGI") between $95,000 and $110,000 for the year of the contribution and
for married individuals who file joint returns with modified AGI between
$150,000 and $160,000 for the year of the contribution. Unmarried individuals
with modified AGI above $110,000 for the year and married individuals who file
joint returns and have modified AGI above $160,000 for the year may not make a
contribution for that year. Modified AGI is defined in Code Section 530(c)(2).
ARTICLE III
No part of the trust may be invested in life insurance contracts, nor
may the assets of the trust account be commingled with other property except in
a common investment fund (within the meaning of Code Section 530(b)(1)(D)).
ARTICLE IV
1. Any balance to the credit of the Designated Beneficiary on the
date on which such Designated Beneficiary attains age 30 shall be distributed to
the Designated Beneficiary within 30 days of such date.
2. Any balance to the credit of the Designated Beneficiary shall be
distributed to the estate of the Designated Beneficiary within 30 days of the
date of such Designated Beneficiary's death.
ARTICLE V
The Grantor shall have the power to direct the Trustee regarding the
investment of the above-listed amount assigned to the trust (including earnings
thereon) in the investment choices offered by the Trustee. The Responsible
Individual, however, shall have the power to redirect the Trustee regarding the
investment of such amounts, as well as the power to direct the Trustee regarding
the investment of all additional contributions (including earnings thereon) to
the trust. In the event that the Responsible Individual does not direct the
Trustee regarding the investment of additional contributions (including earnings
thereon), the initial investment direction of the Grantor also will govern all
additional contributions made to the trust account until such time as the
Responsible Individual otherwise directs the Trustee. Unless otherwise provided
in this agreement, the Responsible Individual also shall have the power to
direct the Trustee regarding the administration, management, and distribution of
the account.
ARTICLE VI
The Responsible Individual named by the Grantor shall be a parent or
guardian of the Designated Beneficiary. The trust shall have only one
Responsible
<PAGE>
Individual at any time. If the Responsible Individual becomes incapacitated or
dies while the Designated Beneficiary is a minor under state law, the successor
Responsible Individual shall be the person named to succeed in that capacity by
the preceding Responsible Individual in a witnessed writing or, if no successor
is so named, the successor Responsible Individual shall be the Designated
Beneficiary's other parent or successor guardian.
The Responsible Individual shall continue to serve as the Responsible
Individual for the trust after the Designated Beneficiary attains the age of
majority under state law and until such time as all assets have been distributed
from the trust and the trust terminates. If the Responsible Individual becomes
incapacitated or dies after the Designated Beneficiary reaches the age of
majority under state law, the Responsible Individual shall be the Designated
Beneficiary.
ARTICLE VII
The Responsible Individual may change the beneficiary under this
agreement to another member of the Designated Beneficiary's family described in
Code Section 529(e)(2) in accordance with the Trustee's procedures and Article
XV hereof.
ARTICLE VIII
1. The Grantor agrees to provide the Trustee with the information
necessary for the Trustee to prepare any reports required under Code Section
530(h).
2. The Trustee agrees to submit reports to the Internal Revenue
Service and the Responsible Individual as prescribed by the Internal Revenue
Service.
ARTICLE IX
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV will be controlling. Any additional
articles that are not consistent with Code Section 530 and related regulations
will be invalid.
ARTICLE X
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the Grantor and the Trustee.
<PAGE>
ARTICLE XI
The Trustee shall invest all assets of the trust in shares of Amway
Mutual Fund, Inc. or in the Cash Equivalent Fund. If the Grantor fails to make
an investment election, the Trustee shall invest all assets of the Trust in
shares of Amway Mutual Fund, Inc. Any investment election made by the Grantor
shall continue in effect until changed by the Responsible Individual. The
Responsible Individual may change his investment election by delivering a new
written investment election form to Amway Management Company before the
Responsible Individual wants to make a change. The change in investment
election may apply to future contributions, amounts already invested, or both.
The terms and conditions of making and changing investment elections shall also
be subject to any requirements imposed by Amway Mutual Fund, Inc. and the Cash
Equivalent Fund.
ARTICLE XII
The Trustee shall be entitled to reasonable compensation for all
services rendered hereunder as shall initially be agreed upon between the
Grantor and the Trustee or subsequently agreed upon between the Responsible
Individual and the Trustee.
ARTICLE XIII
1. The Trustee may resign at any time upon giving at least 45 days'
prior written notice to the Responsible Individual.
2. The Responsible Individual may remove the Trustee at any time
upon giving at least 45 days' prior written notice to the Trustee. The
Responsible Individual shall fill any vacancy in the office of the Trustee
howsoever caused by written instrument delivered to the retiring Trustee with
the acceptance of the successor Trustee endorsed thereon; provided that such
successor Trustee is a bank or a person approved by the Secretary of the
Treasury to hold assets of Education Individual Retirement Accounts.
3. Each successor Trustee shall succeed to the title of the Trust
vested in its predecessor without the signing or filing of any further
instruments, but any resigning or removed Trustee shall execute all documents
and do all acts necessary to vest such title in any successor Trustee, and shall
turn over to the successor Trustee copies of all such records pertaining to the
Trust which such successor Trustee may properly need to administer the Trust.
Each successor Trustee shall have and enjoy all powers, both discretionary and
ministerial, herein conferred upon its predecessor. No successor Trustee shall
be personally liable for any act or failure to act of any predecessor Trustee,
and, with the approval of the Responsible Individual, a successor Trustee may
accept the account rendered and the property delivered to it by the predecessor
Trustee as a full and complete discharge to the predecessor Trustee without
incurring any liability or responsibility for so doing.
<PAGE>
ARTICLE XIV
1. Any provision herein to the contrary notwithstanding, the Trust
created by this Agreement shall terminate:
(a) When the Trustee receives written instructions from the
Responsible Individual to transfer all of the assets of the Trust
to the trustee or custodian of another education individual
retirement trust, or directly to the Designated Beneficiary or
Responsible Individual; or
(b) Upon the distribution of all of the assets of the Trust in
accordance with Articles IV or V.
2. Unless one of the events described in paragraph 1 occurs, this
Trust shall continue even though no contributions are made to the Trust for any
particular year or years.
3. Upon termination of this Trust, the Trustee shall continue to
have all of the powers provided in this Agreement as are necessary or desirable
for the orderly liquidation and distribution of the Trust assets, and shall be
entitled to reserve such reasonable amounts as it may deem necessary to provide
for the payment of any expenses then or thereafter chargeable to the Trust.
ARTICLE XV
1. The Responsible Individual may change the Designated Beneficiary
of the Trust to a child, sibling or child of a sibling of the Designated
Beneficiary by filing a change of Designated Beneficiary form with the Trustee.
2. Neither the Grantor, the Responsible Individual, nor the
Designated Beneficiary shall have any right to pledge, hypothecate, anticipate,
or in any way create a lien upon any assets or part of the Trust. Distributions
shall be made only to the Designated Beneficiary, the Responsible Individual or
their legal representatives or heirs at law upon their personal receipts or
endorsements and no interest in the Trust, or any part thereof, shall be
assignable in anticipation of payment either by voluntary or involuntary act, or
by operation of law, or be liable in any way for the debts or defaults of such
Designated Beneficiary or Responsible Individual or their legal representatives
or heirs-at-law. The provisions of this paragraph shall not apply to the extent
that they violate any applicable law.
3. No amendments or modification or termination of this Trust shall
cause any part of the Trust to be used or diverted to or for the benefit of
anyone other than the Designated Beneficiary or Responsible Individual; provided
that the rights, duties, or responsibilities of the Trustee shall not be changed
without its written consent.
<PAGE>
4. In interpreting this Agreement, words in the masculine gender
shall include the feminine, words in the singular shall include the plural, and
vice versa, as may be appropriate. The word "person" shall include natural and
legal persons.
5. Any notice or statement which the Trustee is required to give
hereunder shall be deemed given when mailed to the intended recipient at his
last known address. Any notice or statement to be given to the Trustee shall be
deemed given only when actually received by the Trustee.
6. The powers and duties of the Trustee and all questions of
interpretation of this Declaration of Trust shall be governed by the laws of the
state of Michigan except to the extent that such laws are pre-empted by federal
law.
7. This Agreement may be executed by completing and signing the
Amway Management Company Education Individual Retirement Trust Account
application, which application incorporates by reference this Agreement.
This material is not authorized for distribution to prospective
investors in Amway Mutual Fund, Inc. or the Cash Equivalent Fund, unless
preceded or accompanied by an effective Prospectus which includes information
regarding the Fund's investment objectives, management, sales commission, and
other information. All written questions should be directed to Amway Management
Company, 7575 East Fulton Road, Ada, Michigan 49355-7150 or questions by
telephone to (616) 787-6288 or (800) 346-2670.
<PAGE>
AMWAY MANAGEMENT COMPANY
EDUCATION INDIVIDUAL RETIREMENT TRUST ACCOUNT
APPLICATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S><C>
REGISTRATION INFORMATION
Name of Grantor __________________________________ Name of Responsible Individual____________________
Social Security No._ _ _/_ _ _/_ _ _ Address
Zip
Name of Designated Beneficiary____________________ Social Security No._ _ _/_ _ _/_ _ _
Address Birth Date _ _/_ _/_ _
Zip
Social Security No._ _ _/_ _ _/_ _ _
Birth Date _ _/_ _/_ _
</TABLE>
INITIAL CONTRIBUTION AND INVESTMENT
Checks should be made payable to Michigan National Bank, Trustee. The minimum
initial contribution to the Amway Mutual Fund, Inc. is $100. The minimum
initial contribution to the Cash Equivalent Fund is $500.
Contribution for Tax Year 19__ Amount $_______________(maximum $500)
My contributions should be invested as follows (indicate dollar amount):
$_____________Amway Mutual Fund, Inc. $_____________Cash Equivalent Fund
SIGNATURES
The grantor hereby (i) acknowledges receipt of the Education IRA Agreement and
Disclosure Statement on the date of this application; (ii) acknowledges receipt
of the current Prospectuses for Amway Mutual Fund, Inc. and the Cash Equivalent
Fund and agrees to their terms; (iii) consents to the trustee fee specified in
the Disclosure Statement; and (iv) has read and agrees to the provisions of the
Education IRA Agreement, which together with this application, represents the
entire agreement.
<PAGE>
Grantor's Signature_____________________________________________________________
Date of Application_____________________________________________________________
Application Accepted by Michigan National Bank, Trustee
By______________________________________________________________________________
Date____________________________________________________________________________
Return completed Application to: Amway Management Company, 7575 East Fulton
Road, Ada, Michigan 49355-7150. A copy of the accepted Application will be
returned to you.
<PAGE>
AMWAY MANAGEMENT COMPANY
EDUCATION INDIVIDUAL RETIREMENT ACCOUNT
_____________________________
CHANGE OF DESIGNATED BENEFICIARY
As the Responsible Individual of the Education Individual Retirement
Account established by ___________________________ for the benefit of
_______________________, I hereby request that the Designated Beneficiary of the
Trust be changed to _____________________________. I understand and agree that
all the other terms of the Trust will remain the same until changed by the
Trustee or I direct that the Designated Beneficiary be changed again.
Responsible Individual's signature
________________________________________________
Date: ____________________, 19__
<PAGE>
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of the 9th day of February, 1998, by and
between AMWAY MUTUAL FUND INC., a Delaware corporation (hereinafter the "Fund"),
and AMWAY MANAGEMENT COMPANY, a Michigan corporation (hereinafter the
"Distributor").
WHEREAS, the Fund engages in business as an open-end management investment
company, and is registered as such under the Investment Company Act of 1940, as
amended (the "Act"); and
WHEREAS, Fund desires to finance the distribution of the shares of its
common stock, together with any additional such classes or series that may
hereafter be offered to the public in accordance with this Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Act (the "Plan and Agreement");
and
WHEREAS, the Distributor desires to be retained to perform services in
accordance with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Fund, including a majority of the directors who are not
interested persons of the Fund, as defined in the Act, and who have no direct or
indirect financial interest in the operation of this Plan and Agreement (the
"Disinterested Directors") cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Fund adopts the Plan set forth herein and the Fund and
the Distributor hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document by which
the Fund adopts a Plan pursuant to Rule 12b-1 under the Act and
authorizes payments as described herein. The Agreement is defined as
those provisions of this document by which the Fund retains the
Distributor to provide distribution services as described herein. The
Fund may retain the Plan notwithstanding termination of the Agreement.
The Fund is hereby authorized to utilize the assets of the Fund's to
finance certain activities in connection with distribution of the
Fund's shares.
2. Subject to the supervision of the Board of Director, the Fund
hereby retains the Distributor to promote the distribution of shares
of the Fund by providing services and engaging in activities as
specified herein. The activities and services to be provided by the
Distributor hereunder shall include one or more of the following: (a)
the payment of compensation (including trail commissions and incentive
compensation) to securities dealers, financial institutions and other
organizations, which may include companies affiliated with the
Distributor, that render distribution and administrative services in
connection with the distribution
<PAGE>
of the shares of the Fund; (b) the printing and distribution of
reports and prospectuses for the use of potential investors in the
Fund; (c) the preparing and distributing of sales literature; (d) the
providing of advertising and engaging in other promotional activities,
including direct mail solicitation, and television, radio, newspaper
and other media advertisements; and (e) the providing of such other
services and activities as may from time to time be agreed upon by the
Distributor and the Fund. Such reports and prospectuses, sales
literature, advertising and promotional activities and other services
and activities may be prepared and/or conducted either by companies
affiliated with the Distributor or by third parties.
3. The Distributor hereby undertakes to use its best efforts to
promote sales of shares of the Fund to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and as
it from time to time believes will best further sales of such shares.
4. The Fund is hereby authorized to expend, out of its assets, on a
monthly basis, and shall pay to the Distributor a maximum amount
computed at an annual rate of 0.25 of 1% of the average daily net
assets of each Fund during the month. The Fund's Board of Directors
shall from time to time determine the amounts, within the foregoing
maximum amounts, that the Fund will pay the Distributor hereunder.
No payments will be made by the Fund hereunder after the date of
termination of the Plan and Agreement.
5. To the extent that obligations incurred by the Distributor out of
its own resources to finance any activity primarily intended to result
in the sales of shares of the Fund, pursuant to this Plan and
Agreement or otherwise, may be deemed to constitute the indirect use
of Fund assets, such indirect use of Fund assets is hereby authorized
in addition to, and not in lieu of, any other payments authorized
under this Plan and Agreement.
6. The Distributor shall provide to the Board of Directors of the
Fund, at least quarterly, a written report of all moneys spent by the
Distributor on the activities and services specified in paragraph (2)
above pursuant to the Plan and Agreement. Upon request, but no less
frequently than annually, the Distributor shall provide to the Board
of Directors of the Fund such information as may reasonably be
required for it to review the continuing appropriateness of the Plan
and Agreement.
7. This Plan and Agreement shall each become effective immediately
upon approval by a vote of a majority of the outstanding voting
securities of the Fund as defined in the Act, and shall continue in
effect until February 9, 1999 unless terminated as provided below.
Thereafter, the Plan and Agreement shall continue in effect from year
to year, provided that the continuance of each is approved at least
annually by a vote of the Board of Directors of the Fund, including a
majority of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such continuance. The Plan may be
terminated at any time,
<PAGE>
without penalty, by the vote of a majority of the Disinterested
Directors or by the vote of a majority of the outstanding voting
securities of the Fund. The Distributor, or the Fund, by vote of a
majority of the Disinterested Directors or of the holders of a
majority of the outstanding voting securities of the Fund, may
terminate the Agreement under this Plan, without penalty, upon 30
days' written notice to the other party.
8. So long as the Plan remains in effect, the selection of persons
to serve as directors of the Fund who are not "interested persons" of
the Fund shall be committed to the discretion of the directors then in
office who are not "interested persons" of the Fund. However, nothing
contained herein shall prevent the participation of other persons in
the selection and nomination process, provided that a final decision
on any such selection or nomination is within the discretion of, and
approved by, a majority of the directors of the Fund then in office
who are not "interested persons" of the Fund.
9. This Plan may not be amended to increase the amount to be spent
by the Fund hereunder without approval of a majority of the
outstanding voting securities of the Fund. All material amendments to
the Plan and Agreement must be approved by the vote of the Board of
Directors of the Fund including a majority of the Disinterested
Directors, cast in person at a meeting called for the purpose of
voting on such amendment.
10. To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it shall
remain in effect as such, so as to authorize the use by the Fund of
its assets in the amounts and for the purposes set forth herein,
notwithstanding the occurrence of an "assignment," as defined by the
Act and the rules thereunder. To the extent it constitutes an
agreement with the Distributor pursuant to a plan, it shall terminate
automatically in the event of such "assignment." Upon a termination
of the agreement with the Distributor, the Fund may continue to make
payments pursuant to the Plan only upon the approval of a new
agreement under this Plan and Agreement, which may or may not be with
the Distributor, or the adoption of other arrangements regarding the
use of the amounts authorized to be paid by the Fund hereunder, by the
Fund's Board of Directors in accordance with the procedures set forth
in paragraph 7 above.
11. The Fund shall preserve copies of this Plan and Agreement and all
reports made pursuant to paragraph 6 hereof, together with minutes of
all Board of Directors meetings at which the adoption, amendment of
continuance of the Plan were considered (describing the factors
considered and the basis for decision), for a period of not less than
six years from the date of this Plan and Agreement, or any such
reports or minutes, as the case may be, the first two years in an
easily accessible place.
12. This Plan and Agreement shall be construed in accordance with the
laws of the State of Michigan and applicable provisions of the Act.
To the extent the
<PAGE>
applicable laws of the State of Michigan, or any provisions herein,
conflict with the applicable provisions of the Act, the latter shall
control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Plan and Agreement on the 9th day of February, 1998.
AMWAY MUTUAL FUND, INC
By: /s/ James J. Rosloniec
--------------------------------------
James J. Rosloniec
ATTEST: /s/ John Dougherty President
---------------------------
AMWAY MANAGEMENT COMPANY
By: /s/ Allan D. Engel
--------------------------------------
Allan D. Engel
ATTEST: /s/ John Dougherty President
---------------------------
<PAGE>
EXHIBIT OF PERFORMANCE CALCULATIONS
This exhibit reflects the calculation of the performance figures that
appear under "Investment Performance Information" in Part A (information
required in a prospectus) for Amway Mutual Fund ("Fund") and Ark Composite
The average annual total return for the Fund for a specific period is found
by taking a hypothetical $1,000 investment ("Initial Investment") at the
beginning of the period reinvesting all dividends and capital gains at the net
asset value on the reinvestment dates during the period, and computing the
redeemable value at the end of the period. The redeemable value is then divided
by the initial investment, and this quotient is taken to the Nth root (N
representing the number of years in the period) and 1 is subtracted from the
result, which is then expressed as a percentage. Thus, the following formula
applies:
Average Annual Total Return = (Redeemable Value/Initial Investment)1/N-1
Using the formula provided, average annual total return for the 1, 5, and
10 year periods are calculated in the following schedules which are included on
Pages C-187 through C-190.
<PAGE>
AMWAY MUTUAL FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
TEN YEARS
- ------------------------------------------------------------------------------------------
INITIAL DIVIDENDS CAP GAIN EXECUTION
DATE DESCRIPTION INVESTMENT PER SH. PER SH. PRICE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/87 Purchase $1,000.00 7.870
3/31/88 Qtr. FMV
6/15/88 OID 0.070 8.490
6/30/88 Qtr. FMV
9/30/88 Qtr. FMV
12/16/88 OID & CG 0.085 1.745 6.410
12/31/88 Qtr. FMV
3/31/89 Qtr. FMV
6/21/89 OID 0.090 7.460
6/30/89 Qtr. FMV
9/30/89 Qtr. FMV
12/15/89 OID & CG 0.070 1.160 7.100
12/31/89 Qtr. FMV
3/31/90 Qtr. FMV
6/20/90 OID 0.050 7.660
6/30/90 Qtr. FMV
9/30/90 Qtr. FMV
12/14/90 OID & CG 0.030 0.430 6.740
12/31/90 Qtr. FMV
3/31/91 Qtr. FMV
6/14/91 OID 0.050 8.340
6/30/91 Qtr. FMV
9/30/91 Qtr. FMV
12/13/91 OID & CG 0.010 1.360 7.390
12/31/91 Qtr. FMV
3/31/92 Qtr. FMV
6/30/92 Qtr. FMV
9/30/92 Qtr. FMV
12/15/92 OID & CG 0.022 0.638 7.310
12/31/92 Qtr. FMV
3/31/93 Qtr. FMV
6/30/93 Qtr. FMV
9/30/93 Qtr. FMV
12/14/93 OID & CG 0.020 0.640 7.470
12/31/93 Qtr. FMV
3/31/94 Qtr. FMV
6/30/94 Qtr. FMV
9/30/94 Qtr. FMV
12/19/94 OID & CG 0.030 0.340 6.740
12/31/94 Qtr. FMV
3/31/95 Qtr. FMV
6/30/95 Qtr. FMV
9/30/95 Qtr. FMV
12/20/95 OID & CG 0.105 1.420 7.300
12/31/95 Qtr. FMV
3/31/96 Qtr. FMV
6/30/96 Qtr. FMV
9/30/96 Qtr. FMV
12/18/96 OID & CG 0.092 1.410 7.470
12/31/96 Qtr. FMV
3/31/97 Qtr. FMV
6/30/97 Qtr. FMV
9/30/97 Qtr. FMV
12/17/97 OID & CG 0.095 1.505 7.710
12/31/97 Qtr. FMV
<CAPTION>
- ------------------------------------------------------------------------------------------
SHARES FROM VALUE OF ORDINARY INC
DATE DESCRIPTION NAV / SH INITIAL INV. SHARES DIVIDENDS $
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/87 Purchase 127.065
3/31/88 Qtr. FMV 8.040 127.065 1,021.60
6/15/88 OID 127.065 8.89
6/30/88 Qtr. FMV 8.520 127.065 1,082.59
9/30/88 Qtr. FMV 8.280 127.065 1,052.10
12/16/88 OID & CG 127.065 10.89
12/31/88 Qtr. FMV 6.490 127.065 824.65
3/31/89 Qtr. FMV 6.870 127.065 872.94
6/21/89 OID 127.065 14.82
6/30/89 Qtr. FMV 7.370 127.065 936.47
9/30/89 Qtr. FMV 8.240 127.065 1,047.01
12/15/89 OID & CG 127.065 11.67
12/31/89 Qtr. FMV 7.260 127.065 922.49
3/31/90 Qtr. FMV 7.240 127.065 919.95
6/20/90 OID 127.065 9.78
6/30/90 Qtr. FMV 7.670 127.065 974.59
9/30/90 Qtr. FMV 6.550 127.065 832.27
12/14/90 OID & CG 127.065 5.90
12/31/90 Qtr. FMV 6.820 127.065 866.58
3/31/91 Qtr. FMV 8.220 127.065 1,044.47
6/14/91 OID 127.065 10.51
6/30/91 Qtr. FMV 7.980 127.065 1,013.98
9/30/91 Qtr. FMV 8.450 127.065 1,073.70
12/13/91 OID & CG 127.065 2.12
12/31/91 Qtr. FMV 8.110 127.065 1,030.50
3/31/92 Qtr. FMV 7.660 127.065 973.32
6/30/92 Qtr. FMV 7.260 127.065 922.49
9/30/92 Qtr. FMV 7.420 127.065 942.82
12/15/92 OID & CG 127.065 5.52
12/31/92 Qtr. FMV 7.570 127.065 961.88
3/31/93 Qtr. FMV 7.940 127.065 1,008.89
6/30/93 Qtr. FMV 7.870 127.065 1,000.00
9/30/93 Qtr. FMV 8.310 127.065 1,055.91
12/14/93 OID & CG 127.065 5.47
12/31/93 Qtr. FMV 7.710 127.065 979.67
3/31/94 Qtr. FMV 7.410 127.065 941.55
6/30/94 Qtr. FMV 7.020 127.065 891.99
9/30/94 Qtr. FMV 7.270 127.065 923.76
12/19/94 OID & CG 127.065 8.93
12/31/94 Qtr. FMV 6.880 127.065 874.21
3/31/95 Qtr. FMV 7.330 127.065 931.39
6/30/95 Qtr. FMV 7.820 127.065 993.65
9/30/95 Qtr. FMV 8.540 127.065 1,085.13
12/20/95 OID & CG 127.065 32.95
12/31/95 Qtr. FMV 7.430 127.065 944.09
3/31/96 Qtr. FMV 8.140 127.065 1,034.31
6/30/96 Qtr. FMV 8.320 127.065 1,057.18
9/30/96 Qtr. FMV 8.480 127.065 1,077.51
12/18/96 OID & CG 127.065 34.91
12/31/96 Qtr. FMV 7.620 127.065 968.23
3/31/97 Qtr. FMV 7.630 127.065 969.50
6/30/97 Qtr. FMV 8.680 127.065 1,102.92
9/30/97 Qtr. FMV 9.440 127.065 1,199.49
12/17/97 OID & CG 127.065 43.29
12/31/97 Qtr. FMV 7.730 127.065 982.21
<CAPTION>
- ------------------------------------------------------------------------------------------
ACC ORDINARY OID ACC OID ACC OID
DATE DESCRIPTION INC DIV $ SHARES SHARES CURR FMV
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/87 Purchase
3/31/88 Qtr. FMV 0.000 0.00
6/15/88 OID 8.89 1.048 1.048
6/30/88 Qtr. FMV 1.048 8.93
9/30/88 Qtr. FMV 1.048 8.67
12/16/88 OID & CG 19.78 1.699 2.746
12/31/88 Qtr. FMV 2.746 17.82
3/31/89 Qtr. FMV 2.746 18.87
6/21/89 OID 34.61 1.987 4.733
6/30/89 Qtr. FMV 4.733 34.88
9/30/89 Qtr. FMV 4.733 39.00
12/15/89 OID & CG 46.27 1.643 6.377
12/31/89 Qtr. FMV 6.377 46.29
3/31/90 Qtr. FMV 6.377 46.17
6/20/90 OID 56.05 1.276 7.653
6/30/90 Qtr. FMV 7.653 58.70
9/30/90 Qtr. FMV 7.653 50.13
12/14/90 OID & CG 61.96 0.876 8.529
12/31/90 Qtr. FMV 8.529 58.17
3/31/91 Qtr. FMV 8.529 70.11
6/14/91 OID 72.47 1.261 9.790
6/30/91 Qtr. FMV 9.790 78.12
9/30/91 Qtr. FMV 9.790 82.72
12/13/91 OID & CG 74.58 0.286 10.076
12/31/91 Qtr. FMV 10.076 81.72
3/31/92 Qtr. FMV 10.076 77.18
6/30/92 Qtr. FMV 10.076 73.15
9/30/92 Qtr. FMV 10.076 74.76
12/15/92 OID & CG 80.10 0.755 10.830
12/31/92 Qtr. FMV 10.830 81.99
3/31/93 Qtr. FMV 10.830 85.99
6/30/93 Qtr. FMV 10.830 85.24
9/30/93 Qtr. FMV 10.830 90.00
12/14/93 OID & CG 85.57 0.732 11.562
12/31/93 Qtr. FMV 11.562 89.15
3/31/94 Qtr. FMV 11.562 85.68
6/30/94 Qtr. FMV 11.562 81.17
9/30/94 Qtr. FMV 11.562 84.06
12/19/94 OID & CG 94.49 1.324 12.887
12/31/94 Qtr. FMV 12.887 88.66
3/31/95 Qtr. FMV 12.887 94.46
6/30/95 Qtr. FMV 12.887 100.77
9/30/95 Qtr. FMV 12.887 110.05
12/20/95 OID & CG 127.45 4.514 17.401
12/31/95 Qtr. FMV 17.401 129.29
3/31/96 Qtr. FMV 17.401 141.64
6/30/96 Qtr. FMV 17.401 144.78
9/30/96 Qtr. FMV 17.401 147.56
12/18/96 OID & CG 162.35 4.673 22.074
12/31/96 Qtr. FMV 22.074 168.20
3/31/97 Qtr. FMV 22.074 168.42
6/30/97 Qtr. FMV 22.074 191.60
9/30/97 Qtr. FMV 22.074 208.38
12/17/97 OID & CG 205.65 5.615 27.689
12/31/97 Qtr. FMV 27.689 214.04
<CAPTION>
- ------------------------------------------------------------------------------------------
CAP GAIN ACC CAP CAP GAIN ACC CAP GAIN
DATE DESCRIPTION DIST $ GAIN DIST $ DIST SHARES DIST SHARES
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/87 Purchase
3/31/88 Qtr. FMV 0.00 0.000
6/15/88 OID 0.00 0.00 0.000 0.000
6/30/88 Qtr. FMV 0.00 0.000
9/30/88 Qtr. FMV 0.00 0.000
12/16/88 OID & CG 223.56 223.56 34.876 34.876
12/31/88 Qtr. FMV 223.56 34.876
3/31/89 Qtr. FMV 223.56 34.876
6/21/89 OID 0.00 223.56 0.000 34.876
6/30/89 Qtr. FMV 223.56 34.876
9/30/89 Qtr. FMV 223.56 34.876
12/15/89 OID & CG 193.34 416.90 27.231 62.107
12/31/89 Qtr. FMV 416.90 62.107
3/31/90 Qtr. FMV 416.90 62.107
6/20/90 OID 0.00 416.90 0.000 62.107
6/30/90 Qtr. FMV 416.90 62.107
9/30/90 Qtr. FMV 416.90 62.107
12/14/90 OID & CG 84.63 501.53 12.557 74.665
12/31/90 Qtr. FMV 501.53 74.665
3/31/91 Qtr. FMV 501.53 74.665
6/14/91 OID 0.00 501.53 0.000 74.665
6/30/91 Qtr. FMV 501.53 74.665
9/30/91 Qtr. FMV 501.53 74.665
12/13/91 OID & CG 287.67 789.20 38.926 113.591
12/31/91 Qtr. FMV 789.20 113.591
3/31/92 Qtr. FMV 789.20 113.591
6/30/92 Qtr. FMV 789.20 113.591
9/30/92 Qtr. FMV 789.20 113.591
12/15/92 OID & CG 159.97 949.17 21.883 135.474
12/31/92 Qtr. FMV 949.17 135.474
3/31/93 Qtr. FMV 949.17 135.474
6/30/93 Qtr. FMV 949.17 135.474
9/30/93 Qtr. FMV 949.17 135.474
12/14/93 OID & CG 174.96 1,124.12 23.421 158.895
12/31/93 Qtr. FMV 1,124.12 158.895
3/31/94 Qtr. FMV 1,124.12 158.895
6/30/94 Qtr. FMV 1,124.12 158.895
9/30/94 Qtr. FMV 1,124.12 158.895
12/19/94 OID & CG 101.16 1,225.28 15.009 173.904
12/31/94 Qtr. FMV 1,225.28 173.904
3/31/95 Qtr. FMV 1,225.28 173.904
6/30/95 Qtr. FMV 1,225.28 173.904
9/30/95 Qtr. FMV 1,225.28 173.904
12/20/95 OID & CG 445.67 1,670.95 61.051 234.955
12/31/95 Qtr. FMV 1,670.95 234.955
3/31/96 Qtr. FMV 1,670.95 234.955
6/30/96 Qtr. FMV 1,670.95 234.955
9/30/96 Qtr. FMV 1,670.95 234.955
12/18/96 OID & CG 534.98 2,205.94 71.618 306.573
12/31/96 Qtr. FMV 2,205.94 306.573
3/31/97 Qtr. FMV 2,205.94 306.573
6/30/97 Qtr. FMV 2,205.94 306.573
9/30/97 Qtr. FMV 2,205.94 306.573
12/17/97 OID & CG 685.85 2,891.78 88.955 395.528
12/31/97 Qtr. FMV 2,891.78 395.528
<CAPTION>
- ------------------------------------------------------------------------------------------
ACC CAP GAIN TOTAL SHARES TOTAL SHARES AVG ANN
DATE DESCRIPTION CURRENT FMV OWNED OWNED 12/31 FMV RETURN
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/87 Purchase 127.065
3/31/88 Qtr. FMV 0.00 127.065 1,021.60
6/15/88 OID 128.112
6/30/88 Qtr. FMV 0.00 128.112 1,091.52
9/30/88 Qtr. FMV 0.00 128.112 1,060.77
12/16/88 OID & CG 164.687
12/31/88 Qtr. FMV 226.35 164.687 1,068.82 3.3838%
3/31/89 Qtr. FMV 239.60 164.687 1,131.40
6/21/89 OID 166.674
6/30/89 Qtr. FMV 257.04 166.674 1,228.39
9/30/89 Qtr. FMV 287.38 166.674 1,373.40
12/15/89 OID & CG 195.549
12/31/89 Qtr. FMV 450.90 195.549 1,419.68 12.3908%
3/31/90 Qtr. FMV 449.66 195.549 1,415.77
6/20/90 OID 196.825
6/30/90 Qtr. FMV 476.36 196.825 1,509.65
9/30/90 Qtr. FMV 406.80 196.825 1,289.21
12/14/90 OID & CG 210.258
12/31/90 Qtr. FMV 509.21 210.258 1,433.96 9.4295%
3/31/91 Qtr. FMV 613.74 210.258 1,728.32
6/14/91 OID 211.519
6/30/91 Qtr. FMV 595.82 211.519 1,687.92
9/30/91 Qtr. FMV 630.92 211.519 1,787.34
12/13/91 OID & CG 250.732
12/31/91 Qtr. FMV 921.22 250.732 2,033.43 15.2513%
3/31/92 Qtr. FMV 870.11 250.732 1,920.60
6/30/92 Qtr. FMV 824.67 250.732 1,820.31
9/30/92 Qtr. FMV 842.84 250.732 1,860.43
12/15/92 OID & CG 273.369
12/31/92 Qtr. FMV 1,025.54 273.369 2,069.41 12.8862%
3/31/93 Qtr. FMV 1,075.67 273.369 2,170.55
6/30/93 Qtr. FMV 1,066.18 273.369 2,151.42
9/30/93 Qtr. FMV 1,125.79 273.369 2,271.70
12/14/93 OID & CG 297.523
12/31/93 Qtr. FMV 1,225.08 297.523 2,293.90 12.5928%
3/31/94 Qtr. FMV 1,177.42 297.523 2,204.64
6/30/94 Qtr. FMV 1,115.45 297.523 2,088.61
9/30/94 Qtr. FMV 1,155.17 297.523 2,162.99
12/19/94 OID & CG 313.855
12/31/94 Qtr. FMV 1,196.46 313.855 2,159.33 10.1006%
3/31/95 Qtr. FMV 1,274.72 313.855 2,300.56
6/30/95 Qtr. FMV 1,359.93 313.855 2,454.35
9/30/95 Qtr. FMV 1,485.14 313.855 2,680.33
12/20/95 OID & CG 379.421
12/31/95 Qtr. FMV 1,745.72 379.421 2,819.10 12.2050%
3/31/96 Qtr. FMV 1,912.54 379.421 3,088.49
6/30/96 Qtr. FMV 1,954.83 379.421 3,156.78
9/30/96 Qtr. FMV 1,992.42 379.421 3,217.49
12/18/96 OID & CG 455.712
12/31/96 Qtr. FMV 2,336.09 455.712 3,472.52 13.2569%
3/31/97 Qtr. FMV 2,339.15 455.712 3,477.08
6/30/97 Qtr. FMV 2,661.05 455.712 3,955.58
9/30/97 Qtr. FMV 2,894.05 455.712 4,301.92
12/17/97 OID & CG 550.282
12/31/97 Qtr. FMV 3,057.43 550.282 4,253.68 15.5784%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
FIVE YEARS
- ------------------------------------------------------------------------------------------------------
INITIAL DIVIDENDS CAP GAIN EXECUTION
DATE DESCRIPTION INVESTMENT PER SH. PER SH. PRICE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/92 Purchase $1,000.00 7.570
3/31/93 Qtr. FMV
6/30/93 Qtr. FMV
9/30/93 Qtr. FMV
12/14/93 OID & CG 0.020 0.640 7.470
12/31/93 Qtr. FMV
3/31/94 Qtr. FMV
6/30/94 Qtr. FMV
9/30/94 Qtr. FMV
12/19/94 OID & CG 0.030 0.340 6.740
12/31/94 Qtr. FMV
3/31/95 Qtr. FMV
6/30/95 Qtr. FMV
9/30/95 Qtr. FMV
12/20/95 OID & CG 0.105 1.420 7.300
12/31/95 Qtr. FMV
3/31/96 Qtr. FMV
6/30/96 Qtr. FMV
9/30/96 Qtr. FMV
12/18/96 OID & CG 0.092 1.410 7.470
12/31/96 Qtr. FMV
3/31/97 Qtr. FMV
6/30/97 Qtr. FMV
9/30/97 Qtr. FMV
12/17/97 OID & CG 0.095 1.505 7.710
12/31/97 Qtr. FMV
<CAPTION>
- ------------------------------------------------------------------------------------------------------
SHARES FROM VALUE OF ORDINARY INC
DATE DESCRIPTION NAV / SH INITIAL INV. SHARES DIVIDENDS $
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/92 Purchase 132.100
3/31/93 Qtr. FMV 7.940 132.100 1,048.88
6/30/93 Qtr. FMV 7.870 132.100 1,039.63
9/30/93 Qtr. FMV 8.310 132.100 1,097.75
12/14/93 OID & CG 132.100 2.64
12/31/93 Qtr. FMV 7.710 132.100 1,018.49
3/31/94 Qtr. FMV 7.410 132.100 978.86
6/30/94 Qtr. FMV 7.020 132.100 927.34
9/30/94 Qtr. FMV 7.270 132.100 960.37
12/19/94 OID & CG 132.100 3.96
12/31/94 Qtr. FMV 6.880 132.100 908.85
3/31/95 Qtr. FMV 7.330 132.100 968.30
6/30/95 Qtr. FMV 7.820 132.100 1,033.03
9/30/95 Qtr. FMV 8.540 132.100 1,128.14
12/20/95 OID & CG 132.100 13.87
12/31/95 Qtr. FMV 7.430 132.100 981.51
3/31/96 Qtr. FMV 8.140 132.100 1,075.30
6/30/96 Qtr. FMV 8.320 132.100 1,099.08
9/30/96 Qtr. FMV 8.480 132.100 1,120.21
12/18/96 OID & CG 132.100 12.15
12/31/96 Qtr. FMV 7.620 132.100 1,006.61
3/31/97 Qtr. FMV 7.630 132.100 1,007.93
6/30/97 Qtr. FMV 8.680 132.100 1,146.63
9/30/97 Qtr. FMV 9.440 132.100 1,247.03
12/17/97 OID & CG 132.100 20.40
12/31/97 Qtr. FMV 7.730 132.100 1,021.14
<CAPTION>
- ------------------------------------------------------------------------------------------------------
ACC ORDINARY OID ACC OID ACC OID
DATE DESCRIPTION INC DIV $ SHARES SHARES CURR FMV
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>>
12/31/92 Purchase
3/31/93 Qtr. FMV 0.000 0.00
6/30/93 Qtr. FMV 0.000 0.00
9/30/93 Qtr. FMV 0.000 0.00
12/14/93 OID & CG 0.00 0.354 0.000
12/31/93 Qtr. FMV 0.000 0.00
3/31/94 Qtr. FMV 0.000 0.00
6/30/94 Qtr. FMV 0.000 0.00
9/30/94 Qtr. FMV 0.000 0.00
12/19/94 OID & CG 0.00 0.588 0.000
12/31/94 Qtr. FMV 0.000 0.00
3/31/95 Qtr. FMV 0.000 0.00
6/30/95 Qtr. FMV 0.000 0.00
9/30/95 Qtr. FMV 0.000 0.00
12/20/95 OID & CG 0.00 1.900 0.000
12/31/95 Qtr. FMV 0.000 0.00
3/31/96 Qtr. FMV 0.000 0.00
6/30/96 Qtr. FMV 0.000 0.00
9/30/96 Qtr. FMV 0.000 0.00
12/18/96 OID & CG 0.00 1.627 0.000
12/31/96 Qtr. FMV 0.000 0.00
3/31/97 Qtr. FMV 0.000 0.00
6/30/97 Qtr. FMV 0.000 0.00
9/30/97 Qtr. FMV 0.000 0.00
12/17/97 OID & CG 0.00 2.646 0.000
12/31/97 Qtr. FMV 8.147 62.98
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CAP GAIN ACC CAP GAIN CAP GAIN DIST ACC CAP GAIN
DATE DESCRIPTION DIST $ DIST $ SHARES DIST SHARES
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/92 Purchase
3/31/93 Qtr. FMV 0.00 0.000
6/30/93 Qtr. FMV 0.00 0.000
9/30/93 Qtr. FMV 0.00 0.000
12/14/93 OID & CG 84.54 0.00 11.318 0.000
12/31/93 Qtr. FMV 0.00 0.000
3/31/94 Qtr. FMV 0.00 0.000
6/30/94 Qtr. FMV 0.00 0.000
9/30/94 Qtr. FMV 0.00 0.000
12/19/94 OID & CG 44.91 0.00 6.664 0.000
12/31/94 Qtr. FMV 0.00 0.000
3/31/95 Qtr. FMV 0.00 0.000
6/30/95 Qtr. FMV 0.00 0.000
9/30/95 Qtr. FMV 0.00 0.000
12/20/95 OID & CG 187.58 0.00 25.696 0.000
12/31/95 Qtr. FMV 0.00 0.000
3/31/96 Qtr. FMV 0.00 0.000
6/30/96 Qtr. FMV 0.00 0.000
9/30/96 Qtr. FMV 0.00 0.000
12/18/96 OID & CG 186.26 0.00 24.935 0.000
12/31/96 Qtr. FMV 607.31 82.680
3/31/97 Qtr. FMV 607.31 82.680
6/30/97 Qtr. FMV 607.31 82.680
9/30/97 Qtr. FMV 607.31 82.680
12/17/97 OID & CG 332.52 939.83 43.128 125.808
12/31/97 Qtr. FMV 939.83 125.808
<CAPTION>
- ------------------------------------------------------------------------------------------------------
ACC CAP GAIN TOTAL SHARES TOTAL SHARES AVG ANNUAL
DATE DESCRIPTION CURRENT FMV OWNED OWNED 12/31 FMV RETURN
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>>
12/31/92 Purchase 132.100
3/31/93 Qtr. FMV 0.00 132.100 1,048.88
6/30/93 Qtr. FMV 0.00 132.100 1,039.63
9/30/93 Qtr. FMV 0.00 132.100 1,097.75
12/14/93 OID & CG 132.100
12/31/93 Qtr. FMV 0.00 132.100 1,018.49 0.9205%
3/31/94 Qtr. FMV 0.00 132.100 978.86
6/30/94 Qtr. FMV 0.00 132.100 927.34
9/30/94 Qtr. FMV 0.00 132.100 960.37
12/19/94 OID & CG 132.100
12/31/94 Qtr. FMV 0.00 132.100 908.85 -3.1356%
3/31/95 Qtr. FMV 0.00 132.100 968.30
6/30/95 Qtr. FMV 0.00 132.100 1,033.03
9/30/95 Qtr. FMV 0.00 132.100 1,128.14
12/20/95 OID & CG 132.100
12/31/95 Qtr. FMV 0.00 132.100 981.51 -0.4656%
3/31/96 Qtr. FMV 0.00 132.100 1,075.30
6/30/96 Qtr. FMV 0.00 132.100 1,099.08
9/30/96 Qtr. FMV 0.00 132.100 1,120.21
12/18/96 OID & CG 132.100
12/31/96 Qtr. FMV 630.02 214.780 1,636.63 10.3545%
3/31/97 Qtr. FMV 630.85 214.780 1,638.77
6/30/97 Qtr. FMV 717.66 214.780 1,864.29
9/30/97 Qtr. FMV 780.50 214.780 2,027.53
12/17/97 OID & CG 257.908
12/31/97 Qtr. FMV 972.50 266.055 2,056.61 15.5129%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
ONE YEAR
- --------------------------------------------------------------------------------------
INITIAL DIVIDENDS CAP GAIN EXECUTION
DATE DESCRIPTION INVESTMENT PER SH. PER SH. PRICE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/96 Purchase $1,000.00 7.620
3/31/97 Qtr. FMV
6/30/97 Qtr. FMV
9/30/97 Qtr. FMV
12/17/97 OID & CG 0.095 1.505 7.710
12/31/97 Qtr. FMV
<CAPTION>
- --------------------------------------------------------------------------------------
SHARES FROM VALUE OF ORDINARY INC
DATE DESCRIPTION NAV / SH INITIAL INV. SHARES DIVIDENDS $
- --------------------------------------------------------------------------------------
12/31/96 Purchase 131.233
3/31/97 Qtr. FMV 7.630 131.233 1,001.31
6/30/97 Qtr. FMV 8.680 131.233 1,139.10
9/30/97 Qtr. FMV 9.440 131.233 1,238.84
12/17/97 OID & CG 131.233 12.47
12/31/97 Qtr. FMV 7.730 131.233 1,014.43
<CAPTION>
- --------------------------------------------------------------------------------------
ACC ORDINARY OID ACC OID ACC OID
DATE DESCRIPTION INC DIV $ SHARES SHARES CURR FMV
- --------------------------------------------------------------------------------------
12/31/96 Purchase
3/31/97 Qtr. FMV
6/30/97 Qtr. FMV
9/30/97 Qtr. FMV
12/17/97 OID & CG 0.00 1.617 0.000
12/31/97 Qtr. FMV 0.000 0.00
<CAPTION>
- --------------------------------------------------------------------------------------
CAP GAIN ACC CAP CAP GAIN ACC CAP GAIN
DATE DESCRIPTION DIST $ GAIN DIST $ DIST SHARES DIST SHARES
- --------------------------------------------------------------------------------------
12/31/96 Purchase
3/31/97 Qtr. FMV
6/30/97 Qtr. FMV
9/30/97 Qtr. FMV
12/17/97 OID & CG 197.30 0.00 25.590 0.000
12/31/97 Qtr. FMV 0.00 0.000
<CAPTION>
- --------------------------------------------------------------------------------------
ACC CAP GAIN TOTAL SHARES TOTAL SHARES AVG ANNUAL
DATE DESCRIPTION CURRENT FMV OWNED OWNED 12/31 FMV RETURN
- --------------------------------------------------------------------------------------
12/31/96 Purchase 131.233
3/31/97 Qtr. FMV 131.233
6/30/97 Qtr. FMV 131.233
9/30/97 Qtr. FMV 131.233
12/17/97 OID & CG 158.440
12/31/97 Qtr. FMV 0.00 158.440 1,224.74 22.47%
</TABLE>
<PAGE>
ARK ASSET MANAGEMENT
10 YR ANNUALIZED RETURN:
NO SALES FEE
<TABLE>
<CAPTION>
RETURN FOR VALUE VALUE WITH RETURN WITH
PERIOD PURCHASE PERIOD EXPENSE RATIO EXPENSE RATIO EXPENSE RATIO
- -------------------------------------------------------------------------------------------------------------------------
10000
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1/1/88-12/31/88 $10,000.00 21.04% $12,104.00 $11,982.96 19.84%
1/1/89-12/31/89 11,982.96 25.33% 15,018.24 $14,838.02 24.13%
1/1/90-12/31/90 14,838.02 1.89% 15,118.46 $14,937.04 0.69%
1/1/91-12/31/91 14,937.04 18.71% 17,731.76 $17,536.71 17.61%
1/1/92-12/31/92 17,536.71 18.15% 20,719.63 $20,491.71 17.05%
1/1/93-12/31/93 20,491.71 17.40% 24,057.27 $23,814.29 16.30%
1/1/94-12/31/94 23,814.29 2.80% 24,481.09 $24,211.80 1.70%
1/1/95-12/31/95 24,211.80 38.47% 33,526.08 $33,157.29 37.37%
1/1/96-12/31/96 33,157.29 24.53% 41,290.77 $40,877.87 23.53%
1/1/97-12/31/97 40,877.87 23.57% 50,512.78 $50,058.16 22.67%
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT: $10,000.00 AVG ANNUAL RETURN: 17.48%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
5 YR ANNUALIZED RETURN: NO SALES FEE
<TABLE>
<CAPTION>
RETURN FOR VALUE B-4 VALUE WITH
PERIOD PURCHASE PERIOD EXPENSE RATIO EXPENSE RATIO
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1/1/93-12/31/93 $1,000.00 17.40% $1,174.00 $1,162.14
1/1/94-12/31/94 1,162.14 2.80% 1,194.68 $1,181.54
1/1/95-12/31/95 1,181.54 38.47% 1,636.08 $1,618.08
1/1/96-12/31/96 1,618.08 24.53% 2,015.00 $1,994.85
1/1/97-12/31/97 1,994.85 23.57% 2,465.03 $2,442.85
- ---------------------------------------------------------------------------------------------------------
INVESTMENT: $1,000.00 AVERAGE ANNUAL RETURN: 19.56%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
1 YR ANNUALIZED RETURN: NO SALES FEE
<TABLE>
<CAPTION>
RETURN FOR VALUE B-4 VALUE WITH
PERIOD PURCHASE PERIOD EXPENSE RATIO EXPENSE RATIO
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1/1/97-12/31/97 $1,000.00 23.57% $1,224.70 $1,223.34
- ---------------------------------------------------------------------------------------------------------
INVESTMENT: $1,000.00 AVERAGE ANNUAL RETURN: 22.67%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
POWER OF ATTORNEY
WHEREAS, AMWAY MUTUAL FUND TRUST (herein referred to as the Trust), intends
to file with the Securities and Exchange Commission, under the provisions of the
Securities Act of 1933, as amended, and of the Investment Company Act of 1940,
as amended, its Registration Statement relating to the sale of shares of
beneficial interest in Amway Mutual Fund (the "Fund"); and
WHEREAS, each of the undersigned holds the office or offices in the Trust
herein below set opposite his name, respectively;
WHEREAS, THEREFORE, each of the undersigned hereby constitutes and appoints
JAMES J. ROSLONIEC, individually, his attorney, with full power to act for him
and in his name, place, and stead to sign his name, in the capacity or
capacities set forth below, to the Registration Statement, relating to the sale
of shares of beneficial interest in the Fund, and to any and all amendments to
such Registration Statement, and hereby ratifies and confirms all that said
attorney may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 9th
day of February, 1998.
Richard A. DeWitt, Trustee /s/ Richard A. DeWitt
Donald H. Johnson, Trustee /s/ Donald H. Johnson
Walter T. Jones, Trustee /s/ Walter T. Jones
STATE OF MICHIGAN}
}SS
COUNTRY OF KENT }
I, Patricia S. Grooters, a Notary Public in and for the County and State
aforesaid, do hereby certify that the above-named Trustees, RICHARD A. DE WITT,
DONALD H. JOHNSON, and WALTER T. JONES, of AMWAY MUTUAL FUND TRUST, known to me
and to be the same persons whose names are subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he
executed the same instrument as his free and voluntary act and deed, for the
uses and purposes therein set forth.
IN WITNESS WHEREOF, I have hereto set my hand and notarial seal this 9th
day of February, 1998.
/s/ Patricia S. Grooters
-------------------------
Patricia S. Grooters
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 25. Persons Controlled by or under Common Control with Registrant
Not Applicable.
ITEM 26. Number of Holders of Securities
Listed below is the number of Amway Mutual Fund, Inc. common stock
shareholders as of December 31, 1997. Common stock with a par value
of $1 is the only class of stock issued.
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock 18,694
ITEM 27. Indemnification
Indemnification is covered in Section 9 of the Principal Underwriter
Agreement between Amway Mutual Fund and Amway Management Company,
which is filed as an exhibit hereto. Also, a Joint Directors and
Officers Liability Insurance Policy for Amway Management Company and
Amway Mutual Fund. is provided by those entities. The Sixth Article
of the Agreement and Declaration of Trust of Amway Mutual Fund, which
is filed as an exhibit hereto, provides for indemnification for any
person to the extent permitted by law.
ITEM 28. Business and Other Connections of Investment Adviser.
Amway Management Company acts as the investment advisor, principal
underwriter, and transfer agent for Amway Mutual Fund and as a
servicing agent for the Cash Equivalent Fund.
Business histories of each Director and Officer of the Investment
Adviser of the Registrant has been attached hereto on Pages C-__
through C-__.
Business histories of the Sub-Adviser for the Registrant and of each
of its Directors and Officers have been attached on Pages C-__ through
C-__.
ITEM 29. Principal Underwriter
(a) The principal underwriter, Amway Management Company, acts as such
only for Amway Mutual Fund. Listed below is the information required
pertaining to the individual Directors and Officers of the principal
underwriter. There is no other principal underwriter.
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 29. Principal Underwriter (continued)
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Office Position and Offices
Business Address With Underwriter With Registrant
------------------ -------------------- --------------------
<S> <C> <C>
James J. Rosloniec Vice President, Treasurer President, Treasurer
7575 Fulton Street, East and Director and Director
Ada, MI 49355-0001
Allan D. Engel President, Secretary and Secretary and Assistant
7575 Fulton Street, East Director Treasurer
Ada, MI 49355-7150
</TABLE>
(c) Not Applicable.
ITEM 30. Location of Accounts and Records
With respect to each account, book, or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR
270.31a-1 to 31a-3) promulgated thereunder, all transfer agent and
shareholder records are in the custody and control of Amway Management
Company., Ada, Michigan, pursuant to the Common Records Agreement
Among Amway Mutual Fund and Amway Management Company, all portfolio
securities held or in transfer are under the control of the Custodian,
Michigan National Bank, Grand Rapids, Michigan; all portfolio security
records and brokerage records related thereto are in the custody and
control of Amway Management Company, Ada, Michigan, or Ark Asset
Management Company, Inc., the Sub-Adviser, pursuant to the
Sub-Advisory Agreement; and all remaining records are in the custody
and control of Amway Mutual Fund, Ada, Michigan.
ITEM 31. Management Services
Amway Management Company has entered into a contract with DST, Inc.
which provides access to a data processing recordkeeping system for
stockholder accounting. The system provides and supports remote
terminal access to DST facilities for the maintenance of stockholder
records, processing of information, and the generation of output with
respect thereto. Pursuant to this agreement, Amway Management has
paid to DST, including equipment costs, telephone lines, and service
fees for the three years ending August 31, 1997, the fiscal year-end,
a total of $279,930.59.
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 32. Undertakings
(a) Not applicable
(b) Not applicable
(c) Amway Mutual Fund undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Fund's latest Annual Report
to Shareholders, upon request and without charge.
<PAGE>
SCHEDULE RE EDUCATION AND BUSINESS HISTORY - ALLAN D. ENGEL
EDUCATION:
North High School, Omaha, Nebraska
Creighton University, Omaha, Nebraska, BSBA 1974
Creighton University, Omaha, Nebraska, JD 1976
POSITIONS:
November 1975 to November 1978, Elmer Fox Westheimer & Co., 7171 Mercy
Road, Omaha, Nebraska 68106, Certified Public Accountant, Tax-Staff.
November 1978 to October 1991, Amway Corporation, 7575 East Fulton Road,
Ada, Michigan 49355, Manager-Financial Projects.
December 1980 to April 18, 1988, Amway Management Company, 7575 East Fulton
Road, Ada, Michigan 49355, Secretary and Assistant Treasurer.
November 1980 to December 1980, Amway Stock Transfer Co., 7575 East Fulton
Road, Ada, Michigan 49355, Assistant Secretary and Assistant Treasurer.
November 1990 to June 1991, DeVos Foundation, 7575 East Fulton Road, Ada,
Michigan 49355, Assistant Treasurer.
December 1986 to December 1994, Amway Corporation Hourly Employees' Pension
Plan, 7575 East Fulton Road, Ada, Michigan 49355, Trustee.
January 1993 to September 1994, Eastbank Corp., 7575 East Fulton Road, Ada,
Michigan 49355, Secretary and Assistant Treasurer.
December 1991 to December 1995, Peter Island Hotel, Inc., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, owns and operates
Peter Island Yacht Club, Secretary and Assistant Treasurer.
December 1980 continuing, Amway Stock Transfer Co., 7575 East Fulton Road,
Ada, Michigan 49355, Secretary and Assistant Treasurer.
December 1980 continuing, Amway Mutual Fund, Inc., 7575 East Fulton Road,
Ada, Michigan 49355, Secretary and Assistant Treasurer.
March 1984 continuing, Amway Mutual Fund, Inc. 7575 East Fulton Road, Ada,
Michigan 49355, Director.
April 18, 1988 continuing, Amway Management Company, 7575 East Fulton Road,
Ada, Michigan 49355, President, Secretary and Director.
October 1991 continuing, Amway Corporation, 7575 East Fulton Road, Ada,
Michigan 49355, Senior Manager-Investments & Real Estate.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - ALLAN D. ENGEL
-2-
December 1991 continuing, Amway Capital Corp., 7575 East Fulton Road, Ada,
Michgian 49355, Secretary and Assistant Treasurer.
December 1991 continuing, Amway Grand Plaza Association, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Secretary and
Assistant Treasurer.
December 1991 continuing, Amway Hotel Corporation, 7575 East Fulton Road,
Ada, Michigan 49355, Secretary and Assistant Treasurer.
December 1991 continuing, Amway Properties Corporation, 7575 East Fulton
Road, Ada, Michigan 49355, Ada, Michigan 49355, Secretary and Assistant
Treasurer.
December 1991 continuing, H.I., Inc., c/o Amway Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, Secretary and Assistant Treasurer.
December 1991 continuing, Ja-Ri Corporation, 7575 East Fulton Road, Ada,
Michigan 49355, Secretary and Assistant Treasurer.
December 1991 continuing, Peter Island Estate Ltd., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, owns and operates Peter Island
Yacht Club, Secretary and Assistant Treasurer.
December 1991 continuing, Ultimate Marketing Corp., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, Secretary and Assistant
Treasurer.
December 1991 continuing, Amway Stock Transfer Co., 7575 East Fulton Road,
Ada, Michigan 49355, Director.
November 1992 continuing, Amway Export VA, Co., 7575 East Fulton Road, Ada,
Michigan 49355, Secretary and Assistant Treasurer.
November 1992 continuing, Amway Real Estate Corp., 7575 East Fulton Road,
Ada, Michigan 49355, Secretary and Assistant Treasurer.
December 1992 continuing, Jay and Betty Van Andel Foundation, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Secretary and
Assistant Treasurer.
January 1993 continuing, Meadowbrooke Corp., 7575 East Fulton Road, Ada,
Michigan 49355, Secretary and Assistant Treasurer.
January 1993 continuing, Auric Corp., 7575 East Fulton Road, Ada, Michigan
49355, Secretary and Assistant Treasurer.
April 1993 continuing, Emerald Maritime Service, Inc., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Secretary and
Assistant Treasurer.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - ALLAN D. ENGEL
-3-
April 1993 continuing, Enterprise Inc., c/o Amway Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, Secretary and Assistant Treasurer.
September 1994 continuing, Plaza Towers Corp., 7575 East Fulton Road, Ada,
Michigan 49355, Vice President, Secretary, and Director.
May 1995 continuing, Aviation, Inc., 7575 East Fulton Road, Ada, Michigan
49355, Secretary, Assistant Treasurer and Director.
May 1995 continuing, Magic Carpet Aviation, 7575 East Fulton Road, Ada,
Michigan 49355, Secretary, Assistant Treasurer and Director.
September 1995 continuing, Amway Grand Plaza Association, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Director.
September 1995 continuing, Amway Properties Corporation, 7575 East Fulton
Road, Ada, Michigan 49355, Vice President and Director.
September 1995 continuing, Amway Real Estate Corp., 7575 East Fulton Road,
Ada, Michigan 49355, Vice President and Director.
September 1995 continuing, Auric Corp., 7575 East Fulton Road, Ada,
Michigan 49355, Vice President and Director.
September 1995 continuing, Aviation, Inc., 7575 East Fulton Road, Ada,
Michigan 49355, Vice President.
September 1995 continuing, Emerald Maritime Service, Inc., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Director.
September 1995 continuing, Enterprise, Inc., c/o Amway Corporation, 7575
East Fulton Road, Ada, Michigan 49355, Vice President and Director..
September 1995 continuing, Magic Carpet Aviation, 7575 East Fulton Road,
Ada, Michigan 49355, Vice President.
September 1995 continuing, Meadowbrooke Corp., 7575 East Fulton Road, Ada,
Michigan 49355, Vice President and Director.
September 1995 continuing, Peter Island Estate Ltd., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, owns and operates Peter Island
Yacht Club, Vice President and Director.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - ALLAN D. ENGEL
-4-
September 1995 continuing, Ultimate Marketing Corp., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, Vice President and Director.
September 1996, continuing, Amway Mutual Fund, Inc., 7575 East Fulton Road,
Ada, Michigan 49355, Vice-President, Secretary and Assistant Treasurer.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - JAMES J. ROSLONIEC
EDUCATION:
Catholic Central High School, Grand Rapids, Michigan
Davenport College, Grand Rapids, Michigan, AS Degree 1965
Central Michigan University, Mt. Pleasant, Michigan, BS Degree 1968
POSITIONS:
1968-1970 Staff Member of C.H. Vannatter, CPA, Grand Rapids, Michigan
1970-1972 Senior Internal Auditor of Gulf & Western Industries, Inc.,
Grand Rapids, Michigan
1972-1974 Controller of Furniture City Manufacturing (a Gulf & Western
subsidiary), Grand Rapids, Michigan
1974-1979 Manager of Internal Audit of Amway Corporation, Ada,
Michigan
1979-1991 Vice President-Finance and Treasurer of Amway Corporation,
Ada, Michigan
1991-Present Vice President-Audit and Control of Amway Corporation, Ada,
Michigan
December 8, 1980 to March 22, 1984, Amway Management Company, 7575 East
Fulton Road, Ada, Michigan 49355, Vice President and Treasurer.
December 8, 1980 to March 22, 1984, Amway Stock Transfer Co., 7575 East
Fulton Road, Ada, Michigan 49355, Vice President and Treasurer.
December 8, 1980 to March 22, 1984, Amway Mutual Fund, Inc., 7575 East
Fulton Road, Ada, Michigan 49355, open-end investment company, President
and Treasurer.
January 13, 1993 to September 28, 1994, Eastbank Corp., c/o Amway
Corporation 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Treasurer.
March 23, 1984 to April 18, 1988, Amway Management Company, 7575 East
Fulton Road, Ada, Michigan 49355, President, Treasurer, and Director.
June 9, 1978 continuing, Amway Stock Transfer Co, 7575 East Fulton Road,
Ada, Michigan 49355, President, Treasurer, and Director.
November 16, 1979 continuing, Amway Hotel Corporation, 7575 East Fulton
Road, Ada, Michigan 49355, owns all issued and outstanding stock of
Pantlind Hotel Company, Vice President and Treasurer.
November 16, 1979 continuing, Amway Properties Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, Vice President and Treasurer.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - JAMES J. ROSLONIEC
-2-
November 16, 1979 continuing, Ja-Ri Corporation, 7575 East Fulton Road,
Ada, Michigan 49355, sale of food supplements and real estate holding
company, Treasurer.
November 16, 1979 continuing, Peter Island Estate Ltd., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, owns and operates
Peter Island Yacht Club, Vice President and Treasurer.
November 16, 1979 continuing, Peter Island Hotel, Inc., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Treasurer.
June 2, 1980 continuing, Enterprise, Inc., c/o Amway Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, Vice President and Treasurer.
June 5, 1980 continuing, Emerald Maritime Service, Inc., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Treasurer.
September 18, 1980 continuing, Amway Grand Plaza Association, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Treasurer.
March 22, 1984 continuing, Amway Mutual Fund, Inc., 7575 East Fulton Road,
Ada, Michigan 49355, open-end investment company, President, Treasurer, and
Director.
January 27, 1986 continuing, Ultimate Marketing Corp., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Treasurer.
January 18, 1988 continuing, Amway Capital Corporation, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Vice President and
Treasurer.
September 18, 1989 continuing, H.I., Inc., c/o Amway Corporation, 7575 East
Fulton Road, Ada, Michgian 49355, Vice President and Treasurer.
May 15, 1990 continuing, Amway Environmental Foundation, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Treasurer.
December 13, 1991 continuing, Ja-Ri Corporation, c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, Vice President
August 31, 1992 continuing, Amway Export DV, Co., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michgian 49355, Treasurer.
November 12, 1992 continuing, Amway Export VA, Co., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, Vice President, Treasurer and
Director.
November 23, 1992 continuing, Amway Real Estate Corp., 7575 East Fulton
Road, Ada, Michigan 49355, Vice President and Treasurer.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - JAMES J. ROSLONIEC
-3-
December 11, 1992 continuing, Jay and Betty Van Andel Foundation, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, Treasurer.
January 13, 1993 continuing, Auric Corp., c/o Amway Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, Vice President and Treasurer.
January 13, 1993 continuing, Meadowbrooke Corp., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan, Vice President and Treasurer.
September 28, 1994 continuing, Eastbank Corp., c/o Amway Corporation, 7575
East Fulton Road, Ada, Michigan 49355, President, Treasurer, and Director.
May 2, 1995 continuing, Aviation, Inc., 7575 East Fulton Road, Ada,
Michigan 49355, Treasurer.
May 2, 1995 continuing, Magic Carpet Aviation, Inc., 7575 East Fulton Road,
Ada, Michigan 49355, Treasurer.
September 1, 1995 continuing, Amway Grand Plaza Association, c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, President and
Director.
September 1, 1995 continuing, Amway Hotel Corporation, 7575 East Fulton
Road, Ada, Michigan 49355, Director.
September 1, 1995 continuing, Amway Properties Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, President.
September 1, 1995 continuing, Amway Real Estate Corp., 7575 East Fulton
Road, Ada, Michigan 49355, President and Director.
September 1, 1995 continuing, Auric Corp., c/o Amway Corporation, 7575 East
Fulton Road, Ada, Michigan 49355, President and Director.
September 1, 1995 continuing, Aviation, Inc., 7575 East Fulton Road, Ada,
Michigan 49355, President and Director.
September 1, 1995 continuing, Emerald Maritime Service, Inc., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, President and
Director.
September 1, 1995 continuing, Enterprise, Inc., c/o Amway Corporation, 7575
East Fulton Road, Ada, Michigan 49355, President and Director.
September 1, 1995 continuing, Magic Carpet Aviation, Inc., 7575 East Fulton
Road, Ada, Michigan 49355, President and Director.
September 1, 1995 continuing, Meadowbrooke Corp., c/o Amway Corporation,
7575 East Fulton Road, Ada, Michigan 49355, President and Director.
<PAGE>
SCHEDULE RE BUSINESS AND EDUCATION HISTORY - JAMES J. ROSLONIEC
-4-
September 1, 1995 continuing, Peter Island Estate Ltd., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, President
and Director.
September 1, 1995 continuing, Ultimate Marketing Corp., c/o Amway
Corporation, 7575 East Fulton Road, Ada, Michigan 49355, President
and Director.
PROFESSIONAL ACTIVITIES:
Member of Advisory Board to the Dean of Business Administration,
Central Michigan University
Board of Directors of the American Cancer Society, Kent County Unit
Chairman of Development Task Force with American Cancer Society -
Michigan Division
Member of Advisory Board to the Accounting School, Grand Valley State
University
Board of Directors of the Protection Mutual Insurance Co.
Member of Board at Blythefield Country Club.
<PAGE>
ARK ASSET MANAGEMENT CO., INC.
LARGE CAP VALUE TEAM BIOGRAPHIES
CLIENT COMMUNICATIONS
Joseph P. Scanlon, Jr., Managing Director
B.S., M.B.A., Graduate Assistant-Economics, St John's University (1973)
Managing Director, Equity Portfolio Management Services, Ark Asset
management Co., Inc. (1989-Present)
Senior Vice President, Lehman management Co., Inc. (1983-1989)
Vice President, Director of New Business/Client Servicing, Institutional
Investment Division, Citibank (1978-1982)
Vice President, Director of Marketing, Asset Management Division, Loeb
Rhoades & Co., Inc. (1974-1978)
PORTFOLIO MANAGERS
C. Charles Hetzel, CFA, Vice-Chairman
B.S., University of Utah (1963)
M.B.A., Columbia Graduate School of Business Admin. (1965)
Vice-Chairman, Ark Asset Management Co., Inc. (1989-Present)
Vice-Chairman, Lehman Management Co., Inc. (1985-1989)
President, The Lehman Corporation
Vice-Chairman, The Lehman Investors Fund, Inc. (1984-1985)
Executive Vice President & Director, Lehman Management Co., Inc.
(1974-1984)
Managing Director, Lehman Brothers, Executive Vice President & Director,
The One William Street Fund (1973-1984)
Vice President & Director of Research, The Lehman Corporation (1970-1973)
Security Analyst, The Lehman Corporation (1965-1970)
John E. Bailey, CFA, Managing Director
B.A., University of Pennsylvania (1973-1976)
M.B.A., Harvard Business School (1978-1980)
Managing Director, Ark Asset Asset Management Co., Inc. (1993-Present)
Equity Portfolio Manager, Managing Partner (Pasadena Office), Loomis,
Sayles (1984-1993)
Equity Portfolio Manager, First Pacific Advisors (1980-1983)
Lending Representative, National Bank of North America (1976-1978)
<PAGE>
ARK ASSET MANAGEMENT CO., INC.
LARGE CAP VALUE TEAM BIOGRAPHIES
-2-
PORTFOLIO MANAGERS
Steven M. Steiner, Managing Director
B.S., Pennsylvania State University (1965)
M.B.A., Northwestern Graduate School of Management (1966)
Managing Director, Ark Asset Management Co., Inc. (1990-Present)
Managing Director, Equitable Capital management Corp. (1986-1990)
Managing Director, Equitable Investment Management Corp. (1981-1986)
Portfolio Manager, Neuberger & Berman (1981)
Vice President, Equitable Life (1969-1980)
1st Lieutenant, U.S. Army (1966-1968)
William G. Steuernagel, CFA, Managing Director
B.S., M.B.A., Boston University (1972)
Managing Director, Ark Asset Management Co., Inc. (1993-Present)
Senior Manager & Portfolio Manager, Ark Asset Management Co., Inc.
(1989-1993)
First Vice President & Analyst/Portfolio Manager, Lehman Management Co.,
Inc. (1988-1989)
Vice President & Analyst/Portfolio Manager, Butler Capital (1987-1988)
First Vice President & Security Analyst, Lehman Management Co., Inc.
(1983-1987)
Senior Investment Officer, Mellon Bank East (1972-1983)
James G. Pontone, Senior Manager
B.A., Skidmore College (1982)
M.B.A., New York University, Stern School of Business (1989)
Portfolio Manager, Ark Asset Management Co., Inc. (1995-Present)
Portfolio Manager/Analyst, Mitchell Hutchins Institutional Investors (1994)
Vice President, Mitchell Hutchins Institutional Investors (1992-1994)
Associate, Morgan Stanley Asset Management (1991-1992)
Assistant Trader, Spear, Leeds & Kellogg, Inc. (1986-1987)
Investment Executive, Paine Webber, Inc. (1985-1986)
Registered Representative, Merrill Lynch & Co. (1983-1985)
<PAGE>
AMWAY MUTUAL FUND
FORM N-1A
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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(a) 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,
thereto duly authorized in the Township of Ada, and State of Michigan, on the
day of February 23, 1998.
- --------------------------------------------------------------------------------
AMWAY MUTUAL FUND, INC.
- --------------------------------------------------------------------------------
By /s/ James J. Rosloniec
--------------------------
JAMES J. ROSLONIEC
President
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the date
indicated:
- --------------------------------------------------------------------------------
Signature Title and Capacity Date
- --------------------------------------------------------------------------------
/s/James J. Rosloniec Principal Executive and February 23, 1998
- ------------------------- Financial Officer -----------------
JAMES J. ROSLONIEC and Director
/s/ Allan D. Engel Principal Accounting February 23, 1998
- ------------------------- Officer and Director -----------------
ALLAN D. ENGEL
RICHARD A. DEWITT Director
DONALD H. JOHNSON Director
WALTER T. JONES Director
By /s/ James J. Rosloniec February 23, 1998
- -------------------------- -----------------
JAMES J. ROSLONIEC
(Attorney-in-Fact)
