<PAGE>
As filed with the Securities and Exchange Commission on November 29, 1996
REGISTRATION NO. 33-18278
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 8
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CIRCUS CIRCUS ENTERPRISES, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0121916
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
2880 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(702) 734-0410
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE AND TELEPHONE NUMBER)
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CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING AND INVESTMENT PLAN
----------------
YVETTE LANDAU, GENERAL COUNSEL
CIRCUS CIRCUS ENTERPRISES, INC.
2880 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(702) 734-0410
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPY TO:
HOWELL J. REEVES, ESQUIRE
WOLF, BLOCK, SCHORR AND SOLIS-COHEN
TWELFTH FLOOR, PACKARD BUILDING
15TH AND CHESTNUT STREETS
PHILADELPHIA, PENNSYLVANIA 19102-2678
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<PAGE>
PROSPECTUS
LOGO
CIRCUS CIRCUS ENTERPRISES, INC.
2,700,000 SHARES
OF
COMMON STOCK
($.01 2/3PAR VALUE)
----------------
CIRCUS CIRCUS EMPLOYEES'
PROFIT SHARING AND INVESTMENT PLAN
----------------
This Prospectus covers interests in the Circus Circus Employees' Profit
Sharing and Investment Plan (the "Plan") as well as 2,700,000 shares of Common
Stock, $.01 2/3 par value, of Circus Circus Enterprises, Inc. (the "Company")
which may be acquired pursuant to the Plan as more fully set forth herein.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES 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.
----------------
NEITHER THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING
CONTROL BOARD, THE MISSISSIPPI GAMING COMMISSION NOR ANY OTHER
GAMING REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE
SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE CON-
TRARY IS UNLAWFUL.
----------------
The date of this Prospectus is November 29, 1996.
<PAGE>
ADDITIONAL INFORMATION
The Company has filed a Registration Statement with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, with respect to the shares offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, including the financial schedules and exhibits filed or
incorporated as a part thereof. Items of information omitted from this
Prospectus but contained in the Registration Statement may be inspected and
copies may be obtained (at prescribed rates) at the Commission's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied (at prescribed
rates) at the Public Reference Section offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, Suite 1300, New York, New York
10048. In addition, the Company's Common Stock is listed on the New York Stock
Exchange and the Pacific Stock Exchange and similar information concerning the
Company can be inspected and copied at the New York Stock Exchange, 20 Broad
Street, New York, New York 10005 and at the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California 94104.
No person is authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
described herein, and any information or representation not contained herein
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell these securities in any state
to any person to whom it is unlawful to make such offer in such state. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that information herein is correct as of
any time subsequent to its date.
GENERAL INFORMATION
This Prospectus relates to interests in the Circus Circus Employees' Profit
Sharing and Investment Plan of Circus Circus Enterprises, Inc., and its
participating subsidiaries, and to shares of the Company's Common Stock, $.01
2/3 par value ("Common Stock"), which may be purchased by the Trustee or
contributed by the Employer pursuant to the Plan. The Company is a Nevada
corporation having its principal executive offices located at 2880 Las Vegas
Boulevard South, Las Vegas, Nevada 89109 (telephone number 702-734-0410). The
principal provisions of the Plan are summarized in this Prospectus.
2
<PAGE>
DEFINITIONS
The following terms, as used in this Prospectus, have the following
meanings:
"Account" means, as required by the context, the entire amount held from
time to time for the benefit of any one Participant, or the portion thereof
attributable to Savings Contributions, Matching Contributions, Automatic
Contributions, Discretionary Contributions or Rollover Contributions, as well
as ESOP Matching Contributions, ESOP Automatic Contributions, 401(k) Automatic
Contributions and 401(k) Matching Contributions made under Plan provisions
previously in effect.
"Actual Contribution Percentage" means, with respect to a group of
Participants for a Plan Year, the average of the ratios (calculated separately
for each member of the group) of the amount of Matching Contributions on
behalf of each Participant who is a member of such group (other than Family
Members of certain Highly Compensated Employees for Plan Years beginning
before January 1, 1997) to the amount of the Compensation for each Participant
who is a member of such group for the Plan Year.
"Actual Deferral Percentage" means, with respect to a group of Participants
for a Plan Year, the average of the ratios (calculated separately for each
member of the group) of the amount of Savings Contributions on behalf of each
Participant who is a member of such group (other than Family Members of
certain Highly Compensated Employees for Plan Years beginning before January
1, 1997) to the amount of the Compensation for each Participant who is a
member of such group for the Plan Year.
"Agreement of Trust" means the Fifth Amendment and Restatement of the Circus
Circus Employees' Profit Sharing and Investment Trust entered into between the
Company and the Trustee effective as of January 1, 1996, except as otherwise
provided therein, as it may be amended from time to time.
"Automatic Contribution" means, as the context requires, the Automatic
Contribution, or for Plan Years beginning on or after January 1, 1989 and
ending prior to January 1, 1996, the ESOP Automatic Contribution, or for Plan
Years beginning prior to January 1, 1989, the 401(k) Automatic Contribution.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
statute.
"Company" means Circus Circus Enterprises, Inc., or its successors.
"Compensation" means regular salaries and wages, overtime pay, bonuses and
commissions paid or accrued by an Employer, tips declared by or distributed to
an Employee while performing services for an Employer, Savings Contributions
to this Plan, and elective contributions to any plan maintained by an Employer
pursuant to Section 125 of the Code, but does not include third party
disability payments, stock options, relocation expense payments, credits or
benefits under the Plan (other than Savings Contributions), any amount
contributed to any pension, employee welfare, life insurance or health
insurance plan or arrangement, or any other tax-favored fringe benefits (other
than elective contributions to a Section 125 plan). However, no Compensation
in excess of $150,000 (adjusted under such regulations as may be issued by the
Secretary of the Treasury) will be taken into account for any Employee. In
applying such limit for Plan Years beginning before January 1, 1997, the
Compensation of a Highly Compensated Employee who is (i) a 5% owner of an
Employer, or (ii) one of the ten Highly Compensated Employees paid the
greatest amount of Compensation during the Plan Year will be aggregated with
the Compensation of any spouse or minor child of such Employee who is also
receiving Compensation from the Employer.
"Contract" means the Group Annuity Contract No. GA70867, effective as of
November 1, 1985, between the Custodian and the Company, and the related
letters dated November 15 and December 4, 1985, respectively, from the
Custodian.
"Custodian" means Principal Financial Group, Des Moines, Iowa, acting in its
capacity under the Contract.
3
<PAGE>
"Discretionary Contribution" generally means a Discretionary Contribution
under the Plan by an Employer on behalf of a Participant.
"Diversification Election" means a Participant's election to diversify a
portion of his ESOP Matching Contribution Account and ESOP Automatic
Contribution Account pursuant to the Diversification provisions of the Plan.
"Diversification Election Period" means the six Plan Year period beginning
with the later of: (1) the Plan Year after the Plan Year in which the
Participant attains age 55; or (2) the Plan Year after the Plan Year in which
the Participant first completes ten (10) years of participation in the Plan
(disregarding participation before January 1, 1989).
"Earnings" means, with respect to a Valuation Period, the aggregate of the
unrealized appreciation or depreciation accruing to the Trust Fund (or any
Fund or separate portion of a Segregated Investment Fund) during such a
period; and the income earned or the loss sustained by the Trust Fund (or any
Fund or separate portion of a Segregated Investment Fund) during such period,
whether from investments or from the sale or exchange of assets.
"Eligibility Date" means January 1 and July 1 in any Plan Year.
"Employee" means, except as otherwise provided in the Plan, any person
employed by the Employer, but generally does not include union employees other
than participating union employees at Circus Circus Reno, Circus Circus Las
Vegas, Excalibur, Luxor and Hacienda.
"Employer" means the Company, Circus Circus Casinos, Inc., Slots-A-Fun,
Inc., Edgewater Hotel Corporation, Colorado Belle Corp., New Castle Corp.,
Meshell Operating Corp., Circus Circus Development Corp., Pinkless, Inc., and
Ramparts, Inc., all Nevada corporations; Circus Circus Mississippi, Inc., a
Mississippi corporation; Railroad Pass Investment Group, Jean Development
Company and Jean Development West, all Nevada partnerships; and any other
subsidiary or related corporation or other entity that adopts the Plan with
the consent of the Company. Railroad Pass Investment Group, Jean Development
Company and Jean Development West are, at times, collectively referred to
herein as the "Gold Strike Entities."
"Employer Securities" means securities of the Company that are readily
tradable on an established securities market or meet other conditions of
Section 4975 of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ESOP Automatic Contribution" means an Automatic Contribution pursuant to
the Plan, attributable to any Plan Year beginning on or after January 1, 1989,
and ending prior to January 1, 1996, by an Employer on behalf of a
Participant, other than an officer, director, 10% owner of the Company, or any
other Participant who is required to file reports under Section 16(a) of the
Securities Exchange Act of 1934.
"ESOP Contribution" means an ESOP Automatic Contribution and an ESOP
Matching Contribution attributable to any Plan Year beginning on or after
January 1, 1989 and ending prior to January 1, 1996.
"ESOP Fund" means a Fund established under the Plan based upon all
contributions other than (i) Savings Contributions, (ii) Matching
Contributions for years beginning prior to January 1, 1990 and beginning on or
after January 1, 1996, and (iii) Automatic Contributions for years beginning
prior to January 1, 1989 and beginning on or after January 1, 1996.
"ESOP Matching Contribution" means a Matching Contribution pursuant to the
Plan, attributable to any Plan Year beginning on or after January 1, 1990 and
ending prior to January 1, 1996, by an Employer on behalf
4
<PAGE>
of a Participant, other than an officer, director, 10% owner of the Company,
or any other Participant who is required to file reports under Section 16(a)
of the Securities Exchange Act of 1934.
"Family Member" of a Highly Compensated Employee generally means such
Employee's spouse, lineal descendent or ascendent, or the spouse of his lineal
descendant or ascendent. However, for certain circumstances as enumerated in
the Plan, Family Member of a Highly Compensated Employee includes only the
Employee's spouse and his lineal descendants who have not attained age 19
before the close of the Plan Year.
"401(k) Automatic Contribution" means an Automatic Contribution under the
Plan, attributable to any Plan Year beginning before January 1, 1989, on
behalf of a Participant by an Employer.
"401(k) Matching Contribution" means a Matching Contribution under the Plan,
attributable to any Plan Year beginning before January 1, 1990, on behalf of a
Participant by an Employer.
"Fund" means a fund established under the Plan.
"Gross Compensation" means, with respect to an Employee during a Plan Year,
total taxable compensation of such Employee for such Plan Year as defined in
the Plan, subject to certain limits defined in the Plan, plus the amount of
such Employee's Savings Contribution for such Plan Year.
"Highly Compensated Employee"
(1) For Plan Years beginning before January 1, 1997, the term "Highly
Compensated Employee" means, subject to further limitations set forth in the
Plan, any Employee during the Plan Year or the immediately preceding Plan
Year:
(A) who was a 5% owner of an Employer;
(B) whose Section 415 Compensation was more than $75,000 (adjusted under
such regulations as may be issued by the Secretary of the Treasury);
(C) whose Section 415 Compensation was more than $50,000 (adjusted under
such regulations as may be issued by the Secretary of the Treasury), and
who was a member of the "top paid group." As used herein, "top paid group"
shall mean all Employees who are in the top 20% of the Employer's work
force on the basis of Section 415 Compensation paid during the year; or
(D) who was an officer of an Employer and received compensation in excess
of 50% of the amount in effect under Section 415(b)(1)(A) of the Code for
any such Plan Year. However, no more than 50 Employees will be considered
Highly Compensated Employees merely by reason of their status as officers
of an Employer.
(2) For Plan Years beginning after December 31, 1996, the term "Highly
Compensated Employee" means, subject to further limitations set forth in the
Plan, any Employee who:
(A) was a 5% owner of an Employer at any time during the Plan Year or the
preceding Plan Year; or
(B) for the preceding Plan Year,
(i) had Section 415 Compensation in excess of $80,000 (adjusted under
such regulations as may be issued by the Secretary of the Treasury),
and
(ii) if the Company so elects, was a member of the "top paid group"
(Employees in the top 20% of the Employer's work force on the basis of
Section 415 Compensation paid during the year).
"Hour of Service" means, as set forth in detail in the Plan, an hour for
which an Employee performs services, an hour for which he is paid for reasons
other than the performance of services (i.e., sick pay and vacation pay), or
an hour of unpaid maternity or paternity leave within certain limits described
in the Plan.
"Matching Contribution" means, as the context requires, the Matching
Contribution, or for Plan Years beginning on or after January 1, 1990 and
ending prior to January 1, 1996, the ESOP Matching Contribution, or for Plan
Years beginning prior to January 1, 1990, the 401(k) Matching Contribution.
5
<PAGE>
"Net Compensation" means, with respect to an Employee during a Plan Year,
the amount of such Employee's Gross Compensation for such Plan Year less the
amount of such Employee's Savings Contribution for such Plan Year.
"Normal Retirement Date" means the date on which a Participant attains the
age of 65 years, or the 5th anniversary of the date the Participant commenced
participation in the Plan, whichever date occurs later.
"One Year Break in Service" means a Plan Year (and, for purposes of
eligibility and participation, the year beginning with the date the Employee's
employment commenced), in which an Employee has 500 or fewer Hours of Service,
and it is deemed to occur on the last day of any such year.
"Participant" means:
(1) any eligible Employee of an Employer who has become a Participant
under the Plan, except that an Employee who has made a Rollover
Contribution prior to his Eligibility Date is considered a Participant
solely with respect to his Rollover Contribution Account; and
(2) any former employee of an Employer who became a Participant under the
Plan and who still has a balance in an Account under the Plan.
"Plan" means the profit sharing and investment plan described in this
Prospectus.
"Plan Administrator" means the Company.
"Plan Year" means each 12-month period ending on December 31.
"Savings Contribution" means a contribution to the Plan by or on behalf of
an Employee pursuant to paragraph (a) of Article VI of the Plan.
"Section 415 Compensation" means all compensation received by or made
available to the Participant from all Employers and all affiliates for
personal services actually rendered, as well as tips which the Employer is
required to report to the Employee and the Internal Revenue Service, but does
not include Savings Contributions, elective contributions to any plan
maintained by an employer pursuant to Section 125 of the Code, deferred
compensation, stock options and other distributions that receive special tax
benefit.
"Segregated Investment Fund" means a Fund established under the Plan for
designated investments, in which the assets of each Participant selecting the
Fund are separately invested, and the Earnings attributable to such assets are
separately accounted for.
"Transfer of Functions Date" means the date on or about January 1, 1991 when
there was transferred to the Trustee the responsibility for investments made
with respect to the General Common Stock Fund and the Money Market Fund.
"Trust" means, collectively, the trust or trusts established by the
Agreement and Declarations of Trust and the account or accounts established by
the Contract.
"Trust Fund" means, collectively, the trust funds and accounts established
under all Agreements of Trust and all Contracts from which the amounts of
supplementary compensation provided for by the Plan are to be paid or are to
be funded.
"Trustee" means Bank of America, Nevada (formerly Valley Bank of Nevada), in
its capacity as trustee under the Agreement of Trust.
"Valuation Date" means, with respect to the Trust Fund, the last day of each
calendar month, and such other dates as the Plan Administrator may select.
Interim Valuation Dates no more frequently than weekly may be used for
purposes of facilitating hardship withdrawals.
6
<PAGE>
"Valuation Period" means the period beginning with the first day after a
Valuation Date and ending with the next Valuation Date.
"Year of Credited Service" means, in general, a Plan Year beginning on or
after the Employee's date of employment or most recent date of reemployment,
whichever is later, during which the Employee completed 1,000 or more Hours of
Service. However, an Employee who becomes a Participant after November 20,
1989 will not receive credit for any Plan Year before the Plan Year in which
he became a Participant, except that any Employee who would have become a
Participant in an earlier Plan Year if he had not been a member of a
collective bargaining unit will have the same number of Years of Credited
Service that he would have had if he had not been a member of such unit.
Employees of Employers acquired by the Company during 1995 will get credit for
all 1995 service with the acquired Employer (or its predecessor), but only if
they were employed continuously by the acquired Employer (or its predecessor)
from January 1, 1995 through the date of the acquisition.
"Year of Service" means a Year of Vesting Service or a Year of Eligibility
Service, as required by the context as follows:
(A) "Year of Vesting Service" means a Plan Year beginning on or after
January 1, 1985, during which an Employee completes 1,000 or more Hours of
Service. Employees of Employers acquired by the Company during 1995 will
get credit for all 1995 service with the acquired Employer (or its
predecessor), but only if they were employed continuously by the acquired
Employer (or its predecessor) from January 1, 1995 through the date of the
acquisition.
(B) "Year of Eligibility Service" means the consecutive 12-month period
beginning with the date the Employee is first credited with an Hour of
Service, provided he completes 1,000 Hours of Service during that 12-month
period; otherwise, any Plan Year during which the Employee completes 1,000
or more Hours of Service. (The Year of Service is not completed until the
end of the 12-month period or the Plan Year, as the case may be, even if
1,000 Hours of Service are completed earlier).
An Employee receives credit for his Hours of Service for the Employer or an
"Affiliate" of the Employer (as defined in the Plan) whether or not he was an
Employee at the time such Hours of Service were completed.
7
<PAGE>
THE PLAN
GENERAL
The Plan covers the Employees of the Employer. The Plan was originally
adopted in 1985. In 1989, employee stock ownership plan ("ESOP") features were
added to the Plan, and it was renamed the Circus Circus Employees' Profit
Sharing, Investment and Employee Stock Ownership Plan and thereafter, the
Board of Directors of the Company adopted additional amendments to the Plan
and the Trust. The Company has obtained from the Internal Revenue Service (the
"IRS") a favorable determination letter dated May 23, 1995 that the Plan, as
amended through November 22, 1993, meets the requirements of a qualified
profit sharing plan under Section 401(a) of the Code, a qualified cash or
deferred arrangement under Section 401(k) of the Code, and a qualified ESOP
under Section 4975(e)(7) of the Code, and that the Trust, as amended through
the Third Trust Amendment, is exempt from Federal income tax under Section
501(a) of the Code. However, the favorable determination letter was
conditioned upon the adoption of an additional amendment on or before August
21, 1995. The required additional amendment was in fact adopted on July 12,
1995.
On November 21, 1995, the Company adopted a Tenth Amendment and Restatement
of the Plan and a Fifth Amendment and Restatement of the Trust (collectively
the "1995 Amendments"). In conjunction with the 1995 Amendments, the Company
intends to resubmit the Plan, as so amended, to the IRS to seek its
determination that the Plan, in its amended form, continues to meet the
requirements of a qualified profit sharing plan under Section 401(a) of the
Code, a qualified cash or deferred arrangement under Section 401(k) of the
Code, and a qualified ESOP under Section 4975(e)(7) of the Code, and that the
Trust continues to be exempt from Federal income tax under Section 501(a) of
the Code. It is possible that the IRS could request further amendments to the
Plan or the Trust, and could condition any determination letter upon timely
adoption of such amendments. Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis, special counsel to the Company ("Trenam Kemker"), has provided the
Company with their opinion that subject to certain limitations set forth
therein, principally related to adoption of final regulations by the IRS and
the U.S. Department of Labor, the adoption of the 1995 Amendments will not
cause the Plan or Trust documents to fail to be in substantial compliance with
Sections 401(a), 401(k) and 4975(e) of the Code, so long as any further
amendments requested by the IRS are adopted within 90 days after the issuance
of any determination letter that is conditioned upon timely adoption of such
amendments, and that the adoption of the 1995 Amendments will not cause the
Plan to fail to be in substantial compliance with the applicable portions of
ERISA that did not amend the Code.
PURPOSE
The Plan is designed to provide eligible Employees an opportunity to
increase their retirement savings by offering the advantages of a qualified
cash or deferred arrangement under Section 401(k) of the Code. See "Federal
Tax Aspects." In general, an Employee who meets the Plan's eligibility
requirements becomes a Participant. A Participant may authorize the Company to
make a Savings Contribution (as described under "Contributions," below) by
reducing the Participant's salary by an amount not in excess of his base pay
and not in excess of 15% of his Gross Compensation. Subject to limitations set
forth in the Plan, the Company will partially match Savings Contributions, and
will make Automatic Contributions. The Company further may choose to make
Discretionary Contributions. A Participant may direct the investment of all of
his Savings Contributions, together with Matching Contributions for years
beginning prior to January 1, 1990 and beginning on or after January 1, 1996
and Automatic Contributions for years beginning prior to January 1, 1989 and
beginning on or after January 1, 1996, into one or more of seven investment
options. See "Investment of Contributions," below. All other contributions
will be ESOP Contributions, which will generally remain invested, pursuant to
an Agreement of Trust, in Employer Securities in the ESOP Fund.
ADMINISTRATION
The Company, as Plan Administrator, is responsible for the control and
management of the operation and administration of the Plan. As Plan
Administrator, the Company is a "named fiduciary" as such term is defined
8
<PAGE>
in the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
The Plan Administrator has the power and the duty to take all action and to
make all decisions necessary or proper to administer the Plan. To the extent
consistent with applicable law, the determination of the Plan Administrator as
to any question involving the general administration and interpretation of the
Plan is conclusive and binding on any person making a claim under the Plan.
The Plan Administrator may make and enforce rules and regulations relating to
the Plan. In administering the Plan, the Plan Administrator must act in a
nondiscriminatory manner. Each year, the Plan Administrator prepares a report
concerning the financial condition and operation of the Plan.
The assets of the Plan constitute a Trust Fund. The Plan Administrator has
no duty with respect to the investments to be made of the funds in the Trust
Fund. The Trustee has such function with respect to each of the Plan's funds
other than with respect to amounts which remain invested in GIAs constituting
part of the Custodian's general account, as described under "Investments of
Contributions--II. Fixed Income Fund," below.
The Trustee has powers and responsibilities with respect to the
administration of the Circus Circus Stock Fund, the ESOP Fund, the Fixed
Income Fund (except to the extent amounts remain invested in GIAs constituting
part of the Custodian's general account, as described under "Investment of
Contributions--II. Fixed Income Fund," below), the General Common Stock Fund,
the U.S. Government Securities Fund, the Capital Fund, the International
Growth Fund and the Small Capitalization Index Fund, including (i) initial
investment of the funds deposited in each such Fund, (ii) reinvestment, sale,
exchange or other disposition of all or any portion of each such Fund's
assets, (iii) exercise of the voting rights associated with any securities
constituting a part of each such Fund's assets (except that any shares in the
ESOP Fund that are allocated to a Participant's Account are voted by the
Trustee in accordance with instructions from the Participant), (iv)
disbursement from each such Fund in accordance with instructions from the Plan
Administrator, and (v) the valuation of each such Fund.
Except where the Plan expressly provides that the Trustee is subject to the
direction of a named fiduciary or where authority to manage, acquire or
dispose of assets of the Plan is delegated by a named fiduciary to one or more
investment managers, the Circus Circus Stock Fund, the ESOP Fund, the Fixed
Income Fund (except to the extent amounts remain invested in GIAs constituting
part of the Custodian's general account as described under "Investment of
Contributions--II. Fixed Income Fund," below), the General Common Stock Fund,
the U.S. Government Securities Fund, the Capital Fund, the International
Growth Fund and the Small Capitalization Index Fund are under the control and
management of the Trustee. In connection with its control and management of
the Circus Circus Stock Fund and the ESOP Fund, the Trustee selects brokers to
effect particular securities transactions resulting in the most favorable net
results for the Plan by taking into account such factors as price, commission,
size of order and execution by the broker. Factors such as the broker's
execution and capital commitment capabilities, initiation of trades and
securities syndication are evaluated by the Trustee in selecting a broker.
Brokerage transactions are not directed to brokers because of their research
services. The Trustee periodically evaluates the reasonableness of brokerage
commissions paid by the Circus Circus Stock Fund and the ESOP Fund by
reviewing such factors as the competitive negotiated rate structure at the
time the commission was charged and the effectiveness of the brokers'
executions. The Trustee may pay a brokerage commission in excess of that which
another broker might have charged for effecting the same transaction in
recognition of the value of the brokerage execution services performed by the
selected broker.
The Company is responsible for all expenses incurred in implementing the
Plan and the Trust. Except as otherwise described in this Prospectus, the
expenses of the administration of the Trust Fund, including compensation
payable to the Trustee and the Custodian, the compensation of any investment
manager, the expenses incurred by the Plan Administrator in discharging its
duties, all income or other taxes of any kind levied or assessed upon or with
respect to the Trust Fund and any interest that may be payable on money
borrowed for the benefit of the Trust by the Trustee or the Custodian are to
be paid or provided for by the Company and, if not paid by the Company, are to
be paid out of the assets of the Trust Fund. However, no excise tax or other
liability imposed upon the Trustee, the Custodian, the Plan Administrator or
anyone else, for failure to comply with the provisions of any federal law will
be subject to payment or reimbursement from the assets of the Trust. For
information regarding certain fees to be paid out of the assets of the Funds,
see "Description of Investment Options," below.
9
<PAGE>
ELIGIBILITY
Participation in the Plan is available to eligible Employees of the Company
and any of the Company's subsidiaries that adopt the Plan with the Company's
consent. The subsidiaries of the Company presently participating in the Plan
are Circus Circus Casinos, Inc., Colorado Belle Corp., Edgewater Hotel
Corporation, Slots-A-Fun, Inc., New Castle Corp., Ramparts, Inc., Circus
Circus Development Corp., Pinkless, Inc., and Meshell Operating Corp., all
Nevada corporations; Railroad Pass Investment Group, Jean Development Company
and Jean Development West, all Nevada partnerships; and Circus Circus
Mississippi, Inc., a Mississippi corporation. Such entities are herein
referred to collectively with the Company and individually, as the context
requires, as the "Employer."
The eligibility requirements for participation in the Plan restrict
participation to Employees who have completed one Year of Eligibility Service
and have attained the age of 21 years.
The number of employees anticipated to be eligible to participate in the
Plan as of January 1, 1997 is approximately 10,000.
PARTICIPATION IN THE PLAN
Under the terms of the Plan, an Employee initially becomes a Participant in
the Plan on the first January 1 or July 1 on which such Employee meets all of
the requirements for eligibility to participate in the Plan. In addition, the
Plan Administrator may accept a Rollover Contribution from an Employee who is
expected to become a Participant, and any Employee who has made a Rollover
Contribution prior to entering the Plan is considered a Participant with
respect to his Rollover Contribution Account. Each Participant in the Plan
remains a Participant until his termination of employment.
Participation in the Plan is not terminated by transfers between the Company
and its participating subsidiaries, provided the Participant continues to be
an eligible Employee after the transfer. If a Participant transfers to a
subsidiary or business of the Company that is not an Employer, no further
contributions to the Plan may be made on his behalf. However, amounts credited
to his Account remain invested under the terms of the Plan.
An Employee who ceases to be a Participant in the Plan, and who later is
reemployed by an Employer, will become a Participant again on the date of his
reemployment. An Employee who has completed one Year of Service before
becoming an Employee of an Employer (as a result of his employment with an
"Affiliate," as defined in the Plan, or his exclusion as a result of a
collective bargaining agreement) will enter the Plan as a Participant on the
later to occur of (i) the first Eligibility Date concurring with or occurring
after the Employee's 21st birthday and (ii) the date he becomes an Employee of
the Employer.
CONTRIBUTIONS
As described below, a Participant may make Savings Contributions to the
Plan, and an Employer makes Matching Contributions and Automatic Contributions
and may make Discretionary Contributions.
Savings Contributions. Savings Contributions are those made to the Plan at
the election of a Participant pursuant to Section 401(k) of the Code. The
Participant selects the amount of his Savings Contributions which, under the
terms of the Plan, may be in any amount not exceeding 15% of his Gross
Compensation, up to a maximum of $9,500 (subject to annual adjustment) in any
Plan Year. See "Limitations on Contributions," below. The Participant's
Employer will make the appropriate reduction in the salary of the Participant.
Savings Contributions are forwarded by the Plan Administrator to the Trustee
to be invested in accordance with the Participant's investment election. The
Savings Contributions specified by the Participant are made by the Employer
and, provided the Actual Deferral Percentage is within the limits described
under "Limitations on Contributions," below, will not be included in the
Participant's compensation for Federal income tax purposes at the time the
contribution is made. See "Federal Tax Aspects."
10
<PAGE>
Each Participant must indicate the amount of his Savings Contributions by
calling the Benefit Information Line ("BIL"). The election must be executed
and in effect before the first day of the first pay period to which it
applies. Before any salary reduction contributions to the Plan can be made,
however, an Employee Signature Authorization Form must be completed, signed,
and returned to the Plan's record keeper.
Savings Contributions may be changed or suspended, as discussed below. A
Savings Contribution is made through a payroll deduction and must be paid by
the Employer to the Plan within a reasonable period after it is withheld from
the Participant's pay but no later than the fifteenth business day of the
month following the month in which it is withheld from the Participant's pay.
The amount of a Participant's Savings Contribution is credited to the
Participant's Account and invested in accordance with his instructions. See
"Investment of Contributions," below. Savings Contributions are fully (100%)
vested and nonforfeitable.
If a Participant selects a specified dollar contribution, that contribution
will be subject to certain limits, so that it may have to be reduced under
certain circumstances. However, it will not be increased unless the
Participant formally changes his election. If a Participant elects to
contribute a specified percentage of his compensation, any increase or
decrease in such Participant's compensation at any time will automatically
result in a corresponding adjustment to the Participant's Savings
Contribution.
11
<PAGE>
Matching Contributions. Matching Contributions for each eligible Participant
are made by the Employer in cash. Subject to the Plan's limitation on Matching
Contributions in any Plan Year, a Matching Contribution is made for each Plan
Year, for each Participant who is an Employee on the last day of such Plan
Year, in an amount equal to 25% of the Participant's Savings Contributions for
the Plan Year. Under the Plan, the Matching Contribution made to a
Participant's Account in a Plan Year will not exceed the amount determined
from the following table based on the Participant's Years of Credited Service:
<TABLE>
<CAPTION>
MAXIMUM AMOUNT OF
YEARS OF MATCHING CONTRIBUTIONS
CREDITED SERVICE PER PLAN YEAR
---------------- ----------------------
<S> <C>
1 $ 62.50
2 75.00
3 87.50
4 100.00
5 125.00
6 150.00
7 175.00
8 or more 200.00
</TABLE>
The amount of the Matching Contribution made on behalf of a Participant is
credited to the Participant's Matching Contributions Account and invested in
accordance with his instructions. Matching Contributions, along with ESOP
Matching Contributions made prior to January 1, 1996, become vested and
nonforfeitable according to a vesting schedule as described under "Vesting,"
below.
Automatic Contributions. Automatic Contributions are made by the Employer
for each Plan Year on behalf of each eligible Participant who completes 1,000
Hours of Service during such Plan Year and who is an Employee on the last day
of such Plan Year. Automatic Contributions are made in cash. The amount of the
Automatic Contribution for a Participant in any Plan Year is determined from
the following table based on the Participant's Years of Credited Service:
<TABLE>
<CAPTION>
AMOUNT OF
YEARS OF AUTOMATIC CONTRIBUTIONS
CREDITED SERVICE PER PLAN YEAR
---------------- -----------------------
<S> <C>
1 $250.00
2 300.00
3 350.00
4 400.00
5 500.00
6 600.00
7 700.00
8 or more 800.00
</TABLE>
The amount of the Automatic Contribution made on behalf of a Participant is
credited to the Participant's Automatic Contributions Account and invested in
accordance with his instructions. Automatic Contributions, along with ESOP
Automatic Contributions made prior to January 1, 1996, become vested and
nonforfeitable according to a vesting Schedule as described under "Vesting,"
below.
Amounts that are forfeited during a Plan Year ("Forfeitures"), to the extent
they are not needed to restore the Forfeitures of returning Participants who
have "bought back" their prior Forfeitures, will be reallocated as additional
Automatic Contributions to Participants who otherwise qualify for Automatic
Contributions for that Plan Year. A Participant's share of any such additional
Automatic Contributions will be a fraction, the numerator of which is his
regular Automatic Contribution for the Plan Year and the denominator of which
is the aggregate of all regular Automatic Contributions for all Participants
for the Plan Year.
12
<PAGE>
Discretionary Contributions. Discretionary Contributions may be made by the
Employer at its discretion. The Discretionary Contributions made by the
Employer will be in cash. A Participant's share of any Discretionary
Contributions in a Plan Year will be determined as of the last day of such
Plan Year by multiplying the total Discretionary Contribution for the Plan
Year by a fraction, the numerator of which is the Participant's Compensation
for such Plan Year and the denominator of which is aggregate Compensation for
such Plan Year for all Participants receiving an allocation. The amount of the
Discretionary Contribution credited to a Participant's Account is invested in
accordance with his instructions. Discretionary Contributions will become
vested and nonforfeitable according to a vesting schedule described under
"Vesting," below.
An Employee will be entitled to share in a Discretionary Contribution for a
Plan Year only if he completes 1,000 Hours of Service during that Plan Year
and only if he is employed by the Employer on the last day of the Plan Year.
Top Heavy Rules. If the Plan becomes "top heavy" as defined in Section 416
of the Code, certain limitations may be placed on contributions made on behalf
of "key employees" as defined in Section 416 and certain minimum contributions
may be required on behalf of certain other Participants as set forth in the
Plan.
ROLLOVER CONTRIBUTIONS
Any Participant of the Plan (or an Employee who is expected to become a
Participant), at any time, may submit a written application requesting the
Plan Administrator to direct the Trustee to accept a Rollover Contribution. A
Rollover Contribution accepted by the Plan Administrator will be placed in a
Rollover Contribution Account established for the Participant and will become
part of the Trust Fund. The amount placed in a Rollover Contribution Account
will be invested in accordance with the contributing Participant's
instructions. See "Investment of Contributions," below. Rollover Contributions
are not subject to the limits outlined under "Limitations on Contributions,"
below.
LIMITATIONS ON CONTRIBUTIONS
Section 401(k) of the Code limits the Savings Contributions of Participants
who are Highly Compensated Employees. Under the Plan, the Actual Deferral
Percentage ("ADP") for the group of Highly Compensated Employees for a Plan
Year (the "HC ADP") may not exceed 125% of the ADP for the group of all other
eligible employees (the "non-HC ADP"). Alternatively, the excess of the HC ADP
for a Plan Year over the non-HC ADP may not exceed two percentage points (or
such lesser amount as may be established by applicable regulations); and the
HC ADP for a Plan Year may not exceed 200% of the non-HC ADP. For Plan Years
beginning before January 1, 1997, the HC ADP and the Non-HC ADP are computed
using contributions made for the Plan Year being tested. For Plan Years
beginning after December 31, 1996, the HC ADP is determined using the
contributions of Highly Compensated Employees made for the Plan Year being
tested, but the Non-HC ADP generally may be computed using the contributions
of Non-Highly Compensated Employees for the Plan Year preceding the Plan Year
being tested. Savings Contributions that are in violation of these limits must
be returned to the Highly Compensated Employees on whose behalf the excess
Savings Contributions were made, as provided in Section 401(k) of the Code.
Under Section 401(k) of the Code, no Participant's Savings Contributions for
any Plan Year can exceed $9,500 (subject to annual adjustment). Any Savings
Contribution in excess of this limit must be returned to the Participant
making such contribution, as provided in Section 401(k) of the Code.
As described above, the Plan limits each Participant's Savings Contributions
to 15% of his Gross Compensation. However, Section 415 of the Code also limits
overall allocations on behalf of any Participant to 25% of the Participant's
Net Compensation. (Section 415 also establishes other limitations, which are
described below.) All contributions including both Savings Contributions and
all employer contributions, are counted toward the overall limit, and the
maximum Savings Contributions that can be made in a Plan Year without
exceeding the 25% of Net Compensation overall limit will be difficult to
calculate.
13
<PAGE>
Illustration: In general, a Savings Contribution equal to 15% of
Gross Compensation will equal approximately 18% of Net Compensation,
thus leaving a margin of only 7% of Net Compensation for Employer
contributions. Thus, if Employer contributions for a Participant for
any year are to exceed 7% of Net Compensation, then the Participant
must contribute less than 18% of Net Compensation (or less than 15% of
Gross Compensation) in order to stay within the overall limit of 25%
of Net Compensation.
Section 401(m) of the Code further limits Matching Contributions of
Participants who are Highly Compensated Employees. Under the Plan, the Actual
Contribution Percentage ("ACP") for the group of Highly Compensated Employees
for a Plan Year (the "HC ACP") may not exceed 125% of the ACP for the group of
all other eligible employees (the "Non-HC ACP"). Alternatively, the excess of
the HC ACP for a Plan Year over the Non-HC ACP may not exceed two percentage
points (or such lesser amount as may be established by applicable
regulations); and the HC ACP for a Plan Year may not exceed 200% of the Non-HC
ACP. For Plan Years beginning before January 1, 1997, the HC ACP and the Non-
HC ACP are computed using contributions made for the Plan Year being tested.
For Plan Years beginning after December 31, 1996, the HC ACP is determined
using contributions of Highly Compensated Employees made for the Plan Year
being tested, but the Non-HC ACP generally may be computed using the
contributions of Non-Highly Compensated Employees for the Plan Year preceding
the Plan Year being tested. Matching Contributions that are in violation of
these limits, but that are vested under the schedule set forth herein, will be
distributed to the Highly Compensated Employees on whose behalf the excess
Matching Contributions were made, and such amounts that are not vested will be
forfeited, and held in the Plan to be allocated to the Accounts of other
Participants in the manner set forth in the Plan.
Under Section 415 of the Code, the total of all Savings, Matching, Automatic
and Discretionary Contributions allocated to a Participant's Account for any
year generally may not exceed the lesser of (a) $30,000 or (b) 25% of his
Compensation for the year. The $30,000 limitation is subject to cost of living
adjustments. If, for any year, these limitations are exceeded, the Plan
currently provides as follows:
1. The excess will be deemed first to consist of Discretionary
Contributions (but only up to the amount of Discretionary Contributions
to which the Participant would have been entitled in the absence of
these limitations). Excess Discretionary Contributions will be allocated
to the Accounts of Participants who have not yet reached their
respective Section 415 limits.
2. Any remaining excess will be deemed to consist next of Savings
Contributions (but only up to the amount of Savings Contributions made
by the Participant). Excess Savings Contributions will be refunded (with
the earnings, if any, on the excess amounts) to the Participant
following the end of the Plan Year.
3. Any remaining excess will be deemed next to consist of Automatic
Contributions (but only up to the Automatic Contributions to which the
Participant would have been entitled in the absence of these
limitations), and finally Matching Contributions. Excess Automatic and
Matching Contributions will be allocated to the Automatic Contribution
Accounts of Participants who have not yet reached their respective
Section 415 limits.
CHANGE OF CONTRIBUTIONS
A Participant may elect to increase or decrease the amount of his Savings
Contribution by accessing BIL. Changes in the amount of a Participant's
Savings Contribution may be made by the Participant by accessing BIL, as of
the first day of any calendar quarter, so long as they are made no later than
the 21st day of the month preceding the first day of such calendar quarter.
Any increase or decrease in the amount of contributions must be within the
percentage limits set forth above. See "Contributions" and "Limitations on
Contributions," above. However, a Participant may always suspend or reduce
further Savings Contributions to the Plan at any time. Such suspensions will
be effective for the pay period immediately following the date on which the
paymaster receives notification of the suspension or reduction. A Participant
who suspends further Savings Contributions may reinstate such contributions,
but only as provided in the Plan.
14
<PAGE>
ACCOUNTS
The accounts and records of the Plan are maintained by the Plan
Administrator and disclose the status of the Account of each Participant. Each
Participant will be advised from time to time, at least once each year, of the
balance of his Account.
Each Participant's Account under the Plan represents the Participant's
interest in the Funds established under the Plan. Separate accounting records
are kept for those parts of the Participant's Account that result from
Savings, Matching, Automatic, 401(k) Matching, 401(k) Automatic, ESOP
Matching, ESOP Automatic, Discretionary and Rollover Contributions.
INVESTMENT OF CONTRIBUTIONS
Generally, each Participant must direct how the portion of his Savings
Contributions Account, Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account, 401(k) Matching Contribution
Account, 401(k) Automatic Contribution Account and Rollover Contribution
Account are to be allocated among the seven investment options available under
the Plan. Furthermore, each Participant who has made a Diversification
Election must direct the applicable portion of his ESOP Matching Contribution
Account and ESOP Automatic Contribution Account to be invested among six
investment options available under the Plan. No more than 25% of contributions
may be invested in the Circus Circus Stock Fund (referred to in the Plan as
"Fund A").
If a Participant does not specifically designate the investment option or
options for all or part of his Account, the Plan requires such portion to be
invested in the Fixed Income Fund unless the Trustee determines that a
different fund shall be the default fund. Also, if the Plan Administrator has
been notified that the Participant (or the beneficiary of a deceased
Participant) is incompetent, or if the beneficiary of a deceased Participant
is a child, the Trustee will determine the fund in which the Participant's
Account is invested unless a legal guardian has been appointed for such
Participant or beneficiary.
A Participant may change his investment election with respect to the
investment of future contributions or transfer previously contributed amounts
among the available investment options described below, so long as no more
than 25% of future contributions are invested in the Circus Circus Stock Fund,
and so long as the change does not increase the combined percentage of the
Participant's Matching Contribution Account, Automatic Contribution Account,
Discretionary Contribution Account, Rollover Account and 401(k) Employer
Contribution Account, together with any portion of his ESOP Matching
Contribution Account and ESOP Automatic Contribution Account which is subject
to a diversification election that is invested in the Circus Circus Stock Fund
to exceed 25% of his combined balances of such accounts. However, a
Participant may not change investment options other than as of the beginning
of a calendar quarter, and any change will not be effective until the first
January 1, April 1, July 1 or October 1 following the Participant's change of
such option through BIL, so long as such change is made on or prior to the
21st day of the month immediately preceding the date as of which the change is
to be effective. If, as a result of a change of investment election by a
Participant, there occurs any withdrawal of funds from the Fixed Income Fund
(referred to in the Plan as "Fund B") prior to maturity other than for
termination of employment, retirement, disability or death benefits, the
Participant's Account may be subject to a surrender charge. See the
description of the "Fixed Income Fund," below.
Each Participant is solely responsible for the investment of the amounts in
his Account other than those invested in the ESOP Fund, as described below.
Neither the Trustee, the Custodian, any investment advisors to the Funds, the
Plan Administrator, nor any officer or employee of the Company is empowered to
advise a Participant as to the manner in which his Account should be invested.
THE FACT THAT A PARTICULAR INVESTMENT OPTION IS AVAILABLE TO PARTICIPANTS FOR
INVESTMENT UNDER THE PLAN IS NOT TO BE CONSTRUED AS A RECOMMENDATION FOR
INVESTMENT IN SUCH INVESTMENT OPTION. A PARTICIPANT ASSUMES ALL RISKS IN
CONNECTION WITH CHANGES IN VALUE OF THE FUND OR FUNDS IN WHICH HE INVESTS.
EARNINGS, IF ANY, OF EACH FUND WILL BE REINVESTED IN THE SAME FUND, AND
LOSSES, IF ANY, WILL BE ALLOCATED ONLY TO THE FUND INCURRING THE LOSS.
15
<PAGE>
The Plan is intended to constitute a plan described in Section 404(c) of
ERISA and the regulations thereunder (which may be found at Section 2550.404c-
1 of the Code of Federal Regulations). Information required by those
regulations will be provided by the Plan Administrator, and the designated
contact for such information is the Corporate Director--Human Resources.
Fiduciaries will be relieved of liability for any losses that are the direct
and necessary result of investment instructions given by the Participant (or
beneficiary).
The portion of a Participant's ESOP Matching Contributions Account and ESOP
Automatic Contributions Account that is not invested pursuant to a
Diversification Election will be invested, pursuant to an Agreement of Trust,
in the ESOP Fund which will, except in certain circumstances provided in the
Plan, invest primarily in Employer Securities. Contributions to the ESOP Fund
may be made, at the Employer's election on a year-to-year basis, in Employer
Securities, cash, or any combination thereof. Where possible, it is the
Company's intention to credit Participants' accounts in the ESOP Fund with the
amounts of ESOP Matching Contributions and ESOP Automatic Contributions
(whether in cash, Employer Securities or combinations thereof) on or as of
December 31 of the Plan Year as follows:
1. Where the contribution is made in cash, the credit to the
Participant's ESOP Fund Account will initially reflect the
Participant's pro-rata entitlement to the cash contribution. The
Trustee has sole investment discretion. However, the Trustee has
indicated that it will generally attempt to purchase, at their
market price, the number of Employer Securities which can be
purchased with the cash contribution on such funding date or such
alternative date as the Trustee may elect consistent with its duties
to the Participants.
2. Upon such purchase of Employer Securities, each Participant's ESOP
Account will reflect the number of shares so acquired in
substitution of the cash credit previously reflected therein.
DESCRIPTION OF INVESTMENT OPTIONS
There currently are seven investment options available to Participants under
the Plan. Set forth below is information concerning each of these investment
options.
I. CIRCUS CIRCUS STOCK FUND
This Fund (referred to in the Plan as "Fund A") is invested by the Trustee
primarily in the Common Stock of the Company, subject to the right of the
Trustee to invest this Fund or any part thereof in other investments. The
Trustee has discretion as to the timing and manner of purchasing shares. Such
purchases may include open-market or privately negotiated transactions. Cash
dividends, if any, will be reinvested in this Fund, and any stock dividends or
shares issued pursuant to a stock split on the shares held by this Fund will
be added to this Fund. The Company has from time to time declared a split of
its Common Stock, the most recent such action being a three-for-two split
effective at the close of business on July 9, 1993, but has not declared any
cash dividends on its Common Stock since it became publicly owned in 1983 and
there is no assurance dividends will be paid on the Company's Common Stock in
the future. The Company's current policy is to retain earnings for the
operation and expansion of its business. The Company's loan agreement with its
bank group contains covenants which have the effect of limiting the amount of
dividends the Company may pay on its Common Stock and there is no assurance
the Company may not enter into other agreements which impose other
restrictions on the payment of dividends.
Participants investing in this Fund will not have any voting rights with
respect to the shares held in this Fund. The voting rights with respect to
such shares are vested in the Trustee. Participants who have made
Diversification Elections may not direct investments into this Fund with
respect to applicable portions of their ESOP Matching Contribution and ESOP
Automatic Contribution Accounts.
16
<PAGE>
THE VALUE OF THIS FUND IS DETERMINED BY THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK. AS THE MARKET PRICE OF THE COMMON STOCK FLUCTUATES UP OR DOWN,
SO DOES THE VALUE OF A PARTICIPANT'S SHARE OF THIS FUND. AND, COMMISSIONS PAID
ON ACCOUNT OF TRANSACTIONS BY THIS FUND ARE NOT PAID BY THE COMPANY BUT ARE
CHARGED AGAINST THE ASSETS OF THE FUND. ACCORDINGLY, THE VALUE OF A
PARTICIPANT'S SHARE OF THIS FUND COULD BE LESS THAN HIS CONTRIBUTIONS TO THIS
FUND. SINCE THIS FUND IS NOT DIVERSIFIED, IT HAS A HIGHER DEGREE OF RISK THAN
THE OTHER FUNDS.
The Company's Common Stock is listed on the New York Stock Exchange and on
the Pacific Stock Exchange. The following table sets forth for the calendar
quarters shown the low and high sale prices for the Common Stock on the New
York Stock Exchange Composite Tape (adjusted retroactively to reflect a three-
for-two split effective July 9, 1993, rounded to the nearest one-eighth). The
last reported sale price of the Common Stock on November 22, 1996 on the New
York Stock Exchange Composite Tape was $35 5/8 per share. A PARTICIPANT WHO IS
CONTEMPLATING AN INVESTMENT IN THIS FUND IS ENCOURAGED TO OBTAIN CURRENT
INFORMATION CONCERNING THE PRICE OF THE COMPANY'S COMMON STOCK.
<TABLE>
<CAPTION>
1993 LOW HIGH
---- ------ ------
<S> <C> <C>
First Quarter................................................ 27 7/8 39 7/8
Second Quarter............................................... 27 5/8 41 1/2
Third Quarter................................................ 33 3/4 48 1/8
Fourth Quarter............................................... 31 1/4 49 3/4
1994
----
First Quarter................................................ 30 1/8 40 3/4
Second Quarter............................................... 20 1/2 32 3/8
Third Quarter................................................ 21 1/2 28 5/8
Fourth Quarter............................................... 19 3/4 25
1995
----
First Quarter................................................ 23 1/2 33 1/8
Second Quarter............................................... 30 36
Third Quarter................................................ 27 36 1/8
Fourth Quarter............................................... 24 3/4 28 5/8
1996
----
First Quarter................................................ 27 5/8 35 3/8
Second Quarter............................................... 33 5/8 44 5/8
Third Quarter................................................ 29 1/8 41
Fourth Quarter (through November 22)......................... 31 1/2 36 1/4
</TABLE>
None of the Company's Common Stock purchased for the Circus Circus Stock
Fund pursuant to the Plan will be purchased from the Company. Because all of
the Company's Common Stock purchased for the Circus Circus Stock Fund pursuant
to the Plan will be previously issued and outstanding, the Company will not
receive any proceeds on account of any purchase of its Common Stock for the
Circus Circus Stock Fund.
In order to facilitate compliance with Section 16 of the Securities Exchange
Act of 1934 (the "1934 Act") and the regulations promulgated thereunder, a
Participant in the Plan who is subject to the reporting requirements of
Section 16(a) of the 1934 Act (i.e., an "officer" of the Company within the
meaning of Rule 16a-1 under the 1934 Act, a director of the Company or the
beneficial owner of 10% or more of the issued and outstanding shares of the
Company's Common Stock within the meaning of Rule 16a-1(a)(1) under the 1934
Act) is not permitted to invest in the Circus Circus Stock Fund.
17
<PAGE>
II. FIXED INCOME FUND
Amounts allocated to this Fund (referred to in the Plan as "Fund B"), and
amounts originally invested in Guaranteed Interest Accounts ("GIAs") which are
reinvested in this Fund as GIAs mature, are invested by the Trustee in the
Merrill Lynch Retirement Preservation Trust.
THE INFORMATION INCLUDED IN THIS PROSPECTUS CONCERNING THE MERRILL LYNCH
RETIREMENT PRESERVATION TRUST HAS BEEN PROVIDED TO THE COMPANY BY MERRILL
LYNCH TRUST COMPANY.
The Merrill Lynch Retirement Preservation Trust is a collective trust fund
whose primary objective is to achieve high current income consistent with
preservation of capital and liquidity through a diversified portfolio of
guaranteed investments, U.S. Government and U.S. Government Agency securities
and money market instruments. Merrill Lynch Trust Company, the trustee of the
Merrill Lynch Retirement Preservation Trust, utilizes the services of Merrill
Lynch Asset Management as a nondiscretionary investment advisor, but Merrill
Lynch Trust Company makes all investment decisions for the Merrill Lynch
Retirement Preservation Trust. WHILE THE MERRILL LYNCH RETIREMENT PRESERVATION
TRUST INVESTS IN GUARANTEED INVESTMENTS, NEITHER THE MERRILL LYNCH RETIREMENT
PRESERVATION TRUST NOR ITS UNITS ARE GUARANTEED.
Although there can be no assurances that the Merrill Lynch Retirement
Preservation Trust's objectives will be achieved, the Merrill Lynch Retirement
Preservation Trust seeks to achieve an effective yield that is typically
higher than money market fund yields and the yields of sponsor-managed GIC
portfolios of comparable duration. The portfolio is also structured to produce
yields that are sensitive to market opportunities. The return on this Fund's
investment in the Merrill Lynch Retirement Preservation Trust will be a blend
of all the rates on each GIC, U.S. Government Agency Obligation and money
market instrument in the Merrill Lynch Retirement Preservation Trust's
portfolio, less its fees and expenses, during the period of the investment.
Since the Merrill Lynch Retirement Preservation Trust will remain in the
market to make new investments, the effective rate may change frequently.
The Merrill Lynch Retirement Preservation Trust invests in GICs (i.e.,
contracts issued by insurance companies or banks which provide for a return of
principal plus interest, either periodically or at maturity), or similar
investments which pay a fixed or variable rate of return on an agreed schedule
and are benefit responsive (collectively "Guaranteed Investments"). Benefit
responsiveness may be provided by the issuer of the Guaranteed Investment or a
third party. A maximum of 80% of the Merrill Lynch Retirement Preservation
Trust will be invested in Guaranteed Investments and a minimum of 20% of the
assets of the Merrill Lynch Retirement Preservation Trust will be invested in
money market instruments.
The Merrill Lynch Retirement Preservation Trust reviews the quality of each
issuer's credit at least quarterly and each issuer must be determined to have
a AA- or better rating from Standard & Poors Corporation or an Aa3 or better
rating from Moody's Investors Service, or be determined to be of comparable
quality in order to qualify for investment of Merrill Lynch Retirement
Preservation Trust assets. As of October 31, 1996, approximately 24 insurance
carriers and approximately 13 banks satisfied the credit criteria for
investment of the Merrill Lynch Retirement Preservation Trust's assets.
There are no voting rights associated with this Fund's investment in the
Merrill Lynch Retirement Preservation Trust to which Participants who invest
in this Fund or the Trustee are entitled.
18
<PAGE>
The following information concerning the performance of the Merrill Lynch
Retirement Preservation Trust has been provided to the Company on an unaudited
basis by Merrill Lynch Trust Company.
<TABLE>
<CAPTION>
NET ANNUAL EFFECTIVE YIELD(1)(2)(3)
---------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
January......................... 5.98% 6.20% 5.54% 6.22% 6.88%
February........................ 6.16% 6.26% 5.99% 6.71% 6.90%
March........................... 6.15% 6.20% 5.45% 6.18% 6.76%
April........................... 6.01% 6.21% 5.81% 6.22% 7.05%
May............................. 6.07% 6.20% 5.79% 6.10% 6.92%
June............................ 6.12% 6.23% 5.21% 6.24% 7.02%
July............................ 6.02% 6.16% 5.85% 5.94% 6.77%
August.......................... 6.19% 6.15% 5.89% 5.99% 6.61%
September....................... 6.11% 6.19% 5.93% 5.98% 6.63%
October......................... 6.06% 6.07% 5.98% 5.88% 6.63%
November........................ -- 6.11% 6.09% 6.06% 6.66%
December........................ -- 6.05% 6.19% 5.90% 6.68%
</TABLE>
- --------
(1) The net annual effective yield for the period from September 22, 1989
(commencement of operations) through September 30, 1996 was 6.89%.
(2) These yields are net of the .30% fee payable to Merrill Lynch Trust
Company at the current level of investment by this Fund in the Merrill
Lynch Retirement Preservation Trust ($15,267,000 at October 31, 1996).
Such fee, which is not paid by the Company but is charged against the
assets of this Fund, is based upon the amount of assets invested by this
Fund in the Merrill Lynch Retirement Preservation Trust. Accordingly, such
fee may increase or decrease in the future, as described below, depending
on subsequent levels of investment by this Fund in the Merrill Lynch
Retirement Preservation Trust.
(3) The net annual effective yield assumes that income earned from investments
in the Merrill Lynch Retirement Preservation Trust during the applicable
period is reinvested and is expressed as an annual percentage rate.
The following table sets forth certain information provided to the Company
by Merrill Lynch Trust Company concerning the fee payable to Merrill Lynch
Trust Company, which is not paid by the Company but is charged against the
assets of this Fund.
<TABLE>
<CAPTION>
ANNUAL
PERCENTAGE
ASSETS(1) RATE(2)
--------- ----------
<S> <C>
$10,000-$100,000.................................................. 1.00%
$100,001-$500,000................................................. .80%
$500,001-$1,000,000............................................... .60%
$1,000,001-$3,000,000............................................. .50%
$3,000,001-$10,000,000............................................ .40%
$10,000,001-$15,000,000........................................... .30%
$15,000,001-$50,000,000........................................... .20%
$50,000,001-$100,000,000.......................................... .15%
$100,000,001-$500,000,000......................................... .13%
</TABLE>
- --------
(1) Represents the assets of this Fund projected by the Merrill Lynch Trust
Company to be invested in the Merrill Lynch Retirement Preservation Trust
during the 12-month period for which the fee is payable. Once established
for a 12-month period, the fee will not be adjusted for such period, even
if the actual amount of assets is different than the amount projected.
(2) The rate payable on account of this Fund's participation in the Merrill
Lynch Retirement Preservation Trust is determined initially as of the date
such participation commences and on each subsequent anniversary of such
date and, in each case, is applicable to the 12-month period commencing on
the applicable determination date. The fee for the 12-month periods of
this Fund's participation in the Merrill Lynch Retirement Preservation
Trust ending December 31, 1996 and 1997 will be .30% and .20%,
respectively.
19
<PAGE>
Amounts allocated to this Fund prior to the Transfer of Functions Date were
invested in GIAs which constitute part of the Custodian's general account. The
Custodian's general account is invested principally in privately placed bonds
and mortgage loans with maturities that generally parallel the Custodian's
guarantees under its GIAs. The Custodian's GIAs offer guaranteed principal and
interest for different length guarantee periods ranging from two through seven
years, but five year terms were generally selected. All contributions received
during the first year (hereinafter referred to as the "Deposit Year") of each
guarantee period became part of that year's GIA. Each contribution made during
a Deposit Year received the then available guaranteed interest rate for the
guarantee period selected by the Plan Administrator, as declared from time to
time by the Custodian. At the end of the Deposit Year, the average guaranteed
rate (weighted by the size and timing of each deposit) was determined. The
average guaranteed rate was then credited and is compounded annually to the
account balance for the remaining years of the guarantee period. At the end of
each Deposit Year, that GIA was closed and no additional contributions were
made to it. At the end of its guarantee period, a GIA matures. At maturity,
GIAs are reinvested (without penalty or adjustment) by the Trustee in the
Merrill Lynch Retirement Preservation Trust unless the funds are transferred
to one or more of the other investment options then available under the Plan
in accordance with the terms of the Plan.
Any transfer out of a GIA prior to the end of its guarantee period (other
than for benefit payments at retirement, death, disability, or termination of
employment) will be subject to a charge if the guaranteed interest rate for an
account with the same guarantee period on the surrender date is greater than
the guaranteed interest rate being credited to the GIA from which the transfer
is being made. The charge, a percentage of the amount being withdrawn, is the
difference between the guaranteed interest rate for new deposits to an account
with the same guarantee period and the guaranteed interest rate being credited
to the GIA from which the transfer is being made, multiplied by the number of
years and fractions (to the nearest day) remaining in the guarantee period of
the GIA from which the transfer is being made. If the guaranteed interest rate
for new deposits to an account with the same guarantee period is equal to or
less than the average credited rate for the GIA from which the transfer is
being made, the transfer will involve no charge. If a Participant has more
than one GIA and does not specify the GIA from which the transfer is to be
made, the transfer will be made proportionally from each of the Participant's
GIAs.
III. GENERAL COMMON STOCK FUND
This Fund (referred to in the Plan as "Fund C") is invested by the Trustee
in the S&P 500 Index Portfolio (the "Portfolio"), one of the portfolios of SEI
Index Funds ("SEI Index Funds"), an open-end management investment company
that has diversified portfolios.
THE INFORMATION INCLUDED IN THIS PROSPECTUS CONCERNING THE PORTFOLIO IS A
SUMMARY OF CERTAIN OF THE INFORMATION CONTAINED IN THE CURRENT PROSPECTUS OF
SEI INDEX FUNDS, DATED JULY 31, 1996, RELATING TO THE PORTFOLIO AND AN
UNRELATED BOND INDEX PORTFOLIO OF SEI INDEX FUNDS (THE "PORTFOLIO'S 1996
PROSPECTUS"). SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
PORTFOLIO'S 1996 PROSPECTUS. ANY PARTICIPANT WHO IS CONTEMPLATING AN
INVESTMENT IN THIS FUND IS ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ
IT AND RETAIN THE COPY FOR FUTURE REFERENCE. A COPY OF THE MOST RECENT
PROSPECTUS OF THE SEI INDEX FUNDS FOR THE PORTFOLIO WHICH HAS BEEN PROVIDED TO
THE COMPANY WILL BE PROVIDED TO A PARTICIPANT BY THE COMPANY UPON REQUEST, AND
A COPY OF SUCH PROSPECTUS WILL BE PROVIDED TO A PARTICIPANT AS SOON AS
PRACTICABLE FOLLOWING SUCH PARTICIPANT'S INITIAL INVESTMENT IN THIS FUND
UNLESS, PRIOR TO SUCH INITIAL INVESTMENT, A COPY HAD BEEN PROVIDED TO THE
PARTICIPANT.
The Portfolio seeks to provide investment results that correspond to the
aggregate price and dividend performance of the securities in the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500 Index") which is
comprised of 500 selected common stocks, most of which are listed on the New
York Stock Exchange. However, there can be no assurance that the Portfolio
will achieve its investment objective.
20
<PAGE>
The Portfolio's ability to duplicate the performance of the S&P 500 Index
will depend to some extent on the size and timing and cashflows into and out
of the Portfolio as well as the extent of the Portfolio's expenses. Over time,
the correlation between the performance of the Portfolio and the S&P 500 Index
is expected to be over 0.95. A correlation of 1.00 would indicate perfect
correlation. The Portfolio will normally be invested in all of the stocks
which comprise the S&P 500 Index, except when changes are made to the S&P 500
Index itself. The Portfolio's policy is to be fully invested in common stocks,
and it is expected that cash reserves or other non-Index securities would
normally be less than 10% of net assets.
The weightings of stocks in the S&P 500 Index are based on each stock's
relative total market value, i.e., market price per share times the number of
shares outstanding. Because of this weighting, approximately 50% of the S&P
500 Index is currently composed of the 50 largest companies in the S&P 500
Index, and the S&P 500 Index currently represents over 65% of the market value
of all U.S. common stocks listed on the New York Stock Exchange.
World Asset Management, the Portfolio's investment adviser (the "Portfolio
Adviser") makes no attempt to "manage" the Portfolio in the traditional sense
(i.e., by using economic, financial or market analysis). The adverse financial
situation of a company usually will not result in the elimination of a stock
from the Portfolio. However, SEI Index Funds reserves the right to remove an
investment from the Portfolio if, in the judgment of the Portfolio Adviser,
the merit of the investment has been substantially impaired by extraordinary
events or financial conditions. Furthermore, administrative adjustments may be
made in the Portfolio from time to time because of mergers, changes in the
composition of the S&P 500 Index and similar reasons. In certain
circumstances, the Portfolio Adviser may exercise discretion in determining
whether to exercise warrants or rights issued in respect to portfolio
securities or whether to tender portfolio securities pursuant to a tender or
exchange offer.
THE PORTFOLIO IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD &
POOR'S CORPORATION ("S&P"). S&P MAKES NO REPRESENTATION OR WARRANTY, IMPLIED
OR EXPRESS, REGARDING THE ADVISABILITY OF INVESTING IN INDEX FUNDS OR THE
PORTFOLIO OR THE ABILITY OF THE S&P 500 INDEX TO TRACK GENERAL STOCK MARKET
PERFORMANCE.
SEI Fund Management, the Portfolio's manager (the "Manager"), provides
overall management services, regulatory reporting, all necessary office space,
equipment, personnel and facilities, and acts as dividend disbursing agent and
shareholder servicing agent for SEI Index Funds. For its management services,
the Manager is entitled to receive from the Portfolio a fee for these services
which is calculated daily and paid monthly at an annual rate of .22% of the
Portfolio's average daily net assets. The Manager may from time to time waive
all or a portion of its fee in order to limit the operating expenses of the
Portfolio. Any such waiver is voluntary and may be terminated by the Manager
at any time in its sole discretion. For the fiscal year ended March 31, 1996,
the Portfolio paid the Manager a fee, after fee waivers, of .12% of its
average daily net assets. The Manager, which is wholly owned indirectly by SEI
Corporation, also serves as transfer agent to certain classes of SEI Index
Funds.
The Portfolio Adviser and SEI Index Funds are parties to an investment
advisory agreement relating to the Portfolio (the "Advisory Agreement"). Under
the terms of the Advisory Agreement, the Portfolio Adviser provides SEI Index
Funds with certain record keeping and management services in connection with
the Portfolio, including the monitoring of the indexing system and determining
which securities to purchase and sell in order to keep the Portfolio in
balance with the S&P 500 Index. For its services, the Portfolio Adviser is
entitled to a fee, which is calculated daily and paid monthly, at an annual
rate of .03% of the average daily net assets of the Portfolio. For the fiscal
year ended March 31, 1996, the Portfolio paid to the Portfolio Adviser an
advisory fee of .03% of the Portfolio's average daily net assets.
SEI Financial Services Company (the "Portfolio Distributor"), a wholly-owned
subsidiary of SEI Corporation, serves as the Portfolio's distributor pursuant
to a distribution agreement (the "Distribution Agreement") with SEI Index
Funds. SEI Index Funds may also execute brokerage or other agency transactions
21
<PAGE>
through the Portfolio Distributor for which the Portfolio Distributor may
receive usual and customary compensation. Under a shareholder servicing plan
(the "Portfolio Servicing Plan"), a shareholder servicing fee of up to .25% of
average daily net assets attributable to the Portfolio will be paid to the
Portfolio Distributor for services it may perform or compensate other service
providers for performing under the Portfolio Servicing Plan. Under the
Portfolio Servicing Plan, the Portfolio Distributor may retain as a profit any
difference between the fee it receives and the amount it pays to third
parties.
The following table sets forth certain information taken from the
Portfolio's 1996 Prospectus concerning the Portfolio's annual operating
expenses expressed as a percentage of the Portfolio's average net assets.
<TABLE>
<CAPTION>
EXPENSES (1) AMOUNT
------------ ------
<S> <C> <C>
Management/Advisory Fees (After Fee Waiver) (2)................ .19 %
12b-1 Fees..................................................... None
Total Other Expenses........................................... .06 %
Shareholder Servicing Expenses (After Fee Waiver)(3).......... 0.00 %
----
Total Operating Expenses (After Fee Waivers) (4)............... .25 %
</TABLE>
- --------
(1) These expenses are not paid by the Company but are charged against the
assets of the Portfolio.
(2) The Manager has waived, on a voluntary basis, a portion of its fee, and
the management/advisory fee shown reflects this voluntary waiver. The
Manager reserves the right to terminate its waiver at any time in its sole
discretion. Absent such fee waiver, management/advisory fees would be
.25%.
(3) The Portfolio Distributor has waived, on a voluntary basis, all or a
portion of its shareholder servicing fee, and the Shareholder Servicing
Expenses shown reflect this waiver. The Portfolio Distributor reserves the
right to terminate its waiver at any time in its sole discretion. Absent
such waiver, Shareholder Servicing Expenses would be .25%.
(4) Absent fee waivers, total operating expenses would have been .56%.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor in the Portfolio would pay the fol-
lowing expenses on a $1,000 investment assum-
ing (1) 5% annual return and
(2) redemption at the end of each time peri-
od............................................ $3.00 $8.00 $14.00 $32.00
</TABLE>
THE EXAMPLE, WHICH IS TAKEN FROM THE PORTFOLIO'S 1996 PROSPECTUS, SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. THE PURPOSE OF THE EXPENSE TABLE AND
EXAMPLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE VARIOUS COSTS AND
EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY BORNE BY INVESTORS IN THE
PORTFOLIO. ADDITIONAL INFORMATION MAY BE FOUND UNDER THE HEADINGS "THE
MANAGER," "THE ADVISOR" AND "DISTRIBUTION AND SHAREHOLDER SERVICING" IN THE
PORTFOLIO'S 1996 PROSPECTUS.
22
<PAGE>
The following table sets forth financial highlights taken from the
Portfolio's 1996 Prospectus. This table should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information referred to on the cover page of the Portfolio's 1996 Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period.................. $ 16.40 $ 15.07 $ 15.80 $ 14.17 $ 13.43
-------- -------- -------- -------- --------
Income from Investment Oper-
ations:
Net Investment Income(1).. 0.44 0.42 0.43 0.40 0.40
Net Realized and
Unrealized Gain (Loss) on
Investments.............. 4.72 1.79 (0.22) 1.69 1.01
-------- -------- -------- -------- --------
Total from Investment
Operations............... 5.16 2.21 0.21 2.09 1.41
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Invest-
ment Income.............. (0.37) (0.42) (0.42) (0.40) (0.41)
Distributions from Capital
Gains.................... (0.31) (0.46) (0.52) (0.06) (0.26)
Returns of Capital........ -- -- -- -- --
-------- -------- -------- -------- --------
Total Distributions..... (0.68) (0.88) (0.94) (0.46) (0.67)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................... $ 20.88 $ 16.40 $ 15.07 $ 15.80 $ 14.17
-------- -------- -------- -------- --------
Total Return.............. 31.88% 15.26% 1.19% 14.97% 10.71%
-------- -------- -------- -------- --------
Net Assets, End of Period
(000)...................... $630,566 $458,012 $424,647 $675,484 $470,847
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Ratio of Expenses to Average
Net Assets................. 0.25% 0.25% 0.25% 0.25% 0.25%
Ratio of Expenses to Average
Net Assets Excluding Fee
Waivers.................... 0.35% 0.35% 0.33% 0.35% 0.34%
Ratio of Net Investment
Income to Average
Net Assets................. 2.31% 2.69% 2.57% 2.75% 2.99%
Ratio of Net Investment
Income to Average
Net Assets Excluding Fee
Waivers.................... 2.21% 2.59% 2.49% 2.65% 2.90%
Portfolio Turnover Rate..... 3.00% 4.00% 23.00% 1.00% 1.00%
======== ======== ======== ======== ========
</TABLE>
- --------
(1) Had management fees not been waived and certain other expenses not been
absorbed by the Manager for the Portfolio, the net investment income per
share would have been $.42, $.41, $.41, $.39 and $.38 for the periods
ended 3/31/96, 3/31/95, 3/31/94, 3/31/93 and 3/31/92, respectively.
Participants investing in this Fund will not have any voting rights with
respect to the interest in the Portfolio held in this Fund. The voting rights
with respect to such interest are vested in the Trustee.
IV. U.S. GOVERNMENT SECURITIES FUND
This Fund (referred to in the Plan as "Fund D") is invested by the Trustee
in institutional shares of Federated U.S. Government Securities Fund: 2-5
years (the "U.S. Fund"), an open-end management investment company (a mutual
fund) investing in U.S. Government securities.
THE INFORMATION INCLUDED IN THIS PROSPECTUS CONCERNING THE U.S. FUND IS A
SUMMARY OF CERTAIN OF THE INFORMATION CONTAINED IN THE U.S. FUND'S PROSPECTUS
DATED MARCH 31, 1996 (THE "U.S. FUND 1996 PROSPECTUS"). SUCH SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE U.S. FUND 1996 PROSPECTUS. ANY
PARTICIPANT WHO IS CONTEMPLATING AN INVESTMENT IN THIS FUND IS ADVISED TO
OBTAIN A COPY OF SUCH PROSPECTUS, READ IT AND RETAIN THE COPY FOR FUTURE
REFERENCE. A COPY OF THE MOST RECENT PROSPECTUS OF THE U.S. FUND WHICH HAS
BEEN PROVIDED TO THE
23
<PAGE>
COMPANY WILL BE PROVIDED TO A PARTICIPANT BY THE COMPANY UPON REQUEST, AND A
COPY OF SUCH PROSPECTUS WILL BE PROVIDED TO A PARTICIPANT AS SOON AS
PRACTICABLE FOLLOWING SUCH PARTICIPANT'S INITIAL INVESTMENT IN THIS FUND
UNLESS, PRIOR TO SUCH INITIAL INVESTMENT, A COPY HAD BEEN PROVIDED TO THE
PARTICIPANT.
The investment objective of the U.S. Fund is to provide current income.
According to the U.S. Fund 1996 Prospectus, the U.S. Fund pursues this
investment objective by investing in U.S. government securities with remaining
maturities of five years or less. According to the U.S. Fund 1996 Prospectus,
as a matter of operating policy, which may be changed without approval of the
U.S. Fund's shareholders, the dollar-weighted average maturity of the U.S.
Fund's portfolio will not be less than two years nor more than five years.
While there is no assurance that the U.S. Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in the U.S. Fund 1996 Prospectus. THE U.S. FUND SHARES ARE NOT
DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY
BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. U.S. Fund shares are
currently sold and redeemed at their net asset value without a sales charge
imposed by the U.S. Fund.
The following table sets forth selected per share data and ratios for the
shares of the U.S. Fund which appears in the U.S. Fund 1996 Prospectus. This
information (which is presented for a share outstanding throughout each
period) should be read in conjunction with the financial statements of the
U.S. Fund included in the U.S. Fund 1996 Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD.................. $ 10.11 $ 10.78 $ 10.61 $ 10.25 $ 9.87
Income from investment oper-
ations
Net investment income...... 0.64 0.54 0.46 0.57 0.71
Net realized and unrealized
gain (loss) on invest-
ments..................... 0.63 (0.67) 0.17 0.36 0.38
-------- -------- -------- -------- --------
Total from investment oper-
ations.................... 1.27 (0.13) 0.63 0.93 1.09
Less distributions
Dividends to shareholders
from net investment in-
come...................... (0.64) (0.54) (0.46) (0.57) (0.71)
Distributions for
shareholders from net
realized gain on
investment transactions... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions......... (0.64) (0.54) (0.46) (0.57) (0.71)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PE-
RIOD....................... $ 10.74 $ 10.11 $ 10.78 $ 10.61 $ 10.25
======== ======== ======== ======== ========
Total return(a)............. 12.86% (1.18)% 6.07% 9.37% 11.44%
Ratios to average net assets
Expenses................... 0.54% 0.54% 0.52% 0.50% 0.50%
Net investment income...... 6.07% 5.16% 4.30% 5.52% 7.08%
Expense
waiver/reimbursement(b)... 0.25% 0.02% -- -- --
Supplemental data
Net assets, end of period
(000 omitted)............. $871,966 $731,280 $951,528 $845,620 $779,686
Portfolio turnover rate.... 117% 163% 131% 85% 108%
</TABLE>
- --------
(a) Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
24
<PAGE>
The following table sets forth for the U.S. Fund's institutional shares
certain information from the U.S. Fund 1996 Prospectus concerning applicable
shareholder transaction expenses and annual operating expenses of the U.S.
Fund. Such expenses are not paid by the Company but are charged against the
assets of the U.S. Fund.
<TABLE>
<CAPTION>
CHARGE
SHAREHOLDER TRANSACTION EXPENSES: ------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)......................... None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)............... None
Contingent Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, as applicable).................................... None
Redemption Fee (as a percentage of amount
redeemed, if applicable).................................... None
Exchange Fee................................................. None
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET AS-
SETS):
Management Fee............................................... 0.40%
12b-1 Fee.................................................... None
Total Other Expenses......................................... 0.14%
Shareholder Services Fee (after waiver)(1).................. 0.00%
Total Operating Expenses(2)................................... 0.54%
====
</TABLE>
- --------
(1) The maximum shareholder services fee is 0.25%.
(2) The Total Operating Expenses would have been 0.79% absent the voluntary
waiver of a portion of the shareholder services fee.
THE PURPOSE OF THE FOREGOING TABLE, WHICH IS TAKEN FROM THE U.S. FUND 1996
PROSPECTUS, IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE VARIOUS COSTS AND
EXPENSES THAT A SHAREHOLDER OF THE U.S. FUND WILL BEAR, EITHER DIRECTLY OR
INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES,
SEE THE INFORMATION APPEARING UNDER THE HEADINGS "TRUST INFORMATION" AND
"INVESTING IN INSTITUTIONAL SHARES" IN THE U.S. FUND 1996 PROSPECTUS.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment assuming (1) 5% annual re-
turn and (2) redemption at the end of each
time period.................................. $6 $17 $30 $68
</TABLE>
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Investment decisions for the U.S. Fund are made by Federated Management, the
U.S. Fund's investment adviser, subject to direction by the U.S. Fund's Board
of Trustees. Federated Management, a subsidiary of Federated Investors,
continually conducts investment research and supervision for the U.S. Fund and
is responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the U.S. Fund. Federated Management receives an
annual investment advisory fee equal to .40 of 1% of the U.S. Fund's average
daily net assets. Federated Management has also undertaken to reimburse the
U.S. Fund for operating expenses in excess of limitations established by
certain states. For additional information concerning the U.S. Fund's
investment adviser, reference is made to the U.S. Fund 1996 Prospectus.
25
<PAGE>
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the U.S. Fund. Federated Services
Company provides these at an annual rate, which relates to the average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors ("Federated Funds"), as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE FEDERATED
ADMINISTRATIVE FEE FUNDS
------------------ ----------------------------------- ---
<S> <C> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
The U.S. Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under
which the U.S. Fund may make payments up to 0.25 of 1% of the average daily
net asset value of the institutional shares, computed at an annual rate, to
obtain certain personal services for shareholders and the maintenance of
shareholder accounts ("shareholder services"). Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by the U.S.
Fund and Federated Shareholder Services.
Participants investing in this Fund will not have any voting rights with
respect to the interest in the U.S. Fund held in this Fund. The voting rights
with respect to such interest are vested in the Trustee.
V. CAPITAL FUND
This Fund (referred to in the Plan as "Fund E") is invested by the Trustee
in Class A shares of Merrill Lynch Capital Fund, Inc. (the "Capital Fund").
THE INFORMATION INCLUDED IN THIS PROSPECTUS CONCERNING THE CAPITAL FUND IS A
SUMMARY OF INFORMATION CONTAINED IN THE CAPITAL FUND'S PROSPECTUS DATED JULY
26, 1996 (THE "CAPITAL FUND 1996 PROSPECTUS"). SUCH SUMMARY IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE CAPITAL FUND 1996 PROSPECTUS. ANY PARTICIPANT
WHO IS CONTEMPLATING AN INVESTMENT IN THIS FUND IS ADVISED TO OBTAIN A COPY OF
SUCH PROSPECTUS, READ IT AND RETAIN THE COPY FOR FUTURE REFERENCE. A COPY OF
THE MOST RECENT PROSPECTUS OF THE CAPITAL FUND WHICH HAS BEEN PROVIDED TO THE
COMPANY WILL BE PROVIDED TO A PARTICIPANT BY THE COMPANY UPON REQUEST, AND A
COPY OF SUCH PROSPECTUS WILL BE PROVIDED TO A PARTICIPANT AS SOON AS
PRACTICABLE FOLLOWING SUCH PARTICIPANT'S INITIAL INVESTMENT IN THIS FUND
UNLESS, PRIOR TO SUCH INITIAL INVESTMENT, A COPY HAD BEEN PROVIDED TO THE
PARTICIPANT.
The Capital Fund seeks to achieve the highest total investment return
consistent with prudent risk through a fully managed investment policy
utilizing equity, debt (including money market) and convertible securities.
This permits management of the Capital Fund to vary investment policy based on
its evaluation of changes in economic and market trends. Total investment
return is the aggregate of income and capital value changes. Consistent with
this policy, the Capital Fund's portfolio may, at any given time, be invested
substantially in equity securities, corporate bonds or money market
securities. It is the expectation of the Capital Fund's management that, over
longer periods, a major portion of the Capital Fund's portfolio will consist
of equity securities of larger market capitalization, quality companies. Since
January 1, 1974, the portion of the Capital
26
<PAGE>
Fund's portfolio invested in equity securities has ranged from approximately
43% to 98% with the balance being invested in corporate bonds, money market
securities, government bonds and mortgage-backed securities. On March 31,
1996, approximately 46.7% of the Capital Fund's portfolio was invested in
equity securities. There can be no assurance that the Capital Fund's
investment objective will be achieved.
The following table sets forth selected per share data for the Class A
shares of the Capital Fund taken from the Capital Fund 1996 Prospectus. This
information should be read in conjunction with the financial statements of the
Capital Fund included in the Statement of Additional Information referred to
on the cover page of the Capital Fund 1996 Prospectus.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING PER-
FORMANCE:
Net asset value, begin-
ning of year........... $ 27.74 $ 27.46 $ 27.89 $ 26.90 $ 25.38
---------- ---------- ---------- ---------- ----------
Investment income--
net.................... 1.21 1.01 .97 .87 1.02
Realized and
unrealized gain
(loss) on
investments and
foreign currency
transactions--net... 5.41 1.77 .50 1.99 2.12
---------- ---------- ---------- ---------- ----------
Total from investment
operations............. 6.62 2.78 1.47 2.86 3.14
---------- ---------- ---------- ---------- ----------
Less dividends and dis-
tributions:
Investment income--
net.................... (1.16) (.94) (.95) (.87) (1.02)
Realized gains on in-
vestments--net......... (2.30) (1.56) (.95) (1.00) (.60)
---------- ---------- ---------- ---------- ----------
Total dividends and dis-
tributions............. (3.46) (2.50) (1.90) (1.87) (1.62)
---------- ---------- ---------- ---------- ----------
Net asset value, end of
year................... $ 30.90 $ 27.74 $ 27.46 $ 27.89 $ 26.90
========== ========== ========== ========== ==========
TOTAL INVESTMENT RETURN
(EXCLUSIVE OF EFFECTS
OF SALES LOADS):
Based on net asset value
per share.............. 24.50% 10.95% 5.39% 11.33% 12.96%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ .56% .57% .53% .55% .56%
========== ========== ========== ========== ==========
Investment income--net.. 4.09% 3.81% 3.52% 3.56% 4.21%
========== ========== ========== ========== ==========
SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands)......... $3,225,758 $2,507,767 $2,237,492 $2,056,023 $1,533,530
========== ========== ========== ========== ==========
Portfolio turnover...... 84% 89% 86% 55% 59%
========== ========== ========== ========== ==========
Average commission rate
paid................... $ .0382 * * * *
========== ========== ========== ========== ==========
</TABLE>
- --------
* Data not required for the period.
The Capital Fund offers four classes of shares which may be purchased at a
price equal to the next determined net asset value per share, plus, in the
case of Class A shares (the Class invested in by this Fund), a sales charge
imposed at the time of purchase (the "Class A shares"). Each Class A share and
each share of the Capital Fund's other classes of shares represents an
identical interest in the investment portfolio of the Capital Fund and has the
same rights, except that Class B, Class C and Class D shares bear the expenses
of the ongoing account maintenance fees and Class B and Class C shares bear
the expenses of the ongoing distribution fees and the additional incremental
transfer agency costs resulting from a deferred sales charge arrangement. The
deferred sales charges and account maintenance fees that are imposed on Class
B and Class C shares, as well as the account maintenance fees that are imposed
on the Class D shares, are imposed directly against those classes and not
against all assets of the Capital Fund and, accordingly, such charges do not
affect the net asset value of the Class A shares. ALL OF THIS FUND'S
INVESTMENT IN THE CAPITAL FUND WILL BE EXCLUSIVELY IN CLASS A SHARES. The
aforementioned sales charge generally applicable to the purchase of Class A
shares has been waived for purchases by this Fund so that the purchase price
paid for each Class A share acquired by this Fund is the Capital Fund's per
share net asset value at the time of the purchase. However, the Class A shares
purchased by this
27
<PAGE>
Fund are subject instead to a contingent deferred sales charge of 1.0% of
amounts redeemed within the first year after purchase.
Participants investing in this Fund will not have any voting right with
respect to the interest in the Capital Fund held by this Fund. The voting
rights with respect to such interest are vested in the Trustee.
The Capital Fund pays certain expenses incurred in the operation of the
Capital Fund including, among others, taxes, expenses for legal and auditing
services, costs of printing proxies and stock certificates, charges of the
custodian and transfer agent, expenses of redemption, brokerage costs,
Securities and Exchange Commission fees, all expenses of shareholders' and
Directors' meetings and certain of the expenses of printing prospectuses,
statements of additional information and reports to shareholders. For the
fiscal year ended March 31, 1996, the ratio of total expenses to average net
assets for the Class A shares was 0.56%.
Merrill Lynch Financial Data Services, Inc. ("FDS"), which is a wholly-owned
subsidiary of Merrill Lynch & Co., Inc., acts as the Capital Fund's transfer
agent pursuant to a transfer agency, dividend disbursing agency and
shareholder servicing agency agreement (the "Transfer Agency Agreement").
Pursuant to the Transfer Agency Agreement, FDS is responsible for the
issuance, transfer and redemption of shares and the opening and maintenance of
shareholder accounts. Pursuant to the Transfer Agency Agreement, the Capital
Fund pays FDS a fee of $11.00 per Class A or Class D shareholder account and
$14.00 per Class B or Class C shareholder account and FDS is entitled to
reimbursement from the Capital Fund for out-of-pocket expenses incurred by it
under the Transfer Agency Agreement. For the fiscal year ended March 31, 1996,
the Capital Fund paid FDS $10,911,584 pursuant to the Transfer Agency
Agreement. At the level of accounts existing at June 30, 1996, the annual fee
payable to FDS would aggregate approximately $7,888,459 plus out-of-pocket
expenses.
The following table sets forth certain information from the Capital Fund
1996 Prospectus concerning the annual operating expenses of the Capital Fund
applicable to Class A shares. Such expenses are not paid by the Company but
are charged against the assets of the Capital Fund.
<TABLE>
<CAPTION>
CHARGE
------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS) FOR THE YEAR ENDED MARCH 31, 1995:
Investment Advisory Fees...................................... 0.40%
12b-1 Fees:
Account Maintenance Fee...................................... None
Distribution Fees............................................ None
Other Expenses:
Custodial Fees............................................... 0.01%
Shareholder Servicing Costs.................................. 0.13%
Other........................................................ 0.02%
----
Total Other Expenses....................................... 0.16%
----
TOTAL FUND OPERATING EXPENSES.................................. 0.56%
====
</TABLE>
28
<PAGE>
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR
THE PERIOD OF
-------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
This Fund would pay the following expenses on a
$1,000 investment in the Capital Fund based on
the aforementioned waiver of any front-end
sales charge for Class A shares acquired by
this Fund and assuming (1) a total operating
expense ratio of 0.56% for Class A shares, (2)
a 5% annual return throughout the periods and
(3) redemption at the end of the period....... $5.50 $17.50 $29.50 $66.50
This Fund would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of the period........... $5.50 $17.50 $29.50 $66.50
</TABLE>
THE FOREGOING FEE TABLE (WHICH IS BASED ON A FEE TABLE IN THE CAPITAL FUND
1996 PROSPECTUS, AS ADJUSTED TO ELIMINATE THE MAXIMUM $52.50 FRONT-END SALES
CHARGE WAIVED WITH RESPECT TO THIS FUND'S PURCHASE OF CLASS A SHARES) IS
INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS AND EXPENSES THAT A
SHAREHOLDER IN THE CAPITAL FUND WILL BEAR DIRECTLY OR INDIRECTLY. THE EXAMPLE
SET FORTH ABOVE ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND
UTILIZES A 5% ANNUAL RATE OF RETURN AS MANDATED BY SECURITIES AND EXCHANGE
COMMISSION REGULATIONS. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR ANNUAL RATES OF RETURN, AND ACTUAL EXPENSES OR
ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR PURPOSES OF
THE EXAMPLE.
Merrill Lynch Asset Management, L.P. (the "Investment Adviser"), owned and
controlled by Merrill Lynch & Co., Inc., a financial services holding company
and the parent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, acts as
the investment adviser for the Capital Fund and provides the Capital Fund with
management and investment advisory services. Achieving the Capital Fund's
investment objective depends on informed decisions to buy, sell or hold
particular securities. Subject to the direction of the Capital Fund's Board of
Directors, the Investment Adviser has created a comprehensive management
system that sets objectives and establishes a framework for the selection of
particular securities and the distribution of assets. The system appraises
economic and other forces affecting securities markets and industries, and
assesses short- and long-term prospects. The Investment Adviser regularly
reviews the research and analysis of other brokerage firms with which the
Capital Fund does business.
The Capital Fund pays the Investment Adviser a monthly fee based on the
average daily value of the Capital Fund's net assets at the annual rates of:
0.50% of that portion of average daily net assets not exceeding $250 million;
0.45% of that portion of average daily net assets exceeding $250 million but
not exceeding $300 million; 0.425% of that portion of average daily net assets
exceeding $300 million but not exceeding $400 million; and 0.40% of that
portion of average daily net assets exceeding $400 million. For the fiscal
year ended March 31, 1996, the Investment Adviser earned a fee of $31,428,894
and the effective fee rate was 0.40%.
The Investment Adviser is responsible for placing the Capital Fund's
brokerage business and for negotiating prices, commissions and the charges for
other services. The Investment Adviser is not restricted in its choice of
brokers or dealers. According to the Capital Fund 1996 Prospectus, the
Investment Adviser seeks the most favorable rates and services from any number
of brokers and dealers, including Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
VI. SMALL CAPITALIZATION INDEX FUND
This Fund (referred to in the Plan as "Fund F") is invested by the Trustee
in the Small Capitalization Stock Portfolio (the "Small Cap Fund"), one of the
portfolios of Vanguard Index Trust ("Vanguard Index Trust"), an open-end
diversified investment company designed as an "index fund."
29
<PAGE>
THE INFORMATION INCLUDED IN THIS PROSPECTUS CONCERNING THE SMALL CAP FUND IS
A SUMMARY OF CERTAIN OF THE INFORMATION CONTAINED IN THE CURRENT PROSPECTUS OF
VANGUARD INDEX TRUST, DATED APRIL 30, 1996 RELATING TO THE SMALL CAP FUND AND
FIVE UNRELATED INDEX FUNDS (THE "SMALL CAP FUND 1996 PROSPECTUS"). SUCH
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE SMALL CAP FUND 1996
PROSPECTUS. ANY PARTICIPANT WHO IS CONTEMPLATING AN INVESTMENT IN THIS FUND IS
ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ IT AND RETAIN THE COPY FOR
FUTURE REFERENCE. A COPY OF THE MOST RECENT PROSPECTUS OF THE VANGUARD INDEX
TRUST FOR THE SMALL CAP FUND WHICH HAS BEEN PROVIDED TO THE COMPANY WILL BE
PROVIDED TO A PARTICIPANT BY THE COMPANY UPON REQUEST, AND A COPY OF SUCH
PROSPECTUS WILL BE PROVIDED TO A PARTICIPANT AS SOON AS PRACTICABLE FOLLOWING
SUCH PARTICIPANT'S INITIAL INVESTMENT IN THIS FUND UNLESS, PRIOR TO SUCH
INITIAL INVESTMENT, A COPY HAD BEEN PROVIDED TO THE PARTICIPANT.
The Small Cap Fund seeks to replicate the aggregate price and yield
performance of the Russell 2000 Small Stock Index (the "Russell 2000 Index"),
a broadly diversified small-capitalization stock index consisting of
approximately 2,000 common stocks. However, there can be no assurance that the
Small Cap Fund will achieve its investment objective.
The Small Cap Fund invests in a statistically selected sample of the
approximately 2,000 stocks included in the Russell 2000 Index. Typically, the
Small Cap Fund invests in approximately 1,400 stocks. Stocks are selected for
inclusion in the Small Cap Fund based on their contribution to the Small Cap
Fund's market capitalization, industry weightings and other fundamental
characteristics such as price-earnings ratios, dividend yields, price-to-book
ratios and financial leverage. The stocks held by the Small Cap Fund are
weighted to make the Small Cap Fund's aggregate investment characteristics
similar to those of the Russell 2000 Index as a whole. The Small Cap Fund
attempts to remain fully invested in common stocks. Under normal circumstances
the Small Cap Fund will invest at least 95% of its assets in the common stocks
of the Russell 2000 Index and futures contracts and options. The Small Cap
Fund may invest in certain short-term fixed income securities as cash
reserves, although cash or cash equivalents are normally expected to represent
less than 1% of the Small Cap Fund's assets. The Small Cap Fund may also
invest up to 20% of its assets in stock futures contracts and options in order
to invest uncommitted cash balances, to maintain liquidity to meet shareholder
redemptions, or to minimize trading costs.
The stocks of the Russell 2000 Index to be included in the Small Cap Fund
will be selected utilizing a statistical sampling technique known as
"optimization." This process selects stocks for the Small Cap Fund so that
various industry weightings, market capitalizations and fundamental
characteristics (e.g., price-to-book, price-to-earnings, debt-to-asset ratios,
and dividend yields) closely approximate those of the Russell 2000 Index.
Over time, the correlation between the performance of the Small Cap Fund and
the Russell 2000 Index is expected to be at least 0.95. A correlation of 1.00
would indicate perfect correlation, which would be achieved when the net asset
value of the Small Cap Fund, including the value of its dividend and capital
gains distributions, increases or decreases in exact proportion to changes in
the Russell 2000 Index target benchmark.
THE SMALL CAP FUND IS NEITHER SPONSORED BY NOR AFFILIATED WITH THE FRANK
RUSSELL COMPANY. FRANK RUSSELL'S ONLY RELATIONSHIP TO THE SMALL CAP FUND IS
THE LICENSING OF THE USE OF THE RUSSELL 2000 SMALL STOCK INDEX. FRANK RUSSELL
COMPANY IS THE OWNER OF THE TRADEMARKS AND COPYRIGHTS RELATING TO THE RUSSELL
INDEXES.
30
<PAGE>
The following table sets forth selected per share data and ratios for the
shares of the Small Cap Fund. Results prior to January 31, 1994 are for the
former Vanguard Small Capitalization Stock Fund. This information, which has
been taken from the Small Cap Fund 1996 Prospectus, should be read in
conjunction with the financial statements and notes thereto incorporated by
reference in the Small Cap Fund 1996 Prospectus.
<TABLE>
<CAPTION>
OCT. 1, YEAR ENDED SEPTEMBER
FEB. 1 TO 1993 TO 30,
DEC. 31, JAN. 31, ----------------------
1995 1994(1) 1994 1993 1992 1991
------ --------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period......... $14.99 $16.24 $16.23 $12.63 $12.03 $ 8.55
------ ------ ------ ------ ------ ------
Investment Operations
Net Investment Income
(Loss)............... .24 .20 .05 .20 .19 .20
Net Realized and
Unrealized Gain
(Loss) on
Investments.......... 4.06 (.86) .96 3.73 .88 3.60
------ ------ ------ ------ ------ ------
Total from
Investment
Operations......... 4.30 (.66) 1.01 3.93 1.07 3.80
------ ------ ------ ------ ------ ------
Distributions
Dividends from Net
Investment Income.... (.23) (.22) (.18) (.18) (.18) (.18)
Distributions from
Realized Capital
Gains................ (.45) (.37) (.82) (.15) (.29) (.14)
------ ------ ------ ------ ------ ------
Total
Distributions...... (.68) (.59) (1.00) (.33) (.47) (.32)
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period................. $18.61 $14.99 $16.24 $16.23 $12.63 $12.03
====== ====== ====== ====== ====== ======
Total Return*........... 28.74% (4.00)% 6.65% 31.60% 9.34% 45.91%
====== ====== ====== ====== ====== ======
Ratios/Supplemental Data
Net Assets, End of Pe-
riod (Millions)........ $ 971 $ 605 $ 533 $ 432 $ 202 $ 111
Ratio of Expenses to
Average Net Assets..... .25% .17%** .18%** .18% .18% .21%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 1.58% 1.50%** 1.16%** 1.47% 1.65% 2.11%
Small Cap Fund Turnover
Rate................... 28% 25% 5% 26% 26% 33%
</TABLE>
- --------
* Total return figures do not reflect the annual account maintenance fees of
$10 or applicable portfolio transaction fees.
** Annualized.
The Vanguard Index Trust is a member of The Vanguard Group of Investment
Companies, a family of more than 30 investment companies with more than 90
distinct portfolios and total assets in excess of $190 billion. Through their
jointly-owned subsidiary, The Vanguard Group, Inc. ("Vanguard"), the Vanguard
Index Trust and the other funds in the group obtain at cost virtually all of
their corporate management, administrative and distribution services. Vanguard
also provides investment advisory services on an at-cost basis to certain
Vanguard funds. According to the Small Cap Fund 1996 Prospectus, as a result
of Vanguard's unique corporate structure, the Vanguard funds have costs
substantially lower than those of most competing mutual funds. In 1995,
according to expense data provided by Lipper Analytical Services, the average
expense ratio (annual costs including advisory fees divided by total net
assets) for the Vanguard funds (including the Small Cap Fund) amounted to
approximately .31% compared to an average of 1.11% for the mutual fund
industry.
The Small Cap Fund receives all investment advisory services on an at-cost
basis from Vanguard's Core Management Group (the "Small Cap Fund Investment
Adviser"). The Small Cap Fund is not actively managed, but is instead
administered by the Small Cap Fund Investment Adviser using computerized,
quantitative techniques. The Small Cap Fund Investment Adviser is supervised
by the officers of the Vanguard Index Trust.
The following table from the Small Cap Fund 1996 Prospectus illustrates all
expenses and fees a shareholder of the Small Cap Fund would incur. The
expenses and fees are for the fiscal year ended December 31, 1995.
31
<PAGE>
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.................................... None(1)
Sales Load Imposed on Reinvested Dividends......................... None
Redemption Fees.................................................... None
Exchange Fees...................................................... None
ANNUAL FUND OPERATING EXPENSES
Management and Administrative Expenses(2).......................... 0.12%
Investment Advisory Fees........................................... 0.01
12b-1 Fees......................................................... None
Other Expenses
Distribution Costs............................................... 0.02
Miscellaneous Expenses........................................... 0.02
----
Total Other Expenses............................................... 0.04
----
Total Operating Expenses........................................... 0.17%
====
</TABLE>
- --------
(1) Shareholders are charged a 1% portfolio transaction fee, payable directly
to the Small Cap Fund, on each purchase of shares.
(2) In addition to these costs, the Small Cap Fund assesses an annual account
maintenance fee of $10. This fee will be waived for shareholders with an
account balance of $10,000 or more. For this purpose, the Plan's entire
investment in the Small Cap Fund will constitute the investment of a
single shareholder.
EXAMPLE:
The following example illustrates the expenses that an investor in the Small
Cap Fund would incur on a $1,000 investment over various time periods,
assuming (1) a 5% annual rate of return and (2) redemption at the end of each
period. The example includes the $10 account maintenance fee and the 1%
portfolio transaction fee. As noted in the table on the previous page, the
Vanguard Index Trust charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$23 $48 $74 $140
</TABLE>
Included in these estimates are account maintenance fees of $10, $30, $50
and $100 for the respective periods shown. Accordingly, assuming the Plan's
investment in the Small Cap Fund is larger than $10,000, this Fund's total
expenses will be substantially lower in percentage terms than this
illustration implies.
THIS EXAMPLE WHICH IS TAKEN FROM THE SMALL CAP FUND 1996 PROSPECTUS, SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR PERFORMANCE.
ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
Participants investing in this Fund will not have any voting right with
respect to the interest in the Small Cap Fund held by this Fund. The voting
rights with respect to such interest are vested in the Trustee.
VII. INTERNATIONAL GROWTH FUND
This Fund (referred to in the Plan as "Fund G") is invested by the Trustee
in the Scudder International Fund (the "Scudder Fund"), a series of Scudder
International Fund, Inc. ("SIFI").
THE INFORMATION INCLUDED IN THIS PROSPECTUS CONCERNING THE SCUDDER FUND IS A
SUMMARY OF CERTAIN OF THE INFORMATION CONTAINED IN THE SCUDDER FUND'S
PROSPECTUS DATED AUGUST 1, 1996 (THE "SCUDDER FUND 1996 PROSPECTUS"). SUCH
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE SCUDDER FUND 1996
PROSPECTUS. ANY PARTICIPANT WHO IS CONTEMPLATING AN INVESTMENT IN THIS FUND IS
32
<PAGE>
ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ IT AND RETAIN THE COPY FOR
FUTURE REFERENCE. A COPY OF THE MOST RECENT PROSPECTUS OF THE SCUDDER FUND
WHICH HAS BEEN PROVIDED TO THE COMPANY WILL BE PROVIDED TO A PARTICIPANT BY
THE COMPANY UPON REQUEST, AND A COPY OF SUCH PROSPECTUS WILL BE PROVIDED TO A
PARTICIPANT AS SOON AS PRACTICABLE FOLLOWING SUCH PARTICIPANT'S INITIAL
INVESTMENT IN THIS FUND UNLESS, PRIOR TO SUCH INITIAL INVESTMENT A COPY HAD
BEEN PROVIDED TO THE PARTICIPANT.
The Scudder Fund seeks long-term growth of capital primarily through a
diversified portfolio of marketable foreign equity securities selected
primarily to permit the Scudder Fund to participate in non-United States
companies and economies with prospects for growth. The Scudder Fund invests in
companies, wherever organized, which do business primarily outside the United
States. The Scudder Fund intends to diversify investments among several
countries and to have represented in its portfolio, in substantial
proportions, business activities in not less than three different countries.
The Scudder Fund does not intend to concentrate investments in any particular
industry.
Investors should recognize that investing in foreign securities involves
certain special considerations, including those set forth below, which are not
typically associated with investing in U.S. securities and which may favorably
or unfavorably affect the Scudder Fund's performance. As foreign companies are
not generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to
domestic companies, there may be less publicly available information about a
foreign company than about a domestic company. Many foreign securities
markets, while growing in volume of trading activity, have substantially less
volume than the U.S. market, and securities of some foreign issuers are less
liquid and more volatile than securities of domestic issuers. Similarly,
volume and liquidity in most foreign bond markets is less than in the U.S.
and, at times, volatility of price can be greater than in the U.S. Fixed
commissions on some foreign securities exchanges and bid to asked spreads in
foreign bond markets are generally higher than commissions or bid to asked
spreads on U.S. markets, although the Scudder Fund will endeavor to achieve
the most favorable net results on its portfolio transactions. There is
generally less government supervision and regulation of securities exchanges,
brokers and listed companies than in the U.S. It may be more difficult for the
Scudder Fund's agents to keep currently informed about corporate actions which
may affect the prices of portfolio securities. Communications between the U.S.
and foreign countries may be less reliable than within the U.S., thus
increasing the risk of delayed settlements of portfolio transactions or loss
of certificates for portfolio securities. Payment for securities without
delivery may be required in certain foreign markets. In addition, with respect
to certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect U.S. investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. The management of the Scudder Fund seeks to mitigate the
risks associated with the foregoing considerations through continuous
professional management.
Because investments in foreign securities usually will involve currencies of
foreign countries, and because the Scudder Fund may hold foreign currencies
and forward contracts, futures contracts and options on foreign currencies and
foreign currency futures contracts, the value of the assets of the Scudder
Fund as measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations,
and the Scudder Fund may incur costs in connection with conversions between
various currencies. Although the Scudder Fund values its assets daily in terms
of U.S. dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will do so from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Scudder Fund at one rate, while offering a
lesser rate of exchange should the Scudder Fund desire to resell that currency
to the dealer. The Scudder Fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through entering into options or
forward or futures contracts to purchase or sell foreign currencies.
33
<PAGE>
For a discussion of additional risk factors associated with the Scudder
Fund, see "The Fund's Investment Objectives and Policies--Risk Factors" in the
Statement of Additional Information referred to on the cover page of the
prospectus dated August 1, 1996 relating to the Scudder Fund 1996 Prospectus.
The following table sets forth certain information taken from the Scudder
Fund 1996 Prospectus concerning the Scudder Fund's shareholder transaction
expenses and its annual operating expenses expressed as a percentage of its
average daily net assets for the fiscal year ended March 31, 1996.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES: Expenses charged directly to
individual accounts in the Scudder Fund for various transactions.
Sales commissions to purchase shares (sales load)................. NONE
Commissions to reinvest dividends................................. NONE
Redemption fees................................................... NONE
Fees to exchange shares........................................... NONE
ANNUAL FUND OPERATING EXPENSES: Expenses paid by the Scudder Fund
before it distributes its net investment income, expressed as a
percentage of its average daily net assets for the fiscal year
ended March 31, 1996.
Investment management fee......................................... 0.82%
12b-1 fees........................................................ NONE
Other expenses.................................................... 0.32%
-----
Total Scudder Fund operating expenses............................. 1.14%
=====
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Based on the level of total Scudder Fund
operating expenses listed above, the total
expenses relating to a $1,000 investment,
assuming a 5% annual return and redemption
at the end of each period, are listed
below. Investors do not pay these expenses
directly; they are paid by the Scudder
Fund before it distributes its net
investment income to shareholders......... $12 $36 $63 $139
</TABLE>
ACCORDING TO THE SCUDDER FUND 1996 PROSPECTUS, THE FOREGOING EXAMPLE ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND THAT THE PERCENTAGE
AMOUNTS LISTED UNDER "ANNUAL FUND OPERATING EXPENSES" REMAIN THE SAME EACH
YEAR. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RETURN. ACTUAL SCUDDER FUND EXPENSES AND RETURN VARY FROM YEAR TO
YEAR AND MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
34
<PAGE>
The following table includes selected data for a share of the Scudder Fund
outstanding throughout each period (based on monthly average shares
outstanding during the period) and other performance information derived from
the audited financial statements of the Scudder Fund. If you would like more
detailed information concerning the Scudder Fund's performance, a complete
listing of its portfolio and audited financial statements are available in the
Scudder Fund's Annual Report dated March 31, 1996.
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $39.72 $42.96 $35.69 $34.36 $34.69
------ ------ ------ ------ ------
Income from investment operations:
Net investment income................ .38 .21 .31 .38 .44
Net realized and unrealized gain
(loss) on investment transactions... 7.19 (1.03) 7.74 2.64 (.37)
------ ------ ------ ------ ------
Total from investment operations....... 7.57 (.82) 8.05 3.02 .07
------ ------ ------ ------ ------
Less distributions:
From net investment income........... (.40) -- (.63) (.83) --
In excess of net investment income... -- -- (.06) -- --
From net realized gains on investment
transactions........................ (1.18) (2.42) (.09) (.86) (.40)
------ ------ ------ ------ ------
Total distributions.................... (1.58) (2.42) (.78) (1.69) (.40)
------ ------ ------ ------ ------
Net asset value, end of period......... $45.71 $39.72 $42.96 $35.69 $34.36
====== ====== ====== ====== ======
TOTAL RETURN (%)....................... 19.25 (2.02) 22.69 9.12 .18
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($
millions)............................. 2,515 2,192 2,198 1,180 933
Ratio of operating expenses to average
net assets (%)........................ 1.14 1.19 1.21 1.26 1.30
Ratio of net investment income to
average net assets (%)................ .86 .48 .75 1.13 1.25
Portfolio turnover rate (%)............ 45.2 46.3 39.9 29.2 50.4
</TABLE>
According to the Scudder Fund 1996 Prospectus, the Scudder Fund is designed
for long-term investors who can accept international investment risk. The
dollar value of the Scudder Fund's portfolio securities fluctuates with
changes in market and economic conditions abroad and with changes in relative
currency values. Changes in the Scudder Fund's share price may not be related
to changes in the U.S. stock and bond markets. As with any long-term
investment, the value of shares of the Scudder Fund when sold may be higher or
lower than when purchased. For additional information concerning risks
associated with an investment in the Scudder Fund, see "Risk Factors" in the
Scudder Fund 1996 Prospectus.
35
<PAGE>
Set forth below is additional information from the Scudder Fund 1996
Prospectus concerning the performance of the Scudder Fund. Performance figures
are historical and all total return calculations assume reinvestment of
capital gains and income distributions. THE INVESTMENT RETURN AND PRINCIPAL
VALUE OF THE SCUDDER FUND'S SHARES REPRESENT PAST PERFORMANCE AND WILL VARY
DUE TO MARKET CONDITIONS, AND THE SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN AT ORIGINAL PURCHASE.
ANNUAL CAPITAL CHANGES--PAST TEN YEARS*
<TABLE>
<CAPTION>
YEARS ENDED NET ASSET CAPITAL GAINS
MARCH 31, VALUE/SHARE DIVIDENDS DISTRIBUTIONS CAPITAL CHANGE
----------- ----------- --------- ------------- --------------
<S> <C> <C> <C> <C>
1986 36.93 $0.41 $0.13 +61.28%
1987 44.05 0.49 5.93 +38.44
1988 33.43 0.82 9.39 - 2.45
1989 34.79 0.13 3.06 +13.91
1990 37.00 0.43 3.15 +15.81
1991 34.69 0.74 1.98 - 0.67
1992 34.36 -- 0.40 - 0.95
1993 35.69 0.83 0.86 + 6.53
1994 42.96 0.69 0.09 +21.59
1995 39.72 -- 2.42 - 2.02
1996 45.71 0.40 1.18 +18.19
</TABLE>
GROWTH OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
TOTAL RETURN
YEARS ENDED VALUE OF INITIAL ----------------------------------
MARCH 31, 1996 $10,000 INVESTMENT AVERAGE ANNUAL CUMULATIVE
-------------- ------------------ -------------- ----------
<S> <C> <C> <C>
One Year $11,925 +19.25% +19.25%
Five Years $15,670 +9.40% +56.70%
Ten Years $29,692 +11.50% +196.92%
</TABLE>
- --------
* For definition of "capital change," see "Distribution and performance
information" in the Scudder Fund 1996 Prospectus.
The Scudder Fund retains the investment management firm of Scudder, Stevens
& Clark, Inc., a Delaware corporation (the "Scudder Fund Adviser"), to manage
the Scudder Fund's daily investment and business affairs subject to the
policies established by the SIFI's Board of Directors. Such Board has overall
responsibility for the management of the Scudder Fund under Maryland law. For
the fiscal year ended March 31, 1996, the Scudder Fund Adviser received an
investment management fee of 0.82% of the Scudder Fund's average daily net
assets. The Scudder Fund Adviser receives from the Scudder Fund an investment
management fee for its services equal, on an annual basis, to 0.90 of 1% of
the first $500 million of average daily net assets; 0.85 of 1% of the next
$500 million of such assets; 0.80 of 1% of the next $1 billion of such assets
and 0.75 of 1% of such assets in excess of $2 billion. The fee is payable
monthly, provided that the Scudder Fund will make such interim payments as may
be requested by the Scudder Fund Adviser not to exceed 75% of the amount of
the fee then accrued on the books of the Scudder Fund and unpaid. According to
the Scudder Fund 1996 Prospectus, the fee is higher than that charged by many
funds which invest primarily in U.S. securities but not necessarily higher
than the fees charged to funds with investment objectives similar to that of
the Scudder Fund. All the Scudder Fund's expenses are paid out of its gross
investment income. Shareholders pay no direct charges or fees for investment
services.
36
<PAGE>
Participants investing in this Fund will not have any voting rights with
respect to the interest in the Scudder Fund held by this Fund. The voting
rights with respect to such interest are vested in the Trustee.
----------------
AVAILABILITY OF ADDITIONAL INFORMATION CONCERNING INVESTMENT OPTIONS
A Participant or a Participant's beneficiary will be provided, upon request,
the following information, which will be based on the latest information
available to the Plan:
(i) A description of the annual operating expenses of each designated
investment alternative (e.g., investment management fees, administrative
fees, transaction costs) which reduce the rate of return to Participants
and beneficiaries, and the aggregate amount of such expenses expressed as a
percentage of average net assets of the designated investment alternative;
(ii) Copies of any prospectuses, financial statements and reports, and of
any other materials relating to the investment alternatives available under
the Plan, to the extent such information is provided to the Plan;
(iii) A list of the assets comprising the portfolio of each designated
investment alternative which constitute Plan assets within the meaning of
29 CFR 2510.3-101, the value of each such asset (or the proportion of the
investment alternative which it comprises), and, with respect to each such
asset which is a fixed rate investment contract issued by a bank, savings
and loan association or insurance company, the name of the issuer of the
contract, the term of the contract and the rate of return on the contract;
(iv) Information concerning the value of shares or units in designated
investment alternatives available to Participants and beneficiaries under
the Plan, as well as the past and current investment performance of such
alternatives, determined, net of expenses, on a reasonable and consistent
basis; and
(v) Information concerning the value of shares or units in designated
investment alternatives held in the account of the Participant or
beneficiary.
The information described above may be obtained by a Participant or a
beneficiary upon his or her request, which should be directed to Kathryn
Turner, Corporate Director--Human Resources, Circus Circus Enterprises, Inc.,
2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109 (702-734-0410).
VALUATION OF THE FUNDS
As of the last day of each calendar month and such other dates as the Plan
Administrator may designate from time to time (the "Valuation Date"), the
Custodian and the Trustee will determine the "net worth" of the respective
investment Funds in their custody. Interim Valuation Dates no more frequently
than weekly may be used for purposes of facilitating hardship withdrawals. The
"net worth" of an investment Fund as of any Valuation Date is equal to the
"adjusted net worth" of the assets of such investment Fund as of such
Valuation Date, as determined by the Custodian or Trustee, as the case may be,
and reported to the Plan Administrator, including withdrawals, distributions
and transfers chargeable to such investment Fund which have been incurred but
not yet paid as of such Valuation Date. The Account of each Participant is
adjusted upward or downward as of each Valuation Date in proportion to the
amounts credited to the respective Accounts of all of the Participants that
are invested in each of such Funds so that the sum of the amounts credited to
the Accounts of all of the Participants that are invested in each such Fund
will be equal to the "adjusted net worth" of that Fund and so that the sum of
the Accounts of all of the Participants will be equal to the "adjusted net
worth" of the investment Funds.
VESTING
A participant will be 100% vested in all amounts allocated to his Savings
Contribution Account or his Rollover Contribution Account at all times.
If a Participant first worked as an Eligible Employee before July 3, 1989,
he will be 100% vested in all amounts allocated to his other Accounts at all
times, provided he entered the Plan by December 31, 1992. If he first worked
as an eligible Employee on or after July 3, 1989, or if he enters the Plan
after December 31, 1992, the vested portion of his Matching Contribution
Account, Automatic Contribution Account, ESOP Matching
37
<PAGE>
Contributions, ESOP Automatic Contributions and any Discretionary
Contributions, as well as the earnings thereon, will be determined under the
following schedule based upon the Participant's total number of Years of
Vesting Service as of the date his eligible service terminates:
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF VESTING SERVICE VESTED
------------------------ INTEREST
--------
<S> <C>
Less than 3...................................................... 0%
3................................................................ 25%
4................................................................ 50%
5................................................................ 75%
6 or more........................................................ 100%
</TABLE>
However, a Participant will be 100% vested in all of his accounts upon
reaching his Normal Retirement Date.
The vested portion of a Participant's Account will be available for payment
after the end of the calendar quarter in which his employment terminates. See
"Benefits Under the Plan," below. Any non-vested portion will be forfeited at
the time the vested benefits are paid, or, if earlier, at the time the
Participant has incurred five consecutive One Year Breaks in Service.
Forfeitures during any Plan Year, to the extent not needed to restore the
Forfeitures of returning Participants who have "bought back" their prior
Forfeitures, will be reallocated to other Participants as additional Automatic
Contributions. See "Contributions," above.
If a Participant who has incurred a Forfeiture returns to work after
incurring five consecutive One Year Breaks in Service, the Forfeiture cannot
be reclaimed for any reason.
If a Participant returns before incurring five consecutive One Year Breaks
in Service, then:
--If the Participant did not receive his vested benefits, his entire
Account will remain intact, and he will not incur a Forfeiture.
--If the vested benefits were paid to the Participant, he will have
incurred a Forfeiture, but he has the right to "buy back" his
Forfeiture by paying back to the Trustee the full amount of the prior
distribution, generally within five years after the date he returns to
employment.
WITHDRAWALS ON ACCOUNT OF HARDSHIP
An Employee who has been a Participant in the Plan for at least 18 months
may request a distribution from his Account of his Savings Contributions, plus
earnings credited directly to those contributions prior to January 1, 1989,
for reasons of a "hardship," as defined in the Plan, as determined in the Plan
Administrator's discretion exercised in a uniform and nondiscriminatory
manner. In exercising its discretion, the Plan Administrator will request a
detailed financial statement from the Participant explaining his need for the
funds and available access to funds from other sources.
"Hardship" may include expenses for (a) the purchase of a Participant's
primary residence (excluding mortgage payments), (b) payment of tuition for
the next 12 months of post-secondary education of the Participant, his spouse,
children, or other dependents, (c) payments needed to prevent the
Participant's eviction from or foreclosure on the mortgage on his principal
residence, and (d) medical expenses described in Section 213(d) of the Code
incurred by the Participant, the Participant's spouse or any dependents of the
Participant (as defined in Section 152 of the Code) or that are necessary in
order to permit the Participant or dependent to obtain medical care.
38
<PAGE>
A distribution based on financial hardship may not exceed the amount
required to meet the immediate financial needs created by the hardship and not
reasonably available from the Participant's other resources, nor may such a
distribution be in an amount less than $1,000.
The Plan Administrator has the discretion to determine whether the
requirements for a hardship withdrawal have been met. The Plan Administrator
must deny any request for a financial hardship withdrawal that does not meet
those requirements. The Plan requires that the Plan Administrator strictly
construe the application of facts to the "hardship" definition.
The amount of funds withdrawn by a Participant will be charged against the
Participant's Account.
WITHDRAWALS AFTER AGE 59 1/2
A Participant who is fully vested in his Account balance and has attained
the age of 59 1/2 may request a withdrawal, which will be paid to the
qualifying Participant in a single lump sum payment.
DIVERSIFICATION ELECTION
During the Diversification Election Period a qualifying Participant may
(subject to the minimum amounts specified in the Plan) make a Diversification
Election by directing the Trustee in writing as to the investment of a portion
of his ESOP Matching Contribution Account and ESOP Automatic Contribution
Account through the sale of Employer Securities attributable to the amount to
be diversified.
Such a Participant may elect, within 90 days after the close of the first
Plan Year in the Diversification Election Period, to diversify an amount not
exceeding 25% of the balance of his ESOP Matching and ESOP Automatic Accounts,
determined as of the last day of such Plan Year. Within 90 days after the
close of the second, third, fourth and fifth Plan Years in the Diversification
Election Period, such a Participant may elect to diversify the ESOP Matching
and ESOP Automatic Contribution Accounts, determined as of the last day of
such Plan Year, and the amount with respect to which diversification was
previously elected. In the last Plan Year of the Diversification Election
Period, the Participant may elect to diversify the difference between 50% of
the balance of his ESOP Matching and ESOP Automatic Contribution Accounts,
determined as of the last day of such Plan Year, and the amount with respect
to which diversification was previously elected.
The Trustee may offer Employer Securities being sold pursuant to a
Diversification Election to the Company or its affiliates or in the organized
trading market. The terms of any such offer to the Company or its affiliates
will require that such entities purchase the Employer Securities at fair
market value, as determined at the time of acquisition of the Employer
Securities, without the payment of any sales commissions. The proceeds of
diversification sales are required to be invested in the Funds referred to in
the Plan as Funds B, C, D, E, F and/or G in the proportions elected by the
Participant.
BENEFITS UNDER THE PLAN
Retirement Benefit. A Participant will be entitled to full retirement
benefits under the Plan upon such Participant's attaining the age of 65 years
or, if later, the date on which he completes five full years of participation
in the Plan. Until a Participant reaches the age of 70 1/2 or actually retires
from the employ of the Employer, generally no retirement benefits will be
payable to him, and he will continue to be treated in all respects as a
Participant. Upon retirement of a Participant or his reaching age 70 1/2, such
Participant is entitled to a retirement benefit in an amount equal to 100% of
the balance in his Account as of the Valuation Date concurring with or next
following the date of his retirement.
For calendar years beginning before January 1, 1997, a Participant will be
required to begin receiving payment of his vested retirement benefit, whether
or not he has retired, no later than the first April 1 following the end of
the calendar year in which he attains age 70 1/2. For calendar years beginning
after December 31, 1996, however, payments must generally be made no later
than the first April 1 following the end of the calendar year in which he
attains age 70 1/2 or retires, whichever is later. Thereafter, additional
distributions will be made to
39
<PAGE>
him from his Account in amounts determined under Section 401(a)(9) of the
Code, not later than December 31 of each year, until his entire vested Account
balance has been distributed to him.
Severance of Employment Benefit. A Participant whose employment with the
Employer is terminated for reasons other than retirement or death will be
entitled to a severance of employment benefit in an amount equal to the vested
portion of his Account as of the Valuation Date concurring with or next
following the date on which such termination of employment occurs.
Death Benefit. If a Participant dies, his beneficiary will be entitled to a
death benefit in an amount equal to 100% of the balance in his Account as of
the Valuation Date immediately preceding or concurring with the date of his
death. Each Participant may designate a beneficiary to receive his death
benefit, and may change or revoke any such designation. Each designation or
revocation must be in writing and filed with the Plan Administrator on forms
prescribed by the Plan Administrator.
If a Participant dies without designating a beneficiary or beneficiaries, or
if any such designation is legally ineffective, or if such beneficiary or
beneficiaries do not survive the Participant, then the Participant's death
benefit will be paid to his estate. However, if no personal representative is
appointed for the Participant's estate, then his next of kin under the laws of
descent and distribution in the state where he resided at the time of his
death will be deemed to be his beneficiary or beneficiaries.
Notwithstanding the foregoing, if the Participant is married as of the date
of his death, the Participant's surviving spouse will be his sole beneficiary,
and will receive the full amount of his death benefit unless the spouse
consents to, or has consented to, the Participant's designation of another
beneficiary. Any such consent to the designation of another beneficiary must
be in writing, must acknowledge the effect of the consent, must be witnessed
by a Plan representative or by a notary public, and will be effective only
with respect to that spouse.
To the extent permitted by Internal Revenue Service Rules, any death benefit
payable to a minor child will generally be held until the child has reached
the age of majority unless a legal guardian is appointed for the child.
Deferred Benefit. A Participant or beneficiary who is eligible to receive a
benefit under the Plan, but who does not receive the benefit on the Valuation
Date as of which it is determined, will continue to have his Account held and
invested under the Plan, where it will continue to share in the earnings and
losses of the trust fund and separately invested Funds in which it is
invested.
Payment of Benefits. The benefit to which a Participant is entitled will be
paid to him (or, in the case of a death benefit, will be paid to his
beneficiary or beneficiaries) in a lump sum, as soon as practicable after the
Valuation Date that coincides with or immediately follows the Participant's
retirement, disability, severance of employment or death, as the case may be.
No distribution may be made of the benefit of any Participant prior to his
Normal Retirement Date unless the value of his benefit does not exceed $3,500,
or unless the Participant consents to the distribution. In any event, for Plan
Years beginning before January, 1997, retirement or disability benefits must
begin no later than the April 1 of the year immediately following the calendar
year in which the Participant reaches age 70 1/2. For calendar years beginning
after December 31, 1996, however, payments must generally be made no later
than the first April 1 following the end of the calendar year in which he
attains age 70 1/2 or retires, whichever is later.
Any benefits attributable to a Participant's ESOP Matching Contribution
Account and ESOP Automatic Contribution Account (except as invested pursuant
to a Diversification Election) will be paid to the Participant (or, if
applicable, his beneficiary or beneficiaries), to the extent possible, in
whole units of Employer Securities. Fractional interests will be paid in cash
based on the market price of the Employer Securities at the distribution date.
Any other benefits payable under the Plan may be paid to the Participant
(or, if applicable, his beneficiary or beneficiaries) in cash or in kind.
40
<PAGE>
Under certain circumstances, set forth in detail in the Plan, if Employer
Securities distributed to a Participant or beneficiary are not then listed on
a national securities exchange or quoted by a national securities association,
the Participant or beneficiary will have an option to put any of the units of
such Employer Securities to the Company.
VOTING AND OTHER RIGHTS
As the owner of record of the Employer Securities held under the terms of
the Plan, the Trustee exercises any and all voting and other rights with
respect to such securities. However, a Participant may direct the Trustee
regarding the exercise of such rights for the Employer Securities (including
fractional shares) allocated to his ESOP Matching Contribution Account and
ESOP Automatic Contribution Account.
If possible, the Trustee will notify each Participant at least 30 days
before the date upon which any voting or other rights are to be exercised, and
will provide each Participant with copies of all information distributed to
the security holders of record by the Employer regarding the exercise of such
rights. However, if the notice received by the Trustee, as stockholder of
record, makes it impossible for the Trustee to give the Participants 30 days
notice, the Trustee will notify the Participants regarding the exercise of
such rights as soon as practicable after it receives the information.
Under the terms of the Plan, if the Trustee receives no direction regarding
exercise of voting or other rights with respect to Employer Securities
allocated to a Participant's ESOP Matching Contribution Account and ESOP
Automatic Contribution Account, the Trustee will exercise such rights in the
manner it deems appropriate.
Notwithstanding the provisions of the Plan relating to the voting of
allocated shares, it is also possible that ERISA requirements might be
interpreted, in limited situations, to require the Trustee to make an
independent decision regarding the voting of allocated shares even when
instructions are received from Participants.
Any voting and other rights with respect to Employer Securities (including
fractional shares) held by the Trustee that are allocated to any ESOP loan
suspense account or to the Circus Circus Stock Fund are exercised by the
Trustee at its sole discretion.
Any voting rights with respect to securities representing investments of the
Plan in investment options other than the Circus Circus Stock Fund are vested
in the Trustee.
DIVIDENDS
Cash dividends paid for any Plan Year with respect to Employer Securities
(including fractional shares) allocated to the Participant's ESOP Matching
Contribution Account and ESOP Automatic Contribution Account will be paid, if
the Company so directs, to the Participants to whom they are allocated.
Any such cash dividends which are not distributed to Participants will be
retained by the Trustee and allocated in the same manner as other income of
the ESOP Fund.
Stock Dividends paid with respect to Employer Securities (including
fractional shares) allocated to each Participant's ESOP Matching Contribution
Account and ESOP Automatic Contribution Account will be retained by the
Trustee and allocated in the same manner as other income of the ESOP Fund.
ASSIGNMENT; LIENS
A Participant or his beneficiary may not alienate, sell, transfer, assign,
pledge, encumber or charge his interest in the Plan. No interest in the Plan
may be attached or subjected to other legal process except to the extent
provided in the Plan or as may be required by law. Pursuant to the Retirement
Equity Act of 1984 amending Section 401(a)(13) of the Code, a "qualified
domestic relations order" will not be treated as an illegal assignment or
attachment. Detailed procedures regarding the administration of such orders
are set forth in the Plan's Summary Plan Description, which is available on
request from the Corporate Director--Human Resources. Also, an Internal
Revenue Service levy on an Account is not considered an illegal assignment or
attachment.
41
<PAGE>
AMENDMENT AND TERMINATION
The Company anticipates that the Plan will continue indefinitely as a
qualified plan under the Code, but reserves the right to terminate the Plan at
any time by action of the Board of Directors of the Company or to amend the
Plan by action of the Company's Board of Directors. However, such an amendment
or termination cannot transfer assets of the Plan for purposes other than for
the exclusive benefit of Participants and their beneficiaries, and cannot
cause or permit any assets of the Plan, its Trusts or Contracts to revert to
or become the property of the Company except in the case of a contribution
made to the Plan under a mistake of fact or in the case of a contribution
disallowed as a deduction under the Code with respect to the Company.
REFERENCE TO THE PLAN
The above summary of the Plan and the Agreement of Trust does not purport to
be complete and is subject in all respects to the provisions of the Plan and
the Agreement of Trust, copies of which are available from the Company on
request and which have been filed with the Securities and Exchange Commission
as exhibits to the Company's Registration Statement (SEC File No. 33-18278).
FEDERAL TAX ASPECTS
The Company has obtained from the Internal Revenue Service a favorable
determination letter that the Plan, including the cash or deferred
arrangements under Section 401(k) of the Code and the ESOP features under
Section 4975(e)(7) of the Code, constitutes a qualified profit sharing plan
under Section 401(a) of the Code and a qualified ESOP under Section 4975(e)(7)
of the Code, and that the Trust is exempt from Federal income tax under
Section 501(a) of the Code. In conjunction with the 1995 Amendments, the
Company intends to submit the Plan to the Internal Revenue Service to seek its
determination that the Plan, in its amended form, continues to meet the
requirements of a qualified profit sharing plan under Section 401(a) of the
Code, a qualified cash or deferred arrangement under Section 401(k) of the
Code, and a qualified ESOP under Section 4975(e)(7) of the Code, and that the
Trust continues to be exempt from Federal income tax under Section 501(a) of
the Code. Trenam Kemker, special counsel to the Company, has provided the
Company with their opinion that, subject to certain limitations set forth
therein, principally related to the adoption of final regulations by the
Internal Revenue Service and the U.S. Department of Labor, the adoption of the
1995 Amendments will not cause the Plan or Trust documents to fail to be in
substantial compliance with Sections 401(a), 401(k) and 4975(e)(7) of the
Code, and the adoption of the 1995 Amendments will not cause the Plan to fail
to be in substantial compliance with the applicable portions of ERISA that did
not amend the Code. The IRS could request further amendments to the Plan, and
could condition any determination letter upon timely adoption of such
amendments. The opinion of Trenam Kemker is conditioned upon the adoption by
the Company of any IRS requested amendments within 90 days after the issuance
of a determination letter that is conditioned upon timely adoption of such
amendments. So long as the Code requirements continue to be met, the amounts
contributed by the Company on behalf of a Participant will be deductible by
the Company for Federal income tax purposes and amounts contributed by the
Company as Savings Contributions on behalf of a Participant who has executed a
salary reduction agreement will be excluded from the Participant's gross
income. Contributions made on a Participant's behalf and the income and
appreciation on Employer contributions will not be subject to income tax while
held in the Trust Fund and will not be includable in the Participant's taxable
income until distributed to him.
If an amount in a Participant's Account is withdrawn, the amount withdrawn
will be taxable to him as ordinary income (except for certain lump sum
distributions made after a member has attained age 59 1/2). Any withdrawal
prior to age 59 1/2 will also be subject to a 10% excise tax unless an
exemption from such excise tax is applicable. If a Participant rolls the
distribution over into an IRA or another eligible qualified plan, the excise
tax will not be imposed on the portion of the distribution that is rolled
over. The excise tax also will not be imposed if the Participant is over age
59 1/2 when the distribution is received, or if he is over age 55 and has
retired. Any distribution made after the death of the Participant is exempt
from the 10% excise tax regardless of the age of the Participant. Also, any
distribution to a spouse, former spouse, child or other dependent of the
Participant pursuant to a qualified domestic relations order will be exempt
from the excise tax.
42
<PAGE>
Upon distribution of a Participant's entire Account in a lump sum by reason
of his death or other termination of employment, or after his attainment of
age 59 1/2, the distribution will constitute taxable (ordinary) income to the
Participant which may qualify for special five-year forward income averaging
if the Participant has been a Participant in the Plan for five or more taxable
years. The availability of the election to be taxed under the five-year
forward income averaging provision is subject to a number of limitations
including the limitations that the election be made only once, and that it be
made only after attaining age 59 1/2. Certain Participants who attained the
age of 50 before January 1, 1986, whether or not they have reached age 59 1/2
at the time of distribution, may elect to be taxed under either ten-year
forward income averaging, as in effect immediately before the adoption of the
Tax Reform Act of 1986, or five-year forward averaging.
If a Participant, or an alternate payee under a qualified domestic relations
order who is a spouse or former spouse of a Participant, receives a qualifying
rollover distribution from the Plan, he may transfer, on or before the 60th
day after the day on which he receives such distribution, all or part of the
distribution to: (i) another exempt employees' trust which is part of a
"qualified" plan for Federal income tax purposes, (ii) an "annuity" plan
described in Section 403(a) of the Code, or (iii) an "individual retirement
account," or an "individual retirement annuity" as such terms are described in
the Code, and thereby avoid current taxation of the portion of the
distribution so transferred. Moreover, if the spouse of a Participant receives
a qualifying rollover distribution by reason of the Participant's death, the
spouse may transfer, within the period described in the preceding sentence,
all or a portion of such distribution to an "individual retirement plan" and
thereby avoid current taxation on the portion of the distribution so
transferred. Any lump sum distribution from the Plan to a Participant, to the
surviving spouse of a Participant, or to an alternate payee under a qualified
domestic relations order who is a spouse or former spouse of a Participant,
will be a qualifying rollover distribution. A hardship withdrawal will also
constitute a qualifying rollover distribution, although any intent of the
Participant to roll the money over to an IRA may be inconsistent with the
requirements for receipt of the distribution. A minimum distribution that is
required to be paid at age 70 1/2 or retirement is not a qualifying rollover
distribution, and may not be rolled over to an IRA.
If a Participant, or an alternate payee under a qualified domestic relations
order who is a spouse or former spouse of a Participant, is to receive a
qualifying rollover distribution, he may direct the Trustee to transfer the
amount to be distributed directly to: (i) another exempt employees' trust
which is part of a "qualified" plan for Federal income tax purposes, (ii) an
"annuity" plan described in Section 403(a) of the Code, or (iii) an
"individual retirement account" or an "individual retirement annuity," as such
terms are described in the Code. If he does not elect such a transfer, the
Trustee must withhold 20% of the amount of the distribution to be applied
toward his Federal income tax obligation. In that case, the Participant or
alternate payee may still roll the entire amount of his distribution over to
another plan or an IRA, but the withholding cannot be waived and he will have
to use other funds to complete the rollover.
Similarly, if the surviving spouse of a deceased Participant, is to receive
a qualifying rollover distribution, he may direct the Trustee to transfer the
amount to be distributed directly to an "individual retirement account" or an
"individual retirement annuity," as such terms are described in the Code. In
the absence of a direct transfer election, the same 20% withholding
requirement will apply.
The Plan Administrator will notify all eligible Participants, surviving
spouses and alternate payees who are spouses or former spouses of Participants
of their rights to elect a direct transfer and the procedures for doing so.
If a distribution during a calendar year to a Participant exceeds $150,000,
it may be subject to a 15% excise tax on the portion of the distribution that
is in excess of that amount. In determining whether the $150,000 threshold has
been reached, all distributions from all "qualified" plans, certain similar
types of plans, and IRAs are aggregated. The $150,000 amount is subject to
cost of living adjustments, and also may be a different amount for certain
individuals who filed a "grandfather election" with their 1988 federal income
tax returns. The excise tax may be avoided for the year of distribution by
rolling the distribution over into another "qualified" plan, "annuity" plan or
IRA on or before the 60th day after receipt of the distribution. The excise
tax on excess distributions has been suspended for calendar years 1997, 1998,
and 1999.
43
<PAGE>
The 15% excise tax on any lump sum distribution from the Plan that is made
on account of termination of employment or termination of the Plan, or that is
made after attainment of age 59 1/2, is imposed only on the portion of the
distribution that, when aggregated with all other plan and IRA distributions
received by the Participant or spouse in a calendar year, exceeds $750,000.
However, this $750,000 threshold is only available if five-year or ten-year
forward income averaging, as explained above, is elected, and if no portion of
the distribution is rolled over into an IRA.
With respect to Federal estate tax, distributions under the Plan made as a
result of the death of a Participant or former Participant will generally be
included in determining the taxable amount of the Participant's estate.
However, amounts payable to the deceased Participant's spouse may be eligible
for the Federal estate tax marital deduction. For Federal income tax purposes,
amounts distributed to the beneficiary or estate of a Participant will be
treated in substantially the same way as if distributed to a Participant after
termination of employment.
If a Participant dies with an accumulation that exceeds a threshold
determined under Section 4980A of the Code, the Participant's estate may be
subject to a 15% excise tax on the amount of the "excess accumulation." This
excise tax cannot be avoided by a rollover to an IRA, although in certain
circumstances the Participant's surviving spouse may have the right, if the
spouse is the beneficiary of substantially all of the Participant's
"qualified" plan, "annuity" plan and IRA death benefits, to make an election
to convert the Participant's accumulation to the spouse's distribution for
purposes of this excise tax. In the event that the spouse makes such an
election and then receives a lump sum distribution, the spouse may avoid the
excise tax for the year of distribution by rolling the distribution over into
an IRA on or before the 60th day after receipt of the distribution. Spousal
rollovers to other "qualified" or "annuity" plans are not permitted. The
suspension of the excise tax on excess distributions for calendar years 1997,
1998, and 1999 does not apply with respect to the excise tax on excess
accumulations.
The foregoing description of tax effects is intended to be general in
nature, and is based on interpretations of present Federal statutory and
regulatory authority which may be subject to change. Each Participant or
beneficiary should discuss specific questions with his own tax adviser or
attorney. In addition, there may be tax considerations under foreign, state
and local laws applicable to Participants.
Any material changes in the tax effects of participation in the Plan will be
described in a Supplement to this Prospectus.
APPLICABLE REQUIREMENTS OF ERISA
The Plan is a "defined contribution plan" as described in Section 3(34) of
ERISA. As such, the Plan is subject to the applicable provisions set forth in
Part 1 (Reporting and Disclosure), Part 2 (Participation and Vesting), Part 4
(Fiduciary Responsibility) and Part 5 (Administration and Enforcement) of
Subtitle B of Title I of ERISA which relate to employee pension benefit plans
which are defined contribution plans.
The Plan is not subject to Part 3 (Funding) of Subtitle B of Title I of
ERISA nor is it subject to any of the provisions of Title IV of ERISA. Those
portions of ERISA pertain to "money purchase plans" and "defined benefit
plans."
AMENDMENTS AND OTHER CHANGES AFFECTING THIS PROSPECTUS
After the date hereof, the Plan may from time to time be amended and certain
other changes in respect of the Plan, such as changes in applicable law, may
also occur. Any such amendments or changes that are material for purposes of
this Prospectus will be reflected in a Supplement to this Prospectus.
44
<PAGE>
REPORTS OF THE COMPANY
The Company's Quarterly and Annual Reports to Stockholders, proxy soliciting
material and other communications distributed to the Company's stockholders
generally will be provided to all Participants of the Plan whether or not such
Participants are stockholders of the Company. If a Participant does not for
some reason receive a copy of any of such reports, material or other
communications, he may obtain copies of the same which the Company will
provide promptly without charge upon written or oral request made to the
Company's Corporate Director--Human Resources in the manner described under
"Incorporation of Certain Documents by Reference."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated in this
Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1996 and Amendment No. 1 thereto on Form 10-K/A dated May 22,
1996;
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended April 30, 1996 and July 31, 1996, respectively;
(c) The description of the Common Stock contained in the Company's Form
8-A Registration Statement declared effective by the Commission on October
25, 1983, and any amendments or reports filed for the purpose of updating
such description;
(d) The description of the Company's Common Stock Purchase Rights
contained in the Company's Form 8-A Registration Statement declared
effective by the Commission on August 12, 1994, and any amendments or
reports filed for the purpose of updating such description;
(e) The Plan's Annual Report on Form 11-K for the year ended December 31,
1995 and Amendment No. 1 thereto on Form 11-K/A dated June 21, 1996; and
(f) All documents subsequently filed by the Company or the Plan pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities offered
hereby then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such
documents.
Copies of the documents incorporated by reference herein, except for the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into the documents which this Prospectus incorporates), and
copies of any other documents to which a Participant is entitled as described
in this Prospectus, are available to any Participant receiving a copy of this
Prospectus upon written or oral request. Such request should be directed to
Kathryn Turner, Corporate Director--Human Resources, Circus Circus
Enterprises, Inc., 2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(702-734-0410). See "Additional Information."
LEGAL OPINIONS
The validity of the participation interests in the Plan has been passed upon
by the firm of Schreck, Jones, Bernhard, Woloson & Godfrey, Chartered, Las
Vegas, Nevada. Certain legal matters relating to compliance of the Plan with
the requirements of ERISA have been passed upon by the firm of Trenam, Kemker,
Scharf, Barkin, Frye, O'Neill & Mullis, P.A., Tampa, Florida.
EXPERTS
The consolidated financial statements incorporated by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1996, the Plan's financial statements included in Amendment No. 1
45
<PAGE>
on Form 11-K/A to its Annual Report on Form 11-K for the fiscal year ended
December 31, 1995, incorporated by reference in this Prospectus and elsewhere
in the Registration Statement, to the extent and for the periods indicated in
their reports, have been audited by Arthur Andersen LLP, independent public
accountants, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said reports.
Future consolidated financial statements of the Company and financial
statements of the Plan and the reports thereon of Arthur Andersen LLP also
will be incorporated by reference herein in reliance upon the authority of
that firm as experts in giving those reports to the extent that firm has
audited those consolidated financial statements and consented to the use of
their reports thereon.
46
<PAGE>
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- -------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTA-
TIONS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE-
SENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THESE SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH STATE.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information .................................................... 2
General Information ....................................................... 2
Definitions ............................................................... 3
The Plan .................................................................. 8
General ................................................................. 8
Purpose ................................................................. 8
Administration .......................................................... 8
Eligibility ............................................................. 10
Participation in the Plan ............................................... 10
Contributions ........................................................... 10
Rollover Contributions .................................................. 13
Limitations on Contributions ............................................ 13
Change of Contributions ................................................. 14
Accounts ................................................................ 15
Investment of Contributions ............................................. 15
Description of Investment Options........................................ 16
Availability of Additional Information Concerning Investment Options..... 37
Valuation of the Funds .................................................. 37
Vesting ................................................................. 37
Withdrawals on Account of Hardship ...................................... 38
Withdrawals After Age 59 1/2 ............................................ 39
Diversification Election ................................................ 39
Benefits Under the Plan ................................................. 39
Voting and Other Rights ................................................. 41
Dividends ............................................................... 41
Assignment; Liens ....................................................... 41
Amendment and Termination ............................................... 42
Reference to the Plan ................................................... 42
Federal Tax Aspects ....................................................... 42
Applicable Requirements of ERISA .......................................... 44
Amendments and Other Changes Affecting this Prospectus..................... 44
Reports of the Company .................................................... 45
Incorporation of Certain Documents By Reference............................ 45
Legal Opinions ............................................................ 45
Experts ................................................................... 45
</TABLE>
----------------
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UN-
DER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR THE PLAN SINCE THE DATE HEREOF.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
CIRCUS CIRCUS ENTERPRISES, INC.
----------------
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING AND INVESTMENT PLAN
----------------
PROSPECTUS
----------------
NOVEMBER 29, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Reference is made to the information appearing under the heading
"Incorporation of Certain Documents by Reference" in the Prospectus
constituting a part of this Registration Statement, which information is
incorporated herein by this reference.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Revised Statutes (the "Nevada Law") permits a
corporation to indemnify any of its directors, officers, employees and agents
against costs and expenses arising from claims, suits and proceedings if such
persons acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Notwithstanding the foregoing, in an action by or in the right
of the corporation, no indemnification may be made in respect of any claim,
issue or matter, as to which such person is adjudged to be liable to the
corporation unless a court of competent jurisdiction determines that in view
of all the circumstances of the case, indemnification would be appropriate.
The indemnification provisions of the Nevada Law expressly do not exclude any
other rights a person may have to indemnification under any bylaw, among other
things.
In accordance with Nevada Revised Statutes 78.037, Article XI of the
Company's Restated Articles of Incorporation provides that no director or
officer of the Company shall be personally liable to the Company or its
stockholders for damages for breach of fiduciary duty as a director or
officer, except for (a) acts or omissions which include intentional
misconduct, fraud or a knowing violation of law, or (b) the payment of
dividends in violation of Nevada Revised Statutes 78.300.
Article X, Section 10.2 of the Company's Restated Bylaws provides for
mandatory indemnification of directors and officers to the fullest extent now
or hereafter permitted by law.
The Company maintains a liability insurance policy under which officers and
directors are generally indemnified against losses and liability (including
costs, expenses, settlements, and judgments) incurred by them in such
capacities, individually or otherwise, other than specified excluded losses.
The insurance policy will pay on behalf of the Company all covered losses for
which the Company grants indemnification of each officer or director as
permitted by law which the officer or director becomes legally obligated to
pay on account of an indemnifiable claim. The policy would generally cover, in
addition to other liabilities, liabilities arising under the federal
securities laws; however, the subject of loss may not include any claim or
claims under federal or state law arising out of or relating to (i) the filing
of a registration statement with the Securities and Exchange Commission or the
offer or sale by means of a prospectus of any security with respect to which a
registration statement has been filed, including, but not limited to, any
claim asserting that such registration statement or prospectus contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any underwriting agreement for the offer or sale of any
security, or (iii) any accounting of profits from the purchase or sale of
securities of the Company under Section 16(b) of the Securities Exchange Act
of 1934 or a similar state law.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
<TABLE>
<C> <S>
3(i)(a) Restated Articles of Incorporation of the Company as of July 15, 1988
and Certificate of Amendment thereto, dated June 29, 1989
(Incorporated by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1991).
3(i)(b) Certificate of Division of Shares into Smaller Denominations, dated
June 20, 1991 (Incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended January
31, 1992).
3(i)(c) Certificate of Division of Shares into Smaller Denominations, dated
June 22, 1993 (Incorporated by reference to Exhibit 3(i) to the
Company's Current Report on Form 8-K dated July 21, 1993).
3(ii) Restated Bylaws of the Company (Incorporated by reference to Exhibit
3(ii) to Amendment No. 1 on Form 10-K/A to the Company's Annual Report
on Form 10-K for the fiscal year ended January 31, 1996).
4(a) Rights Agreement, dated as of July 14, 1994, between the Company and
First Chicago Trust Company of New York (Incorporated by reference to
Exhibit 4 to the Company's Current Report on Form 8-K dated August 15,
1994.
4(b) Amendment to Rights Agreement, effective as of April 16, 1996, between
the Company and First Chicago Trust Company of New York (Incorporated
by reference to Exhibit 4(a) to the Company's Quarterly Report on Form
10-Q for the period ended July 31, 1996).
4(c) Group Annuity Contract No. GA70867, effective as of November 1, 1985,
between Bankers Life Company and Circus Circus Enterprises, Inc., and
related letters dated November 15, 1985 and December 4, 1985--
Incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-8 (No. 33-1459).
4(d) Tenth Amendment and Restatement of the Circus Circus Employees' Profit
Sharing, Investment and Employee Stock Ownership Plan.*
4(e) Fifth Amendment and Restatement of the Circus Circus Employees' Profit
Sharing, Investment and Employee Stock Ownership Trust.*
5(a) Opinion of Schreck, Jones, Bernhard, Woloson & Godfrey, Chartered, Las
Vegas, Nevada.*
5(b) Internal Revenue Service determination letter, dated April 28, 1987--
Incorporated by reference to Exhibit 5(b) to the Company's
Registration Statement on Form S-8 (No. 33-1459).
5(c) Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis,
Tampa, Florida.*
5(d) Internal Revenue Service determination letter, dated May 23, 1995.*
23(a) Consent of Schreck, Jones, Bernhard, Woloson & Godfrey, Chartered.
Reference is made to Exhibit 5(a) hereto.
23(b) Consent of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis.
Reference is made to Exhibit 5(c) hereto.
23(c) Consent of Arthur Andersen LLP
24 Power of Attorney. Included on Page II-4 hereof.
</TABLE>
- --------
* Previously filed as an exhibit to this Registration Statement.
II-2
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS AMENDMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF LAS VEGAS, STATE OF NEVADA, ON THE 27TH DAY OF NOVEMBER, 1996.
Circus Circus Enterprises, Inc.
Clyde T. Turner
By_________________________________
CLYDE T. TURNER, CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS CLYDE T. TURNER, MICHAEL S. ENSIGN OR WILLIAM
A. RICHARDSON, AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND
AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS
NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL
AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION
STATEMENT, AND TO FILE THE SAME WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS
IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING
UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND
NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR
COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-
IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS SUBSTITUTE OR SUBSTITUTES,
MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
Clyde T. Turner Chairman of the November 27,
- ------------------------------------- Board and Chief 1996
CLYDE T. TURNER Executive Officer
(Principal
Executive Officer)
Michael S. Ensign Vice Chairman of the November 27,
- ------------------------------------- Board and Chief 1996
MICHAEL S. ENSIGN Operating Officer
Glenn W. Schaeffer President, Treasurer November 27,
- ------------------------------------- and Chief Financial 1996
GLENN W. SCHAEFFER Officer (Principal
Financial Officer)
and Director
William A. Richardson Executive Vice November 27,
- ------------------------------------- President 1996
WILLIAM A. RICHARDSON and Director
II-4
<PAGE>
SIGNATURE TITLE DATE
Senior Vice November ,
- ------------------------------------ President- 1996
KURT D. SULLIVAN Operations and
Director
Tony Coelho* Director November 27,
- ------------------------------------ 1996
TONY COELHO
Fred W. Smith Director November 27,
- ------------------------------------ 1996
FRED W. SMITH
Director November ,
- ------------------------------------ 1996
RICHARD P. BANIS
Director November ,
- ------------------------------------ 1996
RICHARD A. ETTER
- ------------------------------------ Director November ,
ARTHUR M. SMITH 1996
Les Martin Controller November 27,
- ------------------------------------ (Principal 1996
LES MARTIN Accounting
Officer)
- --------
* Signed by Clyde T. Turner pursuant to a Power of Attorney previously filed.
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
Plan has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Las Vegas, State of
Nevada, on the 27th day of November, 1996.
Circus Circus Employees' Profit
SharingAnd Investment Plan
By Circus Circus Enterprises, Inc.
Plan Administrator
Clyde T. Turner
By ___________________________________
Clyde T. Turner, Chairman of the
Board and Chief Executive Officer
II-5
<PAGE>
EXHIBIT 23(C)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 Registration Statement (File No. 33-18278) of our
report dated February 28, 1996 incorporated by reference in Circus Circus
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended January 31,
1996; our report dated June 7, 1996 included in the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Plan's Amendment No. 1
on Form 11-K/A to its Annual Report on Form 11-K for the year ended December
31, 1995; and to all references to our Firm included in this registration
statement.
Arthur Andersen LLP
Las Vegas, Nevada
November 27, 1996
