<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1995.
1933 ACT FILE NO. 2-87153
1940 ACT FILE NO. 811-3880
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THESECURITIES ACT OF 1933
[_]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 15 AND/OR [X]
REGISTRATION STATEMENT UNDER THEINVESTMENT COMPANY ACT OF 1940
[_]
AMENDMENT NO. 15 [X]
WAYNE HUMMER INVESTMENT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
300 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606 (312) 431-1700
(ADDRESS OF PRINCIPAL EXECUTIVE (REGISTRANT'S TELEPHONE NUMBER
OFFICES, ZIP CODE) INCLUDING AREA CODE)
ROBERT J. MORAN
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET, SUITE 2500
CHICAGO, ILLINOIS 60601
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective:
[_]immediately upon filing pursuant to paragraph (b)
[X]on August 1, 1995 pursuant to paragraph (b)
[_]60 days after filing pursuant to paragraph (a)(1)
[_]on (date) pursuant to paragraph (a)(1)
[_]75 days after filing pursuant to paragraph (a)(2)
[_]on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_]This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
AN INDEFINITE AMOUNT OF SECURITIES HAS BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
THE RULE 24F-2 NOTICE FOR THE FISCAL YEAR ENDED MARCH 31, 1995 WAS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION ON OR ABOUT MAY 23, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FORM N-1A
CROSS REFERENCE SHEET
Form N-1A Item Number
- ---------------------
PART A Location in Prospectus
------ ----------------------
1 Cover Page Cover Page
2 Synopsis Summary of Expense
Information
3 Condensed Financial Financial Highlights
Information for the Growth
Fund; Financial Highlights
for the Income
Fund; Performance Information
4 General Description Introduction; Investment
of Registrant Objectives, Policies and
Restrictions of the
Funds
5 Management of the Trust Cover Page; Investment
Objectives, Policies
and Restrictions of the
Funds; Management of
the Trust
5A Management's Discussion Information required by Item 5A
of Fund Performance is included in the
Registrant's Annual Report
of the Growth Fund and the
Income Fund, each for the
year ended March 31, 1995.
As required by said Item
5A, the Registrant undertakes
under "Financial Highlights"
in the Prospectus to provide
free of charge a copy of said
Annual Reports to persons
requesting the same.
6 Capital Stock and Dividends and Capital Gains
Other Securities Distributions; Taxes;
Description of Shares
7 Purchase of Securities Purchase of Shares;
Being Offered Determination of Net
Asset Value
8 Redemption or Repurchase Redemption of Shares
i
<PAGE>
9 Pending Legal Not Applicable
Proceedings
Location in Statement
PART B of Additional Information
------ -------------------------
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 General Information and Background
History
13 Investment Objectives Investment Objectives,
and Policies Policies and Restrictions
14 Management of the Trust Management of the Trust
15 Control Persons and Management of the Trust
Principal Holders of
Securities
16 Investment Advisory Investment Advisory and
and Other Services Other Services; Independent
Auditors; Custodian and
Transfer and Dividend
Paying Agent
17 Brokerage Allocation Brokerage Allocation
18 Capital Stock and Other Shareholder Voting
Securities Rights; Shareholder
Liability
19 Purchase, Redemption and Purchase, Redemption and
Pricing of Securities Pricing of Shares
Being Offered
20 Tax Status Taxes
21 Underwriters Investment Advisory and
Other Services
22 Calculation of Performance Information
Performance Data
23 Financial Financial Statements and
Statements Report of Independent
Auditors
ii
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN
THE STATEMENT OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST, THE IN-
VESTMENT ADVISER, OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
---------------
DISTRIBUTOR AND SHAREHOLDER SERVICE AGENT:
Wayne Hummer & Co.
300 South Wacker Drive
Chicago, Illinois 60606
INVESTMENT ADVISER AND PORTFOLIO ACCOUNTING AGENT:
Wayne Hummer Management Company
300 South Wacker Drive
Chicago, Illinois 60606
AUDITORS:
Ernst & Young LLP
233 South Wacker Drive
Chicago, Illinois 60606
COUNSEL:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
CUSTODIAN AND TRANSFER AND DIVIDEND PAYING AGENT:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
---------------
TABLE OF CONTENTS
PAGE
<TABLE>
<S> <C>
Summary of Expense Information.............................................. 2
Financial Highlights for the Growth Fund.................................... 2
Financial Highlights for the Income Fund.................................... 3
Introduction................................................................ 4
Investment Objectives, Policies and Restrictions of the Funds............... 4
Purchase of Shares.......................................................... 9
Redemption of Shares........................................................ 10
Management of the Trust..................................................... 11
Dividends and Capital Gains Distributions................................... 12
Taxes....................................................................... 12
Performance Information..................................................... 13
Description of Shares....................................................... 14
Determination of Net Asset Value............................................ 15
</TABLE>
LOGO
300 South Wacker Drive, Chicago, Illinois 60606
Wayne Hummer Investment Trust (the "Trust") is a no-load, diversified, open-end
management investment company consisting of two investment portfolios (referred
to individually as a "Fund" and collectively as "Funds") each operating as a
separate mutual fund with its own investment objectives and policies designed
to meet its specific investment goals. The primary investment objective of the
Trust's Wayne Hummer Growth Fund (the "GROWTH FUND") is long-term capital
growth. Current income is a secondary objective. The Growth Fund pursues its
objectives primarily through investment in common stocks and other securities
that the Trust's investment adviser believes have potential for long-term capi-
tal growth. The investment objective of the Trust's Wayne Hummer Income Fund
(the "INCOME FUND") is to achieve as high a level of current income as is con-
sistent with prudent investment management. The Income Fund pursues its objec-
tive primarily through investment in publicly-traded, investment grade debt se-
curities. An investment in the Trust is not a deposit or obligation of or guar-
anteed or issued by any bank, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other agency. Assistance with opening an account
and information about the Trust may be obtained from Wayne Hummer & Co. at the
above address or by telephone at one of the following numbers:
CHICAGO RESIDENTS (312) 431-1700
TOLL-FREE (800) 621-4477
This prospectus sets forth concisely information about the Trust that a pro-
spective investor ought to know before investing. Please read this prospectus
and retain it for future reference. A Statement of Additional Information dated
August 1, 1995 (which is incorporated herein by reference) has been filed with
the Securities and Exchange Commission. It may be obtained from the Trust at no
charge by calling one of the numbers listed above or by writing to Wayne Hummer
& Co. at the above address.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
LOGO
---------------
The date of this prospectus is August 1, 1995.
<PAGE>
SUMMARY OF EXPENSE INFORMATION
<TABLE>
<CAPTION>
FUND
-------------
GROWTH INCOME
------ ------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases or Reinvested Divi-
dends.......................................................... None None
Deferred Sales Load............................................. None None
Redemption Fee.................................................. None None
Exchange Fee.................................................... None None
Annual Trust Operating Expenses (as a percentage of average net
assets)
Management Fees................................................. .80% .50%
12b-1 Fees...................................................... None None
Other Expenses (primarily custodian, transfer agent and profes-
sional fees)................................................... .27% .44%
----- ----
Total Trust Operating Expenses................................ 1.07% .94%
===== ====
</TABLE>
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE ------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
An investor would pay the following ex-
penses on a $1,000 investment, assum-
ing (1) a 5% annual return, and (2)
redemption at the end of each time pe-
riod. As noted in the table above, the
Trust does not charge any redemption
fee................................... Growth $11 $34 $59 $130
Income $10 $30 $52 $115
</TABLE>
The purpose of the preceding table and example is to assist investors in
understanding the various costs and expenses that an investor (referred to
herein as a "Shareholder") in the Trust will bear, directly and indirectly.
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown. The
example assumes a 5% annual rate of return pursuant to requirements of the
Securities and Exchange Commission and is not intended to be representative of
past or future performance of the Trust. See "MANAGEMENT OF THE TRUST" and
"FINANCIAL HIGHLIGHTS" for further information.
FINANCIAL HIGHLIGHTS FOR THE GROWTH FUND
(for a Share outstanding throughout each year)
The table below reflects the results of the Growth Fund's operation for the
ten fiscal periods ended March 31, 1995. The Growth Fund's audited financial
statements and information in the table for the most recent five years,
including the report thereon of Ernst & Young LLP, independent auditors, are
included in the Growth Fund's annual report for the year ended March 31, 1995
which is incorporated by reference into the Statement of Additional
Information. The Growth Fund's annual report also contains additional
performance information. The Statement of Additional Information and/or the
Annual Report may be obtained from Wayne Hummer & Co. upon request and without
charge.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 21.23 $21.72 $20.17 $18.04 $16.54 $14.45 $13.79 $16.14 $13.85 $10.67
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... .32 .28 .28 .36 .46 .30 .27 .33 .27 .29
Net realized and
unrealized gains
(losses) on securities. 2.40 (0.42) 1.70 2.32 2.23 2.39 0.75 (1.28) 2.61 3.20
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations............ 2.72 (0.14) 1.98 2.68 2.69 2.69 1.02 (0.95) 2.88 3.49
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.31) (0.28) (0.29) (0.39) (0.44) (0.24) (0.20) (0.29) (0.24) (0.30)
Distributions from net
realized gain on
securities............. (0.21) (0.07) (0.14) (0.16) (0.75) (0.36) (0.16) (1.11) (0.35) (0.01)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions.... (0.52) (0.35) (0.43) (0.55) (1.19) (0.60) (0.36) (1.40) (0.59) (0.31)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $23.43 $ 21.23 $21.72 $20.17 $18.04 $16.54 $14.45 $13.79 $16.14 $13.85
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN............ 13.04% (0.69)% 9.94% 15.14% 17.47% 18.88% 7.58% (5.95)% 21.71% 33.45%
RATIOS AND SUPPLEMENTARY
DATA
Net assets, end of
period (000's)......... $94,770 $92,391 $93,198 $55,837 $32,445 $24,988 $21,174 $20,451 $18,785 $10,113
Ratio of expenses to
average net
assets (a)............. 1.07% 1.07% 1.12% 1.23% 1.36% 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment
income to average net
assets (a)............. 1.44% 1.33% 1.41% 2.01% 2.87% 1.91% 1.83% 1.73% 1.64% 2.44%
Portfolio turnover rate. 3% 2% 1% 3% 13% 3% 12% 10% 28% 27%
</TABLE>
- -------
NOTE TO FINANCIAL HIGHLIGHTS FOR THE GROWTH FUND:
(a) During the years ended March 31, 1989, 1988, 1987, and 1986 expenses in
excess of the expense limitation of .39%, .05%, .31%, and 1.47%, respectively,
were reimbursed from the Investment Adviser.
2
<PAGE>
FINANCIAL HIGHLIGHTS FOR THE INCOME FUND
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The table below reflects the results of the Income Fund's operation for the
twelve month periods ended March 31, 1995 and 1994 and for the four month
period ended March 31, 1993 (since the Income Fund's inception December 1,
1992). The Income Fund's audited financial statements and information in the
table, including the report thereon of Ernst & Young LLP, independent
auditors, are included in the Income Fund's annual report for the year ended
March 31, 1995 which is incorporated by reference into the Statement of
Additional Information. The Income Fund's annual report also contains
performance information. The Statement of Additional Information and/or the
annual report may be obtained from Wayne Hummer & Co. upon request and without
charge.
<TABLE>
<CAPTION>
DECEMBER
1, 1992
YEAR ENDED THROUGH
MARCH 31, MARCH
------------------ 31,
1995 1994 1993(A)
------- ------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 15.10 $ 15.41 $ 15.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................... 0.99 0.95 0.25
Net realized and unrealized gains (losses)
on securities............................ (0.42) (0.26) 0.41
------- ------- -------
Total from investment operations........ 0.57 0.69 0.66
LESS DISTRIBUTIONS:
Dividends from net investment income...... (0.98) (0.95) (0.25)
Dividends from net realized gains on secu-
rities................................... 0.00(d) (0.05) 0.00
------- ------- -------
Total distributions..................... (0.98) (1.00) (0.25)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............. $ 14.69 $15.10 $15.41
======= ======= =======
TOTAL RETURN................................ 4.16% 4.42% 4.31%
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period (000's)......... $26,352 $33,652 $19,135
Ratio of expenses to average net assets... 0.94% 1.13% 1.39%(b)(c)
Ratio of net investment income to average
net assets............................... 6.70% 6.14% 5.58%(b)(c)
Portfolio turnover rate................... 32% 86% 141%(c)
</TABLE>
NOTES TO FINANCIAL HIGHLIGHTS FOR THE INCOME FUND:
(a) Commencement of operations was December 1, 1992.
(b) During the fiscal period ended March 31, 1993, expenses in excess of the
expense limitation were reimbursable from the Investment Adviser. Absent the
expense limitation, the ratio of expenses to average net assets would have
increased, and the ratio of net investment income to average net assets would
have decreased by 0.10%.
(c) Determined on an annualized basis.
(d) Less than $.01 per share.
3
<PAGE>
INTRODUCTION
The Trust is a no-load, diversified, open-end management investment company
organized as a Massachusetts business trust on September 29, 1983, and
consisting of two Funds, each operating as a separate mutual fund with its own
investment objectives and policies designed to meet its specific investment
goals. An objective of the Trust is to provide its investors with access to
professional advice and portfolio management resources that are normally
beyond the reach of most individual investors. As a "no-load" mutual fund, the
Trust imposes no commissions or charges on its investors when its shares of
either Fund ("Shares" or "Trust Shares") are purchased or redeemed. Shares are
distributed by Wayne Hummer & Co. pursuant to a Distribution Agreement. See
"MANAGEMENT OF THE TRUST."
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS OF THE FUNDS
GROWTH FUND. The primary investment objective of the Growth Fund is to
achieve long-term capital growth. Current income is a secondary objective. The
Growth Fund pursues these investment objectives by investing primarily in
common stocks that the Growth Fund's investment adviser believes have good
long-term growth possibilities, such as the common stocks of companies in
cyclical industries during periods when their common stocks appear to possess
above average potential for capital appreciation. Due to market fluctuations
and the risks inherent in the ownership of all common stocks and other
investments, there can be no assurance that the Growth Fund will achieve its
objectives. The Growth Fund will, however, seek to reduce these risks through
careful management and by investing in a diversified portfolio to enhance
opportunities for above average long-term growth of capital. The Growth Fund's
investment objectives may be changed by the Board of Trustees without
shareholder approval.
Although the Growth Fund normally invests primarily in common stocks of
domestic corporations, occasionally, when such securities are believed to
offer good opportunities for long-term capital growth, the Growth Fund may
make limited investments in preferred stocks and bonds and convertible
debentures rated not less than BBB by Standard and Poor's Corporation ("S&P")
or Baa by Moody's Investors Service, Inc. ("Moody's"). Like higher rated
securities, securities rated in the BBB or Baa categories are considered to
have adequate capacity to pay principal and interest, although they may have
fewer protective provisions than higher rated securities and thus may be
adversely affected by severe economic circumstances and are considered to have
speculative characteristics with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
than is the case with securities in the higher rating categories. If a
defensive position is deemed desirable due to a change in economic or market
conditions, the Growth Fund may, as discussed more fully below, purchase put
and call options, including stock index options, and write covered call
options. The Growth Fund may also invest on a temporary defensive basis all or
part of its assets in fixed income securities such as investment-grade
commercial paper and corporate bonds, United States Government securities,
certificates of deposit, bankers' acceptances, variable rate notes or other
money market instruments (such as short-term corporate debt instruments), or
it may retain cash.
The Growth Fund usually makes investments with the intention of holding such
investments for at least six months, although purchases and sales of
securities will be made whenever necessary to achieve the Growth Fund's
investment objective. During any period when changing market or economic
conditions are foreseen, shifts in portfolio emphasis could increase the rate
of portfolio turnover. This may increase the amount of expenses and brokerage
commissions incurred by the Growth Fund. Because the major portion of the
Growth Fund's investment portfolio normally consists of common stocks, its net
asset value may be subject to greater fluctuation than a portfolio containing
a substantial portion of fixed income securities.
The Growth Fund may invest up to 5% of its net assets in put and call
options traded on national securities exchanges, including put and call
options on stock indices, and may write (sell) covered call options on
securities held in the Growth Fund's investment portfolio. The aggregate
market value of portfolio securities underlying options written by the Growth
Fund may not exceed 25% of the Growth Fund's net assets. Option transactions
will be used primarily to hedge the Growth Fund's investment portfolio and to
protect portfolio securities from unexpected downturns in the market. The
effectiveness of these investment techniques depends on the investment
adviser's ability to predict movements in both interest rates and stock
prices. The risks involved in writing (selling) covered call options include
the possible inability to effect closing transactions at favorable prices and
the inability to participate in any appreciation of the underlying securities
above the exercise price. The risks involved in purchasing put or call options
include the possible loss of the entire premium paid.
4
<PAGE>
In selecting its portfolio investments, the Growth Fund is subject to
certain restrictions and limitations which are fundamental policies of the
Growth Fund. For instance, the Growth Fund may not invest more than 5% of its
total assets in the securities of any one issuer (other than the United States
Government, its agencies or instrumentalities) or own more than 10% of the
outstanding securities, or more than 10% of the outstanding voting securities,
of any one issuer. The Growth Fund also may not invest more than 25% of its
total assets in any one industry.
If any of the foregoing percentage restrictions are adhered to at the time
of investment, a later increase or decrease in percentage ownership resulting
from a change in the value of the Growth Fund's assets will not result in a
violation. A more detailed discussion of the Growth Fund's investment
practices and restrictions and a discussion of their associated risks are
contained in the Trust's Statement of Additional Information under "Investment
Objectives, Policies and Restrictions."
INCOME FUND. The investment objective of the Income Fund is to achieve as
high a level of current income as is consistent with prudent investment
management. The Income Fund pursues its objective primarily through investment
in publicly-traded, investment grade debt securities. The Income Fund's assets
may be invested in a number of types of securities including, but not limited
to, the following: (1) U.S. dollar-denominated corporate debt securities
(domestic or foreign) which are rated not less than Baa by Moody's or BBB by
S&P; (2) obligations of, or guaranteed by, the United States of America, its
agencies or instrumentalities; (3) obligations (payable in U.S. dollars) of,
or guaranteed by, the Government of Canada or any instrumentality or political
subdivision thereof; (4) municipal debt obligations issued by states,
territories or possessions of the United States or the District of Columbia or
their political subdivisions, agencies or instrumentalities, or multistate
agencies or authorities; (5) commercial paper rated Prime-1 or Prime-2 by
Moody's or A-1 or A-2 by S&P; (6) bank certificates of deposit or banker's
acceptances issued by domestic or Canadian chartered banks having total
deposits in excess of $1 billion; (7) time deposits issued by domestic banks
having total deposits in excess of $1 billion and foreign branches of such
banks; (8) options on securities and on indices as described below to hedge
its portfolio investments and not for speculation; (9) financial futures
contracts and options on financial futures contracts to hedge its portfolio
investments and not for speculation; (10) convertible securities which are
convertible into common stock or other equity securities; and (11) cash or
cash equivalents for temporary defensive purposes. Any securities that are
restricted as to disposition under the federal securities laws or are
otherwise considered to be illiquid will not exceed 15% of the net assets of
the Income Fund. A more detailed discussion of the Income Fund's investment
practices and restrictions and a discussion of their associated risks are
contained in the Trust's Statement of Additional Information under "Investment
Objectives, Policies and Restrictions."
There are market and investment risks with any security and the value of an
investment in the Income Fund may fluctuate over time. Normally, the value of
the Income Fund's investments varies inversely with changes in interest rates.
There can be no assurance that the objective of the Income Fund will be
achieved. Corporate debt securities rated within the four highest grades by
Moody's or S&P are generally considered to be "investment grade." Like higher
rated debt securities, securities rated in the Baa or BBB categories are
considered to have adequate capacity to pay principal and interest, although
they may have fewer protective provisions than higher rated securities and
thus may be adversely affected by severe economic circumstances and are
considered to have speculative characteristics. The Income Fund may invest up
to 20% of its total assets in fixed income securities that are rated below Baa
by Moody's or BBB by S&P or are non-rated. For a discussion of lower rated and
non-rated securities and related risks, see "Special Risk Factors--High Yield
(High Risk) Bonds" below. The characteristics of the rating categories are
described in the Trust's Statement of Additional Information under "Appendix
A--Ratings of Investments."
The Income Fund may purchase put and call options traded on national
securities exchanges or the Chicago Board of Trade, including put and call
options on stock indices and interest rates, and may write (sell) covered call
options on securities held in the Income Fund's investment portfolio. The
aggregate market value of portfolio securities underlying options written by
the Income Fund may not exceed 5% of the Income Fund's net assets. Option
transactions will be used to hedge the Income Fund's investment portfolio and
to protect portfolio securities from unexpected downturns in the market. The
effectiveness of these investment techniques depends on the investment
adviser's ability to predict movements in both interest rates and stock
prices. The risks involved in writing (selling) covered call options include
the possible inability to effect closing transactions at favorable prices and
the inability to participate in any appreciation of the underlying securities
above the exercise price. The risks involved in purchasing put or call options
include the possible loss of the entire premium paid.
5
<PAGE>
In selecting its portfolio investments, the Income Fund is subject to
certain restrictions and limitations which are fundamental policies of the
Income Fund. For instance, the Income Fund may not invest more than 5% of its
total assets in the securities of any one issuer (other than the United
States, its agencies or instrumentalities) or own more than 10% of the
outstanding securities, or more than 10% of the outstanding voting securities,
of any one issuer. The Income Fund also may not invest more than 25% of its
total assets in any one industry.
If any of the foregoing percentage restrictions are adhered to at the time
of investment, a later increase or decrease in percentage ownership resulting
from a change in the value of the Income Fund's assets will not result in a
violation. A more detailed discussion of the Income Fund's investment
practices and restrictions and a discussion of their associated risks are
contained in the Trust's Statement of Additional Information under "Investment
Objectives, Policies and Restrictions."
SPECIAL RISK FACTORS--HIGH YIELD (HIGH RISK) BONDS. Subject to its specific
investment objective and policies as described above, the Income Fund may
invest up to 20% of its assets in fixed-income securities below investment
grade offering high current income. Such high yield (high risk), fixed-income
securities ordinarily will be in the lower rating categories of recognized
rating agencies or will be non-rated. Lower rated and non-rated securities,
which are sometimes referred to by the popular press as "junk bonds," have
widely varying characteristics and qualities. These lower-rated or non-rated
fixed-income securities are considered, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation and generally will
involve more credit risk than securities in the higher rating categories.
The market values of such lower rated or non-rated securities tend to react
to individual corporate developments to a greater extent than do those of
higher rated securities, which react primarily to fluctuations in the general
level of interest rates. Such securities also tend to be more sensitive to
economic conditions than higher rated securities. Adverse publicity and
investor perceptions regarding lower rated and non-rated securities, whether
or not based on fundamental analysis, may depress the prices for such
securities. These and other factors adversely affecting the market value of
high yield securities will adversely affect the Income Fund's net asset value.
High yield securities frequently are issued by corporations in the growth
stage of their development. They may also be issued in connection with a
corporate reorganization or a corporate takeover. Companies that issue such
high yielding securities often are highly leveraged and may not have available
to them more traditional methods of financing. Therefore, the risk associated
with acquiring the securities of such issuers generally is greater than is the
case with higher rated securities. For example, during an economic downturn or
recession, highly leveraged issuers of high yield securities may experience
financial stress. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations may also be adversely affected by specific
corporate developments, the issuer's inability to meet specific projected
business forecasts, or the unavailability of additional financing among other
factors. The risk of loss from default by the issuer is significantly greater
for the holders of high yield securities because such securities are generally
unsecured and are often subordinated to other creditors of the issuer.
Although some risk is inherent in all securities ownership, holders of fixed
income securities have a claim on the assets of the issuer prior to the
holders of common stock. Therefore, an investment in fixed income securities
generally entails less risk than an investment in common stock of the same
issuer.
The Income Fund may have difficulty disposing of certain high yield
securities because they may have a thin trading market. Because not all
dealers maintain markets in all high yield securities, the Income Fund
anticipates that such securities could be sold only to a limited number of
dealers or institutional investors. The lack of a liquid secondary market may
have an adverse effect on the market price of such securities. The Income
Fund's ability to dispose of particular issues may also make it more difficult
for the Income Fund to obtain accurate market quotations for purposes of
valuing the Income Fund's assets. Market quotations generally are available on
many high yield issues only from a limited number of dealers and may not
necessarily represent firm bids of such dealers or prices for actual sales.
Municipal Obligations are debt obligations issued by states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, or multistate agencies
or authorities. While in general, Municipal Obligations are tax exempt
securities having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain issues of Municipal Obligations, offer
yields comparable to and in some cases greater than the yields available on
other permissible Income Fund investments. Municipal Obligations generally
include debt obligations issued to obtain funds for various public purposes as
well as certain industrial development
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bonds issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds or notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds that do not carry the
pledge of the credit of the issuing municipality, but generally are guaranteed
by the corporate entity on whose behalf they are issued. Notes are short-term
instruments which are obligations of the issuing municipalities or agencies
and are sold in anticipation of a bond sale, collection of taxes or receipt of
other revenues. Municipal Obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for property or
equipment issued by municipalities although such agreements are obligations of
a municipality, no assurance can be given that the municipality will
appropriate funds for such lease payments. Municipal Obligations bear fixed,
variable or floating rates of interest. The Income Fund may invest in
Municipal Obligations, the ratings of which correspond with the ratings of
other permissible Income Fund investments. Dividends received by shareholders
of Income Fund attributable to interest income received by the Income Fund
from Municipal Obligations will be subject to federal income tax.
Securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities include U.S. Treasury securities, which differ only in their
interest rates, maturities and times of issuance. Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one
to ten years; and Treasury Bonds generally have initial maturities greater
than ten years. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association ("GNMA") pass-through certificates, are supported by the full
faith and credit of the U.S. Treasury; others, such as those of the Federal
Home Loan Banks, by the right of the issuer to borrow from the Treasury;
others, such as those issued by the Federal National Mortgage Association
("Freddie Mac"), by discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality; and others, such as
those issued by the Student Loan Marketing Association, only by the credit of
the agency or instrumentality. While the U.S. Government provides financial
support to such U.S. Government sponsored agencies or instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law. The Income Fund will invest in such securities only when it is
satisfied that the credit risk with respect to the issuer is minimal.
Additional information concerning high yield (high risk) securities appears
in the Trust's Statement of Additional Information under "Appendix A--Ratings
of Investments."
ADDITIONAL INVESTMENT INFORMATION. Zero coupon securities and pay-in-kind
bonds involve additional special considerations. Zero coupon securities are
debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified cash payment date when the
securities begin paying current interest (the "cash payment date") and
therefore are issued and traded at a discount from their face amount or par
value. The market prices of zero coupon securities are generally more volatile
than the market prices of securities that pay interest periodically and are
likely to respond to changes in interest rates to a greater degree than do
securities paying interest currently having similar maturities and credit
quality. Zero coupon, pay-in-kind or deferred interest bonds carry additional
risk in that, unlike bonds that pay interest throughout the period to
maturity, the Income Fund will realize no cash until the cash payment date
unless a portion of such securities are sold and, if the issuer defaults, the
Income Fund may obtain no return at all on its investment. In addition, pay-
in-kind bonds are generally issued by corporations whose cash flows are
currently insufficient to service the intended debt and whose balance sheets
already reflect a significant amount of debt. The utilization of pay-in-kind
bonds has the effect of adding to this debt burden and results in greater risk
to the investor.
Current federal income tax law requires the holder of a zero coupon security
or of certain pay-in-kind bonds (bonds which pay interest through the issuance
of additional bonds) to accrue income with respect to these securities prior
to the receipt of cash payments. To maintain its qualification as a registered
investment company and avoid liability for federal income and excise taxes,
the Income Fund will be required to distribute income accrued with respect to
these securities and may be required to dispose of portfolio securities under
disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements.
The Income Fund will not normally engage in the trading of securities for
the purpose of realizing short-term profits, but will adjust its portfolio as
considered advisable in view of prevailing or anticipated market conditions
and its investment objective. Accordingly, the Income Fund may sell fixed
income securities in anticipation of a rise in interest rates. Frequency of
portfolio turnover will not be a limiting factor should the investment adviser
deem it desirable to purchase or sell securities.
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Higher portfolio turnover involves correspondingly greater brokerage
commissions or other transaction costs. Higher portfolio turnover may result
in the realization of greater net short-term capital gains. In order to
continue to qualify as a regulated investment company for federal income tax
purposes, less than 30% of the annual gross income of the Income Fund must be
derived from the sale or other disposition of securities and certain other
investments held by the Income Fund for less than three months. See "Taxes" in
the Statement of Additional Information.
The Income Fund may take full advantage of the entire range of maturities of
fixed income securities and may adjust the average maturity of its portfolio
from time to time, depending upon its assessment of relative yields on
securities of different maturities and its expectations of future changes in
interest rates. Thus, the average maturity of its portfolio may be relatively
short (under 5 years, for example) at some times and relatively long (over 15
years, for example) at other times. Generally, since the values of short-term
debt securities tend to be more stable than longer term debt securities, the
portfolio's average maturity will be shorter when interest rates are expected
to rise and longer when interest rates are expected to fall.
Neither the Growth Fund nor the Income Fund may borrow money except for
temporary or emergency purposes and not for leverage purposes, and then only
in an amount up to 5% of the net assets of the Growth Fund and up to 10% of
the net assets of the Income Fund, in order to meet redemption requests
without immediately selling any portfolio securities or other assets. These
Funds may not pledge their assets in an amount exceeding the amount of the
borrowings secured by such pledge.
DELAYED DELIVERY TRANSACTIONS. The Income Fund may purchase or sell
portfolio securities on a when-issued or delayed delivery basis. When-issued
or delayed delivery transactions involve a commitment by the Income Fund to
purchase or sell securities with payment and delivery to take place in the
future in order to secure what is considered to be an advantageous price or
yield to the Income Fund at the time of entering into the transaction. The
value of fixed yield securities to be delivered in the future will fluctuate
as interest rates vary. Because the Income Fund is required to set aside cash
or liquid high grade securities to satisfy its commitments to purchase when-
issued or delayed delivery securities, flexibility to manage the Income Fund's
investments may be limited if commitments to purchase when-issued or delayed
delivery securities were to exceed 25% of the value of its assets.
To the extent the Income Fund engages in when-issued or delayed delivery
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with the Income Fund's investment objective and policies and not
for the purpose of investment leverage or to speculate in interest rate
changes. The Income Fund will make commitments to purchase securities on a
when-issued or delayed delivery basis only with the intention of actually
acquiring the securities, but the Income Fund reserves the right to sell these
securities before the settlement date if deemed advisable. See "Investment
Objectives, Policies and Restrictions" in the Statement of Additional
Information.
ASSET-BACKED SECURITIES. The Income Fund may invest in asset-backed
securities. Asset-backed securities are securities which represent a
participation in, or are secured by and payable from, a stream of payments
generated by particular assets, most often a pool or pools of similar assets
(e.g., trade receivables). Asset-backed commercial paper, one type of asset-
backed security, is issued by a special purpose entity organized solely to
issue the commercial paper and to purchase the interest in the assets. The
credit quality of these securities depends primarily upon the quality of the
underlying assets and the level of credit support and/or enhancement provided.
The underlying assets (e.g., loans) are often subject to prepayments which
shorten the securities' weighted average life and may lower their return. If
the credit support or enhancement is exhausted, losses or delays in payment
may result if the required payments of principal and interest are not made.
The value of these securities also may change because of changes in the
market's perception of the creditworthiness of the servicing agent for the
pool, the originator of the pool, or the financial institution providing the
credit support or enhancement.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Income Fund may invest in
collateralized mortgage obligations (CMOs). CMOs are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although
certain classes of CMOs have priority over others with respect to the receipt
of prepayments on the mortgages. Therefore, depending on the type of CMOs in
which the Income Fund invests, the investment may be subject to a greater or
lesser risk of prepayment than other types of mortgage-related securities.
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MORTGAGE-BACKED SECURITIES. The Income Fund may invest in mortgage-backed
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. Some of these securities, such as GNMA certificates, are
backed by the full faith and credit of the U.S. Treasury while others, such as
Freddie Mac certificates, are not.
Mortgage-backed securities are securities representing interests in a pool
of mortgages. Principal and interest payments made on the mortgages in the
underlying mortgage pool are passed through to the Income Fund. Unscheduled
prepayments of principal shorten the securities' weighted average life and may
lower their total return. The value of these securities also may change
because of changes in the market's perception of the creditworthiness of the
federal agency that issued them. In addition, the mortgage securities market
in general may be adversely affected by changes in governmental regulation or
tax policies.
REPURCHASE AGREEMENTS. The Income Fund may enter into repurchase agreements
with a securities dealer or a bank which is a member of the Federal Reserve
System. In the event of a bankruptcy or default of certain sellers of
repurchase agreements, the Income Fund could experience costs and delays in
liquidating the underlying security, which is held as collateral, and the
Income Fund might incur a loss if the value of the collateral held declines
during this period. There is no limit on the percentage of the portfolio's
total assets that may be invested in repurchase agreements, except that
repurchase agreements maturing in more than 7 days, together with any
securities that are restricted as to disposition under the federal securities
laws or are otherwise considered to be illiquid, will not exceed 15% of the
net assets of the Income Fund.
PREFERRED STOCK. Without regard to quality, the Income Fund may invest up to
25% of its total assets (not including cash) in preferred stock. Preferred
stocks are securities that represent an ownership interest in a corporation
providing the owner with claims on the company's earnings and assets before
common stock owners, but after bond owners.
PURCHASE OF SHARES
The Trust's Shares are offered on a continuous basis and sold without a
sales load at their net asset value next determined after an order in proper
form and payment is received. See "DETERMINATION OF NET ASSET VALUE." The
minimum initial investment for the Growth Fund is generally $1,000 and
subsequent investments must generally be at least $500. The minimum initial
investment for the Income Fund is generally $2,500 and subsequent investments
must generally be at least $1,000. The foregoing minimum investments may be
lower for accounts that are part of an employer sponsored and administered
401(K) pension plan. Investments may be made in any amount in excess of these
minimums. Shares may be purchased through the Trust's Distributor, Wayne
Hummer & Co., after establishing a brokerage account with Wayne Hummer & Co.
There is no charge for opening such a brokerage account and no sales charge
for purchasing Shares through Wayne Hummer & Co. The Trust reserves the right,
in its sole discretion, to vary at any time the initial and subsequent
investment minimums, to withdraw the offering or to refuse any purchase order.
To purchase Shares of the Trust, a new investor should mail a completed new
account application to the Trust's Distributor and Shareholder Service Agent,
Wayne Hummer & Co., 300 South Wacker Drive, Chicago, Illinois 60606, and a
brokerage account will then be established in the name of the investor. An
investor who already maintains a brokerage account with Wayne Hummer & Co.
should contact his or her investment executive to purchase Shares of the
Trust. Purchases will be effected through the investor's brokerage account and
all Shares purchased are entered and credited to the account. Payment for
Trust Shares must be made to Wayne Hummer & Co. in cash or by check, draft or
wire transfer unless the necessary funds are already available as a free
credit balance in the investor's brokerage account. Trust Shares may be
purchased through Wayne Hummer & Co. in person, by mail or, where an investor
already has a free credit balance in his or her brokerage account, by
telephone. Orders received by Wayne Hummer & Co. with payment prior to the
close of trading on the New York Stock Exchange (generally 3:00 p.m. Chicago
time) will be effected that business day. Orders received after that time will
be effected the next business day. In the case of an order for the purchase of
Trust Shares paid for by check, Wayne Hummer & Co. advances federal funds on
behalf of the Shareholder, though if the check is subsequently dishonored,
Wayne Hummer & Co. has the right to redeem such Trust Shares and to retain any
dividends or distributions made with respect thereto. The Trust may suspend
the determination of the net asset value, which would delay the normal
processing of orders, in certain unusual circumstances. See "DETERMINATION OF
NET ASSET VALUE." "Business day" as used in this prospectus means any day that
the New York Stock Exchange and federal banks in both Illinois and
Massachusetts are open for business.
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SYSTEMATIC INVESTMENT PLAN. Shareholders of the Trust (except retirement
plan accounts) can arrange to have a pre-authorized amount ($100 minimum)
drawn on their bank account and automatically invested in the specific Fund(s)
of the Trust on a specified day of each month. An authorization agreement
which contains details of the plan can be obtained from the Shareholder's
Wayne Hummer & Co. investment executive. The Systematic Investment Plan may be
terminated by the Trust at any time and by the Shareholder at any time by
notifying his or her investment executive.
EXCHANGE PRIVILEGE. Shareholders of the Trust have the unlimited privilege
(without charge) of exchanging their Shares of the Growth Fund or the Income
Fund for each other or for shares of the Wayne Hummer Money Fund Trust, a
money market mutual fund (the "Money Fund"). Similarly, shares of the Money
Fund may be exchanged for Shares of the Growth Fund and/or the Income Fund
without charge. A Shareholder desiring to utilize the exchange privilege
should contact his or her Wayne Hummer & Co. investment executive at the phone
number or address shown on the cover of this prospectus to obtain information
about the Money Fund and exchange procedures. However, exchanges may only be
made for such Funds which are available for sale in the Shareholder's state of
residence. No guarantee can be made as to the availability of the telephone
exchange privilege (or the telephone redemption privilege discussed below)
during emergency situations or unusual market conditions. Before exchanging
Trust Shares, Shareholders should read the Money Fund prospectus carefully.
Exchanges will be effected through the redemption of Trust Shares tendered for
exchange and the purchase of Money Fund shares at their respective net asset
values next determined after receipt by Wayne Hummer & Co. of the exchange
request. For federal income tax purposes, an exchange constitutes a sale with
respect to which a gain or loss may be realized depending upon whether the
value of the Trust Shares being exchanged is more or less than the
Shareholder's adjusted cost basis.
RETIREMENT PLANS. Wayne Hummer & Co. provides several prototype self-
directed retirement plans, including an Individual Retirement Account Plan, a
Simplified Employee Pension Plan and a Defined Contribution Plan (formerly
"Keogh Plan"), through which an investor may invest in the Trust on a tax-
sheltered basis. The minimum initial purchase of Growth Fund Shares with
respect to each account under the various types of retirement plans is $500
and subsequent investments must be at least $200. The minimum initial purchase
of Income Fund Shares with respect to each account under the various types of
retirement plans is $2,000 and subsequent investments must be at least $500.
Orders for Trust Shares to be purchased for a retirement plan account must be
placed by Wayne Hummer & Co. A retirement plan account may combine investments
in Trust Shares with investments in shares of Wayne Hummer Money Fund Trust or
in other securities purchased through Wayne Hummer & Co.
Additional information on retirement plans provided by Wayne Hummer & Co.,
including a description of applicable service fees and limitations on
contributions and withdrawals, may be obtained by calling Wayne Hummer & Co.
at the telephone numbers shown on the cover of this prospectus or by writing
to Wayne Hummer & Co., Attention: Retirement Plans Department, 300 South
Wacker Drive, Chicago, Illinois 60606.
REDEMPTION OF SHARES
Trust Shares may be redeemed without charge at any time at their net asset
value next determined after the redemption order is received in proper form.
The value of a Shareholder's Trust Shares upon redemption may be more or less
than the cost of such Shares, depending on the net asset value of the Trust's
Shares at the time of redemption.
A Shareholder may redeem Trust Shares through his or her Wayne Hummer & Co.
investment executive by telephone, mail or in person. Such redemption requests
should state the Shareholder's account number. A redemption request received
by Wayne Hummer & Co. prior to the close of trading on the New York Stock
Exchange is effected that day and the proceeds credited to the Shareholder's
Wayne Hummer & Co. brokerage account the next business day. A redemption
request received after the close of trading will be effected the next business
day. The telephone redemption procedure may be terminated by the Trust or
Wayne Hummer & Co. at any time. If, at the time the redemption request is
made, a Shareholder has requested that Wayne Hummer & Co. transmit the
redemption proceeds by mail, the proceeds normally will be mailed on the day
they are credited to the Shareholder's Wayne Hummer & Co. brokerage account,
or, if the request to transmit the proceeds by mail is made subsequent to the
request to redeem, on the next business day after receipt of the Shareholder's
request to transmit the proceeds by mail. In either event, payment will be
made within seven days after the redemption is effected or the request to
transmit proceeds is received. The Trust may suspend the right of redemption
and may postpone the date of payment for Shares for more than seven days under
certain unusual circumstances. See "DETERMINATION OF NET ASSET VALUE."
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Due to the relatively high cost of maintaining smaller accounts, the Trust
reserves the right to redeem Shares (other than Shares purchased for a
retirement plan provided by Wayne Hummer & Co.) for their then current value
if at any time the value of the Shareholder's account is less than $750 in the
case of the Growth Fund or $2,000 in the case of the Income Fund unless this
is due to a decline in the market value of the Trust's assets. In such event,
a Shareholder first will be notified that the value of his or her total
investment is less than the minimum and allowed two months to make an
additional investment before the redemption is made. The proceeds of any such
redemption will be credited to the Shareholder's Wayne Hummer & Co. brokerage
account, if applicable, or will be sent to the Shareholder by mail.
MANAGEMENT OF THE TRUST
Wayne Hummer Management Company (the "Investment Adviser"), 300 South Wacker
Drive, Chicago, Illinois 60606, acts as investment adviser of the Trust and
provides the Trust with operating facilities and management and portfolio
accounting services and serves as investment adviser to the Money Fund, as
well as to various individual, institutional and fiduciary accounts. The
Investment Adviser, organized in 1981, is owned by the general partners of
Wayne Hummer & Co., a securities brokerage firm, which acts as Shareholder
Service Agent and Distributor for the Trust.
Subject to the general supervision of the Board of Trustees, the Investment
Adviser is responsible for management of the Trust's Funds and reviews the
holdings of the Funds in light of its own research analysis and information
from other relevant sources. The Investment Adviser determines the securities
to be purchased, held and sold by the Funds and places all orders.
Alan W. Bird and Thomas J. Rowland are co-portfolio managers of the Growth
Fund. Mr. Bird was the individual portfolio manager of the Growth Fund from
its inception in 1983 until joined by Mr. Rowland in 1987. Mr. Bird joined
Wayne Hummer & Co. in 1983 and became a partner in 1986. He serves as
president of both Wayne Hummer Management Company and the Trust. Prior to
joining Wayne Hummer, Mr. Bird was vice president with Lincoln National
Investment Management Company, executive vice president and chairman of the
board of directors of Royal Bank of Chicago and a senior analyst with the
Endowment Fund of Northwestern University. He earned a BBA from the University
of Iowa and an MBA from Northwestern University. He is a Chartered Financial
Analyst, a Fellow of the Financial Analysts Federation, a member of the
Association for Investment Management and Research and the past chairman of
the Industry Groups Committee of the Investment Analysts Society of Chicago
and the Financial Stock Association. Mr. Rowland joined Wayne Hummer & Co. in
1987 and became a partner in 1990. He serves as vice president of both Wayne
Hummer Management Company and the Trust. Prior to joining Wayne Hummer, Mr.
Rowland spent 14 years with CNA Financial Corporation as a portfolio manager,
research analyst and securities trader. In addition, he spent five years with
the trust department at Harris Trust & Savings Bank. He received a BBA in
finance from the University of Notre Dame and an MBA from Northwestern
University. He is a Chartered Financial Analyst, a Fellow of the Financial
Analysts Federation, a member of the Association for Investment Management and
Research, the Investment Analysts Society of Chicago, and the Security Traders
Association of Chicago.
David P. Poitras is the portfolio manager of the Income Fund. Mr. Poitras
joined Wayne Hummer & Co. in 1985 and became a partner in 1992. He serves as
vice president of the Trust and President and portfolio manager of the Wayne
Hummer Money Fund Trust. He earned a Bachelor of Science degree in finance
from Northern Illinois University. He is a member of the Municipal Bond Club
of Chicago and the Bond Club of Chicago.
As compensation for its advisory and management services to the Trust, the
Investment Adviser receives an annual fee which is computed and accrued daily
and payable monthly. The Investment Adviser receives an annual fee of .80 of
1% of the average daily net assets of the Growth Fund up to $100 million, plus
.65 of 1% of the next $150 million of average daily net assets, plus .50 of 1%
of average daily net assets in excess of $250 million, and an annual fee of
.50 of 1% of the average daily net assets of the Income Fund up to $100
million, plus .40 of 1% of the next $150 million of average daily net assets,
plus .30 of 1% of average daily net assets in excess of $250 million. The
advisory fees paid by the Growth Fund are higher than fees paid by most other
mutual funds, including funds with different investment objectives such as
money market funds. The Investment Adviser has agreed to waive its fees for a
particular Fund to the extent that such Fund's ordinary operating expenses
during any fiscal year exceed either (1) 1.5% of the average daily net assets
of the Fund or (2) the expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Trust's Shares are then
qualified for sale and if required by such laws or regulations, to reimburse
such Fund for certain expenses in excess of any applicable expense
limitations. Expenses which are not subject to these limitations are interest,
taxes, brokerage commissions and extraordinary items. Wayne Hummer Management
Company
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bore all of the initial organizational costs of the Income Fund and all
expenses relating to the initial registration of the Income Fund's Shares.
Such costs and expenses up to $60,000 will be reimbursed by the Trust to Wayne
Hummer Management Company in twenty (20) equal quarterly installment payments,
the first installment of which became due on the ninetieth day next following
the day on which the Income Fund commenced investment operations and was paid
within such time period.
The Investment Adviser also provides the Trust with certain portfolio
accounting services under the terms of a Portfolio Accounting Services
Agreement. The Investment Adviser maintains the accounting books and records
pertaining to each Fund that constitute the record forming the basis for
financial statements of the Funds; maintains capital stock accounts for each
Fund; prepares a daily trial balance for each Fund; calculates the net asset
value of each Fund; maintains all records of a financial nature to each Fund's
transactions; and processes special ledgers and other reports when requested.
As compensation for its accounting services to the Trust, the Investment
Adviser receives an annual fee which is computed and accrued daily and payable
monthly. The Investment Adviser receives for the period January 1, 1995
through December 31, 1995 an annual fee of .0025 of 1% of average daily net
assets of each Fund and for the period January 1, 1996 and thereafter an
annual fee of .01 of 1% of average daily net assets of each Fund; but such fee
shall not exceed $15,000 per Fund per annum. In addition, the Investment
Adviser receives an equipment fee of $50 per Fund per month and is reimbursed
for its out-of-pocket costs for obtaining securities pricing services and the
license for use of portfolio accounting software, and for other out-of-pocket
costs which are incurred in providing the pricing and software services.
Wayne Hummer & Co. acts as the Distributor of the Trust's Shares and the
Shareholder Service Agent to provide information and services to existing and
potential Shareholders, such as: processing new Shareholder account
applications, converting funds into or advancing federal funds for the
purchase of Shares, handling purchase orders and redemption requests, and
answering questions concerning the Trust and Shareholders' transactions with
the Trust. Wayne Hummer & Co. does not receive any compensation for its
services as the Trust's Distributor, though it may be reimbursed by the Trust
for certain out-of-pocket costs which it advances on behalf of the Trust in
connection with its services as Shareholder Service Agent such as postage,
data entry, stationery, and all external forms or other printed material. Any
such reimbursable expenses will be monitored for reasonableness by the
Treasurer of the Trust. Further information with respect to the management of
the Trust is contained in the Trust's Statement of Additional Information
under "Management of the Trust" and "Investment Advisory and Other Services."
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Trust distributes to Shareholders substantially all of its net ordinary
income and any net capital gains realized from the sale of portfolio
securities. The Growth Fund normally declares ordinary income dividends in
April, July, October and December. The Income Fund normally declares ordinary
dividends monthly. Net realized capital gains for both Funds, if any, will be
paid in late April and December.
Dividends and capital gains distributions are automatically reinvested in
Fund Shares at net asset value on the payable date, without a sales charge,
unless the Shareholder instructs otherwise. Such instructions take effect
within 10 days after they are received in writing by Wayne Hummer & Co.
Dividends are taxable to Shareholders whether they are received in cash or
reinvested in additional Shares, as described below.
TAXES
Each Fund intends to continue to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). If so
qualified, a Fund will not be subject to federal income tax on its net
investment income and net realized capital gains distributed to Shareholders.
Dividends paid by the Funds from their net investment income and
distributions of the Fund's net realized capital gains are taxable to
Shareholders whether they are paid in cash or are reinvested in additional
Shares. For federal income tax purposes, distributions of net investment
income and net short-term capital gains are taxable to Shareholders as
ordinary income, while distributions of long-term capital gains are taxable to
Shareholders as long-term capital gains
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regardless of the length of time the Shareholder has held Shares of a Fund.
Under current law, long-term capital gains received by corporations are taxed
at the same rates as ordinary income; long-term capital gains received by
individuals are taxed at a maximum rate of 28%.
Dividends and distributions declared by the Funds in October, November or
December to Shareholders of record as of a date in one of those months and
paid before the following February 1 are treated as paid for federal income
tax purposes on December 31 of the calendar year in which declared. A portion
of the ordinary income dividends paid by the Growth Fund are expected to be
eligible for the dividends-received deduction available to corporate
Shareholders. Only a small portion, if any, of the ordinary income dividends
paid by the Income Fund are expected to qualify for the dividends-received
deduction. Capital gains distributions are not eligible for the dividends-
received deduction. Not later than 60 days after the Trust's fiscal year end,
the Trust will send to its Shareholders a notice designating the amount of any
capital gain distributions, and for corporate Shareholders any distributions
eligible for the dividends-received deduction, which were made during such
year. Shareholders are advised to consult with their tax advisors concerning
their individual tax situations.
A dividend received shortly after the purchase of Shares reduces the net
asset value of the Shares by the amount of the dividend and, although in
effect a return of capital, will be taxable to the Shareholder. If the net
asset value of Shares were reduced below the Shareholder's cost by dividends
representing gains realized on sales of securities, such distributions would
be a return of investment though taxable as stated above.
The Funds are required by law to withhold federal income tax at a rate of
31% from taxable distributions and redemption proceeds paid to Shareholders
who do not furnish their correct taxpayer identification number (in the case
of individuals, their social security number) and in certain other
circumstances.
PERFORMANCE INFORMATION
GROWTH AND INCOME FUNDS. From time to time, in advertisements or reports to
shareholders, each Fund may compare its performance to that of the Consumer
Price Index or various unmanaged indexes such as the Dow Jones Industrial
Average, the Standard & Poor's 500, the Russell Mid-Cap Index, the Lehman
Brothers Bond Indices and the Merrill Lynch Bond Indices. Such Fund may also
quote mutual fund quotation services, such as Lipper Analytical Services, Inc.
or similar industry services, or industry publications such as Morningstar,
Inc., Wall Street Journal, Investor's Daily, Forbes, Barron's, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative for
purposes of comparing their rank or performance to that of other mutual funds
having similar investment objectives. Performance comparisons should not be
considered representative of the future performance of the Fund.
Additionally, from time to time, a Fund may quote average annual total
return, total return and yield figures for its performance in advertisements
and other materials furnished to present or prospective Shareholders. Each of
these figures is based upon historical results and is not necessarily
representative of the future performance of the Fund.
Average annual total return and total return figures measure both the net
income generated by, and the effect of any realized and unrealized
appreciation or depreciation of, the underlying investments in the particular
Fund for the period in question, assuming the reinvestment of all dividends
and distributions during the period. Thus, these figures reflect the change in
value of an investment in such Fund during a specified period. Average annual
total return will be quoted for at least one-, five- and ten-year periods (or
if such periods have not yet elapsed, at the end of a shorter period
corresponding to the life of such Fund) ending on a recent calendar quarter.
Average annual total return figures represent the compound annual percentage
change in the value of a specific dollar invested in such Fund's shares for
the period in question. Total return figures represent the aggregate
percentage or dollar value change over the entire measurement period.
Yield is a measure of the net investment income per share earned over a
specific one-month or 30-day period expressed as a percentage of the
particular Fund's net asset value per share at the end of the period. Yield is
expressed as an annualized figure representing what such Fund's annual yield
would be if the Fund generated the same level of monthly net investment income
over the one-year period. Semi-annual compounding is assumed for the Income
Fund.
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<PAGE>
The Funds' shares are sold at net asset value, and performance and net asset
value will fluctuate. Shares of each Fund are redeemable by an investor at the
then current net asset value, which may be more or less than original cost.
Please refer to the Statement of Additional Information under "Performance
Information" for further information concerning performance of a particular
Fund.
DESCRIPTION OF SHARES
The Trust's Agreement and Declaration of Trust ("Trust Agreement") permits
the Trust to issue an unlimited number of full and fractional units of
beneficial interest ("Shares") in one or more separate series. Only two series
are currently established, which are designated as the "Growth Fund" and the
"Income Fund." Each Share of a Fund of the Trust is without par value,
represents a proportionate interest in that Fund equal to the proportionate
interest represented by each other Share in that Fund, and is entitled to such
dividends and distributions as are declared by the Trustees. Upon liquidation
of a Fund, Shareholders are entitled to share pro rata in the net assets of
the Fund available for distribution. Shares do not have cumulative voting
rights nor any preemptive or conversion rights. Shares when issued as
described herein are fully paid and nonassessable, except as expressly set
forth below. Certificates representing the Shares are not issued. State Street
Bank and Trust Company, the Trust's Transfer Agent, maintains a record of each
Shareholder's ownership. Shareholders will receive confirmations of all
purchases and sales of Trust Shares made for his or her account including
reinvestment of dividends or other distributions.
SHAREHOLDER VOTING RIGHTS. As a general rule the Trust will not hold annual
or other meetings of Shareholders. Under the Trust Agreement, Shareholders are
entitled to vote in connection with the following matters: (1) for the
election or removal of Trustees if a meeting is called for such purpose; (2)
with respect to the adoption of any contract for which approval is required by
the Investment Company Act of 1940 (such as the Trust's Investment Advisory
and Management Agreement); (3) with respect to any termination of the Trust to
the extent and as provided in the Trust Agreement; (4) with respect to any
amendment of the Trust Agreement (other than amendments changing the name of
the Trust, supplying any omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent provision thereof); (5) as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, to the same extent as the stockholders of a Massachusetts
business corporation; and (6) with respect to such additional matters relating
to the Trust as may be required by law, the Trust Agreement, the By-Laws of
the Trust, any registration of the Trust with the Securities and Exchange
Commission or any state, or as the Trustees may consider necessary or
desirable. Each Trustee serves until the next meeting of Shareholders, if any,
and until the election and qualification of his or her successor or until such
Trustee sooner dies, resigns, retires or is removed by vote of at least two-
thirds of the Shares entitled to vote or a majority of the Trustees. Each
Share is entitled to one vote for each Trustee to be elected and one vote on
each other matter presented to Shareholders for a vote.
The Trust Agreement provides that on any matter submitted to a vote of the
Shareholders, all Shares entitled to vote, irrespective of Fund shall be voted
in the aggregate and not by Fund except if the Trustees have determined that
the matter affects only one Fund or as required by the Investment Company Act
of 1940. Thus, voting with respect to certain matters will be by Fund (such as
approval of the Investment Advisory and Management Agreement) and with respect
to other matters will be by all Shareholders without regard to Fund (such as
election of Trustees and the ratification of the selection of independent
auditors).
SHAREHOLDER LIABILITY. The Trust is organized as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
Trust. The Trust Agreement provides that Shareholders shall not be subject to
any personal liability to any person extending credit to, contracting with or
having any claims against the Trust and that every written agreement,
obligation, instrument or undertaking made by the Trust shall contain a
provision that the same is not binding upon the Shareholders personally. With
respect to other claims, a Shareholder may be held personally liable to the
extent that claims are not satisfied by the Trust. Upon payment of any such
liability, however, the Trust Agreement provides that Shareholders of a
particular Fund will be entitled to reimbursement from the general assets of
that Fund. The Trust is covered by insurance which the Trustees consider
adequate to cover foreseeable tort claims. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is considered
remote, since it is limited to circumstances in which the provisions limiting
liability are inoperative and the Trust itself is unable to meet its
obligations.
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<PAGE>
DETERMINATION OF NET ASSET VALUE
GROWTH AND INCOME FUNDS. The net asset value per Share for each Fund is
determined on each day the New York Stock Exchange is open for trading as of
the close of regular session trading on the Exchange (generally 3:00 p.m.,
Chicago time) and at 3:00 p.m. Chicago time on each other day during which
there is a sufficient degree of trading in securities of the particular Fund
so as to affect materially the net asset value of the Shares of such Fund. The
net asset value per Share for each Fund is computed by dividing the value of
the portfolio of securities of the particular Fund plus any other assets minus
all liabilities by the total number of such Fund's Shares outstanding.
Expenses, including the fees payable to the Investment Adviser and amounts
reimbursable to the Shareholder Service Agent, are accrued daily.
In valuing the Growth Fund's securities, each listed and unlisted security
for which last sale information is regularly reported is valued at the last
reported sale price on that day. If there has been no sale on such day, the
last reported sale price prior to that day is utilized if such sale price is
between the closing bid and asked prices of the current day. If such last
reported sale price is not between the current day's closing bid and asked
prices, then the value of such security is taken to be the mean between the
current day's bid and asked prices. In valuing the Income Fund's securities,
fixed income securities are valued by using market quotations, or independent
pricing services that use prices provided by market makers or estimates of
market values obtained from yield data relating to instruments or securities
with similar characteristics.
Any unlisted security for which last sale information is not regularly
reported, any listed debt security which has an inactive listed market for
which over-the-counter market quotations are not readily available and all
other securities and assets are valued for each particular Fund by appraisal
at its fair value as determined in good faith under procedures established by
and under the general supervision and responsibility of the Board of Trustees.
Debt securities having a remaining maturity of less than 60 days are valued at
cost (or, if purchased more than 60 days prior to maturity, the value on the
61st day prior to maturity) adjusted for amortization of premiums and
accretion of discounts.
The Trust may suspend the determination of net asset value and the
processing of orders, the payment of redemption proceeds and postpone the date
of payment for redeemed Shares for more than seven days under the following
unusual circumstances: when the New York Stock Exchange is closed (other than
weekends and holidays) or trading is restricted; when an emergency exists as
determined by the Securities and Exchange Commission, making disposal of
portfolio securities or the valuation of net assets not reasonably
practicable; or during any period when the Securities and Exchange Commission
has by order permitted a suspension of redemption for the protection of
Shareholders.
REPORTS TO SHAREHOLDERS
The Trust sends to its Shareholders various financial reports ("Reports")
such as unaudited semi-annual financial statements and fiscal year-end
financial statements audited by the Trust's independent auditors. To reduce
expenses, only one copy of most Reports may be mailed to all accounts with the
same social security or taxpayer identification number or to all Shareholders
in the same household. Shareholders may call or write Wayne Hummer & Co. to
request that copies of Reports be mailed to each account with a common
taxpayer number or to two or more Shareholders in the same household.
15
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
WAYNE HUMMER INVESTMENT TRUST
A No-Load Mutual Fund
300 South Wacker Drive
Chicago, Illinois 60606
Chicago Residents Call..... (312) 431-1700
Toll Free..... (800) 621-4477
_________________________
This Statement of Additional Information is not the Fund's Prospectus.
This Statement provides additional information which should be read in
conjunction with the Fund's Prospectus dated August 1, 1995. The Prospectus may
be obtained at no charge by telephoning Wayne Hummer & Co., the Fund's
Distributor and Shareholder Service Agent, at one of the above numbers or by
writing to the above address.
The date of this Statement of Additional Information is
August 1, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
BACKGROUND........................................................... 1
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS..................... 1
Growth Fund..................................................... 1
Income Fund..................................................... 1
MANAGEMENT OF THE TRUST.............................................. 14
Trustees........................................................ 14
Officers........................................................ 16
INVESTMENT ADVISORY AND OTHER SERVICES............................... 17
Investment Adviser.............................................. 17
Distributor and Shareholder Service Agent....................... 21
BROKERAGE ALLOCATION................................................. 23
PERFORMANCE INFORMATION.............................................. 24
SHAREHOLDER VOTING RIGHTS............................................ 26
Other Matters................................................... 27
SHAREHOLDER LIABILITY................................................ 27
Limitation of Liability......................................... 28
TRUST NAME........................................................... 28
PURCHASE, REDEMPTION AND PRICING OF SHARES........................... 28
Determination of Net Asset Value................................ 29
TAXES................................................................ 29
Federal Income Tax.............................................. 30
Other Taxes..................................................... 31
INDEPENDENT AUDITORS................................................. 31
CUSTODIAN AND TRANSFER AND DIVIDEND PAYING AGENT..................... 31
LEGAL COUNSEL........................................................ 32
REPORTS TO SHAREHOLDERS.............................................. 32
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT AUDITORS............................................... 32
</TABLE>
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BACKGROUND
Wayne Hummer Investment Trust (the "Trust") is a no-load, diversified,
open-end management investment company the beneficial units ("Shares") of which
are offered in two funds. The Trust is organized as a Massachusetts business
trust pursuant to an Agreement and Declaration of Trust dated September 29, 1983
("Trust Agreement"). Shares of the Trust are distributed by Wayne Hummer & Co.
(the "Distributor" and "Shareholder Service Agent"). Wayne Hummer Management
Company (the "Investment Adviser") is responsible for the management of the
Trust's investment funds subject to the review of the Trust's Board of Trustees.
The Trust is intended to provide its investors (referred to individually as
"Shareholder" and collectively as "Shareholders") with access to professional
advice and portfolio management resources that are normally beyond the reach of
most individual investors. The Trust Agreement provides that the Trust may
issue Shares in one or more series (referred to individually as "Fund" and
collectively as "Funds"). Presently, only two Funds are authorized--the "Growth
Fund" and the "Income Fund." Shares of the Growth Fund were first offered to
the public on December 30, 1983 and shares of the Income Fund on December 1,
1992. See "DESCRIPTION OF SHARES" in the Trust's prospectus dated August 1,
1995 (the "Prospectus").
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Growth Fund. As stated in the Prospectus, the Growth Fund's primary
investment objective is long-term capital growth. Current income is a secondary
objective. Investments generally will be made in companies which the Growth
Fund's investment adviser believes to have an ability to achieve the Growth
Fund's investment objectives. See "INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS" in the Prospectus.
Income Fund. As stated in the Prospectus, the Income Fund's
investment objective is to maximize total return, including a competitive level
of current income, consistent with investing primarily in publicly-traded
investment grade securities. See "INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS" in the Prospectus.
Each Fund of the Trust has adopted certain investment restrictions
which, together with the investment objectives and fundamental policies of such
Trust, cannot be changed without approval by holders of a majority of its
outstanding voting shares. As defined in the Investment Company Act of 1940,
this means the lesser of the vote of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are present or (b) more
than 50% of the outstanding shares of the Fund.
The following investment restrictions, which cannot be changed
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without Shareholder approval, apply to each of the Funds except as indicated to
the contrary.
The Fund may not:
(1) Invest in the securities of an issuer, if immediately after and as
a result of such investment, the Fund owns more than 10% of the outstanding
securities, or more than 10% of the outstanding voting securities, of such
issuer.
(2) Concentrate its investments in any particular industry; provided
that if it is deemed appropriate for the attainment of the Fund's
investment objectives, up to 25% of its total assets may be invested in any
one industry.
(3) Make investments for the purpose of exercising control or
management.
(4) Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, or
by purchase in the open market of securities of closed-end investment
companies where no underwriter or dealer's commission or profit, other than
customary broker's commission, is involved and only if immediately
thereafter no more than 10% of the Fund's total assets would be invested in
such securities.
(5) Purchase or sell real estate, commodities or commodity contracts,
except that the Income Fund may enter into options on financial futures
contracts.
(6) Purchase any securities on margin, except that the Fund may obtain
such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities, except with respect to the Income Fund
which may make margin deposits in connection with transactions on options,
futures and options on futures.
(7) Make short sales of securities or maintain a short position.
(8) Make loans to other persons; provided that the Fund may use
repurchase agreements, and provided further that the acquisition of bonds,
debentures, or other corporate debt securities and investment in government
obligations, short-term commercial paper, certificates of deposit, bankers'
acceptances, variable rate notes or other money market instruments that are
a portion of an issue to the public shall not be deemed to be the making of
a loan and provided further that the Fund may lend its portfolio securities
as set forth in paragraph (9) below.
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<PAGE>
(9) Lend its portfolio securities in excess of 20% of its total
assets; provided that such loans may be made only to New York Stock
Exchange member firms, other brokerage firms having net capital of at least
$10 million and financial institutions, such as registered investment
companies, banks and insurance companies, having at least $10 million in
capital and surplus, and provided further that such loans shall be in
accordance with guidelines established by the Securities and Exchange
Commission for such loans and by the Board of Trustees of the Trust
including maintaining collateral from borrowers at least equal at all times
to the current value of the securities loaned./1/
(10) Mortgage, pledge, hypothecate or in any manner transfer (except
as provided in paragraph (9) above), as security for indebtedness, any
securities owned or held by the Fund except as may be necessary in
connection with borrowings mentioned in paragraphs (15) and (16) above, and
then such mortgaging, pledging or hypothecating may not exceed 15% of the
Fund's total assets.
(11) Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the Securities Act of 1933,
as amended, in selling portfolio securities.
(12) (Growth Fund only) Invest in securities for which there are
legal or contractual restrictions on resale or for which there is no
readily available market, if at the time of acquisition more than 5% of its
total assets would be invested in such securities.
(13) Invest in the securities of any one issuer (other than the United
States, its agencies or instrumentalities), if immediately after and as a
result of such investment, more than 5% of the Fund's total assets would be
invested in the securities of such issuer.
(14) Issue any senior securities except to the extent permitted under
the Investment Company Act of 1940.
(15) (Growth Fund only) Borrow amounts aggregating more than 5% of
its total assets and then only from banks as a temporary measure for
extraordinary or emergency purposes.
- ---------------------
/1/ Neither Fund has in the past engaged in the practices of lending it
portfolio securities as permitted under paragraph (9) or borrowing amounts
as permitted under paragraphs (15) and (16) and neither Fund has a present
intention to do so. Shareholders will be notified of any changes in these
practices.
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(16) (Income Fund only) Borrow amounts aggregating more than 10% of
its total assets and then only from banks as a temporary measure for
extraordinary or emergency purposes.
The following additional investment restrictions, which may be changed by
the Board of Trustees without Shareholder approval, apply to each of the Funds
except as indicated to the contrary.
The Fund may not:
(17) Purchase or sell interests in oil, gas or other mineral
exploration or development programs.
(18) Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except that the Fund may purchase put and call
options, including put and call options on stock indices, to the extent
permitted under paragraph (22) below, and may write covered call options on
individual portfolio securities.
(19) Invest in securities of foreign issuers if at the time of
acquisition more than 10% of its total assets would be invested in such
securities./2/
(20) Invest in securities of companies having a record, together with
predecessors, of less than three years of continuous operation if at the
time of acquisition more than 5% of its total assets would be invested in
such securities./2/
(21) Purchase or retain the securities of any issuer, if those
officers, trustees and directors of the Fund, its Investment Adviser or any
parent or subsidiary thereof, each owning beneficially more than 1/2 of 1%
of the securities of such issuer, own in the aggregate more than 5% of the
securities of such issuer.
(22) Purchase put and call options, including put and call options on
stock indices, if the total cost of all such options held by the Fund would
exceed 5% of the value of the Fund's net assets considered each time such
an option is acquired.
- --------------------------
/2/ Although permitted to a limited extent under paragraphs (19) and (20),
respectively, neither Fund has in the past invested in foreign securities not
publicly traded in the United States or in securities of companies having a
record of less than three years of continuous operations. Neither Fund has the
present intention to begin using these investment practices. Shareholders will
be notified of any change in this intention.
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<PAGE>
(23) (Growth Fund only) Invest in warrants if at the time of
acquisition more than 2% of its total assets would be invested in warrants.
For purposes of this restriction, warrants acquired by the Fund in units or
attached to securities may be deemed to be without value./3/
(24) (Income Fund only) Invest in financial futures contracts and
options on financial futures contracts, unless the aggregate of the
contract value of the outstanding futures contracts and futures contracts
subject to outstanding options written by the Income Fund does not exceed
50% of the total assets of the Income Fund.
(25) (Income Fund only) Invest more than 15% of its net assets in
illiquid securities, including repurchase agreements maturing in more than
seven days.
In order to permit the sale of Shares of each of the Funds in certain
states, the Fund may make commitments more restrictive than the restrictions
described above. Should the Board of Trustees determine that any such
commitment is no longer in the best interests of the Fund and its Shareholders,
the Fund will revoke the commitment by terminating the qualification of its
Shares in the state(s) involved. In such event, the right of Shareholders in
any such state(s) to purchase additional Shares may be restricted.
If any applicable percentage limitations contained in the foregoing
investment restrictions is satisfied at the time the securities subject thereto
are purchased, the Fund will not be required to dispose of such securities in
the event that the percentage restriction is subsequently exceeded due to a
fluctuation in the value of such securities or other securities of the portfolio
or a fluctuation in the number of outstanding securities of the issuer.
Notwithstanding the foregoing, if the percentage restrictions contained in
paragraph (9) or in paragraphs (15) and (16) are violated due to a subsequent
fluctuation in portfolio value, the Fund shall be entitled, as a condition which
shall be a part of all loans subject to paragraph (9) and all borrowings subject
to paragraphs (15) and (16), to reduce within three business days the
outstanding amount of such loans or borrowings in order once again to satisfy
such percentage restriction.
The following discussion applies to each of the Funds except as indicated
to the contrary.
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/3/ Although permitted to a limited extent under paragraph (23), the Growth
Fund has not in the past invested in warrants. The Growth Fund has no present
intention to begin using this investment practice. Shareholders will be notified
of any change in this intention.
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Lending of Fund Securities
--------------------------
In connection with any loan of portfolio securities made by either of the
Funds as permitted under paragraph (9), certain conditions must be met: (i) the
collateral to be received from the borrower will be invested in short-term
securities, the income from which will increase the return to the Fund; (ii) the
Fund will retain rights of beneficial ownership as to the loaned portfolio
securities, including voting rights and rights to dividends, interest or other
distributions, and will have the right to regain record ownership of loaned
securities to exercise such beneficial rights; (iii) such loans will be
terminable within three business days; and (iv) upon termination of the loan,
the Fund will receive securities that are of the same class and issue as those
loaned. In the event that the borrower of loaned portfolio securities fails
financially, the Fund might experience a delay in recovery, incur expenses in
enforcing its rights and experience losses, including a substitution of
securities and loss of income. The Fund may pay reasonable fees to persons not
affiliated, as defined in the Investment Company Act of 1940, with the Fund in
connection with the arranging of such loans.
Options on Securities
- ---------------------
As discussed in the Prospectus, each Fund may engage in options
transactions in accordance with its investment objectives and policies. The
Fund may purchase put and call options to the extent permitted under paragraph
(22) above and may write covered call options on individual portfolio securities
having an aggregate market value of up to 25% of the net assets of the Fund.
The Fund may enter into closing transactions, exercise its options or permit
them to expire. Each of the Funds intend to engage in such transactions at
times when it appears advantageous to its investment adviser to do so in order
to hedge against the effects of market conditions and to protect the value of
its assets. Neither Fund currently engages in or currently plans to engage in
the practice of writing covered call options.
A put option gives the holder (buyer) the "right to sell" a security at a
specified price (the exercise price) at any time until a certain date (the
expiration date). In effect, the buyer of a put option who also owns the
related stock is protected by ownership of a put option against any decline in
that security's price below the exercise price less the amount paid for the
option. The ability to purchase put options allows the Fund to protect capital
gains in an appreciated security it owns, without being required to sell that
security. If the market price of the related investment is above the exercise
price and, as a result, the put is not exercised or sold, the put will become
worthless at its expiration date. A call option gives the holder (buyer) the
"right to purchase" a security at a specified price (the exercise price) at any
time until a certain date (the expiration date). At times
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<PAGE>
the Fund may wish to establish a position in securities upon which call options
are available. By purchasing a call option the Fund is able to fix the cost of
acquiring the stock at the cost of the call option plus the exercise price of
the option. The Fund will benefit only if the market price of the related
investments is above the call price plus the premium during the exercise period
and the call is either exercised or sold at a profit. This procedure also
provides some protection from an unexpected downturn in the market because the
Fund would be at risk only for the amount of the premium paid for the call
option which the Trust's investment adviser may, if it chooses, permit to
expire.
When the Fund writes (sells) a covered call option, it will receive a
premium from the buyer of the option and will be obligated to sell the related
securities at the specified price if the option is exercised before the
expiration date. A call option is considered "covered" when the writer
(seller), in this case the Fund, already owns the underlying securities. In
determining whether a covered call option will be written on one of its
securities, the investment adviser will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for the option. The Fund does not consider a security covered by a call to be
"pledged" as that term is used in paragraph (10) above limiting the pledging or
mortgaging of its assets. If an option written (sold) by the Fund is not
exercised, the Fund will profit from the premium received and, in the event of a
decline in the market value of the related securities, will be able to offset
depreciation in such securities to the extent of the premium received. While
holding securities during the term of a related option written by the Fund, the
Fund may be exposed to possible decreases in the value of such securities that
may otherwise have been avoided if the securities had been sold. In the event
the market value of the related securities increases and the holder does
exercise the call option, the Fund will recognize capital appreciation in the
related securities only to the extent of the exercise price plus the amount of
premium paid and may forfeit an opportunity to realize profit from any increase
in the value of the underlying security above the exercise price plus the
premium.
As part of its options transactions, each of the Funds may also purchase
index options. Through the purchase of index options the Fund can achieve many
of the same objectives as through the purchase of options on individual
securities. Options on securities indices are similar to options on a security
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of an option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The value of a stock index option will generally vary directly in the
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<PAGE>
case of a call, and inversely in the case of a put, with movements in the
underlying index, and the percentage fluctuations in the value of an option may
be many times greater than those of the underlying index. The adviser may
purchase call index options as a hedge against a general increase in the price
of securities in connection with either sales of portfolio securities or
deferrals of purchases of securities it may desire to purchase at a later date.
Put index options may be purchased as a hedge against a general decline in the
value of securities rather than selling portfolio securities. Any protection
provided by stock index options is effective only against changes in the level
of a stock index and not necessarily against a change in the value of individual
securities. Thus, the effectiveness of the use of stock index options as a
hedge is dependent on the extent to which price movements of individual
securities which are being hedged correlate with price movements in the
underlying stock index. Unless a stock index option can be sold or exercised at
a profit prior to expiration, the Fund will forfeit its entire investment in the
option, often in a relatively short period of time. Any profit that may be
realized from the sale or exercise of stock index options will be reduced by
related transaction costs.
Financial Futures Contracts
- ---------------------------
The Income Fund may enter into financial futures contracts for the future
delivery of a financial instrument, such as a security, or the cash value of a
securities index. This investment technique is designed primarily to hedge
(i.e., protect) against anticipated future changes in interest rates or equity
market conditions which otherwise might affect adversely the value of securities
which the Income Fund holds or intends to purchase. A "sale" of a futures
contract means the undertaking of a contractual obligation to deliver the
securities or the cash value of an index called for by the contract at a
specified price during a specified delivery period. A "purchase" of a futures
contract means the undertaking of a contractual obligation to acquire the
securities or cash value of an index at a specified price during a specified
delivery period. At the time of delivery, in the case of fixed income
securities pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities with a different
interest rate than that specified in the contract. In some cases, securities
called for by a futures contract may not have been issued at the time the
contract was written. The Income Fund will not enter into any futures contracts
or options on futures contracts if the aggregate of the contract value of the
outstanding futures contracts of the Income Fund and futures contracts subject
to outstanding options written by the Income Fund would exceed 50% of the total
assets of the Income Fund.
Although some futures contracts by their terms call for the actual delivery
or acquisition of securities, in most cases a party
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<PAGE>
will close out the contractual commitment before delivery without having to make
or take delivery of the security by purchasing (or selling, as the case may be)
on a commodities exchange an identical futures contract calling for delivery in
the same month. Such a transaction, if effected through a member of an
exchange, cancels the obligation to make or take delivery of the securities.
All transactions in the futures market are made, offset or fulfilled through a
clearing house associated with the exchange on which the contracts are traded.
The Income Fund will incur brokerage fees when it purchases or sells contracts,
and will be required to maintain margin deposits. At the time the Income Fund
enters into a futures contract, it is required to deposit with its custodian, on
behalf of the broker, a specified amount of cash or eligible securities, called
"initial margin." The initial margin required for a futures contract is set by
the exchange on which the contract is traded. Subsequent payments, called
"variation margin," to and from the broker are made on a daily basis as the
market price of the futures contract fluctuates. The costs incurred in
connection with futures transactions could reduce the Income Fund's return.
Futures contracts entail risks. If the investment adviser's judgment about the
general direction of interest rates or markets is wrong, the overall performance
may be poorer than if no such contracts had been entered into by the Fund.
There may be an imperfect correlation between movements in prices of
futures contracts and portfolio securities being hedged. In addition, the
market prices of futures contracts may be affected by certain factors. If
participants in the futures market elect to close out their contracts through
offsetting transactions rather than meet margin requirements, distortions in the
normal relationship between the securities and futures markets could result.
Price distortions could also result if investors in futures contracts decide to
make or take delivery of underlying securities rather than engage in closing
transactions because of the resultant reduction in the liquidity of the futures
market. In addition, because, from the point of view of speculators, the margin
requirements in the futures markets are less onerous than margin requirements in
the cash market, increased participation by speculators in the futures market
could cause temporary price distortions. Due to the possibility of price
distortions in the futures market and because of the imperfect correlation
between movements in the prices of securities and movements in the prices of
futures contracts, a correct forecast of market trends by the investment adviser
may still not result in a successful hedging transaction. If any of these
events should occur, the Income Fund could lose money on the financial futures
contracts and also on the value of its portfolio securities.
B-9
<PAGE>
Options on Financial Futures Contracts
- --------------------------------------
The Income Fund may purchase and write call and put options on financial
futures contracts. An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract at a specified exercise price at any time during the period of the
option. Upon exercise, the writer of the option delivers the futures contract
to the holder at the exercise price. The Income Fund would be required to
deposit with its custodian initial margin and maintenance margin with respect to
put and call options on futures contracts written by it. Options on futures
contracts involve risks similar to those risks relating to transactions in
financial futures contracts described above. Also, an option purchased by the
Income Fund may expire worthless, in which case the Income Fund would lose the
premium paid therefor.
Repurchase Agreements
- ---------------------
The Income Fund may invest in repurchase agreements, under which it
acquires ownership of a security and the broker-dealer or bank agrees to
repurchase the security at a mutually agreed upon time and price, thereby
determining the yield during the Income Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement, the Income
Fund might have expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying securities and loss of
income. The securities underlying a repurchase agreement will be marked-to-
market every business day so that the value of such securities is at least equal
to the investment value of the repurchase agreement, including any accrued
interest thereon. In addition, the Income Fund must take physical possession of
the security or receive written confirmation of the purchase and a custodial or
safekeeping receipt from a third party or be recorded as the owner of the
security through the Federal Reserve Book-Entry System. Repurchase agreements
will be limited to transactions with financial institutions believed by the
investment adviser to present minimal credit risk. The Trust's investment
adviser will monitor on an on-going basis the creditworthiness of the broker-
dealers and banks with which the Income Fund may engage in repurchase
agreements. Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of the Income Fund's 15% limitation in
illiquid securities.
Delayed Delivery Transactions
- -----------------------------
The Income Fund may purchase or sell portfolio securities on a when-issued
or delayed delivery basis. When-issued or delayed delivery transactions involve
a commitment by the Income Fund to purchase or sell securities with payment and
delivery to take place in the future in order to secure what is considered to be
an
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<PAGE>
advantageous price or yield to the Income Fund at the time of entering into the
transaction. When the Income Fund enters into a delayed delivery transaction,
it becomes obligated to purchase securities and it has all of the rights and
risks attendant to ownership of a security, although delivery and payment occur
at a later date. The value of fixed income securities to be delivered in the
future will fluctuate as interest rates vary. At the time the Income Fund makes
the commitment to purchase a security on a when-issued or delayed delivery
basis, it will record the transaction and reflect the liability for the purchase
and the value of the security in determining its net asset value. Likewise, at
the time the Income Fund makes the commitment to sell a security on a delayed
delivery basis, it will record the transaction and include the proceeds to be
received in determining its net asset value; accordingly, any fluctuations in
the value of the security sold pursuant to a delayed delivery commitment are
ignored in calculating net asset value so long as the commitment remains in
effect. The Income Fund generally has the ability to close out a purchase
obligation on or before the settlement date, rather than take delivery of the
security.
To the extent the Income Fund engages in when-issued or delayed delivery
purchases, it will do so for the purpose of acquiring portfolio securities
consistent with its investment objectives and policies and not for the purpose
of investment leverage or to speculate in interest rate changes. The Income
Fund will only make commitments to purchase securities on a when-issued or
delayed delivery basis with the intention of actually acquiring the securities,
but it reserves the right to sell these securities before the settlement date if
deemed advisable.
Collateralized Mortgage Obligations
- -----------------------------------
As described in the Prospectus, the Income Fund may purchase or sell
collateralized mortgage obligations ("CMOs"). CMOs are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Income Fund invests, the investment may be subject to a greater or lesser
risk of prepayment than other types of mortgage-related securities. The issuer
of a series of CMOs may elect to be treated as a Real Estate Mortgage Investment
Conduit (a "REMIC"), which has certain special tax attributes.
Mortgage-Backed Securities
- --------------------------
As discussed in the Prospectus, the Income Fund may invest in mortgage-
backed securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. Mortgage-backed
B-11
<PAGE>
securities are securities representing interests in a pool of mortgages.
Principal and interest payments made on the mortgages in the underlying mortgage
pool are passed through to the Income Fund. Unscheduled prepayments of
principal shorten the securities' weighted average life and may lower total
return. (When a mortgage in the underlying mortgage pool is prepaid, an
unscheduled principal prepayment is passed through to the Income Fund. This
principal is returned to the Income Fund at par. As a result, if a mortgage
security was trading at a premium, its total return would be lowered by
prepayments, and if a mortgage security were trading at a discount, its total
return would be increased by prepayments). The value of these securities also
may change because of changes in the market's perception of the creditworthiness
of the federal agency that issued them. In addition, the mortgage securities
market in general may be adversely affected by changes in governmental
regulation or tax policies.
The Income Fund may also invest in the securities of certain supranational
entities, such as the International Development Bank.
Asset-Backed Securities
- -----------------------
As described in the Prospectus, the Income Fund may purchase or sell debt
obligations known as asset-backed securities. Asset-backed securities are
securities which represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a pool or
pools of similar assets (e.g., trade receivables). The credit quality of most
asset-backed securities depends primarily on the credit quality of the assets
underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator or any other affiliated
entities and the amount and quality of any credit support provided to the
securities. The rate of principal payment on asset-backed securities generally
depends on the rate of principal payments received on the underlying assets
which in turn may be affected by a variety of economic and other factors. As a
result, the yield on any asset-backed security is difficult to predict with
precision and actual yield to maturity may be more or less than the anticipated
yield to maturity. Asset-backed securities may be classified either as pass-
through certificates or collateralized obligations.
Pass-through certificates are asset-backed securities which represent an
undivided fractional ownership interest in an underlying pool of assets. Pass-
through certificates usually provide for payments of principal and interest
received to be passed through to their holders, usually after deduction for
certain costs and expenses incurred in administering the pool. Because pass-
through certificates represent an ownership interest in the underlying assets,
the holders thereof bear directly the risk of any defaults by the obligors on
the underlying assets not
B-12
<PAGE>
covered by any credit support.
Asset-backed securities issued in the form of debt instruments, also known
as collateralized obligations, are generally issued as the debt of a special
purpose entity organized solely for the purpose of owning such assets and
issuing such debt. Such assets are most often trade, credit card or automobile
receivables. The assets collateralizing such asset-backed securities are
pledged to a trustee or custodian for the benefit of the holders thereof. Such
issuers generally hold no assets other than those underlying the asset-backed
securities and any credit support provided. As a result, although payments on
such asset-backed securities are obligations of the issuers, in the event of
defaults on the underlying assets not covered by any credit support, the issuing
entities are unlikely to have sufficient assets to satisfy their obligations on
the related asset-backed securities.
Time Deposits, Certificates of Deposit and Bankers' Acceptances
- ---------------------------------------------------------------
The Income Fund may invest in time deposits ("TDs"), certificates of
deposits ("CDs") and bankers' acceptances. TDs are non-negotiable deposits
maintained in a banking institution for a specified period of time (in no event
longer than seven days) at a stated interest rate. CDs are certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time. TDs maturing in more than seven days will not be
purchased by the Income Fund and TDs maturing from two business through seven
calendar days will not exceed 10% of the Income Fund's total assets.
Investments in TDs generally are limited to domestic banks having total assets
in excess of one billion U.S. dollars or to foreign branches of such domestic
banks, and investments in CDs and bankers' acceptances are limited to domestic
or Canadian banks having total assets in excess of one billion dollars. CDs
issued by domestic branches of domestic banks do not benefit materially, and TDs
issued by foreign branches of domestic banks do not benefit at all, from
insurance from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation ("FDIC").
Both domestic banks and foreign branches of domestic banks are subject to
extensive but different governmental regulations which may limit both the amount
and types of loans which may be made and interest rates which may be charged.
In addition, the profitability of the banking industry is dependent largely upon
the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic
conditions as well as exposure to credit losses arising from possible financial
difficulties of borrowers play an important part in the operations of this
industry.
Domestic commercial banks organized under Federal law are
B-13
<PAGE>
supervised and examined by the Comptroller of the Currency and are required to
be members of the Federal Reserve System and to have their deposits insured by
the FDIC. Domestic banks organized under state law are supervised and examined
by state banking authorities. In addition, state banks whose CDs may be
purchased by the Income Fund are insured by the FDIC (although such insurance
may not be of material benefit to the Income Fund, depending upon the principal
amount of the CDs of each bank held by the Income Fund) and are subject to
Federal examination and to a substantial body of Federal law and regulation.
As a result of the foregoing Federal and state laws and regulations,
domestic banks, among other things, are required to maintain specified levels of
reserves, limited in amounts which they can loan a single borrower, and subject
to other regulations designed to promote financial soundness. However, not all
such laws and regulations apply to foreign branches of domestic banks.
Rating of Securities
- --------------------
The Income Fund may invest in securities that are given ratings by Moody's
and S&P. After purchase by the Income Fund, such a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Income Fund. Neither event will require a sale of such security by the
Income Fund. However, the Adviser will consider such event in its determination
of whether the Income Fund should continue to hold the security. To the extent
that the ratings given by Moody's and S&P may change as a result of changes in
such organizations or their rating systems, the Income Fund will attempt to use
comparable ratings as standards for investments in accordance with the
investment policies contained in the prospectus.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Trust and their principal
occupations are set forth below. Unless otherwise noted, the address of each of
the following persons is 300 South Wacker Drive, Chicago, Illinois 60606.
Trustees
- --------
Steven R. Becker, Partner, Wayne Hummer & Co.; Director and Former
----------------
Vice President, Wayne Hummer Management Company.*/4/
- --------------------
* Interested person, as defined in the Investment Company Act of 1940, of
the Fund, the Investment Adviser and/or the Distributor.
/4/ Member of the Executive Committee of the Trust. The Executive
B-14
<PAGE>
Philip M. Burno, Chairman, Board of Trustees of the Trust; Partner,
---------------
Wayne Hummer & Co.; Director, Wayne Hummer Management Company.*/4/
Charles V. Doherty, 3 First National Plaza, Suite 1400, Chicago,
------------------
Illinois 60602; Director, Lakeside Bank, Chicago, Illinois (Illinois State
Chartered Bank); Managing Director, Madison Asset Group, Chicago, Illinois
(Registered Investment Adviser); President and Director, Doherty Zable &
Co. (Certified Public Accountants); September 1, 1989 to December 31, 1992,
President and Chief Operating Officer, Midwest Stock Exchange (now, Chicago
Stock Exchange).
Joel D. Gingiss, 207 Hazel, Highland Park, Illinois 60035; Assistant
---------------
States Attorney, Lake County, Illinois September, 1993 to Present; Former
Chairman of the Board of Directors and President, Gingiss International,
Inc. (franchisor of Gingiss Formalwear Stores); Past President,
International Franchise Association./4/
Patrick B. Long, 101 North Main Street, Ann Arbor, Michigan 48104;
---------------
Chairman and Chief Executive Officer, KMS Industries, Inc. (fusion energy
research).
Eustace K. Shaw, 200 First Avenue E., Newton, Iowa 50208; President,
---------------
B. F. Shaw Printing Co.; Chairman of the Board of Directors, B. F. Shaw
Printing Co.; Former Publisher, Newton Daily News.
The Trustees serve in similar capacities with the Wayne Hummer Money Fund
Trust.
Effective October 24, 1994, Mr. Doherty was elected by the Board of
Trustees to fill the vacancy created by the resignation of Mr. Lyons as a
Trustee of the Trust on May 4, 1994. Mr. Lyons resigned to retire; his
resignation was not due to disagreement with the Trust on any matter relating to
the Trust's operations, policies, or practices.
- --------------------------
Committee is elected by the Board of Trustees and is composed of three
Trustees, two of whom are interested persons as defined in the Investment
Company Act of 1940. The Executive Committee is authorized to exercise such
powers and authority of the Board of Trustees, as the Board of Trustees may
determine, when the Board of Trustees is not in session and as are
consistent with law.
B-15
<PAGE>
Officers
- --------
Alan W. Bird, President of the Trust; Vice President, Wayne Hummer
------------
Money Fund Trust; Partner, Wayne Hummer & Co. since 1986; President, Wayne
Hummer Management Company.
Thomas J. Rowland, Vice President of the Trust and Vice President,
-----------------
Wayne Hummer Management Company since 1987; Partner, Wayne Hummer & Co.
since 1990; Fund Manager, CNA Insurance Companies, for more than five years
prior thereto.
David P. Poitras, Vice President of the Trust; President, Wayne Hummer
----------------
Money Fund Trust since 1993; Vice President, Wayne Hummer Management
Company since May, 1992; Partner, Wayne Hummer & Co. since January, 1992
and Bond Department Manager, Wayne Hummer & Co. since 1987.
Jean M. Watts, Secretary and Treasurer of the Trust and Treasurer,
-------------
Wayne Hummer Money Fund Trust since March, 1988; Administrative Assistant
for the Trust and Wayne Hummer Money Fund Trust, prior thereto.
Wayne Hummer Management Company, the Investment Adviser, pays all
compensation of the officers of the Trust and the compensation of all Trustees
of the Trust who are interested persons, as defined in the Investment Company
Act of 1940, of the Trust. The Trust pays each Trustee who is not an interested
person of the Trust $2,000 per year, plus $500 and expenses for each Board and
committee meeting attended.
The following table sets forth the compensation received by all trustees of
the Trust for the fiscal year ended March 31, 1995. The information in the last
column of the table sets forth the total compensation received by all trustees
for calendar year 1994 for service as a trustee of the Trust and the Wayne
Hummer Money Fund Trust.
B-16
<PAGE>
<TABLE>
<CAPTION>
Pension or
Retirement Total
Aggregate Benefits Compensation
Compensation Acquired as Hummer Funds
from the Part of Trust Paid to
Trustee Trust Expenses Trustees
- ------- ----- -------- --------
<S> <C> <C> <C>
Steven R. Becker $ 0 $ 0 $ 0
Philip M. Burno 0 0 0
Charles V. Doherty 2,000 0 2,000
Joel D. Gingiss 6,000 0 11,500
Patrick B. Long 4,500 0 10,000
Samuel B. Lyons (1) 1,500 0 5,000
Eustace K. Shaw 5,000 0 10,000
_______________
(1) Served on the Board of Trustees through May 4, 1994
</TABLE>
As of June 30, 1995, the Trustees and officers as a group beneficially
owned 1.26% of the outstanding Shares of the Trust. As of June 30, 1995, the
Wayne Hummer & Co. Employees Profit Sharing Trust (the "Retirement Plan") owned
of record and beneficially 5.8% and 5.4%, respectively, of the outstanding
Shares of the Growth Fund and the Income Fund, being 5.5% of the aggregate
outstanding Shares of the Trust. Messrs. Rowland, Cannova, Reilly, Kratzer and
Poitras, as trustees of the Retirement Plan may be deemed to hold beneficial
ownership of the percentage of Shares of the Funds and the Trust as stated
above. Messrs. Rowland, Kratzer and Poitras are also General Partners of Wayne
Hummer & Co., the Trust's Distributor. Messrs. Poitras and Rowland also are
officers of the Trust and Wayne Hummer Management Company, the Trust's
Investment Adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
- ------------------
Wayne Hummer Management Company (the "Investment Adviser"), 300 South
Wacker Drive, Chicago, Illinois 60606, acts as investment adviser to the Trust
and provides the Trust with operating facilities and management services under
the terms of an Investment Advisory and Management Agreement. The Investment
Adviser was organized on November 30, 1981, and also serves as investment
adviser to the Wayne Hummer Money Fund Trust, a diversified open-end investment
company.
The shareholders of the Investment Adviser are the general partners of
Wayne Hummer & Co., an Illinois limited partnership, who own shares in
proportion to their percentage of general
B-17
<PAGE>
partnership interest. Wayne Hummer & Co., a registered broker-dealer firm, acts
as the Trust's Distributor and Shareholder Service Agent.
As noted in the preceding discussion of Trustees and officers, certain
of the partners of Wayne Hummer & Co. are also officers, directors or employees
of the Investment Adviser, as well as officers and interested persons, as
defined in the Investment Company Act of 1940, of the Trust. Moreover, Wayne
Hummer & Co. may be deemed an affiliated person of the Investment Adviser and
the Trust.
Subject to the review of the Board of Trustees, the Investment Adviser
is responsible for the management of the Trust and reviews the portfolio
holdings of each of the Funds in light of its own research analysis and
information from other relevant sources.
The investment decisions for the Funds are reached independently from
one another and from those for Wayne Hummer Money Fund Trust ("WHMFT"), the
other investment company managed by the Investment Adviser. WHMFT may, however,
make investments in money market instruments at the same time as one or both of
the Funds. When one or both Funds and WHMFT have funds available for investment
in or wish to sell money market instruments, the Investment Adviser, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be purchased or sold in order to obtain the best combination of
price and execution. In such event, allocation of the securities so purchased
or sold, as well as the costs incurred in the transaction, will be made by the
Investment Adviser in a manner it considers to be equitable and consistent with
its fiduciary obligations to WHMFT and the Trust. In some cases this procedure
may affect the size or price of the position obtainable for the Trust. It is
the opinion of the Board of Trustees that the benefits available outweigh any
disadvantages that may arise from concurrent transactions.
The executive officers and directors of the Investment Adviser are
as follows:
Harry Flagg Baum, Director; Steven R. Becker, Director; G. Ted Becker,
Treasurer; Alan W. Bird, President; Philip M. Burno, Director; Philip Wayne
Hummer, Director and Executive Vice President; David P. Poitras, Vice
President; William A. Rogers, Director and Secretary; and Thomas J.
Rowland, Vice President.
The Investment Adviser is obligated, among other things: to provide
investment advisory and portfolio management services; to furnish administrative
services, office space and basic facilities for management of the Trust's
affairs (other than distribution of the Trust's Shares and the furnishing of
Shareholder services); and to pay the compensation of all officers and other
personnel of the
B-18
<PAGE>
Trust for their services to the Trust as well as the compensation of the
Trustees of the Trust who are interested persons, as defined in the Investment
Company Act of 1940, of the Trust. The Trust pays all other expenses incurred in
the operation of the Trust including, among other things: brokerage commissions
and other transaction costs in connection with the purchase or sale of portfolio
securities; taxes; expenses for legal, auditing and accounting services; costs
of preparing, typesetting, printing and mailing prospectuses, Shareholder
reports, proxy materials (pertaining to solicitations by the Trust or its Board
of Trustees) and notices to Shareholders of the Trust; costs of preparing and
filing reports with regulatory agencies; charges of the Custodian, Transfer
Agent and Distributor and Shareholder Service Agent; premiums for insurance
carried by the Trust pursuant to the requirements of Section 17(g) of the
Investment Company Act of 1940 or otherwise required by law or deemed desirable
by the Board of Trustees; expenses related to the computation of daily net asset
value; expenses related to the issuance or redemption of Shares; expenses of
registering, qualifying and maintaining registration and qualification of the
Trust or its Shares under federal, state and other laws; fees and out-of-pocket
expenses of Trustees who are not interested persons, as defined in the
Investment Company Act of 1940, of the Trust; expenses incident to holding
meetings of the Trust's Shareholders, including proxy solicitations of the Trust
or its Board of Trustees therefor, as well as expenses incident to holding
meetings of the Board of Trustees and committees of the Board of Trustees;
interest expenses; costs incident to generating and mailing confirmations and
periodic statements to Shareholders; fees and expenses incurred in connection
with any investment company organization or trade association of which the Trust
may be a member; and other expenses properly payable by the Trust. Certain of
these expenses may be advanced on behalf of the Trust by the Investment Adviser
or the Shareholder Service Agent and will be reimbursed to such party by the
Trust.
Under the Investment Advisory and Management Agreement in effect since
August 1, 1988, as amended, the Investment Adviser receives as compensation for
its services to the Growth Fund an annual fee equal to .80 of 1% of the average
daily net assets of the Growth Fund up to $100 million, plus .65 of 1% of the
next $150 million of average daily net assets, plus .50 of 1% of average daily
net assets in excess of $250 million. Such fees are computed and accrued daily
and payable monthly. For the Income Fund, the Investment Adviser receives an
annual fee of .50 of 1% of the average daily net assets up to $100 million, plus
.40 of 1% of the next $150 million of average daily net assets, plus .30 of 1%
of average daily net assets in excess of $250 million. The advisory fee
provided for in the Advisory Agreement is similar to that of comparably sized
funds with similar investment objectives and policies but is higher than fees
paid by most other mutual funds with different investment objectives, such as
money market funds. For the fiscal years ended March 31, 1995, 1994 and 1993,
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<PAGE>
the total advisory fees incurred by the Growth Fund were $721,072, $775,405,
and $571,603, respectively. For the fiscal years ended March 31, 1995, 1994 and
March 31, 1993 (four month period), the total advisory fees incurred by the
Income Fund were $141,795, $158,340 and $18,550, respectively.
The Investment Adviser has agreed to waive its fee to the extent that a
Fund's ordinary operating expenses during any fiscal year, including the fee of
the Investment Adviser, exceed either (1) 1.5% of the average daily net assets
of the Fund or (2) the expense limitations applicable to the Fund imposed by the
securities laws or regulations thereunder of any state in which the Fund's
Shares are qualified for sale, as such limitations may be increased or decreased
from time to time, and if required by such laws or regulations, to reimburse the
Fund for certain expenses in excess of any applicable expense limitation. It is
believed that the most restrictive such state limitation is currently 2.5% of
the first $30 million of average daily net assets, 2% of the next $70 million of
average daily net assets and 1.5% of average daily net assets over $100 million.
Expenses that are not subject to these limitations are interest, taxes,
brokerage commissions and extraordinary items such as litigation costs. For the
fiscal years ended March 31, 1995, 1994 and 1993, fees waived and expenses
reimbursable by the Investment Adviser totalled $0, $0 and $3,888, respectively,
for the Income Fund.
The Investment Advisory and Management Agreement (as amended) was approved
(i) at the May 2, 1995 meeting of the Board of Trustees by a majority of the
Trustees who are neither parties to the Agreement nor interested persons, as
defined in the Investment Company Act of 1940, of any such party, and (ii) by a
majority of the Growth Fund's outstanding shares at a special meeting of
Shareholders held on July 19, 1988. An Amendment to the Investment Advisory and
Management Agreement by which the Investment Adviser agreed to render services
to the Income Fund was approved (i) at the November 24, 1992 meeting of the
Board of Trustees by a majority of the Trustees who are neither parties to the
Agreement nor interested persons, as defined in the Investment Company Act of
1940, of any such party, and (ii) by a majority of the Income Fund's outstanding
shares by written consent on December 1, 1992. Unless earlier terminated as
described below, the Investment Advisory and Management Agreement, as amended,
will continue in effect until July 31, 1996, and thereafter if approved
annually (i) by the Board of Trustees of the Trust or by a majority of the
outstanding Shares of the Trust (as defined under "SHAREHOLDER VOTING RIGHTS")
and (ii) by a majority of Trustees who are not parties to such Agreement or
interested persons, as defined in the Investment Company Act of 1940, of any
such party. The Agreement is not assignable and may be terminated without
penalty on 60 days' written notice at the option of either party thereto or by
the vote of the Shareholders.
B-20
<PAGE>
The Investment Adviser also provides the Trust with certain portfolio
accounting services under the terms of a Portfolio Accounting Services Agreement
(the "Accounting Agreement"). The Investment Adviser maintains the accounting
books and records pertaining to each Fund that constitute the record forming the
basis for financial statements of the Funds; maintains capital stock accounts
for each Fund; prepares a daily trial balance for each Fund; calculates the net
asset value of each Fund; maintains all records of a financial nature to each
Fund's transactions; and processes special ledgers and other reports when
requested.
Under the Accounting Agreement in effect since November 1, 1994, the
Investment Adviser receives as compensation for its accounting services to the
Trust, an annual fee which is computed and accrued daily and payable monthly.
The Investment Adviser receives for the period January 1, 1995 through December
31, 1995 an annual fee of .0025 of 1% of average daily net assets and for the
period January 1, 1996 and thereafter an annual fee of .01 of 1% of average
daily net assets; but such fee shall not exceed $15,000 per Fund per annum. In
addition, the Investment Adviser receives an equipment fee of $50 per Fund per
month and is reimbursed for its out-of-pocket costs for obtaining securities
pricing services, the license for use of portfolio accounting software, and
other out-of-pocket costs which are incurred in providing the pricing and
software services. For the fiscal year ended March 31, 1995, the total
portfolio accounting services fees incurred by the Growth Fund and the Income
Fund were $5,196 and $4,307, respectively.
The Accounting Agreement was approved at the October 25, 1994 meeting of
the Board of Trustees by a majority of the Trustees who are neither parties to
the Accounting Agreement nor interested persons, as defined in the Investment
Company Act of 1940, of any such party. The Accounting Agreement shall continue
in effect until terminated. The Accounting Agreement may be terminated by
either party upon sixty days' prior written notice; provided, however, that the
Trust may terminate the Accounting Agreement without prior notice in order to
preserve the integrity of its records from material and continuing errors and
omissions on the part of the Investment Adviser.
Distributor and Shareholder Service Agent
- -----------------------------------------
Wayne Hummer & Co., with offices at 300 South Wacker Drive, Chicago,
Illinois 60606 acts as Distributor of the Trust's Shares and Shareholder Service
Agent. Pursuant to a Distribution Agreement and a Shareholder Service
Agreement, Wayne Hummer & Co. directly or through other firms, as discussed
below, provides information and services to existing and potential Shareholders
such as: processing new Shareholder account applications; converting funds into
or advancing federal funds for the purchase of Shares as well as transmitting
purchase orders to the Trust's
B-21
<PAGE>
Transfer Agent; transmitting redemption requests to the Trust's Transfer Agent
and transmitting the proceeds of redemption of Shares pursuant to Shareholder
instructions when such redemption is effected through Wayne Hummer & Co.;
providing telephonic and written communications with respect to Shareholder
account inquiries and serving as the primary interface with existing and
potential Shareholders in answering questions concerning the Trust and their
transactions with the Trust; and providing literature distribution, advertising
and promotion as is necessary or appropriate for providing information and
services to existing and potential Shareholders. Wayne Hummer & Co. may be
reimbursed by the Trust for certain out-of-pocket costs in connection with its
services to existing Shareholders as Shareholder Service Agent including such
costs as postage; data entry, modification and printout; stationery; tax forms
and all external forms or printed material, though it does not receive a fee
from the Trust nor is it reimbursed from the Trust for any expenses it incurs in
its capacity as Distributor of the Trust's Shares.
As of January 1, 1991 the Investment Adviser entered into an Agreement with
Wayne Hummer & Co. whereby the Investment Adviser agreed to pay to Wayne Hummer
& Co. the following: (a) for distribution services rendered to the Trust under
the Distribution Agreement, an amount equal to 35% of the gross revenues
generated from the rendering of investment advisory services to the Trust, not
to exceed in the aggregate for a particular fiscal year, however, the net profit
(before taxes and before payment of the fees so payable) earned by the
Investment Adviser for such year for the rendering of such advisory services,
and (b) for services rendered by Wayne Hummer & Co. to Trust Shareholders under
the Shareholder Service Agreement, an amount equal to 130% of the unreimbursed
overhead and labor expenses incurred by Wayne Hummer & Co. in rendering such
services. The Agreement also provides for similar payments to be made by the
Investment Adviser to Wayne Hummer & Co. for distribution and shareholder
services rendered to WHMFT and its shareholders.
Wayne Hummer & Co. may appoint various broker-dealer firms to assist in
providing distribution services for the Trust and may appoint broker-dealers and
other firms (including depository institutions such as commercial banks and
savings and loan associations) to provide administrative services for their
clients as Shareholders of the Trust under service agreements. Wayne Hummer &
Co. may pay these broker-dealers and other firms a fee for their services.
The following persons, all of whom, except as specified, are located at 300
South Wacker Drive, Chicago, Illinois 60606, have been partners or employees of
Wayne Hummer & Co. for at least the past five years, and are presently general
partners of Wayne Hummer & Co.: William B. Hummer; Philip Wayne Hummer; Harry
Flagg Baum; William A. Rogers; Robert F. Kahlfeldt; Philip M. Burno; Joseph A.
B-22
<PAGE>
Piekarczyk; G. Ted Becker; Steven R. Becker; W. Douglas Carroll; Richard J.
Kosarek; Raymond L. Kratzer; Jean E. Williams; Alan W. Bird; Linda C. Becker;
Thomas J. Rowland; Laura A. Kogut; David P. Poitras; Richard Wholey, Jr.; Peder
H. Culver; Daniel G. Hack; and Ronald A. Tyrpin. The George E. Barnes Family
Trust/5/ has been a limited partner of Wayne Hummer & Co. since April, 1986,
John D. Carroll/6/ has been a limited partner since January, 1990, and Robert H.
Chase/7/ has been a limited partner since January, 1992.
BROKERAGE ALLOCATION
The Investment Adviser determines the securities to be purchased, held and
sold by the Funds and places all orders subject to the general supervision of
the Board of Trustees. Transactions are allocated among various broker-dealers
by the Investment Adviser in its best judgment. In placing such orders, the
Investment Adviser primarily is concerned with obtaining the best combination of
price and execution. This does not mean that the Fund must base their execution
decisions solely on whether the lowest possible price or commission costs may be
obtained. In seeking to achieve the best combination of price and execution, an
effort will be made to evaluate the overall quality and reliability of broker-
dealers and the services they provide, including their general execution
capability, reliability and integrity, willingness to take positions in
securities, general operational capabilities and financial condition. The
Investment Adviser is authorized, consistent with Section 28(e) of the
Securities Exchange Act of 1934, to pay a commission to a broker-dealer that may
be greater than the commission another broker-dealer would have charged for
effecting the transaction if the Investment Adviser determines that the
commission is reasonable in relation to the value of brokerage and research
services provided. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or the purchasers or sellers of securities; and
furnishing analysis and reports concerning issuers and industries, securities,
economic factors, trends and portfolio
- -----------------------
/5/ George E. Barnes, grantor of the Family Trust, was a founding partner
of Wayne Hummer & Co. and was a general partner through March, 1986. Mr. Barnes'
address is 5864 Glen Eagle Way, Stuart, Florida 34997.
/6/ John D. Carroll was a general partner of Wayne Hummer & Co. through
December, 1989. His address is 904 El Rancho, Sun City, Florida 33570.
/7/ Robert H. Chase was a general partner of Wayne Hummer & Co. through
December, 1991. His address is 1246 Nicolet Circle, Appleton, Wisconsin 54915.
B-23
<PAGE>
strategy. It is not possible to place a monetary value on such research
services. Since such research and statistical services only supplement the
Investment Adviser's own research efforts and any information received must be
analyzed, weighed and reviewed by the Investment Adviser's staff, the receipt of
such information is not expected to reduce materially the Investment Adviser's
cost of performing its obligations under its advisory agreement with the Trust.
The information received may be made available to Wayne Hummer & Co. for use in
serving its customers. Likewise, information available to Wayne Hummer & Co.
may be made available to the Investment Adviser in serving the Trust and its
other clients. Fund securities will not be purchased from or sold to Wayne
Hummer & Co. or the Investment Adviser or an affiliate, as defined in the
Investment Company Act of 1940, of either. The total brokerage commissions and
other transaction costs paid by the Trust in connection with the purchase or
sale of portfolio securities for the Growth Fund for the fiscal years ended
March 31, 1995, 1994, and 1993, were $23,385, $30,726, and $68,812,
respectively. The total brokerage commissions and other transaction costs paid
by the Trust in connection with the purchase or sale of portfolio securities for
the Income Fund for the fiscal years ended March 31, 1995, 1994 and 1993 were
$0.
PERFORMANCE INFORMATION
As described in the Prospectus, each Fund of the Trust's historical
performance may be shown in the form of "average annual total return," "total
return" and "yield" figures. These various measures of performance are
described below.
Average annual total return and total return measure both the net income
generated by, and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments of the Funds. Yield is an
annualized measure of the net investment income per share earned over a specific
one-month or 30-day period expressed as a percentage of the net asset value of
the particular Fund.
The Fund's average annual total return quotation is computed in accordance
with a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for a specific period is determined
by assuming a hypothetical $1,000 investment in the Fund's shares on the first
day of the period at the then effective net asset value per share ("initial
investment"), and computing the ending redeemable value ("redeemable value") of
that investment at the end of the period. The redeemable value is then divided
by the initial investment, and this quotient is taken to the Nth root (N
representing the number of years in the period) and 1 is subtracted from the
result, which is then expressed as a percentage. The calculation assumes that
all income and capital gains dividends by the Funds have been
B-24
<PAGE>
reinvested at net asset value on the reinvestment dates during the period.
Average annual total return figures for the Growth Fund for the one-, five- and
ten-year periods ended March 31, 1995 are -13.04%, 10.79% and 12.55%,
respectively, and from the date the Growth Fund commenced operations through
March 31, 1995 (a 135 month period) the average annual total return is 12.05%.
Average annual total return for the Income Fund from the date the Income Fund
commenced operations through March 31, 1995 (a 28-month period) is 5.55%, and
for the one-year period ended March 31, 1995 is 4.16%.
The calculation of the Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment (assumed to be $1,000) in the Fund's shares on the first
day of the period at the then effective net asset value per share ("initial
investment") and computing the ending redeemable value ("redeemable value") of
that investment at the end of the period. The total return percentage is then
determined by subtracting the initial investment from the redeemable value and
dividing the difference by the initial investment and expressing the result as a
percentage. This calculation assumes that all income and capital gains
dividends by the Fund have been reinvested at net asset value on the
reinvestment dates during the period. Total return may also be shown as the
increased dollar value of the hypothetical investment over the period. Total
return figures for the Growth Fund for the one-, five- and ten-year periods
ended March 31, 1995, are - 13.04%, 66.95% and 226.12% and from the date the
Growth Fund commenced operations through March 31, 1995 (a 135 month period) the
total return is 259.62%, respectively. Total return for the Income Fund from
the time the Income Fund commenced operations through March 31, 1995 (a 28-month
period) is 13.44%, and for the one-year period ended March 31, 1995 is 4.16%.
The yield for the particular Fund is computed in accordance with a
standardized method prescribed by rules of the Securities and Exchange
Commission. The Growth Fund's yield based upon the one-month period ended March
31, 1995 was 1.38%. The Income Fund's yield based upon the one-month period
ended March 31, 1995 was 7.14%. Each Fund's yield is computed by dividing the
net investment income per share earned during the specific one-month or 30-day
period by the offering price per share on the last day of the period, according
to the following formula:
Yield = 2 [(a-b +1)/6/ -1]
---
cd
Where: a = dividends and interest earned during the period.
B-25
<PAGE>
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the offering price per share on the last day of the period.
In computing yield, the Funds follow certain standardized accounting
practices specified by Securities and Exchange Commission rules. These
practices are not necessarily consistent with those that the Funds use to
prepare their annual and interim financial statements in accordance with
generally accepted accounting principles.
The particular Fund's performance quotations are based upon historical
results and are not necessarily representative of future performance. The
particular Fund's shares are sold at net asset value, and performance figures
and net asset value will fluctuate. Factors affecting the Trust's performance
include general market conditions, operating expenses and investment management.
Shares of each particular Fund are redeemable at net asset value, which may be
more or less than original cost.
SHAREHOLDER VOTING RIGHTS
See "DESCRIPTION OF SHARES - Shareholder Voting Rights" in the Prospectus
for a discussion of those matters in connection with which Shareholders are
entitled to vote. As a general rule the Trust will not hold annual or other
meetings of Trust Shareholders; provided, however, that with respect to the
election of Trustees, the Trust will, in accordance with the Investment Company
Act of 1940, hold a Shareholders' meeting for the election of Trustees at such
time as less than a majority of the Trustees holding office have been elected by
Shareholders, and, if as a result of a vacancy in the Board of Trustees less
than two-thirds of the Trustees holding office have been elected by the
Shareholders, that vacancy will be filled only by a vote of the Shareholders.
In addition, Trustees may be removed from office by a vote of the holders of at
least two-thirds of the outstanding Shares at a meeting duly called for that
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding Shares. Upon the written request of the
holders of Shares having a net asset value of $25,000 or constituting 1% of the
outstanding Shares of each Fund stating that such Shareholders wish to
communicate with the other Shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Trust has undertaken to provide a list of Shareholders or to disseminate
appropriate materials (at the
B-26
<PAGE>
expense of the requesting Shareholders).
The Trust Agreement specifically authorizes the Board of Trustees to
terminate the Trust without Shareholder approval by notice to the Shareholders.
The Investment Company Act of 1940, however, prohibits an investment company
from changing the nature of its business so as to cease to be an investment
company unless such action is authorized by the vote of a majority of its
outstanding Shares.
Other Matters
- -------------
The Trust is a trust of the type commonly known as a "Massachusetts
business trust." The Trust Agreement and the By-Laws of the Trust are designed
to make the Trust similar in many respects to a Massachusetts business
corporation. Unlike a corporation, a Massachusetts business trust is not
required to issue share certificates. Unless terminated by vote of Shareholders
holding at least a majority of the outstanding Shares of a Fund entitled to vote
or by the Trustees by written notice to the Shareholders, the Fund will continue
without limitation as to duration. As used in this Statement of Additional
Information, the term "majority of the outstanding Shares" of the Fund means the
vote of the lesser of (1) the holders of 67% or more of the Shares of the Fund
present or represented by proxy at a meeting, if the holders of more than 50% of
the outstanding Shares of the Fund are present or represented by proxy, or (2)
the holders of more than 50% of the outstanding Shares of the Fund.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the obligations
of the trust, which is not the case with a corporation.
The Trust Agreement provides that Shareholders shall not be subject to any
personal liability to any person extending credit to, contracting with or having
any claims against the Trust and that every written agreement, obligation,
instrument or undertaking made by the Trust shall contain a provision that the
same is not binding upon the Shareholders personally. The law firm of Ropes &
Gray, Boston, Massachusetts, which supervised the organization of the Trust
under Massachusetts law, is of the opinion that, pursuant to Massachusetts law,
Shareholders will not be liable personally for contract claims under any such
agreement, obligation, instrument or undertaking governed by Massachusetts law
and containing such provision when adequate notice of such provision is given.
With respect to other claims, a Shareholder may be held personally liable to the
extent that claims are not satisfied by the Trust. Upon payment of any such
liability, however, the Trust
B-27
<PAGE>
Agreement provides that Shareholders will be entitled to reimbursement from the
general assets of the Trust.
The Trustees intend to conduct the operations of the Trust, with the advice
of counsel, in such a way so as to avoid, as far as possible, ultimate liability
of the Shareholders for liabilities of the Trust. The Trust is covered by
insurance which the Trustees consider adequate to cover foreseeable tort claims.
Limitation of Liability
- -----------------------
The Trust Agreement provides that the Trust shall indemnify the Trustees
and officers of the Trust against liability arising in connection with the
affairs of the Trust to the fullest extent permitted by law. The Trust
Agreement also provides that all third persons shall look solely to the Trust
property for satisfaction of claims arising in connection with the affairs of
the Trust.
TRUST NAME
The Board of Trustees voted to change the name of the Trust from "Wayne
Hummer Growth Fund Trust" to "Wayne Hummer Investment Trust" effective December
1, 1992.
Pursuant to an agreement with the Investment Adviser, the Trust has been
granted a non-exclusive license ("License") to use the trade name and service
mark "Wayne Hummer" (the "Name"), a registered service mark of Wayne Hummer &
Co., without charge for as long as the Trust is solvent, Wayne Hummer Management
Company is the Investment Adviser to the Trust and Wayne Hummer & Co. is the
Distributor and Shareholder Service Agent. If Wayne Hummer Management Company
ceases to act as Investment Adviser or if Wayne Hummer & Co. ceases to act as
Distributor and Shareholder Service Agent, then the Trust will be required to
change its name and to deliver to Wayne Hummer Management Company for
destruction all materials in which the Name is used. Wayne Hummer Management
Company may exercise control over use of the Name and the Trust has agreed to
indemnify Wayne Hummer Management Company against expenses or losses which may
arise from the Trust's misuse of the Name or out of any breach of the License
regarding the use of the Name. The Investment Adviser has entered into a
similar non-exclusive license for use of the Name with Wayne Hummer Money Fund
Trust.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For a discussion of the manner in which Trust shares are offered to the
public, see "PURCHASE OF SHARES" in the Prospectus. Additionally, an investor
in the Trust may purchase additional Trust shares through automatic reinvestment
of dividends. See
B-28
<PAGE>
"DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS" in the Prospectus. For a full
description of redemption procedures, see "REDEMPTION OF SHARES" in the
Prospectus.
Determination of Net Asset Value
--------------------------------
The purchase price for each of the Fund Shares is the net asset value per
Share which is determined on each day the New York Stock Exchange is open for
trading as of the close of regular session trading on the New York Stock
Exchange (generally 3:00 p.m. Chicago time) on each business day and at 3:00
p.m. Chicago time on each other day during which there is a sufficient degree of
trading in securities of the particular Fund so as to affect materially the net
asset value of the Shares of such Fund. The net asset value per Share for each
Fund is computed by dividing the value of the portfolio of securities of the
particular Fund plus any other assets minus all liabilities by the total number
of such Fund's Shares outstanding. Expenses, including the fees payable to the
Investment Adviser and the Distributor and Shareholder Service Agent, are
accrued daily.
In valuing the Growth Fund securities, each listed and unlisted security
for which last sale information is regularly reported is valued at the last
reported sale price on that day. If there has been no sale on such day, the
last reported sale price prior to that day is utilized if such sale is between
the closing bid and asked price of the current day. If the last sale price on a
prior day is not between the current day's closing bid and asked prices, then
the value of such security is taken to be the mean between the current day's bid
and asked prices. In valuing the Income Fund's securities, fixed income
securities are valued by using market quotations, or independent pricing
services that use prices provided by market makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics. Any unlisted security for which last sale information is not
regularly reported or any listed debt security which has an inactive listed
market for which over-the-counter market quotations are readily available is
valued at the highest closing bid price determined on the basis of reasonable
inquiry. Restricted securities and any other securities or other assets for
which market quotations are not readily available are valued by appraisal at
their fair values as determined in good faith under procedures established by
and under the general supervision and responsibility of the Board of Trustees.
Debt securities having a remaining maturity of less than sixty days are valued
at cost adjusted for amortization of premiums and accretion of discounts.
B-29
<PAGE>
TAXES
Please refer to information concerning taxes which is found in the
Prospectus under the heading "TAXES," which is incorporated herein by reference.
The following discussion relates to both Funds.
Federal Income Tax
- ------------------
All distributions of net investment income and net short-term capital gains
will be taxable to Shareholders as ordinary income whether received in cash or
reinvested in additional Shares. Distributions of long-term capital gains,
whether received in cash or reinvested in additional Shares, will be taxable to
Shareholders as long-term capital gains, regardless of the length of time the
Shareholder has held Shares in a Fund. Under current law, ordinary income
distributions and capital gain distributions received by corporate Shareholders
will be taxed at the same rate. However, capital gain distributions received by
individual Shareholders will be taxed at a maximum rate of 28%. Since
distributions reduce net asset value, an investor purchasing Shares shortly
before a record date will, in effect, receive a return of a portion of his or
her investment in such distribution, but the distribution will be taxable. If
the net asset value of Shares is reduced by distributions below a Shareholder's
cost, such distributions would be taxable even though constituting a return of
investment. However, for federal income tax purposes the Shareholder's original
cost continues as the tax basis of the Shares and on redemption his or her
capital gain or loss generally is the difference between the original cost and
the redemption proceeds.
Any loss recognized on the disposition of Shares held for six months or
less will be treated as long-term capital loss to the extent that the
Shareholder has received any long-term capital gain distributions on such
Shares.
A Fund's options, futures and foreign currency transactions are subject to
special tax provisions that may accelerate or defer recognition of certain gains
or losses, change the character of certain gains or losses, or alter the holding
periods of certain of the Fund's securities.
The mark-to-market rules of the Code may require a Fund to recognize
unrealized gains and losses on certain options and futures held by a Fund at the
end of the fiscal year. Under these provisions, 60% of any capital gain net
income or loss recognized will generally be treated as long-term and 40% as
short-term. In addition, the straddle rules of the Code would require deferral
of certain losses realized on positions of a straddle to the extent that a Fund
had unrealized gains in offsetting positions at year end.
B-30
<PAGE>
A 4% excise tax is imposed on the excess of the required distribution for a
calendar year over the distributed amount for such calendar year. The required
distribution generally is the sum of 98% of a Fund's net investment income for
the calendar year plus 98% of its capital gain net income for the one-year
period ending October 31. Each Fund intends to declare or distribute dividends
during the calendar year in an amount sufficient to prevent imposition of the 4%
excise tax.
Shareholders who are non-resident aliens are subject to U.S. withholding
tax on ordinary income dividends (whether received in cash or shares) at a rate
of 30% or such lower rate as prescribed by an applicable tax treaty.
Other Taxes
- -----------
The Trust may be subject to tax in certain states where it does business.
Further, in those states which have income tax laws, the tax treatment of the
Trust and of Shareholders may differ from federal income tax treatment.
Shareholders are advised to consult their own tax advisors regarding specific
questions as to federal, state or local taxes.
INDEPENDENT AUDITORS
The Trust's independent auditors are Ernst & Young LLP, 233 South Wacker
Drive, Chicago, Illinois 60606, who audit and report on the Trust's annual
financial statements, review certain regulatory reports and the Trust's federal
income tax return, and perform other professional accounting, auditing, tax and
advisory services when engaged to do so by the Trust. The selection of
independent auditors is subject to ratification by the Trust's Shareholders when
Shareholders' meetings are held.
CUSTODIAN AND TRANSFER AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as Custodian for the Trust's assets and as the Trust's
Transfer and Dividend Paying Agent.
The Custodian is responsible for holding all securities and cash of the
Trust, receiving and paying for securities purchased, receiving payment for and
delivering securities sold, receiving and collecting income from investments,
making all payments covering expenses of the Trust, and performing other
administrative duties, all as directed by authorized persons. The Custodian
does not perform any advisory function in such matters as purchase and sale of
portfolio securities, payment of dividends, or payment of expenses of the Trust.
The Trust has authorized the Custodian to deposit certain portfolio securities
in central depository systems
B-31
<PAGE>
as permitted under federal law. The Trust may invest in obligations of the
Custodian and may purchase or sell securities from or to the Custodian.
LEGAL COUNSEL
The law firm of Vedder, Price, Kaufman & Kammholz, Chicago, Illinois,
acts as legal counsel for the Trust. The law firm of Bell, Boyd & Lloyd,
Chicago, Illinois, acts as special counsel to those Trustees who are not
interested persons, as defined in the Investment Company Act of 1940, of the
Trust.
REPORTS TO SHAREHOLDERS
The Trust sends to its Shareholders various financial reports
("Reports") such as unaudited semi-annual financial statements and fiscal year-
end financial statements audited by the Trust's independent auditors. To reduce
expenses, only one copy of most Reports may be mailed to all accounts with the
same social security or taxpayer identification number or to all Shareholders in
the same household. Shareholders may call or write Wayne Hummer & Co. to request
that copies of Reports be mailed to each account with a common taxpayer number
or to two or more Shareholders in the same household.
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT AUDITORS
The financial statements and the report of independent auditors
contained in the Growth Fund's and the Income Fund's annual report to
Shareholders (each entitled "Annual Financial Statements (Audited)") for the
fiscal year ended March 31, 1995, are incorporated herein by reference. The
Trust's "Annual Financial Statements (Audited)," unless previously received,
must accompany this Statement of Additional Information.
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<PAGE>
ANNUAL FINANCIAL STATEMENTS
(Audited)
MARCH 31, 1995
Wayne
Hummer
Growth
Fund
Dear Fellow Shareholder:
This annual report of the Wayne Hummer Growth Fund (the "Fund") covers the
eleventh complete fiscal year that ended March 31, 1995, and contains a chart
comparing a hypothetical $10,000 investment in the Fund with a similar amount
invested in "the market" as well as management's discussion and analysis of the
Fund's performance during the past fiscal year. As proxies for "the market" we
provide both the Standard & Poor's 500 Composite Stock Price Index (the "S&P
500") and the Russell Mid Cap Index. The S&P 500 is widely recognized and
commonly cited in the financial press as a barometer of market activity. Stocks
in the S&P 500 represent a broad distribution by industry group, comparable to
that of stocks traded on the New York Stock Exchange. In fact, over 90% of the
market capitalization of the S&P 500 comes from companies listed on the New York
Stock Exchange. The companies comprising the S&P 500 have a mean market
capitalization in excess of $6.6 billion. We believe, however, that the Russell
Mid Cap Index more closely represents the significant characteristics of the
Fund. The Russell Mid Cap Index has a weighted mean market capitalization of
$2.3 billion, estimated price/earnings ratio for 1995 of 17.5, and return on
shareholder's equity of 18.6%. The securities in the Fund's portfolio have a
weighted market capitalization (less the 5 largest companies) of $2.6 billion,
weighted P/E of 17.4, and weighted return on shareholders equity of 17.0%.
For most of the time since the inception of the Fund, its performance has
tracked that of the two indices quite closely, with some of the negative
variation attributable to the Fund's expense ratio which averaged 1.37%
(currently 1.07%) over the past eleven years. Even giving effect to its expense
ratio, the Fund outperformed both indices in the down market years of 1987 and
1990.
For the fiscal year ended March 31, 1995, the value of a Fund share increased to
$23.43 from $21.23 at March 31, 1994, or 10.4%. If distributions to shareholders
of income and capital gains were reinvested, the Fund's total return would be
13.0%. During this same period the total return of the S&P 500 was 15.5% and the
Russell Mid Cap Index, 11.4%.
In general, growth stock mutual funds with investment criteria similar to that
of the Fund under performed the market in 1993 and the early part of 1994. In
early 1994, however, the Federal Reserve started to increase interest rates to
slow an economy that showed evidence of overheating and to dampen increasing
inflationary pressures. With the growing expectation that the economy would
slow, investors shifted from economically sensitive and foreign issues into
higher quality, defensive, and more traditional growth stocks in which the Fund
invests. Coincidentally, at about this time last year the Fund's relative
performance also began to improve as the types of investments favored by the
Fund gained investor popularity. In addition, the Fund's cash equivalent
position was 5% or less during the first quarter of calendar year 1995 (the
Fund's fourth fiscal quarter). Being so fully invested in the market also
contributed to the Fund's performance during a period when the market was up
strongly. As signs of an economic slowdown proliferate, the Fund's investment
advisor, Wayne Hummer Management Company, believes that investment emphasis will
continue to be placed on high financial quality growth stocks with defensive
characteristics that can tolerate a more difficult environment.
The Trustees of the Fund declared an $.08 ordinary income dividend and an $.11
long term gain distribution which was paid on April 28, 1995.
As always, we are pleased to be part of your long-range financial planning.
Sincerely,
[Signature]
Alan W. Bird, CFA
President
April 28, 1995
<PAGE>
WAYNE HUMMER GROWTH FUND VS.
RUSSELL MID-CAP AND THE S&P 500
WAYNE HUMMER RUSSELL
GROWTH FUND S&P 500 MID-CAP
3/31/85 $10,000.00 $10,000.00 $10,000.00
6/30/85 $10,547.04 $10,736.00 $10,793.41
9/30/85 $10,040.76 $10,295.82 $10,681.51
12/31/85 $11,745.56 $12,069.79 $12,465.16
3/31/86 $13,344.50 $13,772,84 $14,505.39
6/30/86 $13,785.98 $14,585.44 $15,397.74
9/30/86 $12,543.10 $13,565.92 $14,306.13
12/31/86 $13,360.99 $14,321.54 $14,732.12
3/31/87 $16,241.63 $17,382.05 $17,703.23
6/30/87 $16,708.31 $18,254.63 $18,024.23
9/30/87 $17,922.88 $19,459.44 $19,087.49
12/31/87 $14,600.49 $15,081.06 $14,765.86
3/30/88 $15,274.88 $15,940.68 $16,569.57
6/30/88 $15,768.54 $16,976.83 $17,771.60
9/30/88 $15,490.86 $17,041.34 $17,606.74
12/31/88 $15,624.31 $17,561.10 $17,691.24
3/31/89 $16,432.47 $18,800.92 $19,010.93
6/30/89 $17,426.50 $20,436.60 $20,748.92
9/30/89 $18,912.86 $22,625.35 $22,725.42
12/31/89 $19,378.41 $23,086.91 $22,335.74
3/31/90 $19,534.51 $22,396.61 $21,472.92
6/30/90 $20,644.12 $23,771.77 $22,268.03
9/30/90 $18,163.49 $20,515.03 $17,853.01
12/31/90 $20,351.48 $22,334.72 $19,770.68
3/31/91 $22,946.30 $25,595.59 $23,818.78
6/30/91 $23,338.07 $25,482.97 $23,954.20
9/30/91 $24,242.33 $26,856.50 $25,729.18
12/31/91 $26,221.77 $29,107.07 $27,988.60
3/31/92 $26,420.60 $28,379.39 $28,423.86
6/30/92 $26,231.33 $28,887.39 $28,364.69
9/30/92 $27,809.21 $29,826.23 $30,861.67
12/31/92 $28,941.11 $31,338.42 $34,103.04
3/31/93 $29,048.10 $32,691.61 $35,956.90
6/30/93 $28,673.82 $32,825.64 $36,523.89
9/30/93 $28,796.68 $33,665.98 $38,478.79
12/31/93 $29,781.09 $34,675.96 $38,980.18
3/31/94 $28,848.97 $33,354.81 $37,827.72
6/30/94 $28,501.87 $33,468.21 $37,010.64
9/30/94 $29,799.91 $35,114.85 $39,115.81
12/31/94 $29,704.27 $35,107.82 $38,163.34
3/31/95 $32,612.65 $38,523.82 $42,135.36
<TABLE>
<CAPTION>
Wayne Hummer Growth Fund
- ----------------------------------------------
Period Growth Total Return
Ended of Cumu- Average
3/31/95 $10,000 lative Annual
- ----------------------------------------------
<S> <C> <C> <C>
1 Year $11,304 13.04% 13.04%
5 Year $16,695 66.95% 10.79%
10 Year $32,612 226.12% 12.55%
Russell Mid Cap
- ----------------------------------------------
Period Growth Total Return
Ended of Cumu- Average
3/31/95 $10,000 lative Annual
- ----------------------------------------------
1 Year $11,139 11.39% 11.39%
5 Year $19,623 96.23% 14.43%
10 Year $42,135 321.35% 15.47%
S & P 500
- ----------------------------------------------
Period Growth Total Return
Ended of Cumu- Average
3/31/95 $10,000 lative Annual
- ----------------------------------------------
1 Year $11,550 15.50% 15.50%
5 Year $17,201 72.01% 11.46%
10 Year $38,524 285.24% 14.44%
</TABLE>
WAYNE HUMMER GROWTH FUND
VALUE OF AN ASSUMED $10,000 INITIAL INVESTMENT
NET VALUE OF VALUE OF
ASSET REINVESTED REINVESTED
VALUE DIVIDENDS CAPITAL GAINS
31-Dec-83 1983 $10,000 $0 $0
31-Mar-84 $9,830 $0 $0
30-Jun-84 $9,350 $58 $0
30-Sep-84 $9,980 $149 $0
31-Dec-84 1984 $10,170 $245 $0
31-Mar-85 $10,670 $357 $0
30-Jun-85 $11,120 $504 $7
30-Sep-85 $10,530 $536 $6
31-Dec-85 1985 $12,250 $695 $7
31-Mar-86 $13,850 $857 $8
30-Jun-86 $13,880 $926 $397
30-Sep-86 $12,570 $903 $359
31-Dec-86 1986 $13,330 $1,023 $381
31-Mar-87 $16,140 $1,309 $461
30-Jun-87 $15,840 $1,436 $1,149
30-Sep-87 $16,930 $1,606 $1,228
31-Dec-87 1987 $13,220 $1,323 $1,557
31-Mar-88 $13,790 $1,430 $1,624
30-Jun-88 $14,190 $1,523 $1,676
30-Sep-88 $13,900 $1,540 $1,642
31-Dec-88 1988 $13,740 $1,669 $1,821
31-Mar-89 $14,450 $1,756 $1,915
30-Jun-89 $15,130 $1,935 $2,152
30-Sep-89 $16,360 $2,169 $2,327
31-Dec-89 1989 $16,410 $2,306 $2,656
31-Mar-90 $16,540 $2,324 $2,678
30-Jun-90 $16,960 $2,580 $3,224
30-Sep-90 $14,860 $2,343 $2,825
31-Dec-90 1990 $16,000 $2,843 $3,600
31-Mar-91 $18,040 $3,206 $4,059
30-Jun-91 $18,130 $3,365 $4,242
30-Sep-91 $18,740 $3,609 $4,385
31-Dec-91 1991 $20,020 $4,142 $4,757
31-Mar-92 $20,170 $4,173 $4,792
30-Jun-92 $19,840 $4,202 $4,883
30-Sep-92 $20,950 $4,560 $5,156
31-Dec-92 1992 $21,640 $4,919 $5,355
31-Mar-93 $21,720 $4,938 $5,374
30-Jun-93 $21,380 $4,949 $5,290
30-Sep-93 $21,400 $5,060 $5,295
31-Dec-93 1993 $22,060 $5,486 $5,511
31-Mar-94 $21,230 $5,279 $5,303
30-Jun-94 $20,910 $5,297 $5,223
30-Sep-94 $21,790 $5,628 $5,443
31-Dec-94 1994 $21,340 $5,766 $5,649
31-Mar-95 $23,430 $6,331 $6,202
NOTE: Performance data quoted herein represents past performance. Actual
investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
<PAGE>
WAYNE HUMMER GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1995
- ------ --------------
<S> <C>
Investments, at value (Cost $69,854,710).......... $94,673,328
Other assets:
Cash............................................ 4,799
Dividends receivable............................ 167,478
Prepaid expenses................................ 16,421
Insurance deposit............................... 3,846
-----------
Total assets.................................. 94,865,872
LIABILITIES AND NET ASSETS
- --------------------------
Due to Wayne Hummer Management Company............ 62,883
Accounts payable.................................. 33,261
-----------
Total liabilities............................. 96,144
-----------
Net assets applicable to 4,045,128
Shares outstanding, no par value,
equivalent to $23.43 per Share................. $94,769,728
===========
ANALYSIS OF NET ASSETS
- ----------------------
Excess of amounts received from issuance of
Shares over amounts paid on redemptions of
Shares on account of capital.................... $69,214,977
Unrealized appreciation of investments............ 24,818,618
Undistributed net realized gain on sales
of investments.................................. 437,110
Undistributed net investment income............... 299,023
-----------
Net assets applicable to Shares outstanding....... $94,769,728
===========
THE PRICING OF SHARES
- ---------------------
Net asset value, offering and redemption price
per share ($94,769,728 / 4,045,128 Shares
outstanding)................................... $23.43
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1995
--------------
<S> <C>
Investment income:
Dividends....................................... $ 2,072,535
Interest........................................ 190,476
-----------
Total investment income....................... 2,263,011
Expenses:
Management fee.................................. 721,072
Transfer agent fees............................. 72,600
Custodian fees.................................. 46,600
Registration costs.............................. 23,328
Audit fees...................................... 21,450
Legal fees...................................... 23,000
Trustee fees.................................... 15,500
Portfolio accounting fees....................... 5,196
Other........................................... 35,884
-----------
Total expenses................................ 964,630
-----------
Net investment income............................. 1,298,381
-----------
Net realized gain on sales of investments......... 1,299,662
Net increase in unrealized appreciation........... 8,553,581
-----------
Net gain on investments........................... 9,853,243
-----------
Net increase in net assets resulting
from operations................................. $11,151,624
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
1995 1994
----------- -----------
<S> <C> <C>
Operations:
Net investment income.............................................. $ 1,298,381 $ 1,283,837
Net realized gain on sales of investments.......................... 1,299,662 275,819
Net increase (decrease) in unrealized appreciation................. 8,553,581 (1,964,263)
----------- -----------
Net increase (decrease) in net assets resulting from operations...... 11,151,624 (404,607)
Dividends to Shareholders from:
Net investment income.............................................. (1,276,626) (1,269,041)
Net realized gain on investments................................... (862,552) (275,819)
----------- -----------
Total dividends to Shareholders...................................... (2,139,178) (1,544,860)
Capital Share transactions:
Proceeds from Shares sold.......................................... 8,456,852 18,706,576
Shares issued upon reinvestment of dividends....................... 2,062,820 1,497,457
----------- -----------
10,519,672 20,204,033
Less payments for Shares redeemed.................................. 17,153,071 19,061,723
----------- -----------
Increase (decrease) from Capital Share transactions.................. (6,633,399) 1,142,310
----------- -----------
Total increase (decrease) in net assets.............................. 2,379,047 (807,157)
Net assets:
Beginning of year.................................................. 92,390,681 93,197,838
----------- -----------
End of year (including undistributed net investment income of
$299,023 and $277,268 at March 31, 1995 and 1994, respectively).. $94,769,728 $92,390,681
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
------- -----------
<S> <C> <C>
COMMON STOCKS (95.7%)
- -------------
AUTO & MACHINERY (10.3%)
- ----------------
Echlin Incorporated 35,000 $ 1,347,500
Emerson Electric Co. 55,000 3,657,500
Illinois Tool Works, Inc. 65,000 3,176,875
Regal-Beloit Corporation 100,000 1,562,500
-----------
9,744,375
BANKS (5.8%)
- -----
First of America Bank Corporation 75,000 2,521,875
Northern Trust Corporation 60,000 2,107,500
UMB Financial Corp. 28,201 846,030
-----------
5,475,405
CHEMICAL (17.4%)
- --------
Avery Dennison Corp. 100,000 3,987,500
International Flavors & Fragrances, Inc. 45,000 2,323,125
Morton International, Inc. 120,000 3,480,000
Nalco Chemical Company 30,000 1,008,750
RPM, Inc. 80,000 1,590,000
Safety-Kleen Corp. 40,000 715,000
Schulman (A.), Inc. 110,000 3,355,000
-----------
16,459,375
ELECTRONICS (3.3%)
- -----------
AMP Incorporated 50,000 1,800,000
Thomas & Betts Corporation 20,000 1,295,000
-----------
3,095,000
FOOD, BEVERAGE & HOUSEHOLD (12.3%)
- --------------------------
Dean Foods Company 80,000 2,260,000
McCormick & Company, Incorporated 100,000 2,262,500
PepsiCo, Inc. 20,000 780,000
Rubbermaid Incorporated 80,000 2,640,000
Sara Lee Corporation 80,000 2,090,000
Smucker (The J. M.) Company Class B 80,000 1,610,000
-----------
11,642,500
HEALTH CARE (9.4%)
- -----------
Abbott Laboratories 40,000 1,425,000
AMSCO International, Inc. (c) 50,000 681,250
Bard (C.R.) Inc. 60,000 1,657,500
Caremark International Inc. 36,250 715,938
R. P. Scherer Corporation (c) 70,000 3,517,500
Technol Medical Products (c) 50,000 950,000
-----------
8,947,188
INSURANCE (7.4%)
- ---------
AON Corporation 30,000 $ 1,095,000
Cincinnati Financial Corporation 45,000 2,340,000
Ohio Casualty Corporation 50,000 1,687,500
Old Republic International Corporation 80,000 1,920,000
-----------
7,042,500
MERCHANDISING (1.8%)
- -------------
Arbor Drugs, Inc. 37,500 890,625
Shopko Stores, Inc. 75,000 768,750
-----------
1,659,375
OIL & GAS (3.8%)
- ---------
Baker Hughes Incorporated 55,000 1,120,625
Burlington Resources, Inc. 60,000 2,445,000
-----------
3,565,625
PAPER & FOREST PRODUCTS (7.0%)
- -----------------------
Albany International Corp. Class A 100,000 1,887,500
Consolidated Papers, Inc. 55,000 2,736,250
Sonoco Products Company 85,000 2,061,250
-----------
6,685,000
PUBLISHING & MEDIA (5.5%)
- ------------------
CCH Incorporated Class B 34,000 578,000
Gannett Inc. 35,000 1,868,125
Interpublic Group of Companies, Inc. 75,000 2,803,125
-----------
5,249,250
SERVICES (6.3%)
- --------
H & R Block, Inc. 60,000 2,602,500
Kelly Services, Inc. Class A 93,750 3,375,000
-----------
5,977,500
MISCELLANEOUS (5.4%)
- -------------
Boeing Company 30,000 1,616,250
Calgon Carbon Corporation 85,000 966,875
Pall Corporation 120,000 2,520,000
-----------
5,103,125
-----------
Total Common Stocks (Cost: $65,827,600) 90,646,218
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (4.2%)
- ----------------------
MATURITY DATE PRINCIPAL
COMMERCIAL PAPER (2.5%) RATE% (1995) AMOUNT
- ---------------- ----- ------------- ----------
<S> <C> <C> <C> <C>
Ford Motor Credit Company 6.036 04/03 $ 200,000 199,934
Prudential Funding Corp. 6.017 04/05 384,000 383,747
American Express Credit Corporation 6.043 04/10 643,000 642,043
General Electric Capital Services, Inc. 6.066 04/13 320,000 319,363
Ford Motor Credit Company 6.055 04/17 481,000 479,727
Associates Corp. of North America 6.077 04/24 380,000 378,551
-----------
2,403,365
OTHER (1.7%)
- -----
United States Treasury Bill 5.845 04/27 165,000 164,316
United States Treasury Bill 5.778 05/25 1,458,000 1,445,643
Other 5.500 02/28/96 13,780 13,786
-----------
1,623,745
-----------
Total Short-Term Investments (Cost: $4,027,110) 4,027,110
-----------
TOTAL INVESTMENTS (COST: $69,854,710) (99.9%) 94,673,328
CASH AND OTHER ASSETS, LESS LIABILITIES (0.1%) 96,400
-----------
NET ASSETS (100.0%) $94,769,728
===========
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS:
(a) Interest rates on money market instruments represent annualized yield to
date of maturity.
(b) Based on the cost of investments of $69,854,710 for federal income tax
purposes at March 31, 1995, the aggregate gross unrealized appreciation was
$26,856,764, the aggregate gross unrealized depreciation was $2,038,146 and
the net unrealized appreciation of investments was $24,818,618.
(c) Non-income producing security.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each year)
<TABLE>
<CAPTION>
Year ended March 31,
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 21.23 $ 21.72 $ 20.17 $ 18.04 $ 16.54
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... 0.32 0.28 0.28 0.36 0.46
Net realized and unrealized gains (losses) on securities. 2.40 (0.42) 1.70 2.32 2.23
------- ------- ------- ------- -------
Total from investment operations......................... 2.72 (0.14) 1.98 2.68 2.69
LESS DISTRIBUTIONS:
Dividends from net investment income..................... (0.31) (0.28) (0.29) (0.39) (0.44)
Distributions from net realized gains on securities...... (0.21) (0.07) (0.14) (0.16) (0.75)
------- ------- ------- ------- -------
Total distributions...................................... (0.52) (0.35) (0.43) (0.55) (1.19)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............................. $ 23.43 $ 21.23 $ 21.72 $ 20.17 $ 18.04
======= ======= ======= ======= =======
TOTAL RETURN............................................... 13.04% (0.69%) 9.94% 15.14% 17.47%
------- ------- ------- ------- -------
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period (000's)........................ $94,770 $92,391 $93,198 $55,837 $32,445
Ratio of expenses to average net assets.................. 1.07% 1.07% 1.12% 1.23% 1.36%
Ratio of net investment income to average net assets..... 1.44% 1.33% 1.41% 2.01% 2.87%
Portfolio turnover rate.................................. 3% 2% 1% 3% 13%
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust"), formerly named Wayne Hummer
Growth Fund Trust, is organized as an unincorporated business trust under the
laws of Massachusetts. The Trust consists of two investment portfolios, the
Wayne Hummer Growth Fund (the "Fund") and the Wayne Hummer Income Fund, each
operating as a separate mutual fund. The Fund commenced investment operations
on December 30, 1983, and may issue an unlimited number of full and
fractional units of beneficial interest (Shares) without par value.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Investments are stated at value. Each listed and unlisted security for which
last sale information is regularly reported is valued at the last reported
sale price on that day. If there has been no sale on such day, the last
reported sale price prior to that day is utilized if such sale is between the
closing bid and asked price of the current day. If the last price on a prior
day is not between the current day's closing bid and asked price, then the
value of such security is taken to be the mean between the current day's bid
and asked price. Any unlisted security for which last sale information is not
regularly reported and any listed debt security which has an inactive listed
market for which over-the-counter market quotations are readily available is
valued at the highest closing bid price determined on the basis of reasonable
inquiry, except that debt securities having a remaining maturity of 60 days
or less are valued on an amortized cost basis. Restricted securities and any
other securities or other assets for which market quotations are not readily
available are valued by appraisal at their fair value as determined in good
faith under procedures established by the Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on the
accrual basis and includes amortization of money market instrument premium
and discount.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund Shares are sold and redeemed on a continuous basis at net asset value.
Net asset value per Share is determined on each day the New York Stock
Exchange is open for trading as of the close of trading on the Exchange and
at 3:00 p.m. Chicago time on each other day during which there is a
sufficient degree of trading in securities of the Fund's portfolio so as to
affect materially the net asset value of the Shares by dividing the value of
net assets (total assets less liabilities) by the total number of Shares
outstanding.
Ordinary income dividends are normally declared and paid in April, July,
October, and December. Capital gains dividends, if any, are paid at least
annually. Dividends will be reinvested in additional Shares unless a
Shareholder requests payment in cash. Dividends payable to Shareholders are
recorded by the Fund on the ex-dividend date. On April 26, 1995, an ordinary
income dividend of $.08 per Share and a capital gain dividend of $0.11 per
Share were declared, payable April 28, 1995, to Shareholders of record on
April 26, 1995.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a Portfolio
Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"). The shareholders of the Investment Adviser are the
general partners of Wayne Hummer & Co. ("Distributor and Shareholder Service
Agent"). For advisory and management services and facilities furnished, the
Fund pays fees of .80 of 1% on the first $100 million of average daily net
assets, .65 of 1% of the next $150 million of average daily net assets and
.50 of 1% of the average daily net assets in excess of $250 million. The
Investment Adviser is obligated to reimburse the Fund to the extent that the
Fund's ordinary operating expenses, including the fee of the Investment
Adviser, exceed the lesser of (1) 1.50% of the average daily net assets of
the Fund or (2) the expense limitations applicable to the Fund imposed by any
state in which the Fund's Shares are sold. During the year ended March 31,
1995, the Fund incurred management fees of $721,072.
<PAGE>
BOARD
OF TRUSTEES
Philip M. Burno
Chairman
Steven R. Becker
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
Eustace K. Shaw
This brochure must
be preceded or
accompanied by
a current
prospectus of
the Wayne Hummer
Growth Fund.
For portfolio accounting services, the Fund pays the Investment Adviser a fee
based on the level of average daily net assets plus out-of-pocket expenses.
Wayne Hummer & Co. serves as Distributor and Shareholder Service Agent
without compensation from the Fund.
Certain trustees of the Fund are also officers or directors of the Investment
Adviser or partners of the Distributor and Shareholder Service Agent. During
the year ended March 31, 1995, the Fund made no direct payments to its
officers and incurred trustee fees for its unaffiliated trustees of $15,500.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
<TABLE>
<CAPTION>
Year ended
March 31, 1995
--------------
<S> <C>
Purchases $2,364,625
Proceeds from sales $7,526,338
</TABLE>
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statement of Changes in
Net Assets are in respect of the following number of shares:
<TABLE>
<CAPTION>
Year ended March 31,
1995 1994
-------- --------
<S> <C> <C>
Shares sold................................... 395,513 867,010
Shares issued upon reinvestment of dividends.. 96,627 69,341
-------- --------
492,140 936,351
Shares redeemed............................... 799,693 (874,902)
-------- --------
Net decrease in Shares outstanding............ (307,553) 61,449
======== ========
</TABLE>
7. FEDERAL TAX STATUS OF 1994 DIVIDENDS
The income dividend is taxable as ordinary income. The dividends paid to you,
whether received in cash or reinvested in Shares, must be included on your
federal income tax return and must be reported by the Fund to the Internal
Revenue Service in accordance with U.S. Treasury Department regulations. An
amount equal to 100% of ordinary income dividends paid during 1994 qualifies
for the dividends-received deduction available to corporations as provided by
the Internal Revenue Code.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Wayne Hummer Growth Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Wayne Hummer Growth Fund as of March 31, 1995,
and the related statements of operations for the year then ended and changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the fiscal years since 1991. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wayne
Hummer Growth Fund as of March 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
periods then ended, and financial highlights for each of the fiscal years since
1991, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
April 28, 1995
WAYNE HUMMER & CO.
300 South Wacker 200 E. Washington Street
Chicago, Illinois Appleton, Wisconsin
60606 54911
1 800 621 4477 (toll-free) 1 800 678 0833 (toll-free)
(312) 431 1700 (local) (414) 734 1474 (local)
<PAGE>
[LOGO OF WAYNE HUMMER INCOME FUND]
ANNUAL FINANCIAL STATEMENTS
(Audited)
MARCH 31, 1995
Fellow Shareholder:
I am pleased to present the annual financial statements for the Wayne Hummer
Income Fund for the period ended March 31, 1995.
Over the last year, the Federal Reserve Bank has increased short-term interest
rates by 250 basis points, from 3.5% to 6.0%. During that same time period,
longer-term interest rates rose and then subsequently fell. At March 31, 1994,
long-term treasury rates were approximately 7.10%. By November, 1994, long-term
rates rose above 8%, however, by March, 1995, they had fallen to 7.45%.
During this period of dramatically higher short-term interest rates and modestly
higher long-term interest rates, the Wayne Hummer Income Fund performed well.
For the one-year period ended March 31, 1995, the Fund's total return (dividends
reinvested plus the change in share price) was 4.16%. Over the same period, The
Merrill Lynch Domestic Master Index* had a return of 4.93%. We have selected
this index for a benchmark comparison because it provides a good approximation
of the bond market's overall performance.
For the six-month period ending March 31, 1995, the Fund's total return
(dividends reinvested plus the change in share price) was 5.52%. For the same
period, the Merrill Lynch Domestic Master Index had a total return of 5.46%.
During the year ended March 31, 1995, in order to limit price volatility, the
portfolio of the Wayne Hummer Income Fund had an average life that was shorter
than that of its benchmark index. As a result, the Fund's portfolio of bonds
was impacted negatively during the year when short and intermediate-term
interest rates rose substantially more than longer-term interest rates. Over
the last half of the fiscal year, however, intermediate-term interest rates were
actually lower--helping the Wayne Hummer Income Fund to perform better than its
benchmark index.
For the year ended March 31, 1995, the Fund paid $0.99303 per share in income
dividends. At March 31, 1995, the SEC yield of the Fund was 7.14%. The net
asset value per share was $14.69.
The credit quality of the Fund's portfolio remains relatively high with over 32%
of the assets invested in U.S. Government and U.S. Government agency securities.
Over 65% of the portfolio's holdings are rated within the highest three credit
categories as assigned by Moody's or Standard & Poor's. The portfolio remains
broadly diversified with 50 different securities represented by over 25
different issuers.
While longer-term interest rates were falling over the last six months, we
reduced the portfolio's average maturity to 7.87 years (a decrease of 1.5 years)
and shortened the portfolio's duration to 4.75 years (a decrease of .8 years).
This was accomplished, primarily, by selling some of the Fund's longer-term
maturities.
Near-term, we don't expect dramatic changes in interest rates. However, we do
expect both short-term and long-term interest rates to be slightly higher six
months from now. As mentioned previously, we have already shortened the
portfolio's average maturity and duration. A slightly shorter average maturity
will help protect the Fund's principal value if, as we expect, interest rates
rise. Going forward, we will continue to pursue a relatively conservative
investment strategy. The portfolio's overall credit quality will remain
relatively high.
We believe that the Fund is appropriately positioned to protect principal value
and provide a relatively high dividend yield in the months ahead.
We appreciate the privilege of investing your funds.
Sincerely,
/s/ David P. Poitras
David P. Poitras
Vice President and Portfolio Manager
May 19, 1995
*The Merrill Lynch Domestic Master Index is an unmanaged index of fixed rate,
coupon bearing government, investment grade corporate and mortgage pass-through
securities.
<PAGE>
WAYNE HUMMER INCOME FUND VS
MERRILL LYNCH DOMESTIC MASTER INDEX
[GRAPH APPEARS HERE]
WAYNE HUMMER MERRILL LYNCH
INCOME FUND DOMESTIC MASTER INDEX
12/1/92 $10,000 $10,000
12/31/92 $10,035 $10,149
3/31/93 $10,431 $10,572
6/30/93 $10,737 $10,855
9/30/93 $11,080 $11,155
12/31/93 $11,044 $11,166
3/31/94 $10,892 $10,857
6/30/94 $10,722 $10,742
9/30/94 $10,751 $10,803
12/31/94 $10,835 $10,851
3/31/95 $11,344 $11,393
<TABLE>
<CAPTION>
Wayne Hummer Income Fund Merrill Lynch Domestic Master
-------------------------------------- -------------------------------------
Total Return Total Return
Period Ended Growth of Cum. Avg. Period Ended Growth of Cum. Avg.
3/31/95 $10,000 Annual 3/31/95 $10,000 Annual
-------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $10,416 4.16% 4.16% 1 Year $10,493 4.93% 4.93%
12/1/92 - $11,344 13.44% 5.55% 12/1/92 - $11,393 13.93% 5.76%
3/31/95 3/31/95
------------------------------------------------------------------------------
</TABLE>
Commencement
Note: Performance data quoted herein represents past performance. Actual
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
ASSETS MARCH 31, 1995
- ------ --------------
<S> <C>
Investments, at value (Cost: $26,516,202).................. $25,830,784
Other assets:
Cash..................................................... 95,837
Interest receivable...................................... 483,683
Deferred organizational costs (net of accumulated
amortization of $28,000)............................... 32,000
Prepaid expenses......................................... 2,001
Paydown principal receivable............................. 464
-----------
Total assets........................................ 26,444,769
LIABILITIES AND NET ASSETS
- --------------------------
Organizational costs payable............................... 35,000
Dividends payable.......................................... 5,547
Due to Wayne Hummer Management Company..................... 11,135
Accounts payable........................................... 40,880
-----------
Total liabilites................................... 92,562
-----------
Net assets applicable to 1,794,131 Shares
outstanding, no par value, equivalent to
$14.69 per Share......................................... $26,352,207
===========
ANALYSIS OF NET ASSETS
- ----------------------
Excess of amounts received from issuance of Shares
over amounts paid on redemptions of Shares on
account of capital....................................... $27,918,149
Unrealized depreciation of investments..................... (685,418)
Accumulated net realized loss on sales of investments...... (880,524)
-----------
Net assets applicable to Shares outstanding................ $26,352,207
===========
THE PRICING OF SHARES
- ---------------------
Net asset value, offering and redemption price per Share
($26,352,207 (divided by) 1,794,131 Shares outstanding).. $ 14.69
===========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED
MARCH 31, 1995
--------------
<S> <C>
Investment income:
Interest................................................. $2,181,578
Expenses:
Management fee........................................... 141,795
Custodian fees........................................... 33,300
Registration costs....................................... 10,864
Transfer agent fees...................................... 30,689
Professional fees........................................ 18,300
Amortization of organization costs....................... 12,000
Portfolio accounting costs............................... 4,307
Printing and reporting fees.............................. 3,700
Trustee fees............................................. 3,500
Other.................................................... 8,732
----------
Total expenses....................................... 267,187
----------
Net investment income...................................... 1,914,391
----------
Net realized loss on sales of investments.................. (895,348)
Net change in unrealized depreciation...................... (100,111)
----------
Net loss on investments.................................... (995,459)
----------
Net increase in net assets resulting
from operations.......................................... $ 918,932
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED MARCH 31,
1995 1994
------------ -----------
<S> <C> <C>
Operations:
Net investment income..................................... $ 1,914,391 $ 1,927,708
Net realized gain (loss) on sales of investments.......... (895,348) 73,716
Net change in unrealized depreciation..................... (100,111) (895,892)
----------- -----------
Net increase in net assets resulting from operations........ 918,932 1,105,532
Dividends to Shareholders from:
Net investment income..................................... (1,899,567) (1,927,708)
Net realized gain on investments.......................... (7,233) (88,694)
----------- -----------
Total dividends to Shareholders............................. (1,906,800) (2,016,402)
Capital Share transactions:
Proceeds from Shares sold................................. 5,097,922 31,086,845
Shares issued upon reinvestment of dividends.............. 1,501,837 1,609,417
----------- -----------
6,599,759 32,696,262
Less payments for Shares redeemed......................... 12,911,490 17,268,235
----------- -----------
Increase (decrease) from Capital Share transactions......... (6,311,731) 15,428,027
----------- -----------
Total increase (decrease) in net assets..................... (7,299,599) 14,517,157
Net assets:
Beginning of period....................................... 33,651,806 19,134,649
----------- -----------
End of period............................................. $26,352,207 $33,651,806
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
March 31, 1995
Principal
Amount Value
--------- -------
<S> <C> <C>
CORPORATE OBLIGATIONS (64.8%)
Airlines (3.8%)
United Air Lines, Inc., 9.76%, due 05/27/06..................................... $ 987,725 $ 1,005,158
Banks and Finance (3.2%)
Citicorp, 9.375%, due 03/01/16.................................................. 825,000 849,816
Brokerage (3.5%)
Merrill Lynch & Co., Inc..
6.25%, due 05/19/03 (b)...................................................... 500,000 470,000
7,00% due 04/27/08........................................................... 500,000 451,540
-----------
921,540
Food & Beverage (1.3%)
Anheuser-Busch Companies, Inc.
10.00%, due 07/01/18......................................................... 280,000 300,157
Sara Lee Corporation, 8.75%, due 05/15/16....................................... 50,000 51,634
-----------
351,791
Insurance (3.0%)
Old Republic International Corporation, 10.00%, due 02/01/18.................... 745,000 791,741
Machinery (6.1%)
Caterpillar Inc., 9.75%, due 06/01/19........................................... 989,000 1,071,670
Parker-Hannifin Corporation, 9.75%, due 02/15/21................................ 480,000 531,288
-----------
1,602,958
Oil & Gas (4.8%)
The Coastal Corporation
10.00%, due 02/01/01......................................................... 700,000 758,821
8.125%, due 09/15/02......................................................... 525,000 518,899
-----------
1,277,720
Paper and Forest Products (7.3%)
Boise Cascade Corporation, 9.875%, due 02/15/01................................. 1,000,000 1,051,800
Georgia Pacific Corporation
9.75%, due 01/15/18.......................................................... 415,000 435,211
9.50%, due 02/15/18.......................................................... 407,000 426,092
-----------
1,913,103
Rail (5.2%)
Burlington Northern Railroad Co., Inc., 9.00%, due 04/01/16..................... 824,000 859,028
Canadian Pacific Limited, 8.85%, due 06/01/22................................... 500,000 511,175
-----------
1,370,203
Retail (6.5%)
Dayton Hudson Corporation
9.50%, due 10/15/16.......................................................... 209,000 219,663
9.25%, due 11/15/16.......................................................... 354,000 372,408
9.875%, due 06/01/17......................................................... 393,000 418,290
May Department Stores Company, 9.875%, due 06/01/17............................. 655,000 697,398
-----------
1,707,759
Telecommunications (2.8%)
NYNEX Corporation, 9.55%, due 05/01/10.......................................... 664,078 750,288
Utilities (12.4%)
Commonwealth Edison Company
8.125% due 01/15/07.......................................................... 500,000 495,475
8.875%, due 10/01/21......................................................... 485,000 471,498
Consolidated Natural Gas Company, 8.625%, due 12/01/11.......................... 1,250,000 1,290,975
Cleveland Electric Illuminating Co., 9.375%, due 03/01/17....................... 1,100,000 1,019,040
-----------
3,276,988
Miscellaneous (4.9%)
CBI Industries, Inc., 6.25%, due 06/30/00....................................... 500,000 470,210
Inco Ltd., Convertible Debenture, 7.75%, due 03/15/16........................... 500,000 497,500
HCA-Hospital Corporation of America, 11.25%, due 12/01/15....................... 285,000 309,581
-----------
1,277,291
-----------
TOTAL CORPORATE OBLIGATIONS (Cost: $17,660,345)............................... 17,096,356
Principal
Amount Value
--------- -------
<S> <C> <C>
MUNICIPALITY - TAXABLE (1.0%)
Virginia State Housing Development, 7.95%, due 05/01/13 (Cost: $254,375)........ $ 250,000 $ 246,523
MORTGAGE-BACKED SECURITIES (23.2%)
Collateralized Mortgage Obligations (14.8%)
Federal Home Loan Mortgage Corporation (11.7%)
4.30%, due 04/15/04.......................................................... 194,010 193,240
8.50%, due 05/15/04.......................................................... 250,000 253,053
8.50%, due 06/15/05.......................................................... 250,000 255,528
7.50%, due 11/15/08.......................................................... 500,000 486,815
7.50%, due 02/15/20.......................................................... 400,000 392,384
8.00%, due 03/15/21.......................................................... 1,000,000 1,009,810
8.00%, due 04/15/22.......................................................... 500,000 505,205
-----------
3,096,035
Federal National Mortgage Association (3.1%)
8.00%, due 02/25/07.......................................................... 500,000 503,990
8.50%, due 04/25/17.......................................................... 109,917 110,000
8.50%, due 06/25/21.......................................................... 200,000 202,094
-----------
816,084
Federal National Mortgage Association (4.7%)
11.25%, due 04/01/01......................................................... 154,001 164,302
10.75%, due 09/01/15......................................................... 171,847 185,025
10.50%, due 01/01/16......................................................... 207,552 222,789
10.50%, due 06/01/19......................................................... 308,448 333,019
9.00%, due 12/01/19.......................................................... 109,638 112,514
8.00%, due 12/01/22.......................................................... 221,764 220,400
-----------
1,238,049
Government National Mortgage Association (3.3%)
9.00%, due 11/15/01.......................................................... 240,791 249,548
8.50%, due 09/20/16.......................................................... 83,207 83,620
8.00%, due 01/20/17.......................................................... 98,087 97,323
8.50%, due 05/15/17.......................................................... 183,871 186,293
9.00%, due 05/15/18.......................................................... 249,976 257,703
-----------
874,487
Federal Home Loan Mortgage Corporation (0.4%)
8.75%, due 10/01/08.......................................................... 98,502 99,270
-----------
TOTAL MORTGAGE-BACKED SECURITIES (Cost: $6,247,893)........................... 6,123,925
U.S. TREASURY NOTES (3.4%)
6.875%, due 10/31/96 (Cost: $891,328)........................................ 900,000 901,719
-----------
TOTAL LONG-TERM OBLIGATIONS (Cost: $25,053,941)................................. 24,368,523
U.S. TREASURY BILLS (5.6%)
5.812%, due 5/04/95 (Cost: $1,462,261)....................................... 1,470,000 1,462,261
-----------
TOTAL INVESTMENTS (Cost: $26,516,202) (98.0%) 25,830,784
CASH AND OTHER ASSETS, LESS LIABILITIES (2.0%) 521,423
-----------
NET ASSETS (100.0%) $26,352,207
===========
NOTES TO PORTFOLIO OF INVESTMENTS:
(a) Based on the cost of investments of $26,516,202 for federal income tax purposes at March 31,
1995 the aggregate gross unrealized appreciation was $55,756, the aggregate gross unrealized
depreciation was $741,174 and the net unrealized depreciation of investments was $685,418.
(b) Floating rate security. Rate shown is the interest rate at March 31, 1995. The next interest
rate change date is May 19, 1995.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
DECEMBER 1, 1992
YEAR ENDED YEAR ENDED THROUGH
MARCH 31, 1995 MARCH 31, 1994 MARCH 31, 1993 (A)
-------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period......................... $ 15.10 $ 15.41 $ 15.00
Income from investment operations:
Net investment income...................................... .99 0.95 0.25
Net realized and unrealized gains (losses) on securities... (.42) (0.26) 0.41
------- ------- -------
Total from investment operations....................... .57 0.69 0.66
Less distributions:
Dividends from net investment income....................... (.98) (0.95) (0.25)
Dividends from net realized gains on securities............ 0.00(d) (0.05) 0.00
------- ------- -------
Total distributions.................................... (.98) (1.00) (0.25)
------- ------- -------
Net asset value, end of period............................... $ 14.69 $ 15.10 $ 15.41
======= ======= =======
Total Return................................................. 4.16% 4.42% 4.31%
RATIOS AND SUPPLEMENTARY DATA
- -----------------------------
Net assets, end of period (000's).......................... $26,352 $33,652 $19,135
Ratio of expenses to average net assets.................... 0.94% 1.13% 1.39%(b)(c)
Ratio of net investment income to average net assets....... 6.70% 6.14% 5.58%(b)(c)
Portfolio turnover rate.................................... 32% 86% 141%(c)
NOTES TO FINANCIAL HIGHLIGHTS:
a.) Commencement of operations was December 1, 1992.
b.) During the fiscal period ended March 31, 1993, expenses in excess of the expense limitation
were reimbursable from the Investment Adviser. Absent the expense limitation, the ratio of
expenses to average net assets would have increased, and the ratio of net investment income
to average net assets would have decreased by 0.10%.
c.) Determined on an annualized basis.
d.) Less than $.01 per share.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust"), formerly named Wayne Hummer Growth
Fund Trust, is organized as an unincorporated business trust under the laws of
Massachusetts. The Trust consists of two investment portfolios, the Wayne
Hummer Income Fund (the "Fund") and the Wayne Hummer Growth Fund, each operating
as a separate mutual fund. The Fund commenced investment operations on
December 1, 1992, and may issue an unlimited number of full and fractional units
of beneficial interest (Shares) without par value.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Fixed income securities are valued by using market quotations, or independent
pricing services that use prices provided by market makers or estimates of
market values obtained from yield data relating to instruments or securities
with similar characteristics. Other securities for which no market quotations
are available are valued at fair value as determined in good faith by the Board
of Trustees. Debt securities having a remaining maturity of less than 60 days
are valued at cost (or, if purchased more than 60 days prior to maturity, the
value on the 61st day prior to maturity) adjusted for amortization of premiums
and accretion of discounts.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Interest income is
determined on an accrual basis, adjusted for amortization of premiums and
accretion of discounts. Realized gains and losses from security transactions
are reported on an identified cost basis.
DEFERRED ORGANIZATIONAL COSTS
Certain organizational costs are reimbursable by the Fund to Wayne Hummer
Management Company, the Fund's Investment Adviser. The costs are being
amortized on the straight-line method and repaid quarterly over a five-year
period.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund Shares are sold and redeemed on a continuous basis at net asset value. Net
asset value per Share is determined on each day the New York Stock Exchange is
open for trading as of the close of trading on the Exchange and at 3:00 p.m.
Chicago time on each other day during which there is a sufficient degree of
trading in securities of the Fund's portfolio so as to affect materially the net
asset value of the Shares by dividing the value of net assets (total assets less
liabilities) by the total number of Shares outstanding.
Dividends from net investment income are declared and distributed monthly.
Capital gains dividends, if any, are paid at least annually. Dividends will be
reinvested in additional Shares unless a Shareholder requests payment in cash.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences primarily relate to differing treatments for mortgage-backed
securities.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments. Such provisions were complied with and therefore
no federal income tax provision is required.
The accumulated net realized loss on sales of investments for federal income tax
purposes at March 31, 1995, amounting to $880,524, is available to offset future
capital gain. If not applied, the loss carry forward is taxable in 2003.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement with Wayne Hummer
Management Company ("Investment Adviser"). The shareholders of the Investment
Adviser are the general partners of Wayne Hummer & Co. ("Distributor and
Shareholder Service Agent"). For advisory and management services and
facilities furnished, the Fund pays fees of .50 of 1% of the first $100 million
of average daily net assets, .40 of 1% of the next $150 million and .30 of 1% of
the average daily net assets in excess of $250 million. The Investment Adviser
is obligated to reimburse the Fund to the extent that the Fund's ordinary
operating expenses, including the fee of the Investment Adviser, exceed the
lesser of (1) 1.50% of the average daily net assets of the Fund or (2) the
expense limitations applicable to the Fund imposed by any state in which the
Fund's Shares are sold. During the year ended March 31, 1995, the Fund incurred
management fees of $141,795.
<PAGE>
BOARD OF TRUSTEES
Philip M. Bumo
Chairman
Steven R. Becker
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
Eustace K. Shaw
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Income Fund.
The Fund pays the Investment Adviser a fee for portfolio accounting services
based on the level of average daily net assets plus out-of-pocket expenses.
Wayne Hummer & Co. serves as Distributor and Shareholder Service Agent without
compensation from the Fund.
Certain trustees of the Fund are also officers or directors of the Investment
Adviser or partners of the Distributor and Shareholder Service Agent. During
the year ended March 31, 1995, the Fund made no direct payments to its officers
and incurred trustee fees for its unaffiliated trustees of $3,500.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1995
--------------
<S> <C>
Purchases $ 8,426,138
Proceeds from Sales $12,624,299
</TABLE>
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statements of Changes in
Net Assets are in respect of the following number of shares:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1995 1994
---------- -----------
<S> <C> <C>
Shares sold.................................... 348,438 1,987,718
Shares issued upon reinvestment of dividends... 103,071 103,111
-------- ----------
451,509 2,090,829
Shares redeemed................................ (886,403) (1,103,571)
-------- ----------
Net increase (decrease) in Shares outstanding.. (434,894) 987,258
======== ==========
</TABLE>
7. FEDERAL TAX STATUS OF 1994 DIVIDENDS
The income dividend is taxable as ordinary income. The dividends paid to you,
whether received in cash or reinvested in Shares, must be included on your
federal income tax return and must be reported by the Fund to the Internal
Revenue Service in accordance with the U.S. Treasury Department regulations.
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Wayne Hummer Income Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Wayne Hummer Income Fund as of March 31, 1995,
and the related statements of operations for the year then ended and changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the fiscal years since 1993. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of March 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wayne
Hummer Income Fund as of March 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
periods then ended, and financial highlights for each of the fiscal years since
1993, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
May 19, 1995
- -------------------------------------------------------------------------------
[LOGO] WAYNE HUMMER & CO.
300 South Wacker 200 E. Washington Street
Chicago, Illinois Appleton, Wisconsin
60606 54911
1.800.621.4477 (toll-free) 1.800.678.0833 (toll-free)
(312) 431.1700 (local) (414) 734.1474 (local)
<PAGE>
AUDITED FINANCIAL STATEMENTS
AS OF MARCH 31, 1995
WAYNE HUMMER INCOME FUND
PART C
WAYNE HUMMER INVESTMENT TRUST
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Index to Financial Statements:
1. Included in Part A of this Registration Statement:
(i) Condensed Financial Information for the Growth Fund -
Per Share Income and Capital Changes
(ii) Condensed Financial Information for the Income Fund -
Per Share Income and Capital Changes
2. Included in Part B of this Registration Statement through
incorporation by reference to the financial statements in each of
the Trust's annual reports to Shareholders for the fiscal year
ended March 31, 1995:
(i) Report of Independent Auditors
(ii) Statement of Assets and Liabilities at March 31, 1995
(iii) Statement of Operations for the year ended March
31, 1995
(iv) Statement of Changes in Net Assets for the years
ended March 31, 1995 and 1994
(v) Portfolio of Investments at March 31, 1995
(vi) Notes to Financial Statements
3. Included in Part C of this Registration Statement:
(i) Schedule I has been omitted as the required
information is presented in the Portfolio of
Investments at March 31, 1995
(ii) Schedules II, III, IV, V, VI and VII are omitted as
the required information is
<PAGE>
not present.
C-2
<PAGE>
(b) Exhibits:
*1.(a) Agreement and Declaration of Trust
dated September 29, 1983 1/
-
*1.(b) Written Instrument Amending The
Agreement and Declaration of Trust
dated December 16, 1983 2/
-
*1.(c) Written Instrument Amending The
Agreement and Declaration of Trust
dated July 19, 1988 4/
-
*1.(d) Written Instrument Amending The
Agreement and Declaration of Trust
dated November 24, 1992 6/
-
*2. Amended and Restated By-laws 5/
-
______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with the Registration
Statement on Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about
October 13, 1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with the Pre-Effective
Amendment No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
C-3
<PAGE>
3. Not applicable
4. Not applicable
*5.(a) Investment Advisory and Management
Agreement dated April 29, 1988 3/
-
*5.(b) Amendment to Investment Advisory
and Management Agreement dated
November 24, 1992 6/
-
*6.(a) Distribution and Shareholder
Service Agreement 1/
-
*6.(b) Distribution Agreement dated August 1,
1988 4/
-
7. Not applicable
_______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with the Registration
Statement on Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about
October 13, 1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed
C-4
<PAGE>
with Pre-Effective Amendment No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
C-5
<PAGE>
*8.(a) Custodian Agreement 2/
-
*8.(b) Amendments to Custodian Agreement dated
October 1987 3/
-
*8.(c) Amendments to Custodian Agreement dated
June 1988 4/
-
*8.(d) Amendment to Custodian Agreement
dated November 24, 1992 6/
-
*9.(a)(1) Transfer and Dividend Paying
Agency Agreement 2/
-
_______________________________
* Filed herewith
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 8 filed on or about July 31, 1990.
C-6
<PAGE>
*9.(a)(2) Amendment to Transfer and Dividend
Paying Agency Agreement dated November 24,
1992 6/
-
*9.(b) Trade Name and Service Mark
License Agreement 5/
-
*9.(c) Shareholder Service Agreement dated
August 1, 1988 4/
-
*9.(d) Portfolio Accounting Services
Agreement
_______________________________
* Filed herewith
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed
C-7
<PAGE>
with Post-Effective Amendment No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 8 filed on or about July 31, 1990.
C-8
<PAGE>
10. Not applicable
*11.(a) Consent of Ernst & Young LLP
(b) Representation of Vedder, Price, Kaufman
Kammholz
12. Not applicable
*13. Investment Letter from Wayne Hummer
Management Company to the Registrant 1/
-
*14.(a) IRA Prototype Plan and Documents 7/
-
*14.(b) SEP Prototype Plan and Documents 7/
-
_______________________________
* Filed herewith
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 8 filed on or about July 31, 1990.
C-9
<PAGE>
*14.(c) Defined Contribution Prototype Plans
and Documents 7/
-
15. Not applicable
*16. Computation of Performance Quotations 3/
-
*27. Financial Data Schedule
_______________________________
* Filed herewith
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 8
C-10
<PAGE>
filed on or about July 31, 1990.
Item 25. Persons Controlled By or Under Common Control with
--------------------------------------------------
Registrant
----------
Not applicable.
Item 26. Number of Holders of Securities
-------------------------------
<TABLE>
<CAPTION>
Number of Holders
Title of Class of Securities
-------------- -----------------
<S> <C>
Growth Fund Portfolio Shares 6,063
Income Fund Portfolio Shares 1,106
(Information provided as of May 31, 1995)
</TABLE>
Item 27. Indemnification
---------------
The information required by this item is incorporated herein by reference
to Item 4 of Part II of Pre-effective Amendment No. 1 to the Form N-1
Registration Statement for Wayne Hummer Growth Trust (renamed Wayne Hummer
Investment Trust), File No. 2-87153, filed on or about December 29, 1983.
Item 28. Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Wayne Hummer Management Company, Registrant's investment adviser and
portfolio accounting agent, is a corporation organized under the laws of
Illinois on November 30, 1981. Wayne Hummer Management Company acts as
investment adviser and portfolio accounting agent to Wayne Hummer Money Fund
Trust, a registered investment company, and as investment adviser to other
institutional, corporate, fiduciary and individual accounts. Set forth below is
information as to any other business, vocation or employment of a substantial
nature in which each director or officer of the Registrant's investment adviser
is, or at any time during the past two fiscal years has been, engaged for his
own account or in the capacity of director, officer, employee, partner or
trustee:
<TABLE>
<CAPTION>
Name and
Affiliation with Name of Company and/or
Investment Adviser Principal Business Capacity
- -------------------- ---------------------- ---------------
<S> <C> <C>
Harry Flagg Baum, Wayne Hummer & Co., General Partner
Director securities brokerage
firm
Steven R. Becker, Wayne Hummer & Co., General Partner
Director securities brokerage
firm
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
Name and
Affiliation with Name of Company and/or
Investment Adviser Principal Business Capacity
- -------------------- ---------------------- ---------------
<S> <C> <C>
Wayne Hummer Money Trustee
Fund Trust
Registrant Trustee
G. Ted Becker, Wayne Hummer & Co., General Partner
Treasurer securities brokerage
firm
Alan W. Bird Wayne Hummer & Co., General Partner
President securities brokerage
firm
Wayne Hummer Money Vice President
Fund Trust
Registrant President
Philip M. Burno, Wayne Hummer & Co., General Partner
Director securities brokerage
firm
Wayne Hummer Money Chairman of
Fund Trust the Board of
Trustees
Registrant Chairman of
the Board of
Trustees
Philip Wayne Hummer, Wayne Hummer & Co., General Partner
Executive Vice securities brokerage
President and firm
Director
David P. Poitras, Wayne Hummer & Co., General Partner
Vice President securities brokerage
firm
Wayne Hummer Money Fund President
Trust, registered
investment company
Registrant Vice President
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
Name and
Affiliation with Name of Company and/or
Investment Adviser Principal Business Capacity
- -------------------- ---------------------- ---------------
<S> <C> <C>
William A. Rogers, Wayne Hummer & Co., General Partner
Secretary and securities brokerage
Director firm
Thomas J. Rowland, Wayne Hummer & Co., General Partner
Vice President securities brokerage
firm
Registrant Vice President
</TABLE>
The principal business address of each company or other entity named above
is 300 South Wacker Drive, Chicago, Illinois 60606.
Item 29. Principal Underwriters
----------------------
(a) Wayne Hummer & Co., the Registrant's distributor, also acts as
distributor of Wayne Hummer Money Fund Trust.
(b) The partners of Wayne Hummer & Co. are:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Wayne Hummer & Co. with Registrant
---- ----------------------- ----------------------
<S> <C> <C>
William B. Hummer General Partner None
Philip Wayne Hummer General Partner None
Harry Flagg Baum General Partner None
John D. Carroll Limited Partner None
Robert H. Chase Limited Partner None
William A. Rogers General Partner None
Robert F. Kahlfeldt General Partner None
Philip M. Burno General Partner Chairman of
the Board of
Trustees
Joseph A.
Piekarczyk General Partner None
G. Ted Becker General Partner None
Steven R. Becker General Partner Trustee
</TABLE>
C-13
<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Wayne Hummer & Co. with Registrant
---- ----------------------- ----------------------
<S> <C> <C>
W. Douglas Carroll General Partner None
Richard J. Kosarek General Partner None
Raymond L. Kratzer General Partner None
Jean E. Williams General Partner None
Alan W. Bird General Partner President
George E. Barnes Limited Partner None
Family Trust
Thomas J. Rowland General Partner Vice President
Linda C. Becker General Partner None
Laura A. Kogut General Partner None
David P. Poitras General Partner Vice President
Richard Wholey, Jr. General Partner None
Peder H. Culver General Partner None
Daniel G. Hack General Partner None
Ronald A. Tyrpin General Partner None
</TABLE>
The principal business address of each General Partner listed above is 300
South Wacker Drive, Chicago, Illinois 60606. George E. Barnes, grantor of the
Family Trust, was a founding partner of Wayne Hummer & Co. and was a General
Partner until April, 1986. Mr. Barnes, whose address is 5864 Glen Eagle Way,
Stuart, Florida 34997, was formerly a Trustee of Registrant. John D. Carroll,
whose address is 904 El Rancho, Sun City Center, Florida 33570, was a General
Partner until December, 1989, and Robert H. Chase, whose address is 1246 Nicolet
Circle, Appleton, Wisconsin 54915, was a General Partner until December, 1991.
(c) Not Applicable.
C-14
<PAGE>
Item 30. Location of Accounts and Records
--------------------------------
All accounts, books and other documents required to be maintained pursuant
to Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are in the physical possession of: Registrant's investment adviser,
Wayne Hummer Management Company; Registrant's distributor and shareholder
service agent, Wayne Hummer & Co.; and Registrant's transfer and dividend paying
agent and custodian, State Street Bank and Trust Company. The address of Wayne
Hummer Management Company and of Wayne Hummer & Co. is 300 South Wacker Drive,
Chicago, Illinois 60606. The address of State Street Bank and Trust Company is
225 Franklin Street, Boston, Massachusetts 02110 .
Item 31. Management Services
-------------------
Not Applicable.
Item 32. Undertakings
------------
Not Applicable.
C-15
<PAGE>
SIGNATURE
Pursuant to the requirement of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents (1) that it meets all
of the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement on Form N-1A pursuant to Rule 485(b) under the Securities
Act of 1933, and (2) that it has duly caused this Post-Effective Amendment to
the Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 26th day of July, 1995.
----
WAYNE HUMMER INVESTMENT TRUST
By /s/ Alan W. Bird, President
----------------------------
Alan W. Bird, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on July 26, 1995 on behalf
of the following persons in the capacities indicated.
Signatures Title
---------- -----
/s/ Alan W. Bird President
- ---------------------
Alan W. Bird
/s/ Jean M. Watts Treasurer
- ---------------------
Jean M. Watts
/s/ Steven R. Becker Trustee
- ---------------------
Steven R. Becker
/s/ Phillip M. Burno Trustee
- ---------------------
Phillip M. Burno
/s/ Joel D. Gingiss Trustee
- ---------------------
Joel D. Gingiss
/s/ Patrick B. Long Trustee
- ---------------------
Patrick B. Long
/s/ Eustace K. Shaw Trustee
- ---------------------
Eustace K. Shaw
/s/ Charles V. Doherty Trustee
- ----------------------
Charles V. Doherty
<PAGE>
INDEX TO EXHIBITS
-----------------
Sequentially
Exhibit Numbered Page
- ------- -------------
*1.(a) Agreement and Declaration of Trust
dated September 29, 1983 1/
-
*1.(b) Written Instrument Amending The
Agreement and Declaration of Trust
dated December 16, 1983 2/
-
*1.(c) Written Instrument Amending The
Agreement and Declaration of Trust
dated July 19, 1988 4/
-
*1.(d) Written Instrument Amending
The Agreement and Declaration of
Trust dated November 24, 1992. 6/
-
*2. Amended and Restated By-laws 5/
-
3. Not applicable
______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with the Registration
Statement on Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about
October 13, 1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective
Amendment No. 13 filed on or about June 1, 1993.
<PAGE>
Sequentially
Exhibit Numbered Page
- ------- -------------
4. Not applicable
*5.(a) Investment Advisory and Management
Agreement dated April 29, 1988 3/
-
*5.(b) Amendment to Investment
Advisory and Management Agreement
dated November 24, 1992 6/
-
*6.(a) Distribution and Shareholder
Service Agreement 1/
-
*6.(b) Distribution Agreement dated August 1,
1988 4/
-
7. Not applicable
______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective
- -
<PAGE>
Amendment No. 15 on or about July 27, 1995. Initially filed with Pre-
Effective Amendment No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective
Amendment No. 13 filed on or about June 1, 1993.
<PAGE>
Sequentially
Exhibit Numbered Page
- ------- -------------
*8.(a) Custodian Agreement 2/
-
*8.(b) Amendments to Custodian Agreement
dated October 1987 3/
-
*8.(c) Amendments to Custodian
Agreement dated June 1988 4/
-
*8.(d) Amendment to Custodian
Agreement dated November 24, 1992
*9.(a)(1) Transfer and Dividend Paying
Agency Agreement 2/
-
===============================
*9.(a)(2) Amendment to Transfer and
Dividend Paying Agency Agreement
dated November 24, 1992
______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed
<PAGE>
with Pre-Effective Amendment No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
<PAGE>
Sequentially
Exhibit Numbered Page
- ------- -------------
*9.(b) Trade Name and Service Mark
License Agreement 5/
-
*9.(c) Shareholder Service Agreement
dated August 1, 1988 4/
-
*9.(d) Portfolio Accounting Services
Agreement
10. Not applicable
*11.(a) Consent of Ernst & Young LLP
(b) Representation of Vedder, Price, Kaufman & Kammholz
______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1 filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 8 filed on or about July 31, 1990.
<PAGE>
Sequentially
Exhibit Numbered Page
- ------- -------------
12. Not applicable
*13. Investment Letter from Wayne Hummer
Management Company to the Registrant 1/
-
*14.(a) IRA Prototype Plan and Documents 7/
-
*14.(b) SEP Prototype Plan and Documents 7/
-
*14.(c) Defined Contribution Prototype Plans
and Documents 7/
-
========================
15. Not applicable
*16. Computation of Performance Quotations 3/
-
*27. Financial Data Schedule
______________________________
* Filed herewith.
1/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Registration Statement on
Form N-1 (File Nos. 2-87153 and 811-3880) filed on or about October 13,
1983.
2/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Pre-Effective Amendment
No. 1
<PAGE>
filed on or about December 29, 1983.
3/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 5 filed on or about June 1, 1988.
4/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 6 filed on or about July 29, 1988.
5/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 12 filed on or about November 13, 1992.
6/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 13 filed on or about June 1, 1993.
7/ Electronically filed with EDGAR Filing of Post-Effective Amendment No. 15
- - on or about July 27, 1995. Initially filed with Post-Effective Amendment
No. 8 filed on or about July 31, 1990.
<PAGE>
EXHIBIT 1(a)
WAYNE HUMMER GROWTH FUND
-------------------------
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this
29th day of September, 1983, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS, the Trustees hereunder are desirous of forming a trust for the
purposes of carrying on the business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees are acquiring and
may hereafter acquire assets and properties, to hold and manage as trustees of a
Massachusetts voluntary association with transferable shares in accordance with
the provisions hereinafter set forth,
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets and properties, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of
the same upon the following terms and conditions for the pro rata benefit of the
holders from time to time of shares in this Trust as hereinafter set forth.
ARTICLE I
---------
Name and Definitions
--------------------
Name and Registered Agent
- -------------------------
Section 1. This Trust shall be known as "Wayne Hummer Growth Fund" and the
Trustees shall conduct the business of the Trust under that name or any other
name as they may from time to time determine. The registered agent for the Trust
in Massachusetts shall be CT Corporation System whose address is 2 Oliver
Street, Boston, Massachusetts or such other person as the Trustees may from time
to time designate.
Definitions
- -----------
Section 2. Whenever used herein, unless otherwise required by the context
or specifically provided:
(a) The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as amended from
time to time, pursuant to Massachusetts General Laws, Chapter 182;
<PAGE>
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV and then in office;
(c) "Shares" mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided
from time to time or, if more than one series is authorized under or
pursuant to Article III, the equal proportionate transferable units of
interest into which each such series shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and
any successor statute) and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "vote of a majority of the
outstanding voting securities" shall have the meanings given them in the
1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
(i) "Net asset value" shall have the meaning set forth in Section 6 of
Article VI hereof.
ARTICLE II
Nature and Purpose
------------------
The Trust is a voluntary association (commonly known as a business trust)
of the type referred to in Chapter 182 of the General Laws of the Commonwealth
of Massachusetts. The Trust is not intended to be, shall not be deemed to be,
and shall not be treated as, a general or a limited partnership, joint venture,
corporation or joint stock company, nor shall the Trustees or Shareholders or
any of them for any purpose be deemed to be, or be treated in any way whatsoever
as though they were, liable or responsible hereunder as partners or joint
venturers. The purpose of the Trust is to engage in, operate and carry on the
business of an open-end management investment company and to do any and all acts
or things as are necessary, convenient, appropriate, incidental or customary in
connection therewith.
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<PAGE>
ARTICLE III
Shares
------
Division of Beneficial Interest
- -------------------------------
Section 1. The Shares of the Trust shall be issued in one or more series as
the Trustees may, without Shareholder approval, authorize from time to time.
Each series shall be preferred over all other series in respect of the assets
allocated to that series as hereinafter provided. The beneficial interest in
each series shall at all times be divided into Shares (without par value) of
such series, each of which shall represent an equal proportionate interest in
such series with each other Share of the same series, none having priority or
preference over another Share of the same series. The number of Shares
authorized shall be unlimited, and the Shares so authorized may be represented
in part by fractional Shares. The Trustees may from time to time divide or
combine the Shares of any series into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series. Without limiting
the authority of the Trustees set forth in this Section 1 to establish and
designate any further series, the Trustees hereby establish and designate a
single series of Shares to be known as the "Growth Portfolio" series. The
establishment and designation of any series of Shares in addition to the
foregoing shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of such series. As provided in Article IX,
Section 1 hereof, any series of Shares (whether or not there shall then be
Shares outstanding of said series) may be terminated by the Trustees by written
notice to the Shareholders of such series or by the vote of the Shareholders of
such series entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter. In the event of any such termination, a
majority of the then Trustees shall execute an instrument setting forth the
termination of such series.
Ownership of Shares
- -------------------
Section 2. The ownership and transfer of Shares shall be recorded on the
books of the Trust or its transfer or similar agent. No certificates certifying
the ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders of each series and as to the number of Shares of
each series held from time to time by each Shareholder.
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<PAGE>
Investments in the Trust; Assets of a Series
- --------------------------------------------
Section 3. The Trustees may issue Shares of the Trust to such persons and
on such terms and, subject to any requirements of law, for such consideration,
which may consist of cash or tangible or intangible property or a combination
thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
a particular series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to such
series of Shares for all purposes subject only to the rights of creditors, and
shall be so handled upon the books of account of the Trust and are herein
referred to as "assets of" such series.
Right to Refuse Orders
- ----------------------
Section 4. The Trust by action of its Trustees shall have the right to
refuse to accept any subscription for its Shares at any time without any cause
or reason therefore whatsoever. Without limiting the foregoing, the Trust shall
have the right not to accept subscriptions under circumstances or in amounts as
the Trustees in their sole discretion consider to be disadvantageous to existing
Shareholders and the Trust may from time to time set minimum and/or maximum
amounts which may be invested in Shares by a subscriber.
Order in Proper Form
- --------------------
Section 5. The criteria for determining what constitutes an order in proper
form and the time of receipt of such an order by the Trust shall be prescribed
by resolution of the Trustees.
When Shares Become Outstanding
- ------------------------------
Section 6. Shares subscribed for and for which an order in proper form has
been received shall be deemed to be outstanding as of the time of acceptance of
the order therefor and the determination of the net price thereof, which price
shall be then deemed to be an asset of the Trust.
Merger or Consolidation
- -----------------------
Section 7. In connection with the acquisition of all or substantially all
the assets or stock of another investment company, investment trust, or of a
company classified as a personal holding company under Federal Income Tax laws,
the Trustees may issue or cause to be issued Shares of a series and accept in
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<PAGE>
payment therefor, in lieu of cash, such assets at their market value, or such
stock at the market value of the assets held by such investment company or
investment trust, either with or without adjustment for contingent costs or
liabilities.
No Preemptive Rights, Etc.
- -------------------------
Section 8. Shareholders shall have no preemptive or other right to receive,
purchase or subscribe for any additional Shares or other securities issued by
the Trust. The Shareholders shall have no appraisal rights with respect to their
Shares and, except as otherwise determined by the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares.
Status of Shares and Limitation of Personal Liability
- -----------------------------------------------------
Section 9. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having become
a Shareholder shall be held to have expressly assented and agreed to the terms
of the Declaration of Trust and to have become a party thereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the same nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or the
Trustees, but only to the rights of said decedent under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
ARTICLE IV
The Trustees
------------
Number, Designation, Election, Term, Etc.
- ----------------------------------------
Section 1.
(a) Initial Trustee. Upon his execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, Phillip M. Burno, shall
become a Trustee hereof.
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<PAGE>
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number of
Trustees to a number other than the number theretofore determined which
number shall not be less than three nor more than fifteen except during the
period that the initial Trustee named above is sole Trustee. No decrease
in the number of Trustees shall have the effect of removing any Trustee
from office prior to the expiration of his term, but the number of Trustees
may be decreased in conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 1.
(c) Term and Election. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee until the next meeting of
Shareholders, if any, called for the purpose of considering the election or
reelection of such Trustee or of a successor to such Trustee, and until the
election and qualification of his successor, if any, elected at such
meeting, or until such Trustee sooner dies, resigns, retires or is removed.
Upon the election and qualification of a new Trustee, the Trust estate
shall vest in the new Trustee (together with the continuing or other new
Trustees) without any further act or conveyance. Prior to any sale of
Shares pursuant to any public offering, the initial Trustee named above
shall have the right to appoint other persons as Trustees each to serve
with such initial Trustee as aforesaid until the first meeting of
Shareholders called for the purpose of the election or re-election of such
Trustee or of a successor to such Trustee.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to
the other Trustees or to the Chairman of the Board, if any, the President
or the Secretary of the Trust, and such resignation or retirement shall
take effect upon such delivery or upon such later date as is specified in
such instrument.
(e) Removal. Any Trustee may be removed for cause at any time by
written instrument, signed by at least a majority of the number of Trustees
prior to such removal, specifying the date upon which such removal shall
become effective. Any Trustee may be removed with or without cause by the
vote of the Shareholders entitled to vote more than fifty percent (50%) of
the votes entitled to be cast on the matter at any meeting called for such
purpose.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase
in the number
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<PAGE>
of Trustees by the other Trustees may (but so long as there are at least
three remaining Trustees, need not unless required by the 1940 Act) be
filled either by a majority of the remaining Trustees, even if less than a
quorum, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine or, whenever deemed
appropriate by the remaining Trustees, by the election by the Shareholders,
at a meeting called for such purpose, of a person to fill such vacancy.
Upon the appointment or election and qualification of a new Trustee as
aforesaid, the Trust estate shall vest in the new Trustee, together with
the continuing Trustees, without any further act or conveyance, except that
any such appointment or election in anticipation of a vacancy to occur by
reason of retirement, resignation, or increase in number of Trustees to be
effective at a later date shall become effective only at or after the
effective date of said retirement, resignation, or increase in number of
Trustees.
(g) Mandatory Election by Shareholders. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting of the
Shareholders for the election of one or more Trustees at such time or times
as may be required in order that the provisions of the 1940 Act may be
complied with, and the authority hereinabove provided for the Trustees to
appoint any successor Trustee or Trustees shall be restricted if such
appointment would result in failure of the Trust to comply with any
provision of the 1940 Act.
(h) Effect of Death, Resignation, Etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them,
shall not operate to annul or terminate the Trust or to revoke or terminate
any existing agency or contract created or entered into pursuant to the
terms of this Declaration of Trust.
(i) No Accounting. Except under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result of his
death, resignation, retirement, removal or incapacity (nor the estate of
any such person) shall be required to make an accounting to the
Shareholders or remaining Trustees upon such cessation.
Powers
- ------
Section 2. The Trustees, subject only to the specific limitations contained
in this Declaration of Trust or otherwise imposed by the 1940 Act or other
applicable law, shall have, without further or other authorization and free from
any power or control of the Shareholders, full, absolute and exclusive power,
control and authority over the Trust assets and the business and
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<PAGE>
affairs of the Trust to the same extent as if the Trustees were the sole and
absolute owners thereof in their own right and to do all such acts and things as
in their sole judgment and discretion are necessary and incidental to, or
desirable for the carrying out of any of the purposes of the Trust or conducting
the business of the Trust. Any determination made in good faith by the Trustees
of the purposes of the Trust or the existence of any power or authority
hereunder shall be conclusive. In construing the provisions of this Declaration
of Trust, there shall be a presumption in favor of the grant of power and
authority to the Trustees. Without limiting the foregoing, the Trustees may
adopt By-Laws not inconsistent with this Declaration of Trust containing
provisions relating to the business of the Trust, the conduct of its affairs,
its rights or powers and the rights or powers of its Shareholders, Trustees,
officers, employees and other agents and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders; fill vacancies
in their number, including vacancies resulting from increases in their number,
unless a vote of the Trust's Shareholders is required to fill such vacancies
pursuant to the 1940 Act; elect and remove such officers and appoint and
terminate such agents as they consider appropriate; appoint from their own
number, and terminate, any one or more committees consisting of two or more
Trustees, including an executive committee which may, when the Trustees are
not in session, exercise some or all of the powers and authority of the Trustees
as the Trustees may determine; appoint an advisory board, the members of which
shall not be Trustees and need not be Shareholders; employ one or more
investment advisers or managers as provided in Section 6 of this Article IV;
employ one or more custodians of the assets of the Trust and authorize such
custodians to employ subcustodians and to deposit all or any part of such assets
in a system or systems for the central handling of securities; retain a transfer
agent or a Shareholder services agent, or both; provide for the distribution of
Shares by the Trust, through one or more principal underwriters or otherwise;
set record dates for the determination of Shareholders with respect to various
matters; and in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
In furtherance of and not in limitation of the foregoing, the Trustees
shall have power and authority:
(a) To invest and reinvest in, to buy or otherwise acquire, to hold,
for investment or otherwise, to sell or otherwise dispose of, to lend or to
pledge, to trade in or deal in securities or interests of all kinds,
however evidenced, or obligations of all kinds, however evidenced, or
rights, warrants, or contracts to acquire such securities, interests, or
obligations, of any private or public company, corporation, association,
general or limited partnership,
-8-
<PAGE>
trust or other enterprise or organization, foreign or domestic, or issued
or guaranteed by any national or state government, foreign or domestic, or
their agencies, instrumentalities or subdivisions (including but not
limited to, bonds, debentures, bills, time notes and all other evidences of
indebtedness); negotiable or non-negotiable instruments; government
securities and money market instruments (including but not limited to, bank
certificates of deposit, finance paper, commercial paper, bankers
acceptances, and all kinds of repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise acquire, to hold,
for investment or otherwise, to sell or otherwise dispose of foreign
currencies, and funds and exchanges, and make deposits in banks, savings
banks, trust companies, and savings and loan associations, foreign or
domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop, and dispose of (by sale or otherwise) any property,
real or personal, and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
(e) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(f) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise;
(h) To allocate assets, liabilities and expenses of the Trust to a
particular series of Shares or to apportion the same among two or more
series;
(i) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or
property of which is or was held
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<PAGE>
in the Trust; to consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through a
Committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security to, any
such committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so deposited
or transferred) as the trustees shall deem proper, and to agree to pay,
and to pay, such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem proper;
(k) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(l) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such
obligations;
(o) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
person against such liability; and
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<PAGE>
(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees of common law trusts.
Except as otherwise provided herein or from time to time in the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum be present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can communicate with each other simultaneously and participation by
such means shall constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
Payment of Expenses, Allocation of Liabilities
- ----------------------------------------------
Section 3. The Trustees are authorized to pay or to cause to be paid out of
the principal or income of the Trust, or partly out of principal and partly out
of income, as they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser or manager, principal underwriter, auditor,
counsel, custodian, transfer agent, shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged with the
liabilities (including, in the discretion of the Trustees or their delegate,
accrued expenses and reserves) incurred in respect of such series and such
series shall also be charged with its share of any other liabilities. The
determination of the Trustees shall be final and conclusive as to the amount of
liabilities to be charged to one or more particular series. The Trustees may
delegate from time to time the power to make such allocation to one or more
Trustees or to an agent of the Trust appointed for such purpose. The liabilities
with which a series is so charged are herein referred to as the "liabilities
of" such series.
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<PAGE>
Section 4. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or arrears, for
charges of the Trust's custodian or transfer or shareholder service or similar
agent, an amount fixed from time to time by the Trustees, by setting off such
charges due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder.
Ownership of Assets of the Trust
- --------------------------------
Section 5. Title to all of the assets of the Trust shall at all times be
considered as vested in the Trustees.
Advisory, Management and Distribution
- -------------------------------------
Section 6. Subject to a favorable vote of a majority of the outstanding
voting securities of the Trust, the Trustees may, at any time and from time to
time, contract for exclusive or nonexclusive advisory and/or management services
with a corporation, trust, association or other organization, every such
contract to comply with such requirements and restrictions as may be set forth
in the By-Laws; and any such contract may contain such other terms interpretive
of or in addition to said requirements and restrictions as the Trustees may
determine, including, without limitation, authority to determine from time to
time what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments. The Trustees may also, at any time and from
time to time, contract with a corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with such requirements
and restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
advisor, principal underwriter, or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for any
parent or affiliate of any organization, with which an advisory or
management or principal underwriter's or distributor's contract, or
transfer, shareholder services or other agency contract may have been or
may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the Trust, or
that
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(b) any corporation, trust, association or other organization with
which an advisory or management or principal underwriter's or distributor's
contract, or transfer, shareholder services or other agency contract may
have been or may hereafter be made also has an advisory or management
contract, or principal underwriter's or distributor's contract, or
transfer, shareholder services or other agency contract with one or more
other corporations, trusts, associations, or other organizations, or has
other businesses or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
----------------------------------------
Voting Powers
- -------------
Section 1. The Shareholders shall have power to vote only: (a) for the
election or removal of Trustees as provided in Article IV, Section 1; (b) with
respect to any investment advisor or manager as provided in Article IV, Section
6; (c) with respect to any termination or reorganization of the Trust to the
extent and as provided in Article IX, Section 1; (d) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 4; (e) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders; and (f) with respect to such
additional matters relating to the Trust as may be required by law, the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or any successor agency) or any state, or as the Trustees
may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which it
is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. On any matter submitted to a vote of Shareholders
all Shares of the Trust then entitled to vote, irrespective of series, shall be
voted in the aggregate and not by series, except (a) when required by the 1940
Act, Shares shall be voted by individual series, in which event, unless
otherwise required by the 1940 Act, a vote of Shareholders of all shares of the
Trust, irrespective of series, shall not be required; and (b) when the Trustees
have determined that the matter affects only the interests of one or more
series, then only Shareholders of such series shall be
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entitled to vote thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the exercise
of the proxy the Trust receives a specific written notice to the contrary from
any one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by Shareholders.
Shareholder Meetings
- --------------------
Section 2. Meetings of Shareholders (including meetings involving only one
or more but less than all series) may be called and held from time to time for
the purpose of taking action upon any matter requiring the vote or authority of
the Shareholders as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Such meetings shall be held at the
principal office of the Trust as set forth in the By-Laws of the Trust, or at
any such other place within the United States as may be designated in the call
thereof, which call shall be made by the Trustees or the President of the Trust.
Meetings of Shareholders may be called by the Trustees or such other person or
persons as may be specified in the By-Laws and shall be called by the Trustees
or such other person or persons as may be specified in the By-Laws upon written
application by Shareholders holding at least twenty-five percent (25%) of the
Shares then outstanding requesting a meeting be called for a purpose requiring
action by the Shareholders as provided herein or in the By-Laws which purpose
shall be specified in any such written application.
Shareholders shall be entitled to at least seven days' written notice of
any meeting of the Shareholders.
Quorum and Required Vote
- ------------------------
Section 3. The presence at a meeting of Shareholders in person or by proxy
of Shareholders entitled to vote at least thirty percent (30%) of all votes
entitled to be cast at the meeting (without regard to series) shall be a quorum
for the transaction of business at a Shareholders' meeting, except that where
any provision of law or of this Declaration of Trust permits or requires that
the holders of any series shall vote as
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a series, then the presence in person or by proxy of Shareholders entitled
to vote at least thirty percent (30%) of all votes entitled to be cast at the
meeting of each series entitled to vote as a series shall constitute a quorum.
Any lesser number, however, shall be sufficient for adjournments. Any adjourned
session or sessions may be held within a reasonable time after the date set for
the original meeting without the necessity of further notice.
Except when a larger vote is required by any provisions of the 1940 Act,
this Declaration of Trust or the By-Laws, a majority of the Shares voted on any
matter shall decide such matter and a plurality shall elect a Trustee, provided
that where any provision of law or of this Declaration of Trust permits or
requires that the holders of any series shall vote as a series, then a majority
of the Shares of that series voted on the matter shall decide that matter
insofar as that series is concerned.
Action by Written Consent
- -------------------------
Section 4. Any action taken by Shareholders may be taken without a
meeting if Shareholders entitled to vote more than fifty percent (50%) of the
votes entitled to be cast on the matter or, where any provision of law or of
this Declaration of Trust permits or requires that the holders of any series
vote as a series, if Shareholders entitled to vote more than fifty percent (50%)
of the votes entitled to be cast thereon of any such series (or in either case
such larger vote as shall be required by any provision of this Declaration of
Trust or the By-Laws) consent to the action in writing and such written consents
are filed with the records of the meetings of Shareholders. Such consent shall
be treated for all purposes as a vote taken at a meeting of Shareholders.
Additional Provisions
- ---------------------
Section 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters not inconsistent with the provisions
hereof.
ARTICLE VI
Distributions, Redemptions and Repurchases,
and Determination of Net Asset Value
------------------------------------
Distributions
- -------------
Section 1. The Trustees may in their sole discretion from time to time
distribute to the Shareholders of any series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities of such series (including such reserves as the
Trustees may establish) determined in accordance with this
-15-
<PAGE>
Declaration of Trust and good accounting practices. The Trustees shall have full
discretion to determine which items shall be treated as income and which items
as capital and their determination shall be binding upon the Shareholders.
Distributions to any series, if any be made, shall be in Shares of such series,
in cash or otherwise and on a date or dates determined by the Trustees. At any
time and from time to time in their discretion, the Trustees may distribute to
the Shareholders of any series as of a record date or dates determined by the
Trustees, in Shares of such series, in cash or otherwise, all or part of any
gains realized on the sale or disposition of property of the Trust or otherwise,
or all or part of any other principal of the Trust. Each distribution pursuant
to this Section 1 shall be made ratably according to the number of Shares of the
series held by the several Shareholders on the applicable record date thereof,
provided that distributions from assets of a series may only be made to the
holders of the Shares of such series and provided that no distributions need be
made on Shares purchased pursuant to orders received, or for which payment is
made, after such time or times as the Trustees may determine. Any distribution
paid in Shares will be paid at the net asset value thereof as determined in
accordance with this Declaration of Trust. The Trustees have the power, in their
discretion, to distribute for any year amounts sufficient to enable the Trust as
a "regulated investment company" under the Internal Revenue Code of 1954 as
amended (or any successor thereto) to avoid any liability for federal income tax
in respect of that year.
Redemptions and Repurchases
- ---------------------------
Section 2. Any holder of Shares of the Trust may by presentation of a
request in proper form, together with his certificates, if any, for such Shares,
in proper form for transfer to the Trust or duly authorized agent of the Trust,
request redemption of his shares for the net asset value thereof determined and
computed in accordance with the provisions of this Section 2 and the provisions
of Section 6 of this Article VI.
Upon receipt by the Trust or its duly authorized agent, as the case may be,
of such a request for redemption of Shares in proper form, such Shares shall be
redeemed at the net asset value per share of the particular series next
determined after such request is received or determined as of such other time
fixed by the Trustees as may be permitted or required by the 1940 Act. The
criteria for determining what constitutes a request for redemption in proper
form and the time of receipt of such request shall be fixed by the Trustees.
The obligation of the Trust to redeem its Shares of each series as set
forth above in this Section 2 shall be subject to the condition that such
obligation may be suspended by the Trust by or under authority of the Trustees
during any period or
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<PAGE>
periods when and to the extent permissible under the 1940 Act. If there is
such a suspension, any Shareholder may withdraw any request for redemption which
has been received by the Trust during any such period and the applicable net
asset value with respect to which would but for such suspension be calculated as
of a time during such period. Upon such withdrawal, the Trust shall return to
the Shareholder the certificates therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustees may from time to time authorize at a price not exceeding the
net asset value of such Shares in effect when the purchase or repurchase or
any contract to purchase or repurchase is made. Shares of any series redeemed or
repurchased by the Trust hereunder shall be cancelled upon such redemption or
repurchase without further action by the Trust or the Trustees and the number of
issued and outstanding Shares of such series shall thereupon be reduced by such
amount.
Payment for Shares Redeemed
- ---------------------------
Section 3. Payment of the redemption price for Shares redeemed pursuant to
this Article VI shall be made by the Trust or its duly authorized agent after
receipt by the Trust or its duly authorized agent of a request for redemption in
proper form (together with any certificates for such Shares as provided ln
Section 2 above) in accordance with procedures and subject to conditions
prescribed by the Trustees; provided, however, that payment may be postponed
during the period in which the redemption of Shares is suspended under Section 2
above. Subject to any generally applicable limitation imposed by the Trustees,
any payment on redemption, purchase or repurchase by the Trust of Shares may, if
authorized by the Trustees, be made wholly or partly in kind, instead of in
cash. Such payment in kind shall be made by distributing securities or other
property, constituting, in the opinion of the Trustees, a fair representation of
the various types of securities and other property then held by the series of
Shares being redeemed, purchased or repurchased (but not necessarily involving a
portion of each of the series' holdings) and taken at their value used in
determining the net asset value of the Shares in respect of which payment is
made.
Redemptions at the Option of the Trust
- --------------------------------------
Section 4. The Trust shall have the right at its option and at any time and
from time to time to redeem Shares of any Shareholder at the net asset value
thereof as determined in accordance with Section 6 of this Article VI, if at
such time such Shareholder owns fewer Shares of a series than, or Shares of a
series having an aggregate net asset value of less than, an amount
-17-
<PAGE>
determined from time to time by the Trustees. Any such redemption at the
option of the Trust shall be made in accordance with such other criteria and
procedures for determining the Shares to be redeemed, the redemption date and
the means of effecting such redemption as the Trustees may from time to time
authorize.
Additional Provisions Relating to Redemptions and Repurchases
- -------------------------------------------------------------
Section 5. The completion of redemption, purchase or repurchase of Shares
shall constitute a full discharge of the Trust and the Trustees with respect to
such Shares.
Determination of Net Asset Value
- --------------------------------
Section 6. The term "net asset value" of each Share of a series as of any
particular time shall be the quotient obtained by dividing the value, as at such
time, of the net assets of such series (i.e., the value of the assets of
such series less the liabilities of such series, exclusive of liabilities
represented by the Shares of such series) by the total number of Shares of such
series outstanding at such time, all determined and computed as follows:
(a) The assets of a series shall be deemed to include such of the
following assets that are determined to be assets of such series as
provided under Section 3 of Article III: (l) all cash on hand or on
deposit, including any interest accrued thereon; (ii) all bills and demand
notes and accounts receivable; (iii) all bonds, time notes, shares of
stock, subscription rights, and other securities, owned or contracted for
by the Trust, other than its own Shares; (iv) all stock and cash dividends
and cash distributions to be received by the Trust and not yet received by
it when the net asset value is being determined as of the record date
therefor or a date subsequent thereto; (v) all interest accrued on any
interest bearing securities owned by the Trust (except interest accrued on
securities which is included in the quoted price); (vi) all repurchase
agreements and (vii) all other property of every kind and nature, including
prepaid expenses. Securities for which market quotations are readily
available shall be valued at prices which, in the opinion of the Trustees
or their delegate, most nearly represent the current market value of such
securities which may, but need not, be the most recent bid price obtained
from one or more of the market makers for such securities and all other
securities and assets shall be valued at fair value as determined in good
faith by or pursuant to the direction of the Trustees. Notwithstanding the
foregoing, short-term debt obligations, commercial paper and repurchase
agreements may, but need not, be valued on the basis of quoted yields for
securities of comparable
-18-
<PAGE>
maturity, quality and type, or on the basis of amortized cost.
(b) The liabilities of a series shall be deemed to include such of
the following liabilities that are determined to be liabilities of such
series as provided under Section 3 of Article IV: (i) all bills and
accounts payable; (ii) all administrative expenses payable and/or
accrued; (iii) all contractual obligations for the payment of money or
property, including the amount of any unpaid distributions upon the Shares
of the Trust declared to Shareholders of record at or before the time as of
which the net asset value is being determined; (iv) all reserves authorized
or approved by the Trustees for taxes or contingencies and (v) all other
liabilities of the Trust of whatsoever kind and nature (except liabilities
represented by outstanding Shares of the Trust).
(c) Any determination of net asset value shall be made by appraisal
or when deemed appropriate by the Trustees, by calculation or estimate. Any
such calculation or estimate shall be based on changes in the market value
of representative or selected securities or based on changes in recognized
market averages since the last appraisal or such other method as the
Trustees shall determine in good faith accurately reflects fair value and
shall be made in a manner which in the opinion of the Trustees or their
delegate will fairly reflect the changes in the net asset value.
(d) Notwithstanding any of the foregoing provisions of this Section 6,
the Trustees may prescribe such other bases for determining the per Share
net asset value of the Shares of a series as they shall deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act.
The Trustees, or any officer, or officers or agent of the Trust designated
for the purpose by the Trustees shall determine the net asset value of the
Shares of each series, and the Trustees shall fix the time or times as of which
the net asset value of the Shares of each series shall be determined and
shall fix the periods during which any such net asset value shall be effective
as to sales, redemptions and repurchases of, and other transactions in, the
Shares of such series, except as such times and periods for any such transaction
may be fixed by other provisions of this Declaration of Trust or by the By-Laws.
Determinations in accordance with this Section 6 made in good faith shall
be binding on all parties concerned.
-19-
<PAGE>
How Long Shares are Outstanding
- -------------------------------
Section 7. Shares of the Trust surrendered to the Trust for redemption by
it pursuant to the provisions of Section 2 of this Article VI shall be deemed to
be outstanding until the redemption price thereof is determined pursuant to this
Article VI and, thereupon and until paid, the redemption price thereof shall be
deemed to be a liability of the Trust. Shares of the Trust purchased by the
Trust in the open market shall be deemed to be outstanding until confirmation of
purchase thereof by the Trust and, thereupon and until paid, the purchase price
thereof shall be deemed to be a liability of the Trust. Shares of the Trust
redeemed by the Trust pursuant to Section 4 of this Article VI shall be deemed
to be outstanding until said Shares are deemed to be redeemed in accordance with
procedures adopted by the Trustees pursuant to said Section 4.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
----------------------------------------------------
Compensation
- ------------
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust if the rate thereof is prescribed by such Trustees.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust, it being recognized that such employment
may result in such Trustee being considered an Affiliated Person or an
Interested Person.
Limitation of Liability
- -----------------------
Section 2. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, investment
advisor or manager, principal underwriter or custodian, nor shall any Trustee be
responsible for the act or omission of any other Trustee. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his capacity as Trustees or Trustee and neither such Trustees or
Trustee nor the Shareholders shall be personally liable thereon.
-20-
<PAGE>
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust by them as Trustees or Trustee or as officers or officer and
not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
they may deem appropriate, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
Trustees' Good Faith Action, Expert Advice, No Bond or Surety
- -------------------------------------------------------------
Section 3. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
only for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be 1iable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees hereunder, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice. In
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any independent public
accountant and (with respect to the subject matter of the contract involved) any
officer, partner or responsible employee of any other party to any contract
entered into pursuant to Section 2 of Article IV. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is required.
Liability of Third Persons Dealing with Trustees
- ------------------------------------------------
Section 4. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
-21-
<PAGE>
ARTICLE VIII
Indemnification
---------------
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust (including persons
who serve at the request of the Trust as directors, officers or trustees of
another organization in which the Trust has an interest as a shareholder,
creditor or otherwise) hereinafter referred to as a "Covered Person", shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any c1aim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been such a
Trustee, director or officer and against amounts paid or incurred by him in
settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason
of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and resulting in a
payment by a Covered Person, unless there has been either a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the settlement
or other disposition or a reasonable determination, based on a review of
readily available facts (as opposed to a full trial-type inquiry) that he
did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees
then in office act on the matter); or
(ii) by written opinion of independent legal counsel.
-22-
<PAGE>
The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect
any other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Article
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Article, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or independent legal counsel in a written opinion shall
determine, based upon a review of the readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is not an
"interested person" of the Trust, (as defined in the 1940 Act (including anyone
who has been exempted from being an "interested person" by any rule, regulation
or order of the Commission), and (b) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending.
As used in this Article, the words "claim", "action", "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or
-23-
<PAGE>
other legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of the
Trust to be held harmless from and indemnified against all loss and expense
arising from such liability; provided, however, there shall be no liability or
obligation of the Trust arising hereunder to reimburse any Shareholder for
taxes paid by reason of such Shareholder's ownership of Shares or for losses
suffered by reason of any changes in value of any Trust assets.
ARTICLE IX
Miscellaneous
-------------
Duration, Termination and Reorganization of Trust
- -------------------------------------------------
Section 1. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by the
Trustees by written notice to the Shareholders without a vote of the
Shareholders of the Trust or by the vote of the Shareholders entitled to vote
more than fifty percent (50%) of the votes entitled to be cast on the matter.
Any series of Shares may be terminated at any time by the Trustees by written
notice to the Shareholders of such series without a vote of the Shareholders of
such series or by the vote of the Shareholders of such series entitled to vote
more than fifty percent (50%) of the votes entitled to be cast on the matter.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the particular series as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets of the
particular series to distributable form in cash or other securities, or any
combination thereof, and distribute the proceeds to the Shareholders of the
series involved, ratably according to the number of Shares of such series held
by the several Shareholders of such series on the date of termination.
At any time by the affirmative vote of the Shareholders of the affected
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter, the Trustees may sell, convey and transfer the assets of
the Trust, or the assets belonging to any one or more series, to another trust,
partnership, association or corporation organized under the laws of any state of
the United States, or to the Trust to be held as assets belonging to another
series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another series of the Trust, Shares of
such other series) with such transfer being made subject to, or with
-24-
<PAGE>
the assumption by the transferee of, the liabilities belonging to each series
the assets of which are so distributed. Following such transfer, the Trustees
shall distribute such cash, shares or other securities (giving due effect to
the assets and liabilities belonging to and any other differences among the
various series the assets belonging to which have so been transferred) among the
Shareholders of the series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so distributed, the
Trust shall be terminated.
Filing of Copies, References, Headings
- --------------------------------------
Section 2. The original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each amendment hereto shall be
filed by the Trust with the Secretary of The Commonwealth of Massachusetts and
with the Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust may rely
on a certificate by an officer of the Trust as to whether or not any such
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendments. In this instrument and in any such amendment, references to
this instrument, and all expressions like "herein", "hereof", and "hereunder",
shall be deemed to refer to this instrument as amended from time to time.
Headings are placed herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning, construction or effect
of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Applicable Law
- --------------
Section 3. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust. Matters not specifically covered herein or as to
which an ambiguity may exist shall be resolved as if the Trust were a business
corporation organized in the Commonwealth of Massachusetts but reference to the
Business Corporation Law of the Commonwealth of Massachusetts is not intended to
give the Trust, the Trustees, the Shareholders or any other person any right,
power, authority or responsibility available only to or in connection with an
entity organized in corporate form.
-25-
<PAGE>
Amendments
- ----------
Section 4. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding more than fifty percent (50%) of the
Shares entitled to vote, except that an amendment which shall affect the holders
of one or more series of Shares but not the holders of all outstanding series
shall be authorized by vote of the Shareholders holding more than fifty percent
(50%) of the Shares entitled to vote of each series affected and no vote of
Shareholders of a series not affected shall be required. Amendments having the
purpose of changing the name of the Trust or of supplying any omission, curing
any ambiguity or curing, correcting or supplementing any provision which is
defective or inconsistent with the 1940 Act or with the requirements of the
Internal Revenue Code and the regulations thereunder for the Trust's obtaining
the most favorable treatment thereunder available to regulated investment
companies shall not require authorization by Shareholder vote.
Use of the Name
- ---------------
Section 5. The Trust is using the registered service mark "Wayne Hummer"
(the "Name") in its name by license of Wayne Hummer Management Company, an
Illinois corporation ("W H Management"), and the Trust's right to use the Name
is subject to the right of W H Management or its successors or assigns at any
time to control the usage of the Name and upon termination of the license to
direct that the Trust stop using the Name in any form or combination as part of
its name, and in any literature or reference whatsoever. All proprietary
interest in the Name shall remain exclusively the property of Wayne Hummer &
Co., an Illinois limited partnership that has granted W H Management a license
to use the Name and the right to sublicense the use of the Name by others. At
the written request of W H Management or its successors or assigns, delivered to
the Trust at its registered office in Boston, Massachusetts, if any, and if
none, at its principal office, the Trust shall forthwith stop using the Name in
accordance with the provisions of such request. The provisions of this Section 5
are binding upon the Trust, its Trustees, officers, Shareholders, creditors,
successors or assigns, and all other persons claiming under or through it. The
terms of this Section 5 do not preclude the use of the Name by any other person
or organization, whether now existing or hereafter created,
-26-
<PAGE>
to which Wayne Hummer & Co., W H Management or any other person or entity
entitled thereto may grant such use.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal for
himself and his assigns, as of the day and year first above written.
/s/ Phillip M. Burno
-----------------------------
(SEAL) Phillip M. Burno
COMMONWEALTH OF MASSACHUSETTS
County of ___________, ss.
Then personally appeared the above-named Phillip M. Burno who acknowledged
the foregoing instrument to be his free act and deed, before me this 29th day of
September, 1983.
/s/ Donna G. Atkinson
-----------------------------
Notary Public
My Commission Expires: October 31, 1996
SEAL
DONNA G. ATKINSON, NOTARY PUBLIC
My commission expires October 31, 1996
-27-
<PAGE>
EXHIBIT 1(b)
WAYNE HUMMER GROWTH FUND
WRITTEN INSTRUMENT AMENDING THE
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
The undersigned, being at least a majority of the trustees of the Wayne
Hummer Growth Fund, a business trust organized under the laws of The
Commonwealth of Massachusetts pursuant to an Agreement and Declaration of Trust
dated September 29, 1983 (the "Declaration of Trust"), do hereby amend,
effective upon the filing of this instrument in the office of the Secretary of
The Commonwealth of Massachusetts, the Declaration of Trust as follows, said
amendment having been approved by the Trust's shareholders.
Subsection (e) of Section 1 of Article IV of the Declaration of Trust is
hereby amended and restated in its entirety as follows:
"(e) Removal. Any Trustee may be removed for cause at any time by
written instrument, signed by at least a majority of the number of Trustees
prior to such removal, specifying the date upon which such removal shall
become effective. Any Trustee may be removed with or without cause (i) by
the vote of the Shareholders entitled to vote at least sixty-six and two-
thirds percent (66-2/3%) of the votes entitled to be cast on the matter
voting together without regard to series at any meeting called for such
purpose, or (ii) by a written consent filed with the custodian of the
Trust's portfolio securities and executed by the Shareholders entitled to
vote at least sixty-six and two-thirds percent (66-2/3%) of the votes
entitled to be cast on the matter voting together without regard to
series."
Section 2 of Article V of the Declaration of Trust is hereby amended and
restated in its entirety as follows:
<PAGE>
-2-
"Shareholders Meetings
----------------------
Section 2. Meetings of Shareholders (including meetings involving only
one or more but less than all series) may be called and held from time to
time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable. Such meetings
sha11 be held at the principal office of the Trust as set forth in the
By-Laws of the Trust, or at any such other place within the United States
as may be designated in the call thereof, which call shall be made by
the Trustees or the President of the Trust. Meetings of Shareholders may
be called by the Trustees or such other person or persons as may be
specified in the By-Laws and shall be called by the Trustees or such other
person or persons as may be specified in the By-Laws upon written
application by Shareholders holding at least twenty-five percent (25%) (or
ten percent (10%) if the purpose of the meeting is to determine if a
Trustee is to be removed from office) of the Shares then outstanding
requesting a meeting be called for a purpose requiring action by the
Shareholders as provided herein or in the By-Laws which purpose shall be
specified in any such written application.
Shareholders shall be entitled to at least seven days' written notice
of any meeting of the Shareholders."
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have this 16th day of December,
1983 signed these presents.
/s/ Steven R. Becker /s/ Chalkley J. Hambleton
- ---------------------------- ---------------------------------
Steven R. Becker Chalkley J. Hambleton
/s/ Philip M. Burno /s/ Philip Wayne Hummer
- ---------------------------- ---------------------------------
Philip M. Burno Philip Wayne Hummer
/s/ Joel D. Gingiss
- ----------------------------
Joel D. Gingiss
<PAGE>
EXHIBIT 1(c)
WAYNE HUMMER GROWTH FUND
------------------------
WRITTEN INSTRUMENT AMENDING
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
The undersigned, being at least a majority of the trustees of Wayne Hummer
Growth Fund, a business trust organized under the laws of The Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated September
29, 1983 as amended on December 16, 1983 (the "Declaration of Trust"), do hereby
amend, effective upon the later of (i) August 1, 1988, or (ii) the filing of
this instrument in the office of the Secretary of The Commonwealth of
Massachusetts, the Declaration of Trust as follows, which amendment need not be
approved by the Shareholders of the Trust.
Section 1 of Article I of the Declaration of Trust is hereby amended and
restated in its entirety as follows:
"Name and Registered Agent
-------------------------
Section 1. This Trust shall be known as "Wayne Hummer Growth Fund
Trust" and the Trustees shall conduct the business of the Trust under that
name or any other name as they may from time to time determine. The
registered agent for the Trust in Massachusetts shall be CT Corporation
System whose address is 2 Oliver Street, Boston, Massachusetts or such
other person as the Trustees may from time to time designate."
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have as of this l9th day of July, 1988
signed these presents.
/s/ Steven R. Becker /s/ Patrick B. Long
- ---------------------------- ---------------------------------
/s/ Philip Hummer /s/ Samuel B. Lyons
- ---------------------------- ---------------------------------
/s/ Philip M. Burno /s/ Joel D. Gingiss
- ---------------------------- ---------------------------------
/s/ E. K. Shaw /s/ Chalkley J. Hambleton
- ---------------------------- ---------------------------------
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
Then personally appeared before me on this 19th day of July, 1988 the
above-named Steven R. Becker, Philip M. Burno, Joel D. Gingiss, Chalkley
J. Hambleton, Philip Wayne Hummer, Patrick B. Long, Samuel B. Lyons and Eustace
K. Shaw known to me and known to be trustees of Wayne Hummer Growth Fund,
and acknowledged the foregoing instrument to be their free act and deed.
----------------------------------------
Notary Public
My Commission Expires: _________________
2
<PAGE>
EXHIBIT 1(d)
WAYNE HUMMER GROWTH FUND TRUST
------------------------------
WRITTEN INSTRUMENT AMENDING
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
The undersigned, being at least a majority of the trustees of Wayne Hummer
Growth Fund Trust, a business trust organized under the laws of The
Commonwealth of Massachusetts pursuant to an Agreement and Declaration of Trust
dated September 29, 1983 as amended on December 16, 1983 and July 19, 1988 (the
"Declaration of Trust"), do hereby amend, effective upon the later of (i)
December 1, 1992, or (ii) the filing of this instrument in the office of the
Secretary of The Commonwealth of Massachusetts, the Declaration of Trust as
follows, which amendment need not be approved by the Shareholders of the Trust:
Section 1 of Article 1 of the Declaration of Trust is hereby amended and
restated in its entirety as follows:
"Name and Registered Agent
-------------------------
Section 1. This Trust shall be known as "Wayne Hummer Investment
Trust" and the Trustees shall conduct the business of the Trust under that
name or any other name as they may from time to time determine. The
registered agent for the Trust in Massachusetts shall be CT Corporation
System whose address is 2 Oliver Street, Boston, Massachusetts or such
other person as the Trustees may from time to time designate."
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have as of this 24th day of November,
1992, signed these presents.
/s/ Steven R. Becker /s/ Patrick B. Long
- ---------------------------- ---------------------------------
Steven R. Becker Patrick B. Long
/s/ Philip M. Burno /s/ Samuel B. Lyons
- ---------------------------- ---------------------------------
Philip M. Burno Samuel B. Lyons
/s/ Joel D. Gingiss /s/ Eustace K. Shaw
- ---------------------------- ---------------------------------
Joel D. Gingiss Eustace K. Shaw
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
Then personally appeared before me the above-named Steven R. Becker, Philip
M. Burno, Joel D. Gingiss, Patrick B. Long, Samuel B. Lyons and Eustace K. Shaw
known to me and known to be trustees of Wayne Hummer Growth Fund Trust and
acknowledged the foregoing instrument to be their act and deed.
Patricia Harris
---------------------------------
Notary Public
My Commission Expires: 12/1/95
----------------------------------
"OFFICIAL SEAL"
PATRICIA HARRIS
Notary Public, State of Illinois
My Commission Expires 12/1/95
----------------------------------
-2-
<PAGE>
EXHIBIT 2
BY-LAWS OF
WAYNE HUMMER INVESTMENT TRUST
-----------------------------
(Amended and Restated as of December 1, 1992)
Section 1. Agreement and Declaration of Trust and Principal Office
------------------------------------------------------------------
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of WAYNE HUMMER INVESTMENT TRUST, the Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust; Resident Agent. The principal office of the
Trust shall be located in Chicago, Illinois. Its resident agent in Massachusetts
shall be CT Corporation System, 2 Oliver Street, Boston, Massachusetts or such
other person as the Trustees may from time to time select.
Section 2. Shareholders
-----------------------
2.1 Shareholder Meetings. Meetings of the shareholders may be called at any
time by the Trustees, by the President or, if the Trustees and the President
shall fail to call any meeting of shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 25% of all
shares issued and outstanding and entitled to vote at the meeting (or 10% if
the purpose of the meeting is to determine if a trustee shall be removed from
office), then such shareholders may call such meeting. Each call of a meeting
shall state the place, date, hour and purposes of the meeting.
2.2 Place of Meetings. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust, at such other place within the United States as shall be designated by
the Trustees or the President of the Trust.
2.3 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be
given at least seven days before the meeting to each shareholder entitled to
vote thereat by leaving such notice with him or at his residence or usual place
of business or by mailing it, postage prepaid, and addressed to such shareholder
at his address as it appears in the records of the Trust. Such notice shall be
given by the Secretary or an Assistant Secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.
2.4 Ballots. No ballot shall be required for any election unless requested by a
shareholder present or represented at the meeting and entitled to vote in the
election.
<PAGE>
2.5 Proxies and Voting. Shareholders entitled to vote may vote either in person
or by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. At all meetings of
shareholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting.
Section 3. Trustees
-------------------
3.1 Committees and Advisory Board. The Trustees may appoint from their number
an executive committee and other committees. Any such committee may be abolished
and reconstituted at any time and from time to time by the Trustees. Except as
the Trustees may otherwise determine, any such committee may make rules for
conduct of its business. The Trustees may appoint an advisory board to consist
of not less than two nor more than five members. The members of the advisory
board shall be compensated in such manner as the Trustees may determine and
shall confer with and advise the Trustees regarding the investments and other
affairs of the Trust. Each member of the advisory board shall hold office until
the first meeting of the Trustees following the meeting of the shareholders, if
any, next following his appointment and until his successor is appointed and
qualified, or until he sooner dies, resigns, is removed, or becomes
disqualified, or until the advisory board is sooner abolished by the Trustees.
3.2 Regular Meetings. Regular meetings of the Trustees may be held without call
or notice at such places and at such times as the Trustees may from time to time
determine, provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as any meeting of the shareholders.
3.3 Special Meetings. Special meetings of the Trustees may be held at any time
and at any place designated in the call of the meeting, when called by the
Chairman of the Board or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant Secretary or by the
officer or one of the Trustees calling the meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by mail at
least three days or by telegram at least twenty-four hours before the meeting
addressed to the Trustee at his or her usual or last known business or residence
address or to give notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him or her before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him or her. Neither notice of a meeting nor a waiver of a
notice need specify the purposes of the meeting.
2
<PAGE>
3.5 Quorum. At any meeting of the Trustees, one-third of the Trustees then in
office shall constitute a quorum; provided, however, a quorum (unless the Board
of Trustees consists of two or fewer persons) shall not be less than two. Any
meeting may be adjourned from time to time by a majority of the votes cast upon
the question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.
Section 4. Officers and Agents
------------------------------
4.1 Enumeration; Qualification. The officers of the Trust shall be a President,
a Treasurer, a Secretary and such other officers, if any, as the Trustees from
time to time may in their discretion elect or appoint. The Trust may also have
such agents, if any, as the Trustees from time to time may in their discretion
appoint. Any officer may be but none need be a Trustee or shareholder. Any two
or more offices may be held by the same person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
4.3 Election. The President, the Treasurer and the Secretary shall be elected
annually by the Trustees at their first meeting in each calendar year or at such
later meeting in such year as the Trustees shall determine. Other officers or
agents, if any, may be elected or appointed by the Trustees at said meeting or
at any other time.
4.4 Tenure. The President, Treasurer and Secretary shall hold office until the
first meeting of Trustees in each calendar year and until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed or becomes disqualified. Each other officer shall hold
office and each agent shall retain his or her authority at the pleasure of the
Trustees.
4.5 Chairman of the Board. The Chairman of the Board of Trustees, if one is so
appointed, shall be chosen from among the Trustees and may hold office only so
long as he continues to be a Trustee. The Chairman of the Board, if any is so
appointed, shall preside at all meetings of the shareholders and of the Trustees
at which he is present; and shall have the such other duties and powers
specified herein and as may be assigned to him by the Trustees.
4.6 President and Vice Presidents. The president shall be the chief executive
officer of the Trust. The president shall, subject to the control of the
Trustees, have general charge and supervision of the Trust and shall perform
such other duties and have such other powers as the Trustees shall prescribe
from time to time. Any Vice President shall at the request or in the absence or
disability of the President exercise the powers of the President
3
<PAGE>
and perform such other duties and have such other powers as shall be designated
from time to time by the Trustees.
4.7 Treasurer and Controller. The Treasurer shall be the chief financial officer
of the Trust and subject to any arrangement made by the Trustees with a bank or
trust company or other organization as custodian or transfer or shareholder
services agent, shall be in charge of its valuable papers and shall have such
other duties and powers as may be designated from time to time by the Trustees
or by the President. If at any time there shall be no Controller, the Treasurer
shall also be the chief accounting officer of the Trust and shall have the
duties and power prescribed herein for the Controller. Any Assistant Treasurer
shall have such duties and powers as shall be designated from time to time by
the Trustees.
The Controller, if any be elected, shall be the chief accounting officer of the
Trust and shall be in charge of its books of account and accounting records.
The Controller shall be responsible for preparation of financial statements of
the Trust and shall have such other duties and powers as may be designated from
time to time by the Trustees or the President.
4.8 Secretary and Assistant Secretaries. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of shareholders or Trustees, an Assistant
Secretary, or if there be none or he or she is absent, a temporary clerk chosen
at the meeting shall record the proceedings thereof in the aforesaid books.
Section 5. Resignations and Removals
------------------------------------
Any Trustee may resign his trust or retire as a Trustee in accordance with
procedures set forth in the Declaration of Trust. Any officer or advisory board
member may resign at any time by delivering his or her resignation in writing to
the Chairman of the Board, the President or the Secretary or to a meeting of
the Trustees. The Trustees may remove any officer or advisory board member
elected or appointed by them with or without cause by the vote of a majority of
the Trustees then in office. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.
Section 6. Vacancies
--------------------
A vacancy in the office of the Trustee shall be filled in accordance with the
Declaration of Trust. Vacancies resulting from the death, resignation,
incapacity or removal of any officer may be filled by the Trustees. Each
successor of any such officer shall hold office for the unexpired term, and in
the case of the President, the Treasurer and the Secretary, until his
4
<PAGE>
or her successor is chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed or becomes disqualified.
Section 7. Shares of Beneficial Interest
----------------------------------------
7.1 Share Certificates. No certificates certifying the ownership of shares shall
be issued except as the Trustees may otherwise authorize. In the event that the
Trustees authorize the issuance of share certificates, subject to the provisions
of Section 7.3, each shareholder shall be entitled to a certificate stating the
number of shares owned by him or her, in such form as shall be prescribed from
time to time by the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary. Such signatures may be facsimiles if the certificate is
signed by a transfer or shareholder services agent or by a registrar, other than
a Trustee, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Trust with the same effect as if he or she were such officer at the time of
its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
7.2 Loss of Certificates. In the case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
7.3 Discontinuance of Issuance of Certificates. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
Section 8. Record Date
----------------------
The Trustees may fix in advance, a time, which shall not be more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the
record date for determining the shareholders having the right to notice and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right, notwithstanding any transfer of shares on the
books of the Trust after the record date.
5
<PAGE>
Section 9. Seal
---------------
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts" together with the name of
the Trust and the year of its organization, cut or engraved thereon; but,
unless otherwise required by the Trustees, the seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any document,
instrument, or other paper executed and delivered by or on behalf of the Trust.
Section 10. Execution of Papers
-------------------------------
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and any transfers of securities standing in the name
of the Trust shall be executed, by the President or by one of the Vice
Presidents or by the Treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
Section 11. Fiscal Year
-----------------------
The fiscal year of the Trust shall end on such date in each year as the
Trustees shall from time to time determine.
Section 12. Amendments
----------------------
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.
6
<PAGE>
AMENDED TO
12/16/83
BY-LAWS OF
WAYNE HUMMER GROWTH FUND
------------------------
Section 1. Agreement and Declaration of
Trust and Principal Office
--------------------------
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of WAYNE HUMMER GROWTH FUND, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust; Resident Agent. The principal office of the
Trust shall be located in Chicago, Illinois. Its resident agent in Massachusetts
shall be CT Corporation System, 2 Oliver Street, Boston, Massachusetts or such
other person as the Trustees may from time to time select.
Section 2. Shareholders
-----------------------
2.1 Shareholder Meetings. Meetings of the shareholders may be called at any
time by Trustees, by the President or, if the Trustees and the President shall
fail to call any meeting of shareholders for a period of 30 days after written
application of one or more shareholders who hold at least 25% of all shares
issued and outstanding and entitled to vote at the meeting (or 10% if the
purpose of the meeting is to determine if a trustee shall be removed from
office), then such shareholders may call such meeting. Each call of a meeting
shall state the place, date, hour and purposes of the meeting.
2.2 Place of Meetings. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust, at such other place within the United States as shall be designated by
the Trustees or the President of the Trust.
2.3 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the Secretary or an Assistant Secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after
<PAGE>
the meeting by such shareholder or his attorney thereunto duly authorized, is
filed with the records of the meeting.
2.4 Ballots. No ballot shall be required for any election unless requested by a
shareholder present or represented at the meeting and entitled to vote in the
election.
2.5 Proxies and Voting. Shareholders entitled to vote may vote either in person
or by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. At all meetings of
shareholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting.
Section 3. Trustees
-------------------
3.1 Committees and Advisory Board. The Trustees may appoint from their number
an executive committee and other committees. Any such committee may be
abolished and reconstituted at any time and from time to time by the Trustees.
Except as the Trustees may otherwise determine, any such committee may make
rules for conduct of its business. The Trustees may appoint an advisory board to
consist of not less than two nor more than five members. The members of the
advisory board shall be compensated in such manner as the Trustees may determine
and shall confer with and advise the Trustees regarding the investments and
other affairs of the Trust. Each member of the advisory board shall hold office
until the first meeting of the Trustees following the meeting of the
shareholders, if any, next following his appointment and until his successor is
appointed and qualified, or until he sooner dies, resigns, is removed, or
becomes disqualified, or until the advisory board is sooner abolished by the
Trustees.
3.2 Regular Meetings. Regular meetings of the Trustees may be held without call
or notice at such places and at such times as the Trustees may from time to time
determine, provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as any meeting of the shareholders.
3.3 Special Meetings. Special meetings of the Trustees may be held at any time
and at any place designated in the call of the
-2-
<PAGE>
meeting, when called by the Chairman of the Board or by two or more Trustees,
sufficient notice thereof being given to each Trustee by the Secretary or an
Assistant Secretary or by the officer or one of the Trustees calling the
meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by mail
at least three days or by telegram at least twenty-four hours before the meeting
addressed to the Trustee at his or her usual or last known business or residence
address or to give notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him or her before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him or her. Neither notice of a meeting nor a waiver of a
notice need specify the purposes of the meeting.
3.5 Quorum. At any meeting of the Trustees, one-third of the Trustees then in
office shall constitute a quorum; provided, however, a quorum (unless the Board
of Trustees consists of two or fewer persons) shall not be less than two. Any
meeting may be adjourned from time to time by a majority of the votes cast upon
the question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.
Section 4. Officers and Agents
------------------------------
4.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect or appoint. The Trust
may also have such agents, if any, as the Trustees from time to time may in
their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
4.3 Election. The President, the Treasurer and the Secretary shall be elected
annually by the Trustees at their first meeting in each calendar year or at such
later meeting in such year as the Trustees shall determine. Other officers or
agents, if any, may be elected or appointed by the Trustees at said meeting or
at any other time.
-3-
<PAGE>
4.4 Tenure. The President, Treasurer and Secretary shall hold office until
the first meeting of Trustees in each calendar year and until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed or becomes disqualified. Each other officer shall hold
office and each agent shall retain his or her authority at the pleasure of the
Trustees.
4.5 Chairman of the Board. The Chairman of the Board of Trustees, if one is so
appointed, shall be chosen from among the Trustees and may hold office only so
long as he continues to be a Trustee. The Chairman of the Board, if any is so
appointed, shall preside at all meetings of the shareholders and of the Trustees
at which he is present; and shall have the such other duties and powers
specified herein and as may be assigned to him by the Trustees.
4.6 President and Vice Presidents. The president shall be the chief executive
officer of the Trust. The president shall, subject to the control of the
Trustees, have general charge and supervision of the Trust and shall perform
such other duties and have such other powers as the Trustees shall prescribe
from time to time. Any Vice President shall at the request or in the absence or
disability of the President exercise the powers of the President and perform
such other duties and have such other powers as shall be designated from time to
time by the Trustees.
4.7 Treasurer and Controller. The Treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the Trustees
with a bank or trust company or other organization as custodian or transfer or
shareholder services agent, shall be in charge of its valuable papers and shall
have such other duties and powers as may be designated from time to time by the
Trustees or by the President. If at any time there shall be no Controller, the
Treasurer shall also be the chief accounting officer of the Trust and shall have
the duties and power prescribed herein for the Controller. Any Assistant
Treasurer shall have such duties and powers as shall be designated from time to
time by the Trustees.
The Controller, if any be elected, shall be the chief accounting officer of the
Trust and shall be in charge of its books of account and accounting records. The
Controller shall be responsible for preparation of financial statements of the
Trust and shall have such other duties and powers as may be designated from time
to time by the Trustees or the President.
4.8 Secretary and Assistant Secretaries. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of shareholders or Trustees, an Assistant
-4-
<PAGE>
Secretary, or if there be none or he or she is absent, a temporary clerk
chosen at the meeting shall record the proceedings thereof in the aforesaid
books.
Section 5. Resignations and Removals
------------------------------------
Any Trustee may resign his trust or retire as a Trustee in accordance with
procedures set forth in the Declaration of Trust. Any officer or advisory board
member may resign at any time by delivering his or her resignation in writing to
the Chairman of the Board, the President or the Secretary or to a meeting of the
Trustees. The Trustees may remove any officer or advisory board member elected
or appointed by them with or without cause by the vote of a majority of the
Trustees then in office. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.
Section 6. Vacancies
--------------------
A vacancy in the office of the Trustee shall be filled in accordance with the
Declaration of Trust. Vacancies resulting from the death, resignation,
incapacity or removal of any officer may be filled by the Trustees. Each
successor of any such officer shall hold office for the unexpired term, and in
the case of the President, the Treasurer and the Secretary, until his or her
successor is chosen and qualified, or in each case until he or she sooner dies,
resigns, is removed or becomes disqualified.
Section 7. Shares of Beneficial Interest
----------------------------------------
7.1 Share Certificates. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize the issuance of share certificates, subject to the
provisions of Section 7.3, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or a Vice President and by the Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary. Such signatures may be facsimiles if the
certificate is signed by a transfer or shareholder services agent or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile
-5-
<PAGE>
signature has been placed on such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Trust with
the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
7.2 Loss of Certificates. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
7.3 Discontinuance of Issuance of Certificates. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
Section 8. Record Date
----------------------
The Trustees may fix in advance a time, which shall not be more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date.
Section 9. Seal
---------------
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts" together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument,
or other paper executed and delivered by or on behalf of the Trust.
-6-
<PAGE>
Section 10. Execution of Papers
-------------------------------
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and any transfers of securities standing in the name
of the Trust shall be executed, by the President or by one of the Vice
Presidents or by the Treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
Section 11. Fiscal Year
-----------------------
The fiscal year of the Trust shall end on such date in each year as the Trustees
shall from time to time determine.
Section 12. Amendments
----------------------
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.
-7-
<PAGE>
EXHIBIT 5(a)
WAYNE HUMMER GROWTH FUND
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
--------------------------------------------
This AGREEMENT made this 29th day of April, 1988 by and between WAYNE HUMMER
GROWTH FUND, a Massachusetts business trust (the "Fund"), and WAYNE HUMMER
MANAGEMENT COMPANY, an Illinois corporation (the "Adviser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Fund is a no-load, open-end, diversified management investment
company registered under the Investment Company Act of 1940 (the "1940 Act"),
the units of beneficial interest ("Shares") of which are registered under the
Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Fund is authorized to issue Shares in separate series with each
such series representing the interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund currently offers Shares in one portfolio, the Growth
Portfolio (hereinafter referred to as the "Initial Portfolio" and, together with
any other portfolios of the Fund which may be established later and served by
the Adviser hereunder, collectively as the "Portfolios" and individually as a
"Portfolio"); and
WHEREAS, the Fund desires at this time to retain the Adviser to render
investment advisory and managerial services to the Fund, and the Adviser is
willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
<PAGE>
1. Initial Appointment of Adviser. The Fund hereby appoints the Adviser to act
as investment adviser to the Fund for the period and on the terms set forth
herein. The Adviser accepts such appointment and agrees to render the services
set forth herein, for the compensation herein provided.
2. Subsequent Appointments of Adviser. In the event that the Fund establishes
one or more portfolios other than the Initial Portfolio with respect to which it
desires to retain the Adviser to render investment advisory and managerial
services hereunder, the Fund shall so notify the Adviser in writing. If the
Adviser is willing to render services to such portfolio or portfolios hereunder,
it shall so notify the Fund of its acceptance in writing. Thereafter, upon
approval by the initial shareholder(s) of such portfolio or portfolios, such
portfolio or portfolios shall become a Portfolio or Portfolios hereunder.
3. Duties of and Expenses Borne by the Adviser. Subject to the general
supervision of the Trustees of the Fund, the Adviser shall manage the investment
operations of the Portfolios and the composition of the Portfolios' assets,
including the purchase, retention and disposition thereof, in accordance with
the investment objectives, policies and restrictions of the respective Portfolio
as stated in the Fund's Prospectus and subject to the following understandings:
(a) The Adviser shall use the skill and care in the management of the
Portfolios as is required to be used in the discharge of fiduciary duties under
the 1940 Act, the
2
<PAGE>
Investment Advisers Act of 1940, the 1933 Act and the Internal Revenue Code of
1986, as each may be amended from time to time.
(b) The Adviser shall provide supervision of Portfolio assets; furnish a
continuous investment program for such Portfolio; determine from time to time
what investments or securities will be purchased, retained or sold by the
Portfolio and what portion of the assets will be invested or held uninvested
as cash.
(c) The Adviser, in the performance of its duties and obligations under this
Agreement, shall act in conformity with the Agreement and Declaration of Trust
("Trust Agreement"), By-Laws, Registration Statement and Prospectus for the
Fund and with the instructions and directions of the Trustees of the Fund, and
will comply with and conform to the requirements of the 1940 Act, the
Investment Advisers Act of 1940, the 1933 Act and the Internal Revenue Code
of 1986 (applicable to the Fund as a regulated investment company or
otherwise), as each may from time to time be amended, and all other applicable
federal and state laws, regulations and rulings.
(d) The Adviser shall determine the securities to be purchased or sold by
the Portfolio and will place orders pursuant to its determinations either
directly with the issuer or underwriter or with any broker-dealer who deals in
the securities in which the Portfolio is active. In placing
3
<PAGE>
orders with broker-dealers, the Adviser will attempt to obtain the best
combination of price and execution. In seeking to achieve the best combination
of price and execution, an effort shall be made to evaluate the overall quality
and reliability of broker-dealers and the services they provide, including their
general execution capability, reliability and integrity, willingness to take
positions in securities, general operational capabilities and financial
condition. Notwithstanding the above, the Adviser is specifically authorized, to
the fullest extent now and hereafter permitted by law, to cause the Fund to pay
a member of a securities exchange, broker, or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
member of an exchange, broker, or dealer would have charged for effecting that
transaction provided that the Adviser has determined in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services (within the meaning of Section 28(e) of the Securities
Exchange Act of 1934) provided by such member, broker, or dealer, when viewed in
terms of either that particular transaction or the overall responsibilities of
the Adviser with respect to accounts as to which the Adviser exercises
investment discretion (within the meaning of Section 3(a)(35) of the Securities
Exchange Act of 1934). In no instance will Portfolio securities be purchased or
sold
4
<PAGE>
from, to or through the Fund's Distributor, Shareholder Service Agent, the
Adviser or an affiliate (as defined in the 1940 Act).
(e) On occasions when the Adviser deems the purchase or sale of a security
to be in the best interests of a Portfolio, as well as other clients, if any
(including any other Portfolio), the Adviser, to the extent permitted by
applicable laws and regulations, may aggregate the securities to be purchased
or sold. In such event, allocation of the securities so purchased or sold will
be made by the Adviser in a manner it considers to be equitable and
consistent with its fiduciary obligations to each, and transaction costs will
be allocated so that each receives, to the extent possible, the same price.
(f) The Adviser shall render to the Trustees of the Fund such periodic and
special reports as the Trustees may reasonably request.
(g) The services of the Adviser to the Portfolio under this Agreement are
not to be deemed exclusive and the Adviser shall be free to render similar or
other services in the future to the Fund or to others so long as its services
under this Agreement are not impaired thereby.
(h) The Adviser shall provide the Fund with, or obtain for it, adequate
office space and such basic office equipment and services including
furnishings, telephone service, heat, utilities, stationery supplies and
similar
5
<PAGE>
items as may reasonably be necessary for managing the Portfolios and conducting
the business of the Fund (other than the distribution of the Fund Shares and
the furnishing of shareholder services) as well as employing or providing and
compensating officers and other personnel for the management of the Portfolios.
(i) The Adviser shall arrange, but not pay for, the computation of the net
asset value of the Portfolios as provided in the Fund's current Prospectus and
bookkeeping services related thereto.
(j) The Adviser shall arrange, but not pay for, the periodic updating of the
Registration Statement, Prospectus and supplements thereto, proxy materials,
tax returns, reports to the Fund's shareholders and filings with and reports
to the Securities and Exchange Commission ("SEC") and state securities
authorities.
(k) The Adviser shall pay any salaries and fees of any officers of the Fund
and salaries and fees of all Trustees of the Fund who are "interested persons"
(as defined in the 1940 Act) of the Fund and of all other personnel of the
Adviser performing services relating to research, statistical and investment
activities.
4. Expenses Borne by the Fund. It is expressly understood that the Fund will
pay all its expenses other than those expressly stated to be payable by the
Adviser pursuant to
6
<PAGE>
paragraph 3 hereunder, unless otherwise agreed in writing, which expenses
payable by the Fund shall include, without limitation:
(i) all federal, state and local or other governmental agency taxes or fees
levied against the Fund;
(ii) costs, including the interest expense, of borrowing money;
(iii) brokerage commissions and other transaction costs in connection with
the purchase or sale of Portfolio securities by the Adviser for the Fund;
(iv) fees and expenses of its Trustees other than those who are "interested
persons" (as defined in the 1940 Act) of the Fund;
(v) expenses incident to holding meetings of the Fund's shareholders,
including proxy solicitations of the Fund or its Board of Trustees with
respect thereto, and meetings of the Board of Trustees and committees of the
Board of Trustees;
(vi) fees and expenses in connection with legal services rendered to the
Fund, the Board of Trustees of the Fund and duly appointed committees of the
Board of Trustees of the Fund, including fees and expenses of special counsel
to those Trustees who are not "interested persons" (as defined in the
Investment company Act of 1940) of the Fund and litigation;
(vii) audit and accounting expenses of the independent auditors;
7
<PAGE>
(viii) custodian, transfer and dividend-paying agent fees and expenses and
shareholder service expenses;
(ix) fees and expenses related to the registering, qualifying and
maintaining registration and qualification of the Fund and its Shares for
distribution under federal, state and other applicable laws;
(x) fees and expenses incident to preparation and filing reports with
regulatory agencies;
(xi) expenses of preparation, printing (including typesetting) and mailing
prospectuses, shareholder reports, proxy materials and notices to shareholders
of the Fund;
(xii) premiums for insurance carried by the Fund pursuant to the
requirements of Section 17(g) of the 1940 Act, or otherwise required by law or
deemed desirable by the Board of Trustees;
(xiii) fees and expenses incurred in connection with any investment company
organization or trade association of which the Fund may be a member;
(xiv) costs and expenses incurred for promotion or advertising of Fund
Shares, but only pursuant to a plan duly adopted in accordance with Rule 12b-1
under the 1940 Act and to the extent that such plan may from time to time
provide;
(xv) expenses related to issuance or redemption of Fund Shares; and
(xvi) expenses incident to the computation of the Fund's net asset value.
8
<PAGE>
5. Books and Records. The Adviser agrees that all records which it maintains
for the Fund are the property of the Fund and it will surrender promptly to the
Fund any of such records upon the Fund's request. The Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 promulgated under the 1940 Act
and such records as are required to be maintained by Rule 31a-1 under said Act.
6. Compensation. Subject to the provisions of paragraph 7 of this Agreement,
the Fund will pay to the Adviser for the services provided and the expenses
assumed by the Adviser pursuant to the Agreement, as full compensation therefor,
a fee based on average daily net assets of the Fund, computed and accrued daily
and paid monthly at the following annual rates:
.80 of 1% of the first $100 million of
average daily net assets; plus
.65 of 1% of the next $150 million of average
daily net assets; plus
.50 of 1% of the average daily net assets in
excess of $250 million.
In addition to the compensation provided above, the Fund shall reimburse the
Adviser on a monthly basis for those expenses which the Fund has agreed to bear
pursuant to the provisions of paragraph 4 of this Agreement, which expenses may
from time to time be incurred by the Adviser for the benefit of the Fund in the
performance of the Adviser's duties pursuant to paragraph 3 hereunder.
9
<PAGE>
7. Expense Limitation. In the event the operating expenses of the Fund,
including all investment advisory and administrative fees, for any fiscal year
ending on a date on which this Agreement is in effect exceed either (i) the
expense limitations applicable to the Fund imposed by the securities laws or
regulations thereunder of any state in which the Fund's Shares are qualified for
sale, as such limitations may be raised or lowered from time to time, or (ii)
1.5% of the Fund's average daily net assets, the Adviser shall reduce its
investment advisory fee to the extent of its share of such excess expenses and,
if required, pursuant to any such laws or regulations, will reimburse the Fund
for its share of annual operating expenses in excess of any expense limitation
that may be applicable; provided, however, there shall be excluded from such
expenses the amount of any interest, taxes, brokerage commissions, and
extraordinary expenses including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by the Fund. Such reduction, if any, shall be computed and accrued
daily, shall be settled on a monthly basis and shall be based upon the expense
limitation applicable to the Fund as of the end of the last business day of the
month. Should two or more such expense limitations be applicable as of the end
of the last business day of the month, the expense limitation which results in
the larger reduction in the Adviser's fees shall be applicable.
10
<PAGE>
8. Limitation of Liability. Subject to Section 36 of the 1940 Act, neither the
Adviser nor any of its agents or employees shall be liable for any error of
judgement or mistake of law or for any loss suffered by any Portfolio in
connection with the matters to which this Agreement relates, except liability to
the Fund or the shareholders to which the Adviser would otherwise be subject by
reason of the Adviser's willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
9. Effectiveness, Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall become effective as of August 1, 1988, and
shall remain in force until July 31, 1989; provided, however, that the
effectiveness of this Agreement, which shall be submitted to the holders of
Shares for approval at a special meeting of shareholders to be held on July 19,
1988, is expressly subject to the prior approval of the shareholders as required
by the 1940 Act and the rules and regulations thereunder. Thereafter, in the
case of the Initial Portfolio and each other Portfolio to which this Agreement
shall have become applicable, this Agreement shall continue in force from year
to year, but only so long as such continuance is specifically approved for each
Portfolio at least annually in the manner required by the 1940 Act and the rules
and regulations thereunder; provided, however, that if the continuation of this
Agreement is not approved for a certain Portfolio, the Adviser
11
<PAGE>
may continue to serve in such capacity for such Portfolio in the manner and to
the extent permitted by the 1940 Act and the rules and regulations thereunder.
This Agreement may also be terminated with respect to all or any of the
Portfolios (i) by the Fund at any time, without the payment of any penalty, upon
sixty (60) days' written notice to the Adviser, by the affirmative vote of a
majority of the Trustees of the Fund or by the affirmative vote of a "majority
of the outstanding Shares" as such term is defined in the 1940 Act representing
the interests in each Portfolio with respect to which this Agreement is to be
terminated or (ii) by the Adviser at any time, without the payment of any
penalty, upon sixty (60) days' written notice to the Fund. This Agreement will
automatically and immediately terminate in the event of its assignment, as such
term is defined in the 1940 Act.
10. Status of Adviser as Independent Contractor. The Adviser shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized by the Trustees of the Fund
from time to time, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
11. Amendment of Agreement. This Agreement may be amended by mutual consent,
but the consent of the Fund must be (a) by vote of a majority of those Trustees
of the Fund who are not parties to this Agreement or "interested persons," as
such term is defined in the 1940 Act, of any such party, cast in person at
12
<PAGE>
a meeting called for the purpose of voting on such amendment, and (b) as to each
Portfolio affected by the amendment by vote of a majority of the outstanding
Shares (as defined in the 1940 Act) representing the interests in such
Portfolio.
12. Limitation of Liability. This Agreement is executed by or on behalf of the
Fund, and the Adviser is hereby expressly put on notice of the limitation of
shareholder liability, as set forth in the Trust Agreement, and agrees that the
obligations assumed by the Fund pursuant to this Agreement shall be limited in
all cases to the Fund and its assets. The Adviser shall not seek satisfaction of
any such obligations from the shareholders or any shareholder of the Fund. In
addition, the Adviser shall not seek satisfaction of any such obligations from
the Trustees or officers of the Fund or any individual Trustee or officer.
13. Miscellaneous. The captions of this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be construed in accordance with applicable federal law and,
except as to paragraph 12 hereof which shall be construed in accordance with the
laws of the Commonwealth of Massachusetts, the laws of the State of Illinois and
shall be binding upon and shall inure to the benefit of the
13
<PAGE>
parties hereto and their respective successors, subject to paragraph 9 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ATTEST: WAYNE HUMMER GROWTH FUND
____________________ By:_________________
Its Secretary Its President
----------------- ---------------
ATTEST: WAYNE HUMMER MANAGEMENT
COMPANY
____________________ By:_________________
Its Secretary Its President
----------------- ---------------
14
<PAGE>
EXHIBIT 5.(b)
AMENDMENT TO
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made as of this 24th day of November, 1992, by and between WAYNE
HUMMER MANAGEMENT COMPANY ("Adviser") and WAYNE HUMMER GROWTH FUND (the "FUND").
WITNESSETH THAT:
----------------
WHEREAS, the Adviser and the Fund are parties to an Investment Advisory and
Management Agreement dated April 29, 1988 (the "Agreement") which governs the
terms and conditions under which the Adviser provides investment advisory and
management services to the Fund:
NOW THEREFORE, the Adviser and the Fund hereby amend the terms of the
Investment Advisory and Management Agreement and mutually agree to the
following:
1. The third WHEREAS clause shall be replaced with the following new third
WHEREAS clause:
"WHEREAS, the Fund currently offers Shares in two portfolios, the Growth
Portfolio and the Income Portfolio (hereinafter referred to, together with
any other portfolios of the Fund which may be established later and served
by the Adviser hereunder, collectively as the "Portfolios" and
individually as a "Portfolio"); and
2. Section 2. Subsequent Appointments of Adviser shall be amended as follows:
the words "Initial Portfolio" in the third line of the first sentence
shall be replaced with the words "current Portfolios."
3. Section 6. Compensation shall be replaced with the following new Section 6:
"Compensation. Subject to the provisions of paragraph 7 of this Agreement,
each Portfolio will pay to the Adviser for the services provided and the
expenses assumed by the Adviser pursuant to the Agreement, as full
compensation therefor, a fee based on average daily net assets of each
Portfolio, computed and accrued daily and paid monthly at the following
annual rates:
<PAGE>
(a) For the Growth Portfolio:
.80 of 1% of the first $100 million of average
daily net assets; plus
.65 of 1% of the next $150 million of average
daily net assets; plus
.50 of 1% of the average daily net assets in excess
of $250 million.
(b) For the Income Portfolio:
.50 of 1% of the first $250 million of average
daily net assets; plus
.30 of 1% of the average daily net assets in excess
of $250 million.
In addition to the compensation provided above, each Portfolio shall
reimburse the Adviser on a monthly basis for those expenses which each
Portfolio has agreed to bear pursuant to the provisions of paragraph 4 of
this Agreement, which expenses may from time to time be incurred by the
Adviser for the benefit of each Portfolio in the performance of the
Adviser's duties pursuant to paragraph 3 hereunder."
4. Section 9. Effectiveness, Duration and Termination shall be amended as
follows: the words "Initial Portfolio" in the first line of the second
sentence shall be replaced with the words "current Portfolios".
5. Effective December 1, 1992, the Fund shall hereinafter be referred to as the
Wayne Hummer Investment Trust and the Agreement shall be binding upon and
shall inure to the benefit of the parties to this Amendment and their
respective successors and assigns.
6. Except as specifically amended herein, the Agreement shall remain in full
force and effect. This Amendment shall not limit the rights of the parties
to the Agreement and the parties hereto acknowledge the binding effect of
the Agreement.
2
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST WAYNE HUMMER GROWTH FUND
_________________________ By_________________________
WAYNE HUMMER MANAGEMENT
COMPANY
ATTEST
_________________________ By_________________________
3
<PAGE>
EXHIBIT 6(a)
DISTRIBUTION AND SHAREHOLDER SERVICE AGREEMENT
----------------------------------------------
This AGREEMENT made this 15th day of December, 1983, between WAYNE HUMMER
GROWTH FUND, a Massachusetts business trust (the "Fund"), and WAYNE HUMMER &
CO., an Illinois general partnership ("WH & Co.").
W I T N E S S E T H:
WHEREAS, the Fund is a no-load, open-end, diversified management investment
company registered under the Investment Company Act of 1940 (the "1940 Act"),
the units of beneficial interest ("Shares") of which are registered under the
Securities Act of 1933, as amended;
WHEREAS, the Fund is authorized to issue Shares in separate series with each
such series representing the interests in a separate portfolio of securities and
other assets and intends initially to offer Shares in one series, the "Growth
Portfolio";
WHEREAS, the Fund has adopted a plan ("Plan") pursuant to Rule 12b-1 of the
1940 Act in order to provide for the payment of certain distribution costs by
the Fund; and
WHEREAS, the Fund in accordance with the Plan desires to retain WH & Co. as the
principal distributor for Shares of the Fund and the primary shareholder service
agent for the Fund and WH & Co. is willing to act in such capacities;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
conditions hereinafter set forth, the parties hereto agree as follows:
<PAGE>
ARTICLE I: DISTRIBUTION
-----------------------
1. Appointment of Distributor. The Fund hereby appoints WH & Co. as the
principal distributor of the Shares of the Fund upon the terms and for the
periods set forth in this Agreement. WH & Co. hereby accepts such appointment
and agrees to render the services and perform the duties of distributor as set
forth herein.
2. Duties of Distributor. The following provisions shall apply to WH & Co.'s
obligations as distributor under this Agreement:
(a) The Fund agrees to sell Shares through WH & Co., as agent, from time to
time during the term of this Agreement upon the terms and at the current
offering price described in the Fund's prospectus. Such sales may, however,
be suspended whenever in the judgment of the Fund it is in its best
interests to do so.
(b) WH & Co. will hold itself available to receive or will arrange for the
receipt of orders for the purchase of Shares and will (and shall have the
authority to) receive and accept or reject or arrange for the receipt and
acceptance or rejection of such orders on behalf of the Fund in accordance
with the provisions of the Fund's prospectus.
(c) WH & Co. shall not be obligated to sell any certain number of Shares.
-2-
<PAGE>
(d) In performing its duties hereunder, WH & Co. shall act in conformity
with the Fund's Agreement and Declaration of Trust, By-Laws, Registration
Statement, and prospectus and with the instructions and directions of the
officers and Trustees of the Fund and shall comply with and conform to the
requirements of the 1940 Act, the Securities Act of 1933, the Securities
Exchange Act of 1934 and all other applicable federal and state laws,
regulations and rulings and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
(e) WH & Co. shall be free to render to others services different from or
similar to those rendered to the Fund hereunder so long as the services
hereunder are not impaired thereby. It further is understood and agreed that by
separate agreement with the Fund, WH & Co. may also serve the Fund in other
capacities; that partners or employees of WH & Co. may serve as officers or
Trustees of the Fund to the extent permitted by law; and that WH & Co. or its
partners or employees are not prohibited from engaging in any other business
activity or from rendering services to any other entity, or from serving as
officers, directors or trustees of any other organizations including investment
companies.
3. Unreimbursable Distribution Costs. During the term of this Agreement, WH &
Co. will pay from the fee provided under paragraph 1 of Article IV of this
Agreement without further
-3-
<PAGE>
reimbursement by the Fund the following costs related to the distribution of the
Fund's Shares:
(a) Costs of all sales presentations, mailing, advertising and any other
distribution efforts which may be undertaken by WH & Co. in its sole discretion
with respect to the Shares. Such costs shall not be deemed to include the costs
of preparing and setting in type prospectuses, proxy materials, reports and
notices or the costs of printing and distributing the same to existing
shareholders and regulatory authorities.
(b) Compensation of any personnel of WH & Co. for activities in connection
with the distribution or sale of the Shares.
4. Representations. Neither WH & Co. nor any other person is authorized by the
Fund to give any information or to make any representation relative to the
Shares other than those contained in the Fund's Registration Statement or
prospectus filed with the Securities and Exchange Commission as either may be
amended from time to time or in any supplemental information to said prospectus
approved by the Fund. WH & Co. agrees that any other information or
representations other than those specified above which it or any dealer or other
person who distributes Shares through WH & Co. may make in connection with the
offer or sale of Shares shall be made entirely without liability on the part of
the Fund. WH & Co. agrees that in offering or selling Shares as agent of the
Fund, it will submit to the Fund's legal counsel or other
-4-
<PAGE>
representative as may be designated by the Fund's Board of Trustees copies of
all sales literature and other similar materials before using the same and will
not use such sales literature if disapproved by the Fund.
ARTICLE II: SHAREHOLDER SERVICES
--------------------------------
1. Appointment of Shareholder Service Agent. The Fund hereby appoints WH & Co.
as the primary shareholder service agent for the Fund upon the terms and for the
periods set forth in this Agreement. WH & Co. hereby accepts such appointment
and agrees to render the services and perform the duties of shareholder service
agent as set forth herein.
2. Services of Shareholder Service Agent. The services to be performed by WH &
Co. as shareholder service agent are set forth in Exhibit A hereto which may at
any time or from time to time be modified or amended by agreement of the parties
in the form of an amended or supplemental schedule initialed by their authorized
representatives. WH & Co. also agrees to perform such additional services within
its capacity of shareholder service agent as may, from time to time, be
requested by the Fund, provided that such additional services are the subject of
a supplement to Schedule A hereto.
3. Costs and Expenses of Performance. The Fund will reimburse WH & Co. for WH &
Co.'s approximate out-of-pocket cost, if any, of providing certain of the
services contemplated by this Agreement as set forth in Exhibit A, including the
costs of
-5-
<PAGE>
postage; data entry, modification, and printout; stationery; tax forms; and all
other external forms or printed material which may be required for performance
by WH & Co. of the services contemplated by this Agreement ("Reimbursable
Expenses"). WH & Co. shall submit to the Fund a monthly report setting forth in
reasonable detail the Reimbursable Expenses of WH & Co. paid or incurred during
such month. The Fund agrees to cause all such reports to be reviewed promptly
(in no event less frequently than quarterly) after receipt. Immediately
thereafter, WH & Co. will be notified of any discernable errors, discrepancies
or omissions.
4. Record Retention and Confidentiality. WH & Co. shall keep and maintain on
behalf of the Fund all records which are required to be maintained pursuant to
Rule 31a-1 of the Securities and Exchange Commission and to preserve such
records for the time periods prescribed therein; provided, however, WH & Co.
shall not be required to maintain those records which would duplicate records
required to be maintained pursuant to any other agreement entered into by the
Fund. In addition, WH & Co. will maintain all records it is required to maintain
pursuant to any applicable statutes, rules and regulations relating to the
maintenance of records in connection with the services to be performed
hereunder. Notwithstanding the foregoing, WH & Co. shall maintain, for a period
of at least six (6) years, all records and documents which may be needed or
required to support or document the entries made by WH & Co. in its performance
of
-6-
<PAGE>
services hereunder. WH & Co. agrees that all records required to be maintained
under this paragraph shall be the property of the Fund; shall be maintained in
such fashion as to preserve the confidentiality thereof and to comply with
applicable rules and regulations of federal and/or state securities laws; and
shall, in whole or any specified part, be available for inspection by or
surrender to the Fund at any reasonable time after receipt of an appropriate
written request.
ARTICLE III: APPOINTMENT OF FIRMS
---------------------------------
1. Appointment of Firms. It is understood and agreed that WH & Co. may in its
discretion appoint broker-dealer firms to assist WH & Co. in providing
distribution services to the Fund including literature distribution, advertising
and promotion. WH & Co. may also appoint broker-dealer and other firms
(including depository institutions such as commercial banks and savings and loan
associations) to provide administrative services for their clients as
shareholders of the Fund. The agreements between WH & Co. and such firms shall
be substantially in the form of the Service Agreements attached hereto as
Exhibits B (broker-dealer) and C (other firms) (collectively the "Service
Agreements"). Such firms shall not be representatives or agents of the Fund and
shall have no direct contractual relationship with the Fund.
2. Services of Firms. The aforementioned broker-dealer and other firms
(collectively "Firms") shall provide, among other
-7-
<PAGE>
things, office space and equipment, telephone facilities, personnel and
assistance to WH & Co. in servicing accounts of such Firm's clients who own Fund
Shares. Such services and assistance may include, but not be limited to,
establishment and maintenance of shareholder accounts and records; processing
purchase and redemption transactions; automatic investment in Fund shares of
client account cash balances; answering routine client inquiries regarding the
Fund; assistance to clients in changing dividend options, account designations
and addresses; and such other services as the Fund may reasonably request
including, in the case of broker-dealer firms, literature distribution,
advertising and promotion assistance.
ARTICLE IV: FEES, EXPENSES AND REPORTS
--------------------------------------
1. Annual Fee. For all of the services to be provided by WH & Co. hereunder,
the Fund shall pay WH & Co. compensation at the annual rate of .25 of 1% of the
Fund's average daily net assets, computed and accrued daily and payable monthly.
This compensation shall be in addition to certain expense reimbursements
provided for under Article II, paragraph 3 hereof. In the event that there is
more than one series of Shares, this fee shall be allocated to the various
series in proportion to the relative average daily net assets of such series.
2. Fees to Firms. From the foregoing fee, WH & Co. may pay compensation to the
Firms, if any, who shall be providing services under the Service Agreements at
the maximum annual rate
-8-
<PAGE>
of .20 of 1% of the average daily net asset value of Fund Shares in those
accounts that such Firms maintain and service at a level deemed to be
satisfactory to WH & Co.
3. Expenses. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by WH & Co.
under this Agreement.
4. Reports. WH & Co. shall prepare reports for the Trustees of the Fund on a
quarterly basis showing amounts expended by WH & Co. under this Agreement and
the purposes for such expenditures, including amounts paid to the various Firms,
if any, and such other information as from time to time shall be reasonably
requested by the Trustees of the Fund.
ARTICLE V: GENERAL
------------------
1. Indemnification.
(a) Subject to the conditions set forth below, the Fund agrees to indemnify
and hold harmless WH & Co. and each person, if any, who controls WH & Co.
within the meaning of Section 15 of the Securities Act of 1933 and Section
20 of the Securities Exchange Act of 1934 against any and all loss,
liability, claim, damage and expense whatsoever (including, but not limited
to, any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or
any claim whatsoever) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Fund's
Registration Statement or the prospectus or any amendment or supplement
thereto or the
-9-
<PAGE>
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Fund with respect to WH & Co. by or on behalf of WH
& Co. expressly for use in the Fund's Registration Statement or prospectus or
any amendment or supplement thereof. If any action is brought against WH & Co.
or any controlling person thereof in respect of which indemnity may be sought
against the Fund pursuant to the foregoing, WH & Co. shall promptly notify the
Fund in writing of the institution of such action and the Fund shall assume the
defense of such action, including the employment of counsel selected by the Fund
and payment of expenses. WH & Co., or any such controlling person thereof, shall
have the right to employ separate counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of WH & Co. or such controlling
person unless the employment of such counsel shall have been authorized in
writing by the Fund in connection with the defense of such action or the Fund
shall not have employed counsel to have charge of the defense of such action, in
which event such fees and expenses shall be borne by the Fund. Anything in this
subparagraph to the contrary notwithstanding, the Fund shall not be liable for
any settlement of any such claim or action effected without its
-10-
<PAGE>
written consent. The Fund agrees promptly to notify WH & Co. of the
commencement of any litigation or proceedings against the Fund or any of its
officers or directors or controlling persons in connection with the issue and
sale of shares or in connection with the Fund's Registration Statement or
prospectus.
(b) WH & Co. agrees to indemnify and hold harmless the Fund, each of its
Trustees, each of its officers and each other person, if any, who controls
the Fund within the meaning of Section 15 of the Securities Act of 1933, with
respect to statements or omissions, if any, made in the Fund's Registration
or prospectus or any amendment or supplement thereof in reliance upon and in
conformity with information furnished to the Fund with respect to WH & Co.
by or on behalf of WH & Co. expressly for use in the Fund's Registration
Statement or prospectus or any amendment or supplement thereof. In case any
action shall be brought against the Fund or any other person so indemnified
based on the Fund's Registration Statement or prospectus or any amendment or
supplement thereof and in respect of which indemnity may be sought against
WH & Co., WH & Co. shall have the rights and duties given to the Fund and
the Fund and each other person so indemnified shall have the rights and
duties given to WH & Co. by the provisions of subparagraph (a) above.
-11-
<PAGE>
(c) Nothing herein contained shall be deemed to protect any person
against liability to the Fund or its shareholders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the duties of such person or by reason of
the reckless disregard by such person of the obligations and duties of such
person under this Agreement.
2. Duration and Termination. This Agreement shall continue, unless
sooner terminated as provided herein, until one year from the date hereof and
shall thereafter continue from year to year so long as each such continuance is
approved at least annually by the vote of the Board of Trustees of the Fund
including a majority of the Trustees of the Fund who are not interested persons
(as defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related
thereto. The Plan (including this Agreement) shall be submitted to the
shareholders of the Fund at the first meeting of shareholders of the Fund after
a public offering of the Fund's shares. This Agreement may be terminated by the
Fund at any time, without the payment of any penalty, upon the vote of a
majority of the Trustees of the Fund who are not interested persons (as defined
in the 1940 Act) of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or any agreement related thereto or by the
vote of a majority of the outstanding voting securities of the Fund (as defined
in the 1940 Act) on 60 days' written notice to WH & Co. This Agreement may be
terminated by WH & Co. at any
-12-
<PAGE>
time, without the payment of any penalty, on 60 days' written notice to the
Fund. This Agreement will automatically and immediately terminate in the event
of its assignment (as defined in the 1940 Act).
3. Amendment of Agreement. This Agreement may be amended by mutual consent
of the parties hereto, but the consent of the Fund must be by the vote of the
Board of Trustees of the Fund including a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related thereto and, in the case of an amendment materially increasing
the amount of expenditures for distribution to be paid by the Fund, by the vote
of a majority of the outstanding voting securities of the Fund (as defined in
the 1940 Act).
4. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be construed in accordance with
applicable federal law and (except as to paragraph 5 of this Article below which
shall be construed in accordance with the laws of The Commonwealth of
Massachusetts) the laws of the State of Illinois and shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, subject to paragraph 2 of this Article.
-13-
<PAGE>
5. Limitation of Liability. All parties hereto are expressly put on
notice of the Wayne Hummer Growth Fund Agreement and Declaration of Trust dated
September 29, 1983 and all amendments thereto, all of which are on file with the
Secretary of the Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representative as such
representative and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers or shareholders of the Fund
individually, but are binding upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
WAYNE HUMMER GROWTH FUND
By________________________
Its President
____________________
ATTEST:
_________________________
Its Secretary
___________________
WAYNE HUMMER & CO
By________________________
A General Partner
ATTEST:
_________________________
Its Partner
___________________
-14-
<PAGE>
EXHIBIT A
SERVICE TO BE RENDERED CHARGE TO FUND
I. SHAREHOLDER ACCOUNTS
1. Open accounts, as necessary, and
assist in maintaining on the records of the
Fund's transfer agent current records for
Fund shareholder accounts showing as to each
shareholder (to the extent such information
is available or obtainable):
A. Name(s) and address(es) with
zip code(s);
B. Type of account and taxpayer
identification or social security
number;
C. Number of Fund Shares
currently owned;
D. Account transaction history,
including records of initial and
additional purchases, redemptions,
dividends and other distributions,
and related tax information..........................Annual Fee*
2. Maintain files of account applications,
requests and correspondence from or on behalf of
shareholders in relation to Fund Shares as well
as copies of all written responses thereto....................Annual Fee
3. Process with the Fund's transfer agent
account records to show all changes or corrections
to shareholders' registration and address records
authorized in writing by or on behalf of the
shareholder...................................................Annual Fee
4. Assist the Fund's transfer agent in
maintaining records of shareholders' transactions
in Fund Shares for federal and state tax and
securities law purposes.......................................Annual Fee
- --------------------------------------------------------------------------------
*Annual Fee as used in this Exhibit A refers to the fee set forth in Paragraph 1
of Article IV of the Agreement.
-1-
<PAGE>
II. PURCHASES AND REDEMPTIONS
1. Conversion of monies to Federal funds........................Annual Fee
2. Prepare and transmit by mail to each shareholder,
confirmations as may be required by law of all purchases and Annual Fee
redemptions of Fund Shares effected through Wayne Hummer & Co........plus Cost**
3. Assist the Fund's transfer agent to prepare and transmit
by mail to each shareholder, periodic statements reflecting all Annual Fee
purchases, dividends and redemptions of Fund Shares..................plus Cost
4. Receive, ascertain the adequacy of, and transmit to the
Fund's transfer agent all purchase orders or redemption requests
received by Wayne Hummer & Co. in accordance with the
requirements set forth in the current prospectus of the Fund.........Annual Fee
5. Requisition from the Fund's custodian and remit the
proceeds of redemption as directed by the individual shareholder
in accordance with the current prospectus of the Fund................Annual Fee
III. SHAREHOLDER COMMUNICATIONS & SERVICES
1. Provide, maintain and man telephone communication systems
for shareholder inquiries concerning the administration of their
Fund accounts........................................................Annual Fee
2. Receive and answer promptly all correspondence or similar
inquiries from or on behalf of shareholders concerning the
administration of their Fund accounts................................Annual Fee
3. Refer to the Fund's investment adviser questions or
matters related to its function......................................Annual Fee
4. Prepare such reports and summaries of shareholder
communications as may be requested by the Fund's officers for the
preparation of reports to the Fund's trustees and appropriate
regulatory authorities...............................................Annual Fee
- --------------------------------------------------------------------------------
**The term "Cost" as used in this Exhibit A refers to approximate out-of-
pocket tangible expenses such as postage and printing of forms.
-2-
<PAGE>
5. Provide and maintain a terminal with on-line facilities Annual Fee
to provide information regarding Fund shareholder accounts............plus Cost
IV. PROXY MATERIALS, ANNUAL AND OTHER REPORTS
1. Transmit (but not prepare) notices of meetings and proxy
statements, prospectuses, annual, semi-annual and quarterly reports
as shall be requested by the Fund and coordinate such mailings to
appropriate categories of Fund shareholders...........................Cost
2. Assist the Fund's transfer agent to furnish to the Fund, by
series if applicable, a list of Fund shareholders eligible to vote
at shareholder meetings showing addresses of record and Shares
held together with an affidavit or other appropriate certification
of the mailing of proxy materials.....................................Annual Fee
V. TAX MATTERS
1. Assist the Fund's transfer agent to prepare and transmit
federal and state tax informational returns relating to Share Annual Fee
transactions to shareholders and governmental agencies................plus Cost
-3-
<PAGE>
EXHIBIT B
SERVICES AGREEMENT
(BROKER-DEALER)
AGREEMENT made as of the day of between Wayne Hummer &
Co., an Illinois general partnership ("WH & Co."), as principal distributor and
primary shareholder service agent for Wayne Hummer Growth Fund, a Massachusetts
business trust (the "Fund"), pursuant to a Distribution and Shareholder Service
Agreement ("Distribution and Service Agreement") dated
, 1983 and (the "Firm") in consideration
of the mutual covenants hereunder contained, the parties agree as follows:
1. WH & Co. hereby appoints the Firm to assist WH & Co. in providing
distribution and shareholder services to the Fund. The Firm shall provide such
office space and equipment, telephone facilities, personnel, literature
distribution, advertising and promotion as is necessary or beneficial for
providing information and services to potential and existing shareholders of the
Fund and for assisting WH & Co. in servicing accounts of the Firm's clients who
own Fund shares ("Clients"). Such services and assistance may include, but not
be limited to, establishment and maintenance of shareholder accounts and
records, processing purchase and redemption transactions, automatic investment
in Fund shares of client account cash balances, answering routine client
inquiries regarding the Fund, assistance to clients in changing dividend
options, account designations and addresses, and such other services as WH & Co.
may reasonably request.
The Firm shall provide such security as is necessary to prevent
unauthorized use of any on-line computer facilities. The Firm agrees to release,
indemnify and hold harmless the Fund, WH & Co., and the Fund's investment
adviser, custodian and transfer agent, from any and all direct or indirect
liabilities or losses resulting from requests, directions, actions or inactions
of or by the Firm, its officers, employees or agents regarding the purchase,
redemption, transfer or registration of Fund shares for accounts of the Firm,
its clients and other shareholders. Principals of the Firm will be available to
consult from time to time with WH & Co. concerning administration and
performance of the services contemplated by this Agreement.
The Firm accepts such appointment and agrees during such period to render
such services and to assume the obligations herein set forth for the
compensation herein provided. The Firm shall for purposes herein provided be
deemed to be an independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent the Fund or
WH & Co. in any way or otherwise be deemed an agent of the Fund or WH & Co.
-1-
<PAGE>
2. For the services and facilities described in Section 1, WH & Co. will
pay a fee to the Firm after the end of each quarter at the annual rate of ___ of
1% of the average aggregate net asset value of the Fund shares in those accounts
for which the Firm provides services at a level deemed by WH & Co. to be
satisfactory. WH & Co. may in its discretion pay such additional amounts to the
Firm from the fee it receives from the Fund under the Distribution and Service
Agreement as shall be deemed appropriate by WH & Co. up to a maximum annual rate
of .20 of 1% of such average aggregate net asset value. For the quarter and year
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during the quarter and year, respectively.
3. No person is authorized to make any representations concerning the Fund
or shares of the Fund except in accordance with the terms of this Agreement.
Neither the Firm nor its agents will use or distribute, or authorize the use or
distribution of, any statements other than those contained in the Fund's current
prospectus or in such supplemental literature or advertising as may be
authorized by the Fund or WH & Co.
4. The Firm shall prepare such quarterly reports for WH & Co. as shall
reasonably be requested by WH & Co.
5. This Agreement shall become effective on the date hereof and shall
continue in effect until terminated. This Agreement shall automatically
terminate in the event of its assignment, as defined in the Investment Company
Act of 1940, and upon any termination of the Distribution and Service Agreement.
It may also be terminated at any time by the Firm or WH & Co. on thirty (30)
days' written notice.
6. The Firm acknowledges that WH & Co. may enter into similar agreements
with others without the consent of the Firm.
7. If any provision of this Agreement shall be held or made invalid by a
court decision, rule or otherwise, the remainder shall not be affected thereby.
8. All communications to WH & Co. shall be mailed to 175 West Jackson
Boulevard, Chicago, Illinois 60604. Any notice to the Firm shall be duly given
if mailed or telegraphed to the
-2-
<PAGE>
address specified below. This Agreement shall be construed in accordance with
applicable federal law and the laws of Illinois.
WAYNE HUMMER & CO.
By
-----------------------------
Its
--------------------------
FIRM
-------------------------------
ADDRESS:
-----------------------
-------------------------------
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<PAGE>
EXHIBIT C
SERVICES AGREEMENT
AGREEMENT made as of the day of between Wayne Hummer & Co.,
an Illinois general partnership ("WH & Co."), as principal distributor and
primary shareholder service agent for Wayne Hummer Growth Fund, a Massachusetts
business trust (the "Fund"), pursuant to a Distribution and Shareholder Service
Agreement ("Distribution and Service Agreement") dated , 1983 and
(the "Firm") in consideration of the mutual covenants hereunder
contained, the parties agree as follows:
1. WH & Co. hereby appoints the Firm to assist WH & Co. in providing
shareholder services to the Fund. The Firm shall provide such office space and
equipment, telephone facilities and personnel as is necessary or beneficial for
providing information and services to assist WH & Co. in servicing accounts of
the Firm's customers who own Fund shares ("Customers"). Such services and
assistance may include, but not be limited to, establishment and maintenance of
shareholder accounts and records, processing purchase and redemption
transactions, automatic investment in Fund shares of Customer account cash
balances, answering routine Customer inquiries regarding the Fund, assistance to
Customers in changing dividend options, account designations and addresses, and
such other services as WH & Co. may reasonably request.
The Firm shall provide such security as is necessary to prevent
unauthorized use of any on-line computer facilities. The Firm agrees to release,
indemnify and hold harmless the Fund, WH & Co., and the Fund's investment
adviser, custodian and transfer agent, from any and all direct or indirect
liabilities or losses resulting from requests, directions, actions or inactions
of or by the Firm, its officers, employees or agents regarding the purchase,
redemption, transfer or registration of Fund shares for accounts of the Firm,
its Customers and other shareholders. Principals of the Firm will be available
to consult from time to time with WE & Co. concerning administration and
performance of the services contemplated by this Agreement.
The Firm accepts such appointment and agrees during such period to render
such services and to assume the obligations herein set forth for the
compensation herein provided. The Firm shall for purposes herein provided be
deemed to be an independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent the Fund or WH &
Co. in any way or otherwise be deemed an agent of the Fund or WH & Co.
-1-
<PAGE>
2. For the services and facilities described in Section 1, WH & Co. will
pay a fee to the Firm after the end of each quarter at the annual rate of of
1% of the average aggregate net asset value of the Fund shares in those accounts
for which the Firm provides services at a level deemed by WH & Co. to be
satisfactory. WH & Co. may in its discretion pay such additional amounts to the
Firm from the fee it receives from the Fund under the Distribution and Service
Agreement as shall be deemed appropriate by WH & Co. up to a maximum rate of .20
of 1% of such average aggregate net asset value. For the quarter and year in
which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during the quarter and year, respectively.
3. No person is authorized to make any representations concerning the Fund
or shares of the Fund except in accordance with the terms of this Agreement.
Neither the Firm nor its agents will use or distribute, or authorize the use or
distribution of, any statements other than those contained in the Fund's current
prospectus or in such supplemental literature as may be authorized by the Fund
or WH & Co.
4. The Firm shall prepare such quarterly reports for WH & Co. as shall
reasonably be requested by WH & Co.
5. This Agreement shall become effective on the date hereof and shall
continue in effect until terminated. This Agreement shall automatically
terminate in the event of its assignment, as defined in the Investment Company
Act of 1940, and upon any termination of the Distribution and Service Agreement.
It may also be terminated at any time by the Firm or WH & Co. on thirty (30)
days' written notice.
6. The Firm acknowledges that WH & Co. may enter into similar agreements
with others without the consent of the Firm.
7. If any provision of this Agreement shall be held or made invalid by a
court decision, rule or otherwise, the remainder shall not be affected thereby.
8. All communications to WH & Co. shall be mailed to 175 West Jackson
Boulevard, Chicago, Illinois 60604. Any notice to the Firm shall be duly
given if mailed or telegraphed to the
-2-
<PAGE>
address specified below. This Agreement shall be construed in accordance with
applicable federal law and the laws of Illinois.
WAYNE HUMMER & CO.
By
------------------------------------
Its
--------------------------------
FIRM
---------------------------------------
ADDRESS:
------------------------------
---------------------------------------
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<PAGE>
EXHIBIT 6(b)
WAYNE HUMMER GROWTH FUND
DISTRIBUTION AGREEMENT
----------------------
This AGREEMENT made this 1st day of August, 1988 between WAYNE HUMMER
GROWTH FUND, a Massachusetts business trust (the "Fund"), and WAYNE HUMMER &
CO., an Illinois general partnership (the "Distributor");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Fund is a no-load, open-end, diversified, management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"), the units of beneficial interest ("Shares") of which are
registered under the Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets and currently offers Shares in one portfolio, the
Growth Portfolio (hereinafter, together with any other portfolio(s) established
by the Fund, referred to as the "Portfolio"); and
WHEREAS, the Fund desires at this time to retain the Distributor as the
principal distributor for Shares of the Portfolio and the Distributor is willing
to act in such capacity;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of the Distributor. The Fund hereby appoints the Distributor
as the principal distributor of the Shares of the Portfolio upon the terms and
for the periods set
<PAGE>
forth in this Agreement. The Distributor hereby accepts such appointment and
agrees to render the services and perform the duties set forth herein.
2. Duties of the Distributor. The following provisions shall apply to the
Distributor's obligations as distributor under this Agreement.
(a) The Fund agrees to sell Shares through the Distributor from time
to time during the terms of this Agreement upon the terms and at the
current offering price described in the Fund's Prospectus. Such sales may,
however, be suspended whenever, in the judgment of the Fund, it is in its
best interests to do so.
(b) The Distributor will hold itself available to receive or will
arrange for the receipt of orders for the purchase of Shares and will (and
shall have the authority to) receive and accept or reject or arrange for
the receipt and acceptance or rejection of such orders on behalf of the
Fund in accordance with the provisions of the Fund's Prospectus.
(c) The Distributor shall not be obligated to sell any certain number
of Shares of any Portfolio.
(d) In performing its duties hereunder, the Distributor shall act in
conformity with the Fund's Agreement and Declaration of Trust, By-Laws,
Registration Statement and Prospectus and with the instructions and
directions of the Trustees of the Fund; and will comply with
2
<PAGE>
and conform to the requirements of the 1940 Act, the 1933 Act, the
Securities Exchange Act of 1934 and all other applicable federal and state
laws, regulations and rulings and the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
(e) The Distributor shall, for all purposes herein provided, be
deemed to be an independent contractor and unless otherwise expressly
provided or authorized shall have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund. The Distributor
shall be free to render to others services different from or similar to
those rendered to the Fund hereunder so long as the Distributor's services
hereunder are not impaired thereby. It further is understood and agreed that
by separate agreement with the Fund, the Distributor may serve the Fund in
other capacities; that partners or employees of the Distributor may serve as
officers or Trustees of the Fund to the extent permitted by law; and that
the Distributor or its partners or employees are not prohibited from
engaging in any other business activity or from rendering services to any
other entity, or from serving as officers, directors or trustees of any
other organizations, including investment companies.
3. Costs and Expenses of Performance. The Distributor will pay and will
not be entitled to reimbursement for the costs
3
<PAGE>
and expenses of providing the services contemplated by this Agreement,
including, but not limited to:
(a) costs of all sales presentations, mailing, advertising and any other
distribution efforts which may be undertaken by the Distributor, in its
discretion, with respect to the Shares of the Portfolio (such costs shall
not be deemed to include the costs of preparing and setting in type
prospectuses, proxy materials, reports and notices or the costs of printing
and distributing the same to existing shareholders and regulatory
authorities); and
(b) compensation of any personnel of the Distributor for activities in
connection with the distribution or sale of the Shares of the Portfolio.
Nothing in this Agreement shall be construed to obligate the Distributor to bear
costs which are reimbursable under any other agreement in effect from time to
time between the Fund and the Distributor, including the Shareholder Service
Agreement dated July l, 1988.
4. Representations. Neither Distributor nor any other person is authorized
by the Fund to give any information or to make any representation relative to
the Shares other than those contained in the Fund's Registration Statement or
Prospectus filed with the Securities and Exchange Commission, as either may be
amended from time to time, or in any supplemental information to said Prospectus
approved by the Fund. Neither Distributor nor its agents will use or distribute
or authorize the use or
4
<PAGE>
distribution of any statement, except in accordance with the terms of this
Agreement. Distributor agrees that in offering or selling Shares, it will submit
to the Fund's legal counsel or other representative, as may be designated by the
Fund's Board of Trustees, copies of all sales literature and other similar
materials before using the same and will not use such sales literature if
disapproved by the Fund. Neither Distributor nor its agents will offer or sell
any Shares of the Fund in any state or other jurisdiction in which the Shares
may not lawfully be offered for sale.
5. Duration and Termination. This Agreement shall become effective on the
date hereof and shall continue in effect until terminated. This Agreement shall
automatically terminate in the event of its assignment. Additionally, this
Agreement may be terminated at any time by the Distributor or by the Fund upon
thirty (30) days' written notice.
6. Shareholder Liability. This Agreement is executed by or on behalf of
the Fund and the obligations hereunder are not binding upon any of the Trustees,
officers or shareholders of the Fund individually, but are binding only upon the
Fund and its assets and property.
7. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule
5
<PAGE>
or otherwise, the remainder of this Agreement shall not be affected thereby.
This Agreement shall be construed in accordance with applicable federal law and
the laws of the State of Illinois (except as to paragraph 8 hereof which shall
be construed in accordance with the laws of the Commonwealth of Massachusetts)
and shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors, subject to paragraph 6 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the day and year first above written.
Attest: WAYNE HUMMER GROWTH FUND
/s/ Jean M. Watts By
______________________ _____________________
Its Secretary Its President
__________________ __________________
Witness: WAYNE HUMMER & CO.
______________________ By______________________
A General Partner
6
<PAGE>
EXHIBIT 8(a)
CUSTODIAN AGREEMENT
-------------------
This Agreement between Wayne Hummer Growth Fund, a business trust organized
under the laws of Massachusetts (the "Fund"), and State Street Bank and Trust
Company, a Massachusetts banking corporation (the "Custodian").
In consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1. Appointment of Custodian and Property to be Held by It.
The Fund hereby appoints the Custodian as custodian of the Fund's assets and
the Custodian hereby accepts such appointment all subject to and in accordance
with the provisions hereof. The Custodian hereby acknowledges that the Fund
intends to initially issue units of beneficial interest ("Shares") in a single
series designated as the Growth Portfolio and that the Fund may issue Shares in
additional or different series from time to time. The Custodian hereby agrees
that all such series (individually a "Portfolio" and collectively the
"Portfolios") shall be subject to this Agreement. The Fund agrees to deliver to
the Custodian all securities and cash owned by it from time to time, all
payments of income and payments of principal or capital distributions received
by it with respect to all securities owned by the Fund from time to time, and
the cash consideration received by the Fund for the issuance and sale of its
Shares from time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not delivered to the
Custodian.
<PAGE>
2. Duties of the Custodian with Respect to Property of the Fund Held by the
Custodian.
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund and for each Portfolio all non-cash property,
including all securities owned by the Fund other than securities which are
maintained in a clearing agency which acts as a securities depository or in
a book-entry system authorized by the United States Department of the
Treasury pursuant to Section 2.12 hereof (collectively referred to herein
as "Securities System").
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund that are held by the Custodian or in a Securities System
account of the Custodian only upon receipt of Proper Instructions (as
hereinafter defined), which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefore;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System in
accordance with the provisions of Section 2.12 hereof;
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<PAGE>
4) To the depository agent therefor in connection with tender or
other similar offers for securities owned by the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable, provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Fund or the Custodian or into the name or nominee name of any
agent or sub-custodian appointed pursuant to Section 2.11
hereof; or for exchange for a different number of bonds,
certificates or other instrument representing the same aggregate
face amount or number of units, provided that, in any such case,
the new securities are to be delivered to the Custodian;
7) To the broker selling the same for examination in accordance
with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement, provided
-3-
<PAGE>
that, in any such case, the new securities and cash, if any, are
to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities, provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund in
accordance with the Fund's then current prospectus, which
collateral may be in the form of cash or cash equivalents
designated in the instructions, except that in connection with
any loans for which non cash collateral is to be credited to the
Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned by the
Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of
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<PAGE>
assets by the Fund, but only against receipt of amounts borrowed
(except that when additional collateral is required to secure an
existing borrowing, further securities may be delivered for that
purpose);
12) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of Shares in connection with distributions in kind,
as may be described from time to time in the Fund's then current
prospectus, in satisfaction of requests by holders of Shares for
repurchase or redemption; and
13) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees of the Fund or of the Executive
Committee of such Board of Trustees specifying the securities to
be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purposes to be proper purposes, and
naming the person or persons to whom delivery of such securities
shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or its
nominee or in the name of the
-5-
<PAGE>
Custodian or its nominee or in the name or nominee name of any agency or
sub-custodian appointed pursuant to Section 2.11 hereof. Each Portfolio
shall have a nominee assigned exclusively to that Portfolio, unless the
Fund has authorized in writing the appointment of a nominee to be used in
common with all Portfolios (if more than one) or with other registered
investment companies having the same investment adviser as the Fund. All
securities accepted by the Custodian on behalf of the Fund under the terms
of this Agreement shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts for each Portfolio in the name of the Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of
this Agreement and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
applicable Portfolio, other than cash maintained by the Fund in a bank
account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the Fund's
Portfolios may be deposited by it to its credit as Custodian for the
exclusive benefit of the applicable Portfolio of the Fund in the Banking
Department of the Custodian or in such other banks or trust companies as it
may in its discretion deem necessary or desirable; provided, however, every
such bank or trust company shall be qualified to act
-6-
<PAGE>
as a custodian under the Investment Company Act of 1940 and each such bank
or trust company and the funds to be deposited with each such bank or trust
company shall be approved by the Board of Trustees of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and shall
be withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the Fund or the
distributor ("Distributor") of the Fund's Shares or the Fund's shareholder
service agent ("Shareholder Service Agent") and deposit into the Fund's
account such payments as are received for Shares issued or sold from time
to time by the Fund (including payments received directly from new or
existing shareholders of the Fund). The Custodian will provide timely
notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement between
the Fund and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, invest in such instruments for such Portfolio or Portfolios
as may be set forth in such instructions, on the same day as received, all
Federal Funds received after a time agreed upon between the Custodian and
the Fund.
2.7 Collection of Income and Other Payments. The Custodian shall collect on a
timely basis all income and other payments with respect to all securities
held hereunder to which
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<PAGE>
the responsibility of the Fund and the Custodian shall have no duty or
responsibility in connection therewith, other than to provide the Fund with
such information, data or other assistance as may be necessary to assist
the Fund in arranging for the timely delivery to the Custodian of the
income to which the Fund is properly entitled.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
1) Upon the purchase of securities for the account of a Portfolio of
the Fund but only (a) against the delivery of such securities to
the Custodian (or any agent or sub-custodian appointed pursuant
to Section 2.11 hereof) registered in the name of the Fund or the
Custodian or in the name of a nominee referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof or (c) in the
case of repurchase agreements entered into between the Fund and
the Custodian, or another bank or a broker or dealer, (i) against
delivery of the securities either in certificated form or through
an entry crediting the Custodian's account at the Federal Reserve
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<PAGE>
Bank with such securities or (ii) against delivery of the receipt
evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund;
2) In connection with any conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2(8)
hereof;
3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the Fund
including, but not limited to, the following payments for the
account of the Fund: interest; taxes; investment advisory and
management, accounting, distribution and shareholder service,
transfer agent and legal fees; registration and qualification
costs, and other expenses of buying and selling Shares; and
operating expenses of the Fund whether or not such expenses are
to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends or other distributions to the
Fund's shareholders declared pursuant to the governing documents
of the Fund; and
6) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a
-10-
<PAGE>
certified copy of a resolution of the Board of Trustees of the
Fund or of the Executive Committee of such Board of Trustees
specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to
be a proper purpose, and naming the person or persons to whom
such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In any
and every case where payment for the purchase of securities on behalf of
the Fund is made by the Custodian in advance of the receipt of the
securities purchased and in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as if the
securities had been received by the Custodian, except that in the case of
repurchase agreements entered into by the Fund with a bank which is a
member of the Federal Reserve System, the Custodian may transfer funds to
the account of such bank prior to the receipt of written evidence that the
securities subject to such repurchase agreement have been transferred by
book-entry into a segregated non-proprietary account of the Custodian
maintained with the Federal Reserve Bank of Boston or of the safekeeping
receipt, provided that such securities have in fact been so transferred by
book-entry.
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<PAGE>
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations
of the Fund's Agreement and Declaration of Trust and By-laws and any
applicable resolutions of the Board of Trustees of the Fund, the Custodian
shall, upon receipt of instructions from the Fund, its Transfer Agent or
its Shareholder Service Agent, make funds available to the Fund for payment
to holders of Shares who have made a request for redemption of Shares by
charging the custody account and either depositing the same in the account
maintained for the purpose of paying for the repurchase or redemption or
delivering the same to the Fund's Shareholder Service Agent by wire
transfer or as otherwise specified in such instructions.
2.11 Appointment of Agents and Sub-Custodians. The Custodian may at any time or
times in its discretion appoint as its agent to carry out such provisions
of this Article 2 as the Custodian may from time to time direct (and may at
any time remove) any other bank or trust company which is itself qualified
to act as a custodian under the Investment Company Act of 1940, as amended.
Any such appointment shall not relieve Custodian of any of its
responsibilities or liabilities hereunder.
The Custodian may also from time to time employ one or more sub-
custodians, but only in accordance with the terms and conditions set forth
in resolutions adopted by the Board
-12-
<PAGE>
of Trustees of the Fund. The Custodian shall have no more or less
responsibility or liability to the Fund on account of any actions or
omissions of any sub-custodian so employed than such sub-custodian has to
Custodian it being understood that the responsibility and liability of any
said sub-custodian shall conform to said resolutions of the Board of
Trustees of the Fund.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the United States Department of
the Treasury and certain federal agencies (collectively referred to herein
as "Securities System") in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for the exclusive benefit of
customers.
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<PAGE>
2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall separately identify
by book-entry those securities belonging to each Portfolio of the Fund.
3) The Custodian shall pay for securities purchased for the account of a
Portfolio of the Fund upon (i) the receipt of advice from the
Securities System that such securities have been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of a
Portfolio of the Fund. The Custodian shall transfer securities sold for
the account of a Portfolio of the Fund upon (i) receipt of advice from
the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of such Portfolio of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of the
Fund shall identify the Fund and the Portfolio, and shall be maintained
for the Fund by the Custodian and be provided to the Fund at its
request. The Custodian shall furnish to the Fund confirmations of each
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<PAGE>
transfer to or from the account of a Portfolio of the Fund in the form
of a written advice or notice and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's transactions in the
Securities System for the account of each Portfolio of the Fund on the
next business day.
4) The Custodian shall provide the Fund with any reports obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited
in the Securities System and shall make a reasonable effort to inform
the Fund of any material deficiencies of which the Custodian may be
aware.
5) The Custodian shall have received the initial or annual certificate, as
the case may be, required by Article 10 hereof.
6) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or employees or from failure of the Custodian or any such agent
or employee to enforce effectively such rights as it
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<PAGE>
may have against the Securities System. At the election of the Fund, it
shall be entitled to be subrogated to the rights which the Custodian
may have with respect to any claim against the Securities System or any
other person as a consequence of any such loss or damage if and to the
extent that the Fund has otherwise not been made whole for any such
loss or damage.
2.13 Ownership Certificates for Tax Purposes. In connection with the receipt of
income or other payments and in connection with transfers of securities of
the Fund held by it, the Custodian shall execute ownership certificates and
affidavits as well as other certificates and affidavits for all Federal and
state tax purposes.
2.14 Proxies. With respect to securities held hereunder, which are registered
otherwise than in the name of the Fund or its nominee, the Custodian shall
cause to be promptly executed all proxies, without indication of the manner
in which such proxies are to be voted, and shall promptly deliver to the
Fund such proxies as well as all proxy soliciting materials and all notices
relating to such securities.
2.15 Communications Relating to Fund Portfolio Securities. The Custodian
promptly shall transmit to the Fund all written information received by the
Custodian from issuers of the securities being held for the Fund including,
without limitation, pendency of calls and maturities of securities and
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<PAGE>
expirations of rights in connection therewith. With respect to tender or
exchange offers, the Custodian promptly shall transmit to the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
2.16 Proper Instructions. "Proper Instructions" as used throughout this Article
2 means a writing signed or initialed by one or more person or persons as
the Board of Trustees of the Fund or the Executive Committee of such Board
of Trustees shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary of the Fund as to the authorization by the Board of Trustees of
the Fund accompanied by a detailed description of procedures
-17-
<PAGE>
approved by such Board of Trustees, Proper Instructions may also include
communications effected directly between electro-mechanical or electronic
devices provided that both the Board of Trustees of the Fund and the
Custodian are satisfied that such procedures afford adequate safeguards for
the Fund's assets.
2.17 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Agreement, provided that all such payments shall be accounted for to
the Fund and that all such payments shall not exceed the amount agreed
to between the parties and set forth in the then current fee schedule
attached to this Agreement in any one month unless prior approval is
obtained from the Fund;
2) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
3) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund
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<PAGE>
except as otherwise directed by the Board of Trustees of the Fund.
2.18 Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper reasonably believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may receive and accept
a certified copy of resolutions adopted by the Board of Trustees of the
Fund or the Executive Committee of such Board of Trustees as conclusive
evidence (a) of the authority of any person to act in accordance with
such resolutions or (b) of any determination or of any action by the Board
of Trustees pursuant to the Agreement and Declaration of Trust and By-laws
of the Fund as described in such resolutions, and such resolutions may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and Circulation of
Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund or the
Executive Committee of such Board of Trustees to keep the books of account of
the Fund. The Custodian will keep those accounts and records set forth in
Schedule A which shall be generated and transmitted to the Fund as set forth in
Schedule A. Schedule A, attached hereto, may at any time and
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<PAGE>
from time to time be modified or amended by agreement of the parties in the form
of an amended or supplemental schedule initialed by their authorized
representatives.
In addition, the Custodian will advise the Fund, or any entity or entities
appointed by the Fund, telephonically at the beginning of each business day as
to the cash available in each Portfolio and confirm transaction data daily and
telephonically at the close of each business day. Cash reports and transaction
data reports shall be confirmed by the Custodian, in writing, to the Fund within
three (3) business days thereafter. Also, the Custodian will provide the Fund,
or any entity or entities appointed by the Fund, with such information as may be
required by them to compute the net asset value per Share of the outstanding
Shares of each Portfolio or, if directed in writing to do so by the Fund, shall
keep such books of account and compute such net asset value per Share. If so
directed, the Custodian shall also calculate periodically as requested by the
Fund the net ordinary income and net realized gains of each Portfolio as the
same are described in the Fund's then current prospectus and shall advise the
Fund and the Transfer Agent daily of the total amounts of such net income and
gains and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of the same among its
various components. The calculations of the net asset value per Share shall be
made at the time or times described from time to time in the Fund's currently
effective prospectus.
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<PAGE>
4. Records.
--------
The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable Federal and state tax laws and any other laws or administrative
rules or procedures which may be applicable to the Fund. All such records shall
be the property of the Fund and shall at all times during the regular business
hours of the Custodian be open for inspection by duly authorized officers,
employees or agents of the Fund and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund
with a tabulation of securities owned in each Portfolio of the Fund and held by
the Custodian or for the benefit of the Fund under the provisions of Section
2.12, and shall, when requested to do so by the Fund and for such compensation
as shall be agreed upon between the Fund and the Custodian, include, where
available, certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountants.
------------------------------------------
The Custodian shall take all reasonable action as the Fund may from time to
time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1 or N-1A and Form N-1R or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
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<PAGE>
6. Reports to Fund by Independent Public Accountants.
--------------------------------------------------
The Custodian shall provide the Fund, at such times as the Fund may
reasonably request, with reports by independent public accountants on the
accounting system, internal accounting controls and procedures for safeguarding
securities, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Agreement.
Such reports shall be of sufficient scope and in sufficient detail, as
reasonably may be required by the Fund, to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, shall so state.
7. Compensation of Custodian.
--------------------------
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian which initial compensation shall be as set forth in
the current fee schedule agreed upon between the parties and attached to this
Agreement as Schedule B; provided, however, such compensation for fees and
expenses reasonably may be changed by the Custodian upon ninety (90) days prior
written notice to the Fund.
8. Responsibility of Custodian.
----------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon any notice,
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request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties. The Custodian shall
be held to the exercise of reasonable care in carrying out the provisions of
this Agreement, but shall be kept indemnified by the Fund, exclusively out of
Fund assets, and shall be without liability to the Fund for any action
reasonably taken or omitted by it in good faith without negligence. The
Custodian shall be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Fund or counsel appointed by the Fund) on all matters,
and shall be without liability for any actions reasonably taken or omitted
pursuant to such advice.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form for which the Custodian would not otherwise be
responsible, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
9. Limitation of Liability.
------------------------
This Agreement is executed by or on behalf of the Fund and the Custodian is
hereby expressly put on notice of the limitation of shareholder liability as set
forth in the Agreement and Declaration of Trust of the Fund dated September 29,
1983 (including
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<PAGE>
any amendments thereto) a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts, and agrees that the obligations assumed by the
Fund pursuant to this Agreement shall be limited in all cases to the Fund and
its assets, and the Custodian shall not seek satisfaction of any such
obligations from the shareholders or any shareholder of the Fund. In addition,
the Custodian shall not seek satisfaction of any such obligations from the
Trustees or Officers of the Fund or any individual Trustee or Officer.
10. Effective Period, Termination and Amendment.
--------------------------------------------
This Agreement shall become effective as of the date the Custodian first
receives Fund assets, shall continue in full force and effect until terminated
as hereinafter provided, may be amended only by mutual written agreement of the
parties hereto and may be terminated by either party by notice to the other
party pursuant to Section 15 hereof, such termination to take effect not sooner
than ninety (90) days after the date of such delivery or mailing. The Custodian
shall not act under Section 2.12 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary of the Fund that the
Board of Trustees of the Fund has approved the initial use of a particular
Securities System and the receipt of an annual certificate of such Secretary or
an Assistant Secretary that such Board of Trustees has reviewed the use by the
Fund of such Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended. The Fund shall
-24-
<PAGE>
not amend or terminate this Agreement in contravention of any applicable Federal
or state regulations, or any provision of the Agreement and Declaration of Trust
of the Fund. The Fund may at any time by action of its Board of Trustees: (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Agreement
in the event of the appointment of a conservator or receiver or other liquidator
for the Custodian at the direction of any appropriate regulatory agency or court
of competent jurisdiction.
Upon termination of this Agreement, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements as
provided for by this Agreement.
11. Successor Custodian.
-------------------
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and all funds and other properties of the
Fund deposited with or held by the Custodian hereunder (appropriate action shall
be taken with respect to securities held in a Securities System to constitute
the successor custodian a holder thereof).
-25-
<PAGE>
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of resolutions of the Board of
Trustees of the Fund, deliver at the office of the Custodian such securities,
funds and other properties in accordance with such resolutions.
In the event that no written order designating a successor custodian or
certified copy of resolutions of the Board of Trustees of the Fund shall have
been delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the Investment Company
Act of 1940, doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities, funds
and other properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it under this
Agreement. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Agreement.
In the event that securities, funds and other properties held by Custodian
hereunder remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the certified copy of
resolutions referred to above or failure of the Board of Trustees of the Fund to
appoint a successor custodian, the Custodian shall be entitled to reasonable
compensation for its services during such period as the
-26-
<PAGE>
Custodian retains possession of such securities, funds and other properties and
the provisions of this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect during such period.
12. Interpretive and Additional Provisions.
---------------------------------------
In connection with the operation of this Agreement, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable Federal or state regulations or any provision of
the Agreement and Declaration of Trust or By-laws of the Fund. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Agreement.
13. Massachusetts Law to Apply.
---------------------------
This Agreement shall be construed and the provisions thereof interpreted
under applicable Federal law and/or in accordance with the laws of the
Commonwealth of Massachusetts.
14. Prior Contracts.
----------------
This Agreement is the complete agreement of the parties hereto relative to
the custody of the Fund's assets and supersedes and terminates, as of the date
hereof, all prior Agreements between the Fund and the Custodian, whether oral or
in writing, relating thereto.
-27-
<PAGE>
15. Notices.
Notices and other writings delivered or mailed registered or certified mail
return receipt requested, postage prepaid, to the Fund at 175 West Jackson
Boulevard, Chicago, Illinois 60604 or to the Custodian at 225 Franklin Street,
Boston, Massachusetts 02110, or to such other address as either party shall
specify by written notice to the other, shall be deemed to have been properly
delivered or given hereunder.
16. Binding Effect/Assignment.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. The rights, duties
and obligations of the Custodian hereunder may not be assigned or delegated
except as expressly set forth herein.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 15 day of December, 1993.
SEAL
ATTEST WAYNE HUMMER GROWTH FUND
/s/ Sharon L. Rosenbaum By /s/ Allen Bil
- ------------------------- --------------------------
Its _____ Secretary Its _____ President
SEAL
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ W. Jannings By /s/ L.M. Lohn
- ------------------------- --------------------------
Its Assistant Secretary Its Vice President
-28-
<PAGE>
Schedule A
A. Computation of Net Asset Value and Offering Price
B. Appraisal
C. General Ledger Activity Journal
D. Daily Portfolio Transaction Journal
E. Daily Accrual Report
F. Statement of Condition and Trial Balance
G. Past Due Dividend and Interest Receivable Report
H. Open Trades Report
I. Dividend and Interest Receivable Report
J. Monthly Purchase and Sales Run
K. Monthly Gain and Loss Report
L. Monthly Cap Stock Analysis Report
<PAGE>
(logo State Street Bank)
SCHEDULE B
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
WAYNE HUMMER GROWTH FUND
- -------------------------------------------------------------------------------
I. Administration
Custody, Portfolio and Fund Accounting Service - Maintain custody of fund
assets. Settle portfolio purchases and sales. Report buy and sell fails.
Determine and collect portfolio income. Make cash disbursements and report
cash transactions. Maintain investment ledgers, provide selected portfolio
transactions, position and income reports. Maintain general ledger and
capital stock accounts. Prepare daily trial balance. Calculate net asset
value daily. Provide selected general ledger reports. Securities yield or
market value quotations will be provided to State Street by the fund.
Each portfolio will be individually subject to the administrative fee shown
below. This fee is an annual charge, billed and payable monthly, based on the
average net assets of each series.
ANNUAL FEES
Custody, Portfolio
Fund Net Assets and Fund Accounting
--------------- -------------------
First $20 million 1/15 of 1%
Next $80 million 1/30 of 1%
Excess 1/100 of 1%
Minimum Monthly
Charges $ 2,000
Minimum Fee Phase In
--------------------
First two months $ 500
Next two months $1,000
Next two months $1,500
Thereafter $2,000
<PAGE>
(logo State Street Bank)
<TABLE>
<CAPTION>
II. Portfolio Trades - For each line item processed
-----------------------------------------------
<S> <C>
State Street Bank Repos $ 7.00
All other trades $12.00
III. Holdings Charge
---------------
For each issue maintained -- monthly charge $ 5.00
IV. Lending of Securities
---------------------
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned
securities $15.00
Deliver securities collateral versus receipt of
loaned securities $25.00
Loaned administration -- mark-to-market per day,
per loan $ 3.00
V. Special Services
----------------
Fees for activities of a non-recurring nature such as fund consolidations
or reorganizations, extraordinary security shipments and the preparation
of special reports will be subject to negotiation.
</TABLE>
<PAGE>
(logo State Street Bank)
VI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Duplicating
DTC Eligibility Books
Transfer Fees
Pricing Services
Sub-custodian Charges
Price Waterhouse Audit Letter
VII. Payment
-------
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
WAYNE HUMMER GROWTH FUND STATE STREET BANK AND TRUST CO.
By Allen M. Bil By Michael J. Laughlin
--------------------- ------------------------
Title President Title Vice President
--------------------- ------------------------
Date December 15, 1983 Date November 9, 1983
--------------------- ------------------------
<PAGE>
(logo State Street Bank)
State Street Bank and Trust Company
Post Office Box 351
Boston, Massachusetts 02101
Mark J. Bowler
Vice President
Mutual Fund Services Division
(617) 786-5899
June 16, 1989
Ms. Jean Watts
Wane Hummer
175 West Jackson Blvd.
Chicago, IL 60604
Dear Jean:
Over the last three years, State Street Bank has maintained its charge
for wire transfers at $4.70 and $4.55 for incoming and outgoing wires
respectively. Effective January 1, 1989, the Federal Reserve System
increased its charges for all wire transfer related activities. Due to
these circumstances we find it necessary to increase our fees for wire
transfers at this time. The new charges are $5.25 for incoming wires,
$5.00 for outgoing wires and become effective July 1, 1989.
During this period, State Street has invested in a new wire transfer
system which has positioned us to provide you with state of the art
capability and service. The new system features significantly greater
capacity, allows for faster processing of wire transfers, and increased
security. We can now offer you on-line inquiry, and remote user
capability. If you would like to know more about these additional
services, please contact me at (617) 786-5899.
Sincerely,
/s/ Mark Bowler
Mark Bowler
Vice President
cc: M. Lincoln
<PAGE>
EXHIBIT 8(b)
(logo State Street Bank)
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
WAYNE HUMMER
GROWTH FUND
- --------------------------------------------------------------------------------
I. Administration
--------------
Custody, Portfolio and Fund Accounting Service - Maintain custody of fund
assets. Settle portfolio purchases and sales. Report buy and sell fails.
Determine and collect portfolio income. Make cash disbursements and report
cash transactions. Maintain investment ledgers, provide selected portfolio
transactions, position and income reports. Maintain general ledger and
capital stock accounts. Prepare daily trial balance. Calculate net asset
value daily. Provide selected general ledger reports. Securities yield or
market value quotations will be provided to State Street by the fund.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
-------------------------
<TABLE>
<CAPTION>
Custody, Portfolio
Fund Net Assets & Fund Acct.
--------------- ------------------
<S> <C>
First $20 Million 1/ 15 of 1%
Next $80 Million 1/ 30 of 1%
Excess 1/100 of 1%
Minimum Monthly
Charges $2,000
</TABLE>
<TABLE>
<CAPTION>
II. Portfolio Trades - For each line item processed
-----------------------------------------------
<S> <C>
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $12.00
New York Physical Settlements $25.00
</TABLE>
<PAGE>
(LOGO STATE STREET BANK)
III. Options
Option charge for each option written or closing
contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
IV. Lending of Securities
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned
securities $15.00
Deliver securities collateral versus receipt of loaned
securities $25.00
Loan administration -- mark-to-market per day, per loan $ 3.00
V. Interest Rate Futures
Transactions -- no security movement $ 8.00
VI. Coupon Bonds
Monitoring for calls and processing coupons -- for each
coupon issue held -- monthly charge $ 5.00
VII. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
VIII. Principal Reduction Payments
Per paydown $10.00
<PAGE>
(LOGO OF STATE STREET BANK)
IX. Dividend Charges (For items held at the Request
of Traders over record date in street form) $50.00
X. Special Services
Fees for activities of a non-recurring nature such as fund consolidations
or reorganizations, extraordinary security shipments and the preparation
of special reports will be subject to negotiation. Fees for tax
accounting/recordkeeping for options, financial futures, and other special
items will be negotiated separately.
XI. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
WAYNE HUMMER GROWTH FUND STATE STREET BANK AND TRUST CO.
By: /s/ Marion L. Rosenbaum By: /s/ Joseph L. Healey
-------------------------- --------------------------
Title: Vice President Title: Vice President
----------------------- -----------------------
Date: October 15, 1987 Date: October 13, 1987
------------------------ ------------------------
<PAGE>
(LOGO OF STATE STREET BANK)
STATE STREET BANK AND TRUST COMPANY
Fee Information for Automated Pricing
WAYNE HUMMER GROWTH FUND
This service provides securities pricing on request. Services and fees are based
on the schedule below. Reports can be generated at State Street or on a remote
basis via PC. Reporting has both up load and down load capabilities. Customized
reports may require programming fees.
- --------------------------------------------------------------------------------
Monthly charges for the State Street Bank Automated Pricing System are
determined by:
1. Mix of security positions.
2. The number of positions that are priced during the month.
Monthly Base Fee $375.00
Monthly Quote Charge:
. Municipal Bonds via Muller Data $ 21.00
. Municipal Bonds via Kenny Information
Systems $ 16.00
. Government, Corporate and Convertible
Bonds via Merrill Lynch $ 11.00
. Corporate and Government Bonds via
Muller Data $ 11.00
. Options, Futures and Private Placements $ 6.00
. Foreign Equities and Bonds via Extel Ltd. $ 6.00
. Listed Equities, OTC Equities, and Bonds $ 6.00
<PAGE>
(LOGO OF STATE STREET BANK)
. Corporate, Municipal, Convertible and
Government Bonds, Adjustable Rate Preferred
Stocks via IDSI $ 6.00
For billing purposes, the monthly quote charge will be based on the average
number of positions in the portfolio.
WAYNE HUMMER GROWTH FUND STATE STREET BANK AND TRUST CO.
By: /s/ Marion L. Rosenbaum By: /s/ Joseph L. Healey
-------------------------- --------------------------
Title: Vice President Title: Vice President
----------------------- -----------------------
Date: October 15, 1987 Date: October 13, 1987
------------------------ ------------------------
<PAGE>
EXHIBIT 8(c)
AMENDMENT TO THE
CUSTODIAN AGREEMENT
-------------------
AGREEMENT made this 1st day of June, 1988 by and between STATE STREET BANK
AND TRUST COMPANY ("Custodian") and WAYNE HUMMER GROWTH FUND (the "Fund").
WITNESSETH THAT:
----------------
WHEREAS, the Custodian and the Fund are parties to a Custodian Agreement
dated December 15, 1983 (as amended to date, the "Agreement") which governs the
terms and conditions under which the Custodian maintains custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Agreement and mutually agree to the following:
Insert as the final paragraph under Responsibility of Custodian:
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of this Agreement, except such as may
arise from its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the account of
the Fund shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize available
cash and to dispose of Fund assets to the extent necessary to obtain
reimbursement.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST WAYNE HUMMER GROWTH FUND
- ---------------------------------- -----------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
- ---------------------------------- -----------------------------------
Assistant Secretary Vice President
<PAGE>
AMENDMENT TO THE
CUSTODIAN AGREEMENT
-------------------
AGREEMENT made this 1st day of June, 1988 by and between STATE STREET BANK
AND TRUST COMPANY ("Custodian") and WAYNE HUMMER GROWTH FUND (the "Fund").
WITNESSETH THAT:
----------------
WHEREAS, the Custodian and the Fund are parties to a Custodian Agreement
dated December 15, 1983 (as amended to date, the "Agreement") which governs the
terms and conditions under which the Custodian maintains custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Agreement and mutually agree to the following:
Replace subsection 7) of Section 2.2 Delivery of Securities with the
following new subsection 7):
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any
such case, the Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST WAYNE HUMMER GROWTH FUND
- ---------------------------------- -----------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
- ---------------------------------- -----------------------------------
Assistant Secretary Vice President
<PAGE>
EXHIBIT 8(d)
AMENDMENT TO CUSTODIAN AGREEMENT
--------------------------------
AGREEMENT made as of this 24th day of November, 1992, by and between STATE
STREET BANK AND TRUST COMPANY ("Custodian") and WAYNE HUMMER GROWTH FUND (the
"Fund").
WITNESSETH THAT:
----------------
WHEREAS, the Custodian and the Fund are parties to a Custodian Agreement
dated December 15, 1983 (as amended to date, the "Agreement") which governs the
terms and conditions under which the Custodian maintains custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Agreement and mutually agree to the following:
1. Section 1. Appointment of Custodian and Property to be Held by It shall
be replaced with the following new Section 1:
"Section 1. Appointment of Custodian and Property to be Held by It
The Fund hereby appoints the Custodian as custodian of the
Fund's assets and the Custodian hereby accepts such appointment all
subject to and in accordance with the provisions hereof. The
Custodian hereby acknowledges that the Fund intends to issue units
of beneficial interest ("Shares") in two series designated as the
Growth Portfolio and the Income Portfolio and that the Fund may
issue Shares in additional or different series from time to time.
The Custodian hereby agrees that all such series (individually a
"Portfolio" and collectively the "Portfolios") shall be subject to
this Agreement. The Fund agrees to deliver to the Custodian all
securities and cash owned by it from time to time, all payments of
income and payments of principal or capital distributions received
by it with respect to all securities owned by the Fund from time to
time, and the cash consideration received by the Fund for the
issuance and sale of its Shares from time to time. The Custodian
shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian."
2. Section 15. Notices shall be amended as follows: the address of the Fund
"175 West Jackson Boulevard, Chicago, Illinois 60604" in the third line
of the first sentence shall be replaced with the current address of the
Fund "300 South Wacker Drive, Chicago, Illinois 60606."
<PAGE>
3. The compensation of the Custodian shall be adjusted as detailed on the
Schedule attached to this Amendment to the Agreement.
4. Effective December 1, 1992, the Fund shall be referred to as the Wayne
Hummer Investment Trust and the Agreement shall be binding upon and
shall insure to the benefit of the parties to this Amendment and their
respective successors and assigns.
5. Except as specifically amended herein, the Agreement (as previously
amended) shall remain in full force and effect. This Amendment shall
not limit the rights of the parties to the Agreement and the parties
hereto acknowledge the binding effect of the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
WAYNE HUMMER GROWTH FUND
ATTEST
- ---------------------------------- -----------------------------------
STATE STREET BANK AND TRUST
COMPANY
ATTEST
- ---------------------------------- -----------------------------------
Assistant Secretary Vice President
2
<PAGE>
[LOGO OF STATE STREET BANK AND TRUST COMPANY]
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
WAYNE HUMMER
GROWTH FUND TRUST
MONEY FUND TRUST
- --------------------------------------------------------------------------------
I. Administration
Custody, Portfolio and Fund Accounting Service - Maintain custody of fund
assets. Settle portfolio purchases and sales. Report buy and sell fails.
Determine and collect portfolio income. Make cash disbursements and report
cash transactions. Maintain investment ledgers, provide selected portfolio
transactions, position and income reports. Maintain general ledger and
capital stock accounts. Prepare daily trial balance. Calculate net asset
value daily. Provide selected general ledger reports. Securities yield or
market value quotations will be provided to State Street by the fund.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
-------------------------
Custody, Portfolio
Fund Net Assets & Fund Acct.
--------------- ------------------
First $20 Million 1/ 15 of 1%
Next $80 Million 1/ 30 of 1%
Excess 1/100 of 1%
Minimum Monthly Charges $3,000
New Fund Phase In
Months 1 and 2 $ 500
Months 3 and 4 $1,000
Months 5 and 6 $1,500
Months 7-12 $2,000
<PAGE>
[LOGO OF STATE STREET BANK AND TRUST COMPANY]
II. Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 12.00
New York Physical Settlements $ 25.00
III. Options
Option charge for each option written or
closing contract, per issue, per broker $ 25.00
Option expiration charge, per issue, per broker $ 15.00
Option exercised charge, per issue, per broker $ 15.00
IV. Lending of Securities
Deliver loaned securities versus cash
collateral $ 20.00
Deliver loaned securities versus securities
collateral $ 30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $ 30.00
Deliver cash collateral versus receipt of
loaned securities $ 15.00
Deliver securities collateral versus receipt
of loaned securities $ 25.00
Loan administration -- mark-to-market per
day, per loan $ 3.00
V. Interest Rate Futures
Transactions -- no security movement $ 8.00
VI. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VII. Holdings Charge
For each issue maintained - monthly charge $ 5.00
<PAGE>
[LOGO OF STATE STREET BANK AND TRUST COMPANY]
VIII. Principal Reduction Payments
Per paydown $ 10.00
IX. Dividend Charges (For items held at the Request
of Traders over record date in street form) $ 50.00
X. Special Services
Fees for activities of a non-recurring nature such as fund consolidations
or reorganizations, extraordinary security shipments and the preparation
of special reports will be subject to negotiation. Fees for tax
accounting/recordkeeping for options, financial futures, and other special
items will be negotiated separately.
XI. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
XII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
WAYNE HUMMER STATE STREET BANK AND TRUST COMPANY
- --------------------------------- -----------------------------------
By /s/ Jean M. Watts By /s/ Michael ?. Williams
------------------------ -------------------------
Title Treasurer Title Vice President
------------------------ -------------------------
Date 11/12/92 Date 11/4/92
------------------------ -------------------------
<PAGE>
EXHIBIT 9(a)(1)
TRANSFER AND DIVIDEND PAYING AGENCY AGREEMENT
---------------------------------------------
This AGREEMENT made as of this 15th day of December, 1983 by and between
the WAYNE HUMMER GROWTH FUND, a Massachusetts business trust having its
principal place of business at 175 West Jackson Boulevard, Chicago, Illinois
60604 and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking
corporation having its principal place of business at 225 Franklin Street,
Boston, Massachusetts 02110.
WITNESSETH:
----------
In consideration of the mutual covenants and conditions hereinafter
provided, the parties hereto agree as follows:
1. Definitions. Unless the context requires otherwise, the following
definitions shall apply:
(a) "Fund" means the Wayne Hummer Growth Fund, a Massachusetts business
trust organized under an Agreement and Declaration of Trust, dated
September 29, 1983, a copy of which together with any amendments thereto is
on file with the Secretary of State of Massachusetts.
(b) "State Street" means State Street Bank and Trust Company.
(c) "Shares" mean units of beneficial interest in the Fund.
(d) "Portfolios" means collectively the series of Shares of the Fund
designated from time to time by the Board of Trustees of the Fund (as of
the date of this Agreement, a
<PAGE>
single series of the Fund's Shares has been designated, the "Growth
Portfolio").
(e) "to the Fund" or "from the Fund" means to or from a person or entity
designated by the Fund in writing.
(f) "Wayne Hummer & Co." means the Illinois limited partnership that is
the principal shareholder service agent of the Fund and the primary
distributor of its Shares.
(g) "Shareholder" means an individual who or entity which owns of record
Shares in any Portfolio.
(h) "Custodian" means State Street in its capacity as Custodian under
the Custodian Agreement with the Fund.
(i) "Board of Trustees" means the Board of Trustees of the Fund.
2. Appointment. State Street is hereby appointed by the Fund, and State
Street hereby accepts such appointment, as agent for the Fund in connection with
the issue, redemption and transfer of Shares and to process investment income
dividends and capital gains and other distributions with respect to such Shares,
to perform certain duties in connection with any special Shareholder plans, to
mail proxy and other materials to Shareholders upon the terms and conditions set
forth herein and to perform such other and further duties as are agreed upon
between the parties hereto from time to time.
3. Documents.
(a) In connection with the appointment of State Street as agent
hereunder, the Fund shall file with State Street the following documents:
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<PAGE>
(i) Certified copies of the Agreement and Declaration of Trust of the
Fund and all amendments thereto;
(ii) A certified copy of the By-laws of the Fund as amended to date;
(iii) A copy of the resolutions of the Board of Trustees authorizing
this Agreement;
(iv) Copies of all application forms and other documents relating to
Shareholder accounts; and
(v) As to the Growth Portfolio, an opinion of counsel for the Fund
with respect to the validity of the Shares, the number of Shares
authorized for such Portfolio, the status of redeemed Shares and
the number of Shares with respect to which a Registration
Statement has been filed with the Securities and Exchange
Commission and is in effect.
(b) The Fund will also furnish to State Street from time to time the
following documents:
(i) Each resolution of the Board of Trustees authorizing the issue of
the Shares and designating the Portfolios under which said Shares
will be issued;
(ii) Each Registration Statement filed with the Securities and Exchange
Commission, amendments thereto and orders relating thereto in
effect with respect to the sale of Shares;
(iii) A certified copy of each amendment to the Agreement and
Declaration of Trust and the By-laws of the Fund;
(iv) Certified copies of each resolution of the Board of Trustees or
the Executive Committee of such Board of Trustees authorizing
officers to give instructions to State Street; and
(v) Such other certificates, documents or opinions which State Street
may, in its discretion, reasonably deem necessary or appropriate
in the proper performance of its duties hereunder.
4. Authorized Shares. The Fund certifies to State Street that, as of the
close of business on the date of this Agreement,
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<PAGE>
it is authorized to issue an unlimited number of Shares in its Growth Portfolio.
5. Registration of Shares. State Street shall record the issuance of the
Shares. Except as specifically provided for herein or otherwise agreed in
writing between State Street and the Fund, State Street shall have no obligation
when recording the issuance of Shares to take cognizance of any securities laws
relating to the issue and sale of such Shares. Based upon information provided
by the Fund regarding the Shares registered with the Securities and Exchange
Commission and registered or qualified for sale in the various states, State
Street will provide necessary information to the Fund in the form of daily and
monthly reports to enable the Fund to comply with the various state securities
laws restricting or limiting the amount of Shares registered or qualified in
such states and will provide the Fund with a special report on a daily basis
whenever the number of Shares sold in any such state exceeds a set percentage of
the total number of Shares so registered or qualified in such state. State
Street shall have no obligation to any Shareholder except as specifically
provided under Sections 8-205, 8-208 and 8-406 of the Massachusetts Uniform
Commercial Code.
6. Certificates. No Share certificates will be issued by the Fund unless
and until otherwise determined by the Board of Trustees. If such certificates
are authorized in the future, an appropriate amendment to this Agreement shall
be made to reflect that fact.
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<PAGE>
7. Receipt of Funds and Purchase of Shares. Upon receipt of Federal funds
transmitted by Wayne Hummer & Co. or otherwise identified as being for the
account of the Fund to the office designated by State Street or of checks sent
directly to State Street by a purchaser of Shares, State Street shall thereupon
credit such funds to the applicable Portfolio and shall deposit the amount due
the Portfolio to the Custodial Account of the Fund. Upon receipt of funds
specified above or through the Federal Reserve Wire System, or upon conversion
into Federal funds of funds transmitted by other bank wire transfer systems,
State Street shall notify the Fund and Wayne Hummer & Co. of receipt of such
deposits, such notification to be given on a daily basis. State Street, within
the time period set forth in the Fund's then current prospectus, shall credit
the Shareholder's account with the number of Shares purchased in a particular
Portfolio according to the price of such Portfolio's Shares in effect for such
purchases computed as set forth in the Fund's then current prospectus. In this
regard, State Street shall:
(a) Compute the number of Shares to which the purchaser is entitled
and the dollar value of the transaction;
(b) In the case of a new Shareholder, establish an account for such
Shareholder, including the information specified in Section 13 hereof; and
(c) Mail to the Shareholder one copy of a confirmation of said
purchase on a form supplied by the Fund, including all information called
for thereon.
-5-
<PAGE>
8. Transfer of Shares. Upon receipt by State Street of instructions for
the transfer of Shares in proper form with such indorsements, instruments of
assignment or evidence of succession as may be required by State Street and
accompanied by payment of such transfer taxes, if any, as may be applicable, and
satisfaction of any other conditions for the registration of transfers contained
in the Fund's Agreement and Declaration of Trust or ByLaws, State Street will
verify the balance of Shares of the Fund in the account, record the transfer of
ownership of Shares in its Shareholder records for the Fund, establish an
account for the transferee if a new shareholder (subject to receipt of a proper
application by such person), and prepare and mail to the Shareholder one copy of
a confirmation of the transfer for each account affected, on a form supplied by
the Fund, including all information called for thereon. State Street shall be
responsible for determining that instructions for transfer and supporting
documents, if any, are in proper legal form for the transfer of Shares.
9. Dividends and Capital Gains Distributions. The Fund promptly will inform
State Street of the declaration of any dividend or other distribution with
respect to the Shares, including the Portfolio designation, the amount of
distribution, dividend number, if any, record date, ex-dividend date, payable
date, and price at which dividends or other distributions are to be reinvested.
State Street will, prior to the payable date of any such dividend or other
distribution, make available to the
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<PAGE>
Fund by CRT display (a written report will be provided upon request) a
designation of all accounts to receive a dividend or distribution showing the
amount of dividend or distribution to be received by each account, the amount to
be withheld in the case of any required withholdings under federal income tax
laws, whether such dividend or distribution is to be paid in cash or reinvested
in Shares, and the total amount of cash and Shares required for the payment of
such dividend or distribution. At times agreed to by the Fund and State Street,
State Street will prepare and mail to Shareholders checks and confirmation
statements for such dividend or distribution and the Fund shall instruct the
Custodian to make available sufficient funds therefor in the dividend account(s)
of the Fund. Where distributions are to be reinvested, the price and date of
reinvestment will be those supplied by the Fund in accordance with the
provisions of the Fund's then current prospectus. Confirmations will be on forms
supplied by the Fund and State Street will prepare and print on such
confirmations all information called for thereon.
10. Redemptions. State Street shall process each order for the redemption
of Shares transmitted by Wayne Hummer & Co. to State Street on behalf of the
Fund. State Street shall keep records and shall supply daily information
sufficient to enable it to confirm such Shareholder transactions including the
trade date, the number of full and fractional Shares redeemed, the Portfolio
from which such Shares have been redeemed, the price per Share and the total
redemption proceeds. In the event of a
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<PAGE>
complete redemption of a Shareholder's Shares, State Street shall also supply
and record (and the confirmation provided by State Street shall show) any taxes
withheld with respect thereto and the total dividends and distributions for the
year to date. Wayne Hummer & Co., acting on behalf of the Fund, will distribute
such redemption proceeds to Shareholders. The requirements as to documentation
and the applicable redemption price shall be as provided in the Fund's then
current prospectus. State Street shall notify the Custodian and the Fund on each
business day of the amount of cash required to meet payments made pursuant to
the provisions of this paragraph and the Fund shall instruct the Custodian to
make available from time to time sufficient funds therefor in the liquidation
account(s) of the Fund. Redemption proceeds are to be wired through the Federal
Reserve Wire System or by bank wire in Federal funds to the bank or trust
company account designated by Wayne Hummer & Co. The time of payment shall be
such as to allow Wayne Hummer & Co. to comply with the Fund's then current
prospectus, subject to such supplemental requirements consistent with such
prospectus as may be established by mutual agreement between the Fund and State
Street.
State Street agrees to accept on behalf of the Fund redemption requests
made by Shareholders to State Street directly in accordance with the Fund's then
current prospectus. Upon receipt of a request for redemption in proper form
containing appropriate documentation authorizing the redemption in accordance
with the Fund's then current redemption policies and containing sufficient
-8-
<PAGE>
information for processing the redemption transaction, State Street shall:
(a) Compute the amount due for said Shares or the total number of
Shares redeemed in accordance with the price of Fund Shares as provided in
the Fund's then current prospectus and shall mail to the Shareholder one
copy of a confirmation of all redemptions on a form provided by the Fund
including all information called for thereon (confirmations of redemptions
which shall result in accrued dividends or other distributions shall
indicate the amount of such payment and any taxes withheld);
(b) State Street shall prepare and mail to the Shareholder a check for
the amount of the redemption price on or before the 7th calendar day
following the date on which documentation which is satisfactory to State
Street is received by State Street; and
(c) If any instruction to redeem tendered by a Shareholder is not
satisfactory to State Street, it shall promptly notify the Fund and the
Shareholder of such fact together with a reason therefor.
The Fund shall instruct the Custodian to make available sufficient funds in the
liquidation accounts of the Fund for such purposes.
11. Checks. The Fund shall supply State Street with a sufficient supply of
serially pre-numbered blank checks for the dividend bank accounts and for the
liquidation bank accounts of the Fund.
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<PAGE>
12. Tax Returns. State Street shall provide to the Fund such books, records
and information as is necessary to permit the Fund to file with the Internal
Revenue Service and with the appropriate state agencies, and shall at the
request of the Fund prepare and mail to Shareholders such returns for reporting
dividends and distributions paid as are required by law to be so filed and
mailed, and shall indicate to the Fund such sums as are required to be withheld
under applicable Federal tax laws, rules and regulations.
13. Books and Records. State Street shall maintain records showing for each
Shareholder's account the following:
(a) Name(s), address, tax identification number, account number, Wayne
Hummer & Co. account number (if any), Portfolio designation;
(b) Number of Shares held;
(c) Historical information regarding each Shareholder, including
purchases, redemptions, transfers, dividends and distributions paid,
dividends and distributions reinvested and date and price for all
transactions;
(d) Any stop or restraining order placed against each Shareholder
account;
(e) Any information required in order for State Street to perform the
calculations contemplated or required by this Agreement; and
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<PAGE>
(f) Information with respect to any required tax withholdings.
Changes in items of information specified above not relating to change
in ownership of Shares will be made by State Street upon receipt of a request
for such change in a manner or form agreed to by State Street and the Fund. In
the case of all changes for which State Street and the Fund agree that a
confirmation will be produced, one copy of the confirmation supplied by the Fund
of such changes will be mailed to the Shareholder.
Any such records required to be maintained by Rule 31a-1 of the General
Rules and Regulations under the Investment Company Act of 1940, as said rule is
in effect from time to time, shall be preserved for the periods prescribed in
said Rule. Such record retention shall be at the expense of the Fund and records
may be inspected by the Fund at reasonable times. State Street may, at its
option at any time, and shall forthwith upon the Fund's demand, turn over to the
Fund and cease to retain in State Street's files, records and documents created
and maintained by State Street pursuant to this Agreement which are no longer
needed by State Street in performance of its services or for its protection. If
not so turned over to the Fund, such records and documents will be retained by
State Street for six years from the year of creation, during the first two years
such documents will be in readily accessible form. At the end of the six year
period, such records and documents will either be turned over to the Fund, or
destroyed in accordance with the Fund's authorization.
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<PAGE>
14. Information Furnished to the Fund. State Street shall, in a manner to
be agreed upon in writing, furnish to the Fund daily and confirm in writing not
less often than monthly, the following information:
(a) Entries in the daily transaction register;
(b) Entries in the dividend and reinvestment registers;
(c) Entries as to the total number of Shares of each Portfolio sold in each
state.
State Street shall furnish to Wayne Hummer & Co., or its designated data
processing agent (presently ADP), Shareholder account positions as of the end of
each calendar month for each Shareholder who has purchased his Shares through
Wayne Hummer & Co. State Street shall furnish to the Fund such other
information, including account lists and statistical information, as may be
agreed upon from time to time.
15. Refusal to Redeem or Transfer. State Street reserves the right to
refuse to redeem or transfer Shares until reasonably satisfied that the
indorsements on the instructions presented are valid and genuine, and for such
purpose may require where necessary or appropriate a guarantee of signature.
State Street also reserves the right to refuse to redeem or transfer Shares
until satisfied that the requested transfer or redemption is legally authorized,
and it shall incur no liability for the refusal to make transfers or redemptions
which it in its judgment deems improper or unauthorized. Notwithstanding the
foregoing, State
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<PAGE>
Street shall redeem or transfer Shares even though not satisfied as to the
indorsement or legal authority of the Shareholder if such instructions for
redemption or transfer have been transmitted to it by Wayne Hummer & Co. and if
it is first indemnified by the Fund to its reasonable satisfaction against all
expenses and liabilities to which it, in its judgment, may be subjected by such
action.
16. Mailings. State Street shall take all steps required, including
addressing of envelopes, to make the following additional mailings: financial
reports furnished by the Fund to Shareholders as requested; the Fund's current
prospectus to Shareholders once a year; and notices and proxy materials to
Shareholders for special meetings of Shareholders. The Fund shall deliver any
material required to be furnished by it to State Street for mailings
sufficiently in advance of all scheduled mailing dates, so that State Street may
effect the scheduled mailings. State Street shall make such other mailings upon
such terms and conditions and for such fees as are agreed to by State Street and
the Fund from time to time.
17. Fund's Securities Law Responsibility. Fund assumes full responsibility
for the preparation, contents, and distribution of each prospectus of Fund and
for complying with all applicable requirements of the Securities Act of 1933,
the Investment Company Act of 1940 and any laws, rules, or regulations of
governmental authorities having jurisdiction over Fund except that State Street
shall be responsible for all laws, rules and
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<PAGE>
regulations of governmental authorities having jurisdiction over transfer
agents and their activities.
18. Registration of State Street as Transfer Agent. State Street represents
that it is registered with the Securities and Exchange Commission as a transfer
agent under Section 17A of the Securities Exchange Act of 1934 and will notify
Fund promptly if such registration is revoked or if any proceeding is commenced
before the Securities and Exchange Commission which may lead to such revocation.
19. Confidentiality of Records. State Street agrees not to disclose any
information received from the Fund to any other customer of State Street or to
any other person except State Street's employees and agents and then only in the
course of performing services for the Fund and shall use its best efforts to
maintain such information as confidential. Upon termination of this Agreement,
State Street shall return to the Fund all records in the possession or control
of State Street related to the Fund's activities, other than State Street's own
business records, it being also understood that any programs and systems used by
State Street to provide the services rendered hereunder will not be given to the
Fund.
Notwithstanding the foregoing, it is understood and agreed that State
Street may maintain with the Fund's records information and data to be utilized
by State Street in providing services to entities serving as trustees and/or
custodians of prototype Keogh Act Plans, IRA Plans, plans for employees of
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<PAGE>
public schools or tax-exempt organizations or corporate profit sharing,
pension or other plans which invest in Shares. In the event that this Agreement
is terminated, State Street may transfer and retain from the records maintained
for the Fund such information and data relating to participants in such plans as
may be required for State Street to continue providing its services to such
trustees and/or custodians.
20. Fees and Charges. State Street shall receive such compensation from the
Fund for its services hereunder and for such other duties performed by it
pursuant hereto as may be agreed upon from time to time. Which agreement shall
be set forth in the then current fee schedule between the parties and attached
hereto. State Street shall be reimbursed for the cost of any and all forms
prepared especially for use in connection with its actions hereunder, it being
agreed that State Street, prior to ordering any forms in such supply as it
estimates will be adequate for more than two years use or cost in excess of
$2,000, shall obtain the prior written consent of the Fund. All forms for which
State Street has received reimbursement from the Fund shall be and remain the
property of the Fund until used. Unless subsequently modified in writing upon
thirty (30) days prior notice by State Street to the Fund, fees and charges
shall be as set forth in the then current fee schedule as agreed to between the
parties from time to time and attached hereto.
21. References to State Street. The Fund shall not circulate any printed
matter which contains any reference to
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<PAGE>
State Street without the prior written approval of State Street, excepting
solely such printed matter as merely identifies State Street as Transfer Agent
and Dividend Paying Agent for the Fund. The Fund shall submit printed matter
requiring approval to State Street in draft form, allowing sufficient time for
review by State Street and its counsel prior to any deadline for printing.
22. Force Majeure. Subject to the provisions of paragraph 23, State Street
shall not be liable for loss of data occurring by reason of circumstances beyond
its control, including but not limited to acts of civil or military authority,
national emergencies, fire, flood or catastrophe, acts of God, insurrection, war
or riots. State Street shall use its best efforts to minimize the likelihood of
such damage, loss of data, delays or errors resulting from uncontrollable
events. If such damage, loss of data, delays or errors occur, State Street shall
use its best efforts to mitigate the effects of such occurrence.
23. Standard of Care. State Street shall at all times act in good faith in
carrying out its duties hereunder and agrees to use its best efforts within
reasonable limits to ensure the accuracy of all services performed under this
Agreement, but assumes no responsibility and shall not be liable for loss or
damage due to errors unless such errors are caused by its negligence, bad faith
or willful misconduct or that of its agents or employees.
24. Indemnification. The Fund shall, exclusively from Fund assets,
indemnify and hold State Street harmless from all loss, cost, damage and expense
incurred by it resulting from any claim,
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<PAGE>
demand, action or suit arising out of the performance by State Street of
its duties hereunder as Transfer and Dividend Paying Agent for the Fund, or as a
result of acting upon any instruction reasonably believed by it to have been
executed by a duly authorized officer of the Fund or Wayne Hummer & Co., or upon
any information, data, records or documents provided State Street or its agents
by computer tape, telex, CRT data entry or other similar means authorized by the
Fund; provided, however, this indemnification shall not apply to actions or
omissions of State Street in cases of its own willful misconduct, bad faith or
ordinary negligence. In order that the indemnification provision contained in
this paragraph 24 shall apply, however, it is understood that if in any case the
Fund may be asked to indemnify or save State Street harmless, the Fund shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that State Street will use all reasonable
care to identify and notify the Fund promptly concerning any situation which
presents or appears likely to present the probability of such a claim for
indemnification against the Fund. The Fund shall have the option to defend State
Street against any claim which may be the subject of this indemnification, and
in the event that the Fund so elects it will so notify State Street, and
thereupon the Fund shall take over the complete defense of the claim, and in any
such situation State Street shall incur no further legal or other expenses for
which it shall seek indemnification under this paragraph. State Street shall in
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<PAGE>
no case confess any claim or make any compromise in any case in which the
Fund will be asked to indemnify State Street except with the Fund's prior
written consent.
State Street shall indemnify, and hold the Fund harmless from all loss,
cost, damage and expense incurred by it resulting from any claim, demand, action
or suit arising out of the negligence, bad faith or willful misconduct of State
Street or its agents or employees in carrying out its duties hereunder;
provided, however, this indemnification shall not apply to actions or omissions
constituting negligence, bad faith or misconduct of the Fund or its agents or
employees. The Fund shall give State Street prompt notice and the opportunity to
defend in the same manner as provided for above in connection with the right of
State Street to be indemnified.
25. Limitation of Liability. Notwithstanding anything hereinbefore to the
contrary, State Street acknowledges that this Agreement is executed by or on
behalf of the Fund and State Street is hereby expressly put on notice of the
limitation of Shareholder liability as set forth in the Fund's Agreement and
Declaration of Trust and agrees that the obligations assumed by the Fund
pursuant to this Agreement shall be limited in all cases to the Fund and its
assets, and State Street shall not seek satisfaction of any such obligations
from the Shareholders or any Shareholder of the Fund. In addition, State Street
shall not seek satisfaction of any such obligations from the trustees or
officers of the Fund or any individual trustee or officer.
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<PAGE>
26. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
27. Amendment and Termination. This Agreement may only be modified or
amended by written instrument between the parties hereto. This Agreement may be
terminated at any time by one hundred twenty (120) days written notice given by
one party to the other.
28. Notices. Any notice under this Agreement shall be in writing addressed
and delivered by certified or registered mail, return receipt requested, postage
prepaid to the party to receive the notice at its address as set forth at the
beginning of this Agreement or at such other address as any party hereafter
designates by a notice given in accordance with this paragraph.
29. Law to Govern. This Agreement shall be construed and the provisions
hereof interpreted under applicable Federal law and the law of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
ATTEST: WAYNE HUMMER GROWTH FUND
_________________________ By__________________________________
Its Secretary Its President
ATTEST: STATE STREET BANK AND TRUST COMPANY
_________________________ By__________________________________
Its Secretary Its Vice President
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<PAGE>
[LOGO OF STATE STREET BANK]
STATE STREET BANK AND TRUST COMPANY
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
WAYNE HUMMER GROWTH FUND
- --------------------------------------------------------------------------------
General - Fees are based on an annual per shareholder account charge for account
maintenance plus out-of-pocket expenses. There is a minimum charge of $2,000 per
month applicable to the entire fund complex. Annual maintenance charges are
given below.
Annual Maintenance Charges - The annual maintenance charge includes the
processing of all transactions and correspondence. The fee is billable on a
monthly basis at the rate of 1/12 of the annual fee. A charge is made for an
account in the month that an account opens or closes.
Equity Fund - Charge per Account $8.00
This includes the processing of 4 share
transactions/account on an average for
the entire account base over the year.
Any share transaction over 4 per year: $1.50
Out-of-Pocket Expenses - Out-of-Pocket expenses include but are not limited to:
postage, forms, telephone, microfilm, microfiche, and expenses occurred at the
specific direction of the fund. Postage for mass mailings is due seven days in
advance of the mailing date.
Payment
The above fees will be charged against the fund's custodian checking account
five (5) days after the invoice is mailed to the fund's offices.
WAYNE HUMMER GROWTH FUND STATE STREET BANK AND TRUST CO.
By /s/ ?????? By /s/ Michael J. ??????
----------------------- -----------------------
Title President Title Vice President
----------------------- -----------------------
Date December 15, 1983 Date November 9, 1983
----------------------- -----------------------
<PAGE>
STATE STREET BANK & TRUST COMPANY
WAYNE HUMMER MONEY FUND TRUST
WAYNE HUMMER GROWTH FUND
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
- --------------------------------------------------------------------------------
General - Fees are based on an annual per shareholder account charge for account
maintenance plus out-of-pocket expenses. Annual maintenance charges for various
kinds of mutual funds are given below. There is a minimum charge per fund on the
following schedule:
One Fund $2,000/month per fund
Annual Maintenance Charges - Fees are billable on a monthly basis at the rate of
1/12 of the annual fee. A charge is made for an account in the month that an
account opens or closes. Includes processing of 8 transactions/account/year for
W.H. Money Fund Trust. Includes 4 transactions/account/year for W. H. Growth
Fund.
Base Fee
W.H. Money Fund Trust $8.80
W.H. Growth Fund 7.25
Other Fees
Share and maintenance transactions*
W.H. Money Fund Trust .80 each
W.H. Growth Fund 1.50 each
* In excess of transactions included in base fee
<PAGE>
Out-of-Pocket Expenses- Out-of-Pocket expenses include but are not limited to:
postage, forms, telephone, microfilm, microfiche, and expenses incurred at the
specific direction of the Fund. Postage for mass mailings is due seven days in
advance of the mailing date.
Wayne Hummer Money Fund Trust STATE STREET BANK AND TRUST CO.
Wayne Hummer Growth Fund
By: /s/ Jean M. Watts By:
-------------------------------- --------------------------------
Title: Treasurer Title: Vice President
----------------------------- -----------------------------
Date: 1-7-91 Date:
------------------------------ ------------------------------
<PAGE>
[Logo of State Street Bank]
STATE STREET BANK & TRUST COMPANY
WAYNE HUMMER MONEY FUND TRUST
WAYNE HUMMER GROWTH FUND
Fee Information for Services as
Plan, Transfer, and Dividend Disbursing Agent
Effective Date - 8/01/92 through 12/31/93
- ------------------------------------------------------------------------------
General - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. Annual maintenance charges for
various kinds of mutual funds are given below. There is a minimum charge per
fund on the following schedule which will be charged in the event the base fee
does not equal the minimum amount agreed to.
Per Fund $2,500 per month
Annual Maintenance Charges - Fees are billable on a monthly basis at the rate of
1/12 of the annual fee. A charge is made for an account in the month that an
account opens or closes.
Base Fee
8/92
----
W.H. Money Fund Trust 9.50
W.H. Growth Fund 7.85
Out-of-Pocket Expenses - Out-of-Pocket expenses include but are not limited to:
confirmation statements, postage, forms, telephone, microfilm, microfiche,
customized system enhancement requests, and any expenses incurred at the
specific direction of the Fund. Postage for mass mailings is due seven days in
advance of the mailing date.
WAYNE HUMMER MONEY FUND TRUST STATE STREET BANK AND TRUST CO.
WAYNE HUMMER GROWTH FUND
By: /s/ Jean M. Watts By: /s/ Janet Wertheimer
------------------------------ --------------------------------
Title: Treasurer Title: Vice President
-------------------------- ----------------------------
Date: 9/14/92 Date: 9/1/92
-------------------------- ----------------------------
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<PAGE>
[LOGO OF STATE STREET BANK]
STATE STREET BANK & TRUST COMPANY
WAYNE HUMMER INCOME FUND
Fee Information for Services as
Plan, Transfer, and Dividend Disbursing Agent
Effective Date - Concurrent with Fund Implementation
through December, 1993
- --------------------------------------------------------------------------------
General - Fees are based on an annual per shareholder account charge for account
maintenance plus out-of-pocket expenses. The annual maintenance charge for the
above fund is given below. There is a minimum charge for the fund on the
following schedule which will be charged in the event the base fee does not
equal the minimum amount agreed to.
Monthly Minimum $0 first calendar month (Dec '92)
$750 second calendar month
$1,000 third calendar month
$1,250 fourth calendar month
$1,500 seventh calendar month
$1,750 tenth calendar month through
twelfth or December 31, 1993
whichever comes last
Annual Maintenance Charges - Fees are billable on a monthly basis at the rate
of 1/12 of the annual fee. A charge is made for an account in the month that
an account opens or closes.
Base Fee
W.H. Income Fund $7.85
Out-of-Pocket Expenses - Out-of-Pocket expenses include but are not limited to:
confirmation statements, postage, forms, telephone, microfilm, microfiche,
customized system enhancement requests, and any expenses incurred at the
specific direction of the Fund. Postage for mass mailings is due seven days in
advance of the mailing date.
WAYNE HUMMER INCOME FUND STATE STREET BANK AND TRUST CO.
By: /s/ Jean M. Watts By: /s/ Janet Westheimer
------------------------ -----------------------------
Title: Treasurer Title: Vice President
--------------------- --------------------------
Date: 10/20/92 Date: September 25, 1992
---------------------- ---------------------------
<PAGE>
EXHIBIT 9(a)(2)
AMENDMENT TO THE TRANSFER AND
-----------------------------
DIVIDEND PAYING AGENCY AGREEMENT
--------------------------------
AGREEMENT made as of this 24th day of November, 1992, by and between STATE
STREET BANK AND TRUST COMPANY ("State Street") and WAYNE HUMMER GROWTH FUND (the
"Fund").
WITNESSETH THAT:
---------------
WHEREAS, State Street and the Fund are parties to a Transfer and Dividend
Paying Agency Agreement dated December 15, 1983 (the "Agreement") which governs
the terms and conditions under which State Street acts as agent for the Fund in
connection with the issue, redemption and transfer of shares of the Fund and
processes certain distributions of the Fund, including but not limited to
dividends of the Fund;
NOW THEREFORE, State Street and the Fund hereby amend the terms of the
Agreement and mutually agree to the following:
1. Paragraph 1, subparagraph (a) is amended and restated in its entirety
effective as of December 1, 1992 as follows:
"Fund" hereinafter means Wayne Hummer Investment Trust, a
Massachusetts business trust organized under an Agreement and
Declaration of Trust, dated September 29, 1983, as amended November 24,
1992, a copy of which together with any and all amendments thereto is on
file with the Secretary of State of Massachusetts.
2. Paragraph 1, subparagraph (d) is hereby amended and restated in its
entirety as follows:
"Portfolios" shall hereinafter mean collectively the series of
shares of the Fund designated from time to time by the Board of Trustees
of the Fund (as of the date of this Amendment two (2) series of the
Fund's Shares have been designated, the "Growth Portfolio" and the
"Income Portfolio").
<PAGE>
3. Paragraph 4 is hereby amended and restated in its entirety as follows:
4. Authorized Shares. The Fund certifies to State Street that, as
of the close of business on the date of this Amendment, the Fund is
authorized to issue an unlimited number of Shares in its Growth
Portfolio and its Income Portfolio.
4. The principal office and place of business for the Fund is 300 South
Wacker Drive, Chicago, Illinois.
5. The compensation of State Street shall be adjusted as detailed on the
Schedule attached to this Amendment to the Agreement.
6. Except as specifically amended herein, the Agreement shall remain in
full force and effect. This Amendment shall not limit the rights of the
parties to the Agreement and the parties hereto acknowledge the binding
effect of the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
WAYNE HUMMER GROWTH FUND
ATTEST
/s/ Jean M. Watts By /s/
- ------------------------ --------------------------------
STATE STREET BANK AND TRUST
COMPANY
ATTEST
/s/ By /s/
- ------------------------ --------------------------------
Assistant Secretary Vice President
2
<PAGE>
- --------------------------------------------------------------------------------
National Financial Data Services, Inc.
Fee Information for Services As Plan, Transfer and Dividend Disbursing Agent
for State Street Bank & Trust Co.
The Wayne Hummer Funds
- --------------------------------------------------------------------------------
Effective from January 1, 1995 through December 31, 1997
- --------------------------------------------------------------------------------
Account Maintenance Fees
- ------------------------
Wayne Hummer Money Fund Trust $9.50 per year*
Wayne Hummer Growth Fund $7.85 per year*
Wayne Hummer Income Fund $7.85 per year*
Future Income/Equity Fund(s) $7.85 per year*
A monthly minimum account maintenance fee applies for each fund/cusip at the
following rates:
Wayne Hummer Money Fund Trust $2,500
Wayne Hummer Growth Fund $2,500
Wayne Hummer Income Fund $1,750
Future Income/Equity Fund(s) $1,750
Out-of-Pocket Expenses
- ----------------------
Out-of-Pocket expenses include but are not limited to: mailing expenses
(statements, stationary, checks, certificates, sales literature, printing,
postage, etc), automated telephone servicing charges, custom programming,
telecommunication expenses, equipment/software expenses (client-site only),
microfiche, freight and all other expenses incurred on the fund's behalf. Due to
the pass-through nature of out-of-pocket expenses, all charges are subject to
change.
* Fees are billed monthly at 1/12 of the annual rate.
The Wayne Hummer Funds State Street Bank & Trust Co.
By: /s/ Jean M. Watts By:
------------------- --------------------
Title: Treasurer Title: Vice President
------------------- --------------------
Date: 4/20/95 Date: 4/15/95
------------------- --------------------
<PAGE>
EXHIBIT 9(b)
TRADE NAME
AND
SERVICE MARK LICENSE AGREEMENT
THIS AGREEMENT made this 1st day of December, 1992, by and between Wayne
Hummer Management Company, a corporation organized and existing under the laws
of the State of Illinois, having its principal office and place of business at
300 South Wacker Drive, Chicago, Illinois, hereinafter for convenience referred
to as "Adviser," and Wayne Hummer Investment Trust, a Massachusetts business
trust having its principal office and place of business at 300 South Wacker
Drive, Chicago, Illinois, hereinafter for convenience referred to as "Fund."
WHEREAS, Adviser has obtained a license together with the right to
sublicense the trade name and service mark "Wayne Hummer" for financial and
investment services and organizations, by mesne license from Wayne Hummer & Co.,
an Illinois partnership, hereinafter referred to as "Owner"; and
WHEREAS, Fund desires the right to use said trade name and service mark for
the described businesses and services;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration by each of the parties to the other in hand paid, the
receipt of which is hereby acknowledged, and of the following mutual promises,
covenants and undertakings, the parties hereto have agreed and do hereby agree
as follows:
1. Adviser hereby grants to Fund a non-exclusive, royalty-free right and
license to use the trade name and service mark "Wayne Hummer," hereinafter
referred to as the "Licensed Name and Mark," for financial and investment
businesses and services, hereinafter referred to as the "Licensed Businesses and
Services," in the territory consisting
<PAGE>
of the United States of America, its territories and dependencies, hereinafter
referred to as the "Licensed Territory."
2. The nature and quality of the Licensed Businesses and Services in
connection with which the Licensed Name and Mark may be used, including but not
limited to the manner of use by Fund, shall have the approval of Adviser.
3. Upon execution of this Agreement and from time to time thereafter,
Adviser wi11 furnish Fund with written standards of quality for the Licensed
Businesses and Services; and Fund agrees to meet the standards of quality so
established. Owner shall be the sole judge of whether or not Fund has met or is
meeting the standards of quality so established.
4. Adviser and Owner shall each have the right to inspect the premises of
Fund where the Licensed Businesses and Services are being conducted and offered,
at reasonable intervals and during regular business hours in order to determine
that said written standards of quality are being met.
5. Fund shall obtain the written approval of Adviser with respect to all
signs, brochures, bulletins, promotional materials, advertising or the like
bearing the Licensed Name and Mark prior to the use thereof; and such approval
of Adviser shall not be unreasonably withheld. For the term of this Agreement,
Fund shall not use a name or mark identical with or confusingly similar to the
Licensed Name and Mark except as permitted by the license hereof.
6. Fund shall have the right to terminate this Agreement at any time upon
thirty (30) days' written notice to Adviser.
7. In the event that Fund shall substantially breach any of the terms of
this Agreement, Adviser shall have the right to terminate the license granted
hereunder by ninety (90) days' written notice to Fund specifying the breach
complained of, provided that,
2
<PAGE>
if during such ninety (90) day period Fund shall correct the breach, then this
license shall continue as if no notice had been given.
8. Adviser shall have the right to terminate this Agreement immediately in
the event of the bankruptcy of Fund, or upon the appointment of a receiver for
the assets of Fund, or in the event Fund shall make an assignment for the
benefit of creditors, or in the event that Adviser shall cease to act as the
investment adviser to the Fund, or in the event that Owner shall cease to act as
the distributor and shareholder service agent for the Fund.
9. Fund agrees: (a) that nothing contained in this Agreement shall give
Fund any right, title or interest in the Licensed Name and Mark, except the
right to use the Licensed Name and Mark in accordance with the terms of this
Agreement; (b) that the Licensed Name and Mark is the sole property of Owner;
and (c) that any and all uses of the Licensed Name and Mark by Fund shall inure
to the benefit of Owner.
10. Fund agrees not to raise or to cause to be raised any questions
concerning or objections to the validity of the Licensed Name and Mark or any
registrations thereof or to the right of Owner thereto, on any grounds
whatsoever.
11. In the event of cancellation or termination of this Agreement in
accordance with Paragraphs 6, 7 or 8 hereof, Fund shall thereupon cease to use
and shall never again use the Licensed Name and Mark and to deliver to Adviser,
free of any charge to Adviser, all signs, brochures, bulletins, promotional
materials, advertising or the like bearing the Licensed Name and Mark that are
then in the possession of Fund.
12. In the event of cancellation or termination in accordance with the
provisions of Paragraphs 6, 7 or 8 hereof, Fund's obligations and agreements set
forth in Paragraphs 9, 10 and 11 hereof shall remain in full force and effect.
3
<PAGE>
13. Fund agrees to notify Adviser of any adverse use in the Licensed
Territory of a name or names or a mark or marks confusingly similar to the
Licensed Name and Mark and agrees to take no action of any kind with respect
thereto except by the express written authorization of Adviser and concurrence
by Owner; and Owner agrees to protect Fund against any unauthorized use, in the
Licensed Territory, of the Licensed Name and Mark, or any name or mark
confusingly similar thereto, to the extent that Owner, upon being given notice
of activities deemed to constitute an infringement of the Licensed Name and Mark
and upon concurring in the determination that such activities constitute
infringement, which concurrence shall not be unreasonably withheld, shall file
suit or resolve the matter within ninety (90) days of such notification. In any
suit brought by Owner for infringement of the Licensed Name and Mark, Fund shall
have the right to be represented by counsel of its own selection and at its own
expense.
14. The license herein granted shall not be assignable or transferable in
any manner whatsoever nor shall Fund have the right to grant any sublicenses.
15. This Agreement embodies the entire understanding of the parties and
supersedes any prior understanding or agreement entered into by the parties
either written or oral. No variation or modification of this Agreement or waiver
of the terms or provisions hereof shall be operative or valid unless in writing
and signed by both parties.
16. All notices, disclosures and other communications hereunder shall be in
writing and shall be deemed to be duly given if delivered or mailed by certified
mail addressed to the parties as indicated hereinabove or to such other address
as either of the parties may furnish to the other in writing.
17. This Agreement is executed by or on behalf of the Fund and the Adviser
is hereby expressly put on notice of the limitation of Shareholder liability as
set forth in the
4
<PAGE>
Fund's Agreement and Declaration of Trust filed with the Secretary of the
Commonwealth of Massachusetts and agrees that the obligations assumed by the
Fund pursuant to this Agreement shall be limited in all cases to the Fund and
its assets, and the Adviser shall not seek satisfaction of any such obligations
from the Shareholders or any Shareholder of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
Officers of the Fund or any individual Trustee or Officer.
18. This Agreement shall be construed in accordance with applicable federal
law and (except as to paragraph 17 hereof which shall be construed in accordance
with the laws of the Commonwealth of Massachusetts) the laws of the State of
Illinois and shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, subject to paragraph 14 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the day and
year first set forth above.
WAYNE HUMMER MANAGEMENT COMPANY
By ____________________________
WAYNE HUMMER INVESTMENT TRUST
By ____________________________
CONSENTED TO:
WAYNE HUMMER & CO.
By _______________________
Date _____________________
5
<PAGE>
TRADE NAME
AND
SERVICE MARK LICENSE AGREEMENT
THIS AGREEMENT made this 11th day of October, 1983, by and between Wayne
Hummer Management Company, a corporation organized and existing under the laws
of the State of Illinois, having its principal office and place of business at
175 West Jackson Boulevard, Chicago, Illinois, hereinafter for convenience
referred to as "Adviser," and Wayne Hummer Growth Fund, a Massachusetts business
trust having its principal office and place of business at 175 West Jackson
Boulevard, Chicago, Illinois, hereinafter for convenience referred to as "Fund."
WHEREAS, Adviser has obtained a license together with the right to
sublicense the trade name and service mark "Wayne Hummer" for financial and
investment services and organizations, by mesne license from Wayne Hummer & Co.,
an Illinois partnership, hereinafter referred to as "Owner"; and
WHEREAS, Fund desires the right to use said trade name and service mark for
the described businesses and services;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration by each of the parties to the other in hand paid, the
receipt of which is hereby acknowledged, and of the following mutual promises,
covenants and undertakings, the parties hereto have agreed and do hereby agree
as follows:
1. Adviser hereby grants to Fund a non-exclusive, royalty-free right and
license to use the trade name and
<PAGE>
service mark "Wayne Hummer," hereinafter referred to as the "Licensed Name and
Mark," for financial and investment businesses and services, hereinafter
referred to as the "Licensed Businesses and Services," in the territory
consisting of the United States of America, its territories and dependencies,
hereinafter referred to as the "Licensed Territory."
2. The nature and quality of the Licensed Businesses and Services in
connection with which the Licensed Name and Mark may be used, including but not
limited to the manner of use by Fund, shall have the approval of Adviser.
3. Upon execution of this Agreement and from time to time thereafter,
Adviser will furnish Fund with written standards of quality for the Licensed
Businesses and Services; and Fund agrees to meet the standards of quality so
established. Owner shall be the sole judge of whether or not Fund has met or is
meeting the standards of guality so established.
4. Adviser and Owner shall each have the right to inspect the premises of
Fund where the Licensed Businesses and Services are being conducted and offered,
at reasonable intervals and during regular business hours in order to determine
that said written standards of quality are being met.
5. Fund shall obtain the written approval of Adviser with respect to all
signs, brochures, bulletins, promotional
-2-
<PAGE>
materials, advertising or the like bearing the Licensed Name and Mark prior to
the use thereof; and such approval of Adviser shall not be unreasonably
withheld. For the term of this Agreement, Fund shall not use a name or mark
identical with or confusingly similar to the Licensed Name and Mark except as
permitted by the license hereof.
6. Fund shall have the right to terminate this Agreement at any time upon
thirty (30) days' written notice to Adviser.
7. In the event that Fund shall substantially breach any of the terms of
this Agreement, Adviser shall have the right to terminate the license granted
hereunder by ninety (90) days' written notice to Fund specifying the breach
complained of, provided that, if during such ninety (90) day period Fund shall
correct the breach, then this license shall continue as if no notice had been
given.
8. Adviser shall have the right to terminate this Agreement immediately in
the event of the bankruptcy of Fund, or upon the appointment of a receiver for
the assets of Fund, or in the event Fund shall make an assignment for the
benefit of creditors, or in the event that Adviser shall cease to act as the
investment adviser to the Fund, or in the event that Owner shall cease to act
as the distributor and shareholder service agent for the Fund.
9. Fund agrees: (a) that nothing contained in this Agreement shall give
Fund any right, title or interest in
-3-
<PAGE>
the Licensed Name and Mark, except the right to use the Licensed Name and Mark
in accordance with the terms of this Agreement; (b) that the Licensed Name and
Mark is the sole property of Owner; and (c) that any and all uses of the
Licensed Name and Mark by Fund shall inure to the benefit of Owner.
10. Fund agrees not to raise or to cause to be raised any questions
concerning or objections to the validity of the Licensed Name and Mark or any
registrations thereof or to the right of Owner thereto, on any grounds
whatsoever.
11. In the event of cancellation or termination of this Agreement in
accordance with Paragraphs 6, 7 or 8 hereof, Fund shall thereupon cease to
use and shall never again use the Licensed Name and Mark and to deliver to
Adviser, free of any charge to Adviser, all signs, brochures, bulletins,
promotional materials, advertising or the like bearing the Licensed Name and
Mark that are then in the possession of Fund.
12. In the event of cancellation or termination in accordance with the
provisions of Paragraphs 6, 7 or 8 hereof, Fund's obligations and agreements set
forth in Paragraphs 9, 10 and 11 hereof shall remain in full force and effect.
13. Fund agrees to notify Adviser of any adverse use in the Licensed
Territory of a name or names or a mark or marks confusingly similar to the
Licensed Name and Mark and agrees to take no action of any kind with respect
thereto
-4-
<PAGE>
except by the express written authorization of Adviser and concurrence by Owner;
and Owner agrees to protect Fund against any unauthorized use, in the Licensed
Territory, of the Licensed Name and Mark, or any name or mark confusingly
similar thereto, to the extent that Owner, upon being given notice of activities
deemed to constitute an infringement of the Licensed Name and Mark and upon
concurring in the determination that such activities constitute infringement,
which concurrence shall not be unreasonably withheld, shall file suit or resolve
the matter within ninety (90) days of such notification. In any suit brought by
Owner for infringement of the Licensed Name and Mark, Fund shall have the right
to be represented by counsel of its own selection and at its own expense.
14. The license herein granted shall not be assignable or transferable in
any manner whatsoever nor shall Fund have the right to grant any sublicenses.
15. This Agreement embodies the entire understanding of the parties and
supersedes any prior understanding or agreement entered into by the parties
either written or oral. No variation or modification of this Agreement or waiver
of the terms or provisions hereof shall be operative or valid unless in writing
and signed by both parties.
16. All notices, disclosures and other communications hereunder shall be in
writing and shall be deemed to be duly given if delivered or mailed by certified
mail addressed to
-5-
<PAGE>
the parties as indicated hereinabove or to such other address as either of the
parties may furnish to the other in writing.
17. This Agreement is executed by or on behalf of the Fund and the Adviser
is hereby expressly put on notice of the limitation of Shareholder liability as
set forth in the Fund's Agreement and Declaration of Trust filed with the
Secretary of the Commonwealth of Massachusetts and agrees that the obligations
assumed by the Fund pursuant to this Agreement shall be limited in all cases to
the Fund and its assets, and the Adviser shall not seek satisfaction of any such
obligations from the Shareholders or any Shareholder of the Fund. In addition,
the Adviser shall not seek satisfaction of any such obligations from the
Trustees or Officers of the Fund or any individual Trustee or Officer.
18. This Agreement shall be construed in accordance with applicable federal
law and (except as to paragraph 17 hereof which shall be construed in accordance
with the laws of the Commonwealth of Massachusetts) the laws of the State
-6-
<PAGE>
of Illinois and shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, subject to paragraph 14 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the day
and year first set forth above.
WAYNE HUMMER MANAGEMENT COMPANY
By /s/ W. A. Rogers, Pres.
-------------------------------------
WAYNE HUMMER GROWTH FUND
By
-------------------------------------
CONSENTED TO:
WAYNE HUMMER & CO.
By /s/ John D. Carroll Gen Part
-----------------------------
Date 10/11/83
--------------------
-7-
<PAGE>
October 11, 1983
Wayne Hummer Growth Fund
175 West Jackson Boulevard
Chicago, Illinois 60604
Re: License Agreement Dated
October 11, 1983
Gentlemen:
This letter is to provide the standards of minimum quality which are required
pursuant to the subject agreement. This letter is being sent to you in duplicate
with the request that you acknowledge receipt by signing and dating one copy of
the letter and returning it to us for our files.
I. A TRADENAME is the business name which identifies your service
organization; and the following requirements are to be met under the tradename
aspect of the license:
(A) EXCLUSIVITY - Only the tradename Wayne Hummer Growth Fund is to
be used; and no others. It is not permitted to abbreviate, alter
or combine this tradename with other words or phrases. For
example, it is specifically not allowed by the license to use
such phrases as "Wayne Hummer companies " or "Wayne Hummer
organization."
(B) DISTINCTION - The words "Wayne Hummer" are preferably used in a
different typeface or a different color from the words "Growth
Fund."
(C) BUSINESS SIGNS AND CALLING CARDS - The tradename permitted in
Paragraph A hereinabove may not be used in conjunction with any
other company name except "Wayne Hummer & Co.," "Wayne Hummer
Money Fund Trust" or with "Wayne Hummer Management Company" and
no other words may be used in larger or bolder typeface on the
same sign, at the same location, or on a calling card.
(D) PREMISES - A licensee shall maintain quarters in first class
downtown office space, the decor to be approved by licensor.
Management of the premises shall be the responsibility of
licensee.
II. A SERVICE MARK identifies particular financial services as originating
with a specific business organization; and the following rules must be
followed:
<PAGE>
Wayne Hummer Growth Fund
Page 2
October 11, 1983
(A) SERVICE MARK SHOULD BE DISTINGUISHED - When it appears in printed
material, the service mark "Wayne Hummer" is preferably
distinguished from the surrounding copy by the use of quotation
marks, or capitalization either fully or initially, by the use of
italics or other differentiating typeface, by underlining, color,
or artwork.
(B) SERVICE MARK SHOULD BE USED IN ADJECTIVE SENSE - The service mark
should not be used as a noun or verb, as a nominative possessive,
in the plural, or as a descriptive adjective to modify any words
other than the common or generic name of the service.
(C) UNIFORMITY - The service mark should never be abbreviated,
altered or combined with other words or phrases other than as set
forth in Paragraph B immediately hereinabove.
(D) NOTICE - Proper notice of federal registration shall be uniformly
employed; and until a mark has been federally registered, the
superscript notation "Wayne Hummer" may be used. Alternately a
footnote reference on each separate literature piece shall
identify the mark, at least once by the phrase, "A service mark
of Wayne Hummer & Co."
(E) PRINTED MATTER - All office signs, promotional literature and
other printed matter which is to be distributed or displayed to
the public shall be submitted in printer's proof to licensor for
approval at least two weeks before final printing is scheduled to
commence. Licensee shall follow instructions from licensor
absolutely and without fail with regard to correcting the proofs.
<PAGE>
Wayne Hummer Growth Fund
Page 3
October 11, 1983
III. The financial and management services offered by any licensee or
sub-licensee shall, at all times, comply with the Investment Advisors'
Act of 1940, the Investment Company Act of 1940, and Rules and
Regulations promulgated under either of such acts, and any state
security law, whenever applicable.
Sincerely,
Wayne Hummer Management Company
By /s/ W. A. Rogers, Pres.
-------------------------------
Acknowledged:
Wayne Hummer Growth Fund
By
Dated: October 11, 1983
<PAGE>
Exhibit 9(c)
WAYNE HUMMER GROWTH FUND
SHAREHOLDER SERVICE AGREEMENT
-----------------------------
This AGREEMENT made this 1st day of August, 1988 between WAYNE HUMMER
GROWTH FUND, a Massachusetts business trust (the "Fund"), and WAYNE HUMMER &
CO., an Illinois general partnership ("WH & Co.");
W I T N E S S E T H:
--------------------
WHEREAS, the Fund is a no-load, open-end, diversified, management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"), the units of beneficial interest ("Shares") of which are registered
under the Securities Act of 1933; and
WHEREAS, the Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers Shares in one portfolio, the Growth
Portfolio (hereinafter, together with any other portfolio(s) established by the
Fund, referred to as the "Portfolio"); and
WHEREAS, the Fund desires at this time to retain WH & Co. to render
services to the Fund and its shareholders and WH & Co. is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Shareholder Service Agent. The Fund hereby appoints WH &
Co. as the primary shareholder service agent
<PAGE>
for the Fund upon the terms and for the period set forth in this Agreement. WH &
Co. hereby accepts such appointment and agrees to render the services and
perform the duties of shareholder service agent as set forth herein.
2. Services. The services to be performed by WH & Co. hereunder are set
forth in Schedule A attached hereto which may, at any time or from time to time,
be modified or amended by agreement of the parties in the form of an amended or
supplemental schedule initialed by their authorized representatives. WE & Co.
also agrees to perform such additional services within its capacity of
shareholder service agent as may, from time to time, be requested by the Fund,
provided that such additional services are the subject of a supplement to
Schedule A attached hereto, as contemplated above.
3. Costs and Expenses of Performance. The Fund will reimburse WH & Co. for
WH & Co.'s approximate out-of-pocket cost, if any, of providing the services
contemplated by this Agreement as set forth on Schedule A, including the costs
of postage; data entry, modification, and printout; stationery; tax forms; and
all other external forms or printed material which may be required for
performance by WH & Co. of the services contemplated by this Agreement
("Reimbursable Expenses"). Such Reimbursable Expenses shall not include any out-
of-pocket cost to WH & Co. for labor or overhead incurred in rendering such
services, nor shall such Reimbursable Expenses include any promotional or
distribution costs incurred by WH & Co.
2
<PAGE>
WH & Co. shall submit to the Fund a monthly report setting forth in
reasonable detail the Reimbursable Expenses of WH & Co. paid or incurred during
such month. The Fund agrees to cause all such reports to be reviewed promptly
(in no event less frequently than quarterly) after receipt. Immediately
thereafter, WH & Co. will be notified of any discernable errors, discrepancies
or omissions and, in the absence of such notification, the report will, for all
purposes, be received as accurate and complete.
4. Effective Date and Term. This Agreement shall become effective on July
1, 1988 (the "Effective Date") and shall continue until terminated as provided
in paragraph 13 of this Agreement.
5. Standard of Care. WH & Co. will make every reasonable effort and take
all reasonably available measures to assure the accurate performance of all
services to be performed by it hereunder within, at a minimum, the time
requirements of any statute, rule or regulation pertaining to the mutual fund
industry and any time requirements set forth in the Prospectus of the Fund. WH &
Co. also shall promptly correct any error or omission made by it in the
performance of its duties hereunder of which it shall have received notice in
writing. In effecting any such corrections, WH & Co. shall take all reasonable
steps necessary to trace and correct any related errors and omissions which
might cause an over-issue of the Fund's Shares and/or the excess payment of
dividends. All allocable costs of corrections shall be charged to the Fund and
the liability of WH & Co. under
3
<PAGE>
this paragraph shall be subject to the limitations provided in paragraph 10 of
this Agreement.
6. Record Retention and Confidentiality. WH & Co. shall keep and maintain
on behalf of the Fund all records which are required to be maintained pursuant
to Rule 31a-1 under the 1940 Act and to preserve such records for the time
periods prescribed therein; provided, however, that WH & Co. shall not be
required to maintain those records which would duplicate records required to be
maintained pursuant to any other agreement entered into by the Fund. In
addition, WH & Co. Will maintain all records it is required to maintain pursuant
to any applicable statutes, rules and regulations relating to the maintenance of
records in connection with the services to be performed hereunder.
Notwithstanding the foregoing, WH & Co. shall maintain, for a period of at least
six (6) years, all records and documents which may be needed or required to
support or document the entries made by WH & Co. in its performance of services
hereunder. WH & Co. agrees that all records required to be maintained under this
paragraph shall be the property of the Fund; shall be maintained in such fashion
as to preserve the confidentiality thereof and to comply with applicable rules
and regulations of federal and/or state securities laws; and shall, in whole or
any specified part, be available for inspection by or surrender to the Fund at
any reasonable time after receipt of an appropriate request.
7. Banking Accounts. WH & Co. shall open such banking accounts as it deems
reasonably required in controlling the
4
<PAGE>
conversion of investors' funds into federal funds or for other purposes it deems
necessary or beneficial and shall be accountable to the Fund on a fiduciary
basis for the management of such accounts and the funds at any time on deposit
therein.
8. Indemnification of WH & Co. The Fund shall indemnify WH & Co. and hold
it, its employees and agents harmless from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against all judgments, liabilities, losses, damages, costs, charges, counsel
fees and other expenses arising from or relating to any action taken or omitted
to be taken by WH & Co. in good faith in reliance upon:
(a) the authenticity of any letter or any other instrument or
communication reasonably believed by it to be genuine and to have been
properly made or signed by an authorized officer or agent of the Fund or by
a shareholder or the authorized agent of a shareholder, as the case may be;
(b) the accuracy of any records or information provided to it by the
Fund, except to the extent the same may contain obvious errors or omissions;
(c) any certificate by an authorized officer of the Fund or any other
person authorized by the Fund's Board of Trustees as conclusive proof of any
fact or matter required to be ascertained by WH & Co. hereunder;
(d) instructions at any time given by an authorized officer of the Fund
with respect to WH & Co.'s duties and
5
<PAGE>
responsibilities hereunder including, as to legal matters pertaining to the
performance of its duties hereunder, such advice or instructions as may be
given to WH & Co. by the counsel to the Fund or any counsel appointed by
such counsel or any authorized officer of the Fund;
(e) instructions regarding the redemptions, exchanges, or other
treatment of the Shares of the Fund, together with all dividends thereon,
and any reinvestment thereof, held or shown to the credit of any
shareholder account which shall satisfy the requirements of the Fund as
contained in its then current Prospectus or as communicated in writing to
WH & Co. by the Fund; and
(f) the advice or opinion of legal counsel furnished to it pursuant to
paragraph 11 hereof.
9. Insurance. WH & Co. shall use its best efforts to obtain or keep in
effect a broad form of Brokers' Blanket Bond (Form 14) in the minimum amount of
$1,000,000 covering theft, embezzlement, forgery and other specified acts of
malfeasance and misfeasance by WH & Co., its agents and employees, with
aggregate coverage for forged signatures in the minimum amount of $1 million.
In the event that WH & Co. shall be unable to obtain or keep in effect any
of the insurance coverage herein referred to, it shall promptly notify the Fund
in writing of such inability and shall use its best efforts to obtain and keep
in effect such
6
<PAGE>
other insurance coverages as the Fund shall reasonably require, in lieu of the
coverage described above.
10. Limitation of WH & Co. Liability. WH & Co. assumes no liability and
shall not be liable for any damage, loss of data, delay or other loss caused by
circumstances or events beyond its control which it would not reasonably have
anticipated.
11. Legal Advice and Instructions. WH & Co. may, at any time, request
instructions from any authorized officer of the Fund with respect to the
performance of its duties and responsibilities hereunder and may consult with
counsel for the Fund relative to any such matter and shall not be liable
hereunder for any action taken or omitted by it in good faith, in accordance
with such instructions, or with an opinion of such counsel or of counsel
appointed by an authorized officer of the Fund to deal with inquiries or
requests for instructions by WH & Co.
12. Documents and Information. As soon as feasible prior to the Effective
Date of the Agreement, the Fund will supply to WH & Co. such documents and
information, including the current Prospectus of the Fund, which WH & Co. may
determine, in its reasonable discretion, to be necessary or appropriate for it
to perform the services to be performed hereunder and will thereafter supply all
amendments or supplemental documents with respect thereto as soon as the same
shall be effective or available for distribution. WH & Co., as Shareholder
Service Agent, has no responsibility for the preparation, content and
7
<PAGE>
clearance of the Prospectus under federal or state securities laws and any rules
or regulations thereunder. The Fund will not make any change in its Prospectus
affecting the services and functions to be performed by WH & Co. hereunder
without a written supplement to Schedule A hereof, as contemplated by paragraphs
1 and 2 of this Agreement.
13. Termination. This Agreement may be terminated by either party only upon
sixty (60) days' prior written notice; provided, however, that the Fund may
terminate this Agreement without prior notice in order to preserve the integrity
of its shareholder records from material and continuing errors and omissions on
the part of WH & Co. In the event of any such termination, WH & Co. will provide
full cooperation, assistance and documentation within its capabilities as shall
be necessary or desirable, in the reasonable judgment of the Fund, to ensure
that any transfer of the duties and responsibilities of WH & Co. is accomplished
with maximum efficiency and with minimum cost and disruption to the Fund's
activities. Such cooperation will include the delivery of all files, documents
and records used, kept or maintained by WH & Co. in the performance of its
services hereunder (except records or documents destroyed pursuant to the
provisions hereof or with the approval of the Fund) together with such of the
Fund's records as may be maintained by WH & Co. in a form other than hard copy
as well as such summary and/or control data relating thereto, if any, used by or
available to WH & Co. as may be requested by the Fund. The cost of all such
8
<PAGE>
termination services on the part of WH & Co. shall be paid by the Fund without
prejudice subject, however, to the rights of the Fund to recover any amounts so
paid in the event that WH & Co. shall be liable to the Fund under paragraph 10
hereof.
14. Assignment. This Agreement and the rights and duties hereunder shall
not be assignable by any of the parties thereto.
15. Limitation of Liability. This Agreement is executed by or on behalf of
the Fund, and WH & Co. is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Agreement and Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Agreement shall
be limited in all cases to the Fund and its assets, and WH & Co. shall not seek
satisfaction of any such obligations from the Trustees, Officers or shareholders
of the Fund.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be construed in accordance with
applicable federal law and (except as to paragraph 15 hereof which shall be
construed in accordance with the laws of the Commonwealth of Massachusetts) the
laws of the State of Illinois and shall be binding upon and shall inure to the
benefit of the
9
<PAGE>
parties hereto and their respective successors, subject to paragraph 14 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ATTEST: WAYNE HUMMER GROWTH FUND
/s/ Jean M. Watts By
___________________ _____________________
Its President
_________________
WITNESS: WAYNE HUMMER & CO.
___________________ _____________________
A General Partner
10
<PAGE>
EXHIBIT 9(d)
PORTFOLIO ACCOUNTING SERVICES AGREEMENT
This Agreement is entered into as of the 1st day of November, 1994 by and
among Wayne Hummer Management Company, an Illinois corporation ("WH Mgt. Co."),
Wayne Hummer Money Fund Trust, a Massachusetts business trust ("WHMFT"), and
Wayne Hummer Investment Trust, a Massachusetts business trust ("WHIT") (WHMFT
and WHIT hereinafter being occasionally referred to individually as a "Fund" and
collectively as the "Funds").
W I T N E S S E T H:
WHEREAS, each Fund is a no-load, open-end, diversified, management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"), the units of beneficial interest ("Shares") of which are registered
under the Securities Act of 1933; and
WHEREAS, each Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, WHMFT currently offers Shares in one portfolio~ Money Market
Portfolio, and WHIT currently offers Shares in two portfolios, the Growth Fund
Portfolio and the Income Fund Portfolio (hereinafter, together with any other
Portfolio(s) established by the Funds, referred to as a "Portfolio" or the
"Portfolios"); and
WHEREAS, each Fund desires at this time to retain WH Mgt. Co. to render
certain portfolio accounting services to such Fund and its Portfolios and WH
Mgt. Co. is willing to render such services;
NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
<PAGE>
1. Appointment of Portfolio Accounting Services Agent. Each Fund hereby
appoints WH Mgt. Co. as the Portfolio Accounting Services Agent for the Fund
upon the terms and for the period set forth in this Agreement. WH Mgt. Co.
hereby accepts such appointment and agrees to render the services and perform
the duties of Portfolio Accounting Services Agent as set forth herein.
2. Services. The services to be performed by WH Mgt. Co. hereunder are set
forth in Schedule A attached hereto which may, at any time or from time to time,
be modified or amended by agreement of the parties in the form of an amended or
supplemental schedule initialed by their authorized representatives. WH Mgt. Co.
also agrees to perform such additional portfolio accounting services within its
capacity of Portfolio Accounting Services Agent as may, from time to time, be
requested by a Fund, provided that such additional services are the subject of a
supplement to Schedule A attached hereto, as contemplated above.
3. Fees, Costs and Expenses of Performance.
3.1 Commencing on January 1, 1995, each Fund will pay WH Mgt. Co. an
equipment fee of Fifty Dollars ($50.00) per Portfolio per month;
3.2 Commencing on the dates set forth below, each Fund will pay WH Mgt.
Co. an annual fee computed by aggregating the below stated percentages of the
average daily net assets of each of its Portfolios, which fee will be accrued
daily and payable monthly but which fee shall not exceed $15,000 per Portfolio
per annum:
DATE FEE
- ---- ---
January 1 through December 31, 1995 1/400th of 1%
January 1, 1996 and thereafter 1/lOOth of 1%
2
<PAGE>
3.3 Commencing on January 1, 1995, with respect to items (i) and (ii)
and November 1, 1994, with respect to item (iii) each Fund will reimburse WH
Mgt. Co. for its approximate out-of-pocket costs of obtaining (i) securities
pricing services through Muller Data Service (or any reasonably similar
successor pricing service) ("Pricing Costs"),/1/ and (ii) a license to use the
Global Investment Systems L.P. Mutual Fund Accounting System software for
portfolio accounting (or any reasonably similar successor portfolio accounting
software) ("Software Costs"),/2/ and (iii) all such other out-of-pocket costs
(exclusive of labor or WH Mgt. Co. overhead) ("OPC's"), which are incurred by WH
Mgt. Co. in providing the pricing and software services, including without
limitation, such things as training expenses, postage, and travel expenses
(collectively, the "Reimbursable Expenses"). Each Fund will reimburse WH Mgt.
Co. by the 15th day of each calendar month (or quarter, as applicable) for that
portion of such costs allocated to its Portfolio(s) during the previous calendar
month (or quarter, as applicable) as follows:
(a) The amount of Pricing Costs allocated to a particular Portfolio for
a particular month will be based upon (1) the average number of securities in
such Portfolio during such calendar month, and (2) the actual Pricing Costs
incurred by WH Mgt. Co. with respect to such Portfolio for such month.
(b) The amount of Software Costs allocated to a particular Portfolio for
a particular calendar quarter will be equal to one-fourth (1/4) of the annual
Software Costs incurred by WH Mgt. Co. from time to time times a fraction (1)
the numerator of which
- -------------------
/1/ The initial Pricing Costs are approximately $21,000 per year.
/2/ The initial Software Costs are approximately $18,750 per year.
3
<PAGE>
is one (1), and (2) the denominator of which is the total number of
Portfolios being serviced under this Agreement during such calendar
quarter.
(c) When a particular OPC expense relates to more than one Portfolio,
such expense shall be allocated equally among all Portfolios to which it
relates.
3.4 On or before the fifth day of each month, WH Mgt. Co. shall submit
to each Fund a monthly report setting forth in reasonable detail the
Reimbursable Expenses and their allocation. Each Fund agrees to cause all such
reports to be reviewed promptly after receipt. Immediately thereafter, WH Mgt.
Co. will be notified of any discernable errors, discrepancies or omissions and,
in the absence of such notification, the report will, for all purposes, be
received as accurate and complete.
4. Effective Date and Term. This Agreement shall become effective on
November 1, 1994 (the "Effective Date") and shall continue until terminated as
provided in paragraph 11 of this Agreement.
5. Standard of Care. WH Mgt. Co. shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement and will make
every reasonable effort and take all reasonably available measures to assure the
accurate performance of all services to be performed by it hereunder within, at
a minimum, the time requirements of any statute, rule or regulation pertaining
to the mutual fund industry and any time requirements set forth in the
Prospectus or Statement of Additional Information of a Fund. WH Mgt. Co. also
shall promptly correct any error or omission made by it in the performance of
its duties hereunder of which it shall have received notice in writing. In
effecting any such corrections, WH Mgt. Co. shall take all reasonable steps
necessary to trace and correct any related errors and omissions. Any costs
4
<PAGE>
or losses incurred by a Fund as a result of any such error or omission or the
correction thereof shall be reimbursed by WH Mgt. Co. and allocated pursuant to
paragraph 3.3 (a) or (b), as appropriate, and the liability of WH Mgt. Co.
under this paragraph shall be subject to the limitations provided in paragraph
8 of this Agreement.
6. Record Retention and Confidentiality. WH Mgt. Co. shall keep and
maintain on behalf of the Fund all records which are required to be maintained
pursuant to Rule 31a-1 under the 1940 Act and to preserve such records for the
time periods prescribed therein; provided, however, that WH Mgt. Co. shall not
be required to maintain those records which would duplicate records required to
be maintained pursuant to any other agreement entered into by a Fund. In
addition, WH Mgt. Co. will maintain all records it is required to maintain
pursuant to any applicable statutes, rules and regulations regulating to the
maintenance of records in connection with the services to be performed
hereunder. Notwithstanding the foregoing, WH Mgt. Co. shall maintain, for a
period of at least six (6) years, all records and documents which may be needed
or required to support or document the entries made by WH Mgt. Co. in its
performance of services hereunder. WH Mgt. Co. agrees that all records required
to be maintained under this paragraph shall be the property of the appropriate
Fund; shall be maintained in such fashion as to preserve the confidentiality
thereof and to comply with applicable rules and regulations of federal and/or
state securities laws; and shall, in whole or any specified part, be available
for inspection by or surrender to the Fund at any reasonable time after receipt
of an appropriate request.
7. Indemnification of WH Mgt. Co. Each Fund shall indemnify, exclusively
out of Fund assets, WH Mgt. Co. and hold it, its employees and agents harmless
from and against any
5
<PAGE>
and all claims, demands, actions and suits, whether groundless or otherwise,
and from and against all judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses arising from or relating to any action
taken or omitted to be taken by WH Mgt. Co. in good faith without negligence. WH
Mgt. Co. may rely and/or act upon:
(a) the authenticity of any letter or any other instrument or
communication reasonably believed by it to be genuine and to have been properly
made or signed by an authorized officer or agent of such Fund;
(b) the accuracy of any records or information provided to it by such
Fund, except to the extent the same may contain obvious errors or omissions;
(c) any certificate by an authorized officer of such Fund or any other
person authorized by such Fund's Board of Trustees as conclusive proof of any
fact or matter required to be ascertained to WH Mgt. Co. hereunder;
(d) instructions at any time given by an authorized officer of such Fund
with respect to WH Mgt. Co.'s duties and responsibilities hereunder including,
as to legal matters pertaining to the performance of its duties hereunder,
such advice or instructions as may be given to WH Mgt. Co. by the counsel to
such Fund or any counsel appointed by such counsel or any authorized officer of
such Fund; and
(e) the advice or opinion of legal counsel furnished to it pursuant to
paragraph 9 hereof.
8. Limitation of WH Mgt. Co. Liability. WH Mgt. Co. assumes no liability
and shall not be liable for any damage, loss of data, delay or other loss caused
by circumstances or events beyond its control which it could not reasonably
have anticipated.
6
<PAGE>
9. Legal Advice and Instructions. WH Mgt. Co. may, at any time, request
instructions from any authorized officer of a Fund with respect to the
performance of its duties and responsibilities to such Fund hereunder and may
consult with counsel for such Fund relative to any such matter and shall not be
liable hereunder for any action taken or omitted by it in good faith, in
accordance with such instructions, or with an opinion of such counsel or of
counsel appointed by an authorized officer of such Fund to deal with inquiries
or requests or instructions by WH Mgt. Co.
10. Documents and Information. As soon as feasible prior to the Effective
Date of the Agreement, each Fund will supply to WH Mgt. Co. such documents and
information, including the current Prospectus and Statement of Additional
Information of the Fund, which WH Mgt. Co. may determine, in its reasonable
discretion, to be necessary or appropriate for it to perform the services to be
performed hereunder and will thereafter supply all amendments or supplemental
documents with respect thereto as soon as the same shall be effective or
available for distribution.
11. Termination. This Agreement may be terminated by a party only upon
sixty (60) days' prior written notice; provided, however that a Fund may
terminate this Agreement without prior notice in order to preserve the integrity
of its records from material and continuing errors and omissions on the part of
WH Mgt. Co. In the event of any such termination, WH Mgt. Co. will provide full
cooperation, assistance and documentation within its capabilities as shall be
necessary or desirable, in the reasonable judgment of the Fund, to ensure that
any transfer of the duties and responsibilities of WH Mgt. Co. is accomplished
with maximum efficiency and with minimum cost and disruption to the Fund's
activities. Such cooperation will include the delivery of all files, documents
and records used, kept or maintained by WH Mgt. Co. in the performance
7
<PAGE>
of its services hereunder (except records or documents destroyed pursuant to the
provisions hereof or with the approval of the Fund) together with such of the
Fund's records as may be maintained by WH Mgt. Co. in a form other than hard
copy as well as such summary and/or control data relating thereto, if any, used
by or available to WH Mgt. Co. as may be requested by the Fund. The cost of all
such termination services on the part of WH Mgt. Co. shall be paid by the Fund
without prejudice subject, however, to the rights of the Fund to recover any
amounts so paid in the event that WH Mgt. Co. shall be liable to the Fund under
paragraph 5 hereof.
12. Assignment. This Agreement and the rights and duties hereunder shall
not be assignable by any of the parties hereto.
13. Limitation of Liability. This Agreement is executed by or on behalf of
each Fund, and WH Mgt. Co. is hereby expressly put on notice of the limitation
of shareholder liability as set forth in the Agreement and Declaration of Trust
of each Fund and agrees that the obligations assumed by a Fund pursuant to this
Agreement shall be limited in all cases to such Fund and its assets, and WH Mgt.
Co. shall not seek satisfaction of any such obligations from the Trustees,
Officers or shareholders of such Fund.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be construed in accordance with
applicable federal law and (except as to paragraph 13 hereof which shall be
construed in accordance with the laws of the Commonwealth of Massachusetts) the
laws of the State of Illinois and shall be binding upon and
8
<PAGE>
shall inure to the benefit of the parties hereto and their respective
successors, subject to paragraph 12 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ATTEST: WAYNE HUMMER MANAGEMENT COMPANY
- ---------------------------- By:
--------------------------------
Its: President
ATTEST: WAYNE HUMMER MONEY FUND TRUST
- ---------------------------- By:
----------------------------------
Its: President
ATTEST: WAYNE HUMMER INVESTMENT TRUST
/s/ Jean M. Watts
- ---------------------------- By: /s/ Thomas J. Rowland
----------------------------------
Its: Vice President
9
<PAGE>
SCHEDULE A
Services to Be Rendered
A. Maintain all books, accounts, ledgers, journals, supporting documents and
supplementary records pertaining to each Portfolio of a Fund which constitute
the record forming the basis for financial statements required of such Fund by
law or required by resolution of the Fund's Board of Trustees.
B. Maintain Capital Stock Accounts for each Portfolio.
C. Prepare for each Portfolio a daily trial balance.
D. Price each Portfolio's securities pursust to the Prospectus arld Statement of
Additional Infox ation of the Fund alld appropnate laws and regulations.
E. Calculate the net asset value of each of the Portfoliots in accordance with
the appropriate Fund' s current Prospectus and Statement of Additional
Information and commuriicate sarne to the appropriate Furld's transfer agent on
each day that the net asset value per share is required to be calculated.
F. Maintain all records of a financial nature pertaining to Portfolio
tansactions, including without limitation investment ledgers, as are required by
law or resolution of a Fund's Board of Trustees.
G. On demand, process and print all special ledgers arld other reports required
by Rule 31(a)-1, Regulations SX and the compliance tests promulgated under both
the Investment Company Act of 1940 and the Internal Revenue Code of 1986, as
amended, that are not required to be maintained under any other agreement
betsveen such Fund and WH Mgt. Co. or a third party.
<PAGE>
Dated: November 1, 1994.
WAYNE HUMMER MANAGEMENT COMPANY
By: /s/
------------------------
Its: President
--------------------
WAYNE HUMMER MONEY FUND TRUST
By: /s/
------------------------
Its: President
--------------------
WAYNE HUMMER INVESTMENT TRUST
By: /s/ Jean M. Watts
------------------------
Its: Secretary
--------------------
A-2
<PAGE>
Exhibit 11(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our report dated April
28, 1995 relating to the Wayne Hummer Growth Fund and our report dated May 19,
1995 relating to the Wayne Hummer Income Fund in the Registration Statement
(Form N-1A) and its incorporation by reference in the related Prospectus and
Statement of Additional Information of Wayne Hummer Investment Trust, filed with
the Securities and Exchange Commission in this Post-Effective Amendment No. 15
to the Registration Statement under the Securities Act of 1933 (Registration No.
2-87153) and in this Amendment No. 15 to the Registration Statement under the
Investment Company Act of 1940 (Registration No. 811-3880).
[SIGNATURE OF ERNST & YOUNG LLP]
ERNST & YOUNG LLP
Chicago, Illinois
July 25, 1995
<PAGE>
Exhibit 11(b)
[LETTERHEAD OF VEDDER, PRICE, KAUFMAN & KAMMHOLZ]
July 26, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Wayne Hummer Investment Trust
To the Commission:
We are counsel to the above-referenced investment company (the "Fund") and
as such have participated in the preparation and review of Post-Effective
Amendment No. 15 to the Fund's Registration Statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures that would render it ineligible to become effective pursuant to
paragraph (b) thereof.
Very truly yours,
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
By /s/ Robert J. Moran
--------------------
Robert J. Moran
RJM/cy
<PAGE>
EXHIBIT 13
WAYNE HUMMER GROWTH FUND
Investment Letter
1. Share Subscription. The undersigned agrees to purchase from Wayne Hummer
Growth Fund (the "Fund") the number of shares (the "Shares") of the Fund's
Growth Portfolio, without par value, set forth at the end of this Agreement on
the terms and conditions set forth herein and in the Preliminary Prospectus
("Preliminary Prospectus") described below, and hereby tenders the amount of
the price required to purchase these shares at a price of $10.00 per share.
The undersigned understands that the Fund has filed a registration
statement with the Securities and Exchange Commission on Form N-1, which
contains the Preliminary Prospectus which describes the Fund and the Shares. By
its signature hereto, the undersigned hereby acknowledges receipt of a copy of
the Preliminary Prospectus.
The undersigned recognizes that the Fund will be not fully operational
until such time as it commences the public offering of its shares. Accordingly,
a number of features of the Fund described in the Preliminary Prospectus,
including, without limitation, the declaration and payment of dividends, and
redemption of shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until the Fund's
registration under the Securities Act of 1933 is made effective.
2. Registration and Warranties. The undersigned hereby represents and
warrants as follows:
(a) It is aware that no Federal or state agency has made any findings
or determination as to the fairness for investment, nor any recommendation or
endorsement, of the Shares;
(b) It has such knowledge and experience of financial and business
matters as will enable it to utilize the information made available to it in
connection with the offering of the Shares, to evaluate the merits and risks of
the prospective investment and to make an informed investment decision;
(c) It recognizes that the Fund has only recently been organized and
has no financial or operating history and, further, that investment in the Fund
involves certain risks, and it has taken full cognizance of and understands all
of the risks related to the purchase of the Shares, and it acknowledges that it
has suitable financial resources and anticipated income to bear the economic
risk of such an investment;
<PAGE>
(d) It is purchasing the Shares for its own account, for investment,
and not with any intention of redemption, distribution, or resale of the Shares,
either in whole or in part;
(e) It will not sell the Shares purchased by it without registration of
the Shares under the Securities Act of 1933 or exemption therefrom;
(f) This Agreement and the Preliminary Prospectus and such material
documents relating to the Fund as it has requested have been provided to it by
the Fund and have been reviewed carefully by it; and
(g) It has also had the opportunity to ask questions of, and receive
answers from, representatives of the Fund concerning the Fund and the terms of
the offering.
3. The undersigned recognizes that the Fund reserves the unrestricted right
to reject or limit any subscription and to close the offer at any time.
4. The undersigned also acknowledges that the costs of organization of the
Fund will be borne by the Fund and will be amortized over a period not to exceed
five years beginning with the commencement of public offering by the Fund. If,
during that period of amortization, the undersigned redeems any Shares purchased
under this form of agreement (hereinafter the "Initial Shares"), the
undersigned agrees that the undersigned will bear any unamortized portion of
those costs of organization in the same proportion as the number of Initial
Shares then being redeemed bears to the number of Initial Shares outstanding at
the time of redemption.
Number of shares: 10,000. Subscription price S10.00 per share for an
aggregate price of $100,000.00.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 27th
day of December, 1983.
WAYNE HUMMER MANAGEMENT COMPANY,
an Illinois corporation
By: /s/ W. A. Rogers
-----------------------------------
Its President
--------------------------------
-2-
<PAGE>
EXHIBIT 14(a)
IRA
Individual Retirement Account
A TAX DEFERRED RETIREMENT SAVINGS PROGRAM
REGULAR IRA
SPOUSAL IRA
ROLLOVER IRA
Wayne Hummer & Co.
SELF-DIRECTED INDIVIDUAL RETIREMENT CUSTODIAL AGREEMENT
The individual whose name appears on the Plan Agreement attached hereto
(hereinafter called "Depositor") is establishing an Individual Retirement
Account (under Section 408(a) of the Internal Revenue Code) to provide for his
or her retirement and for the support of his or her beneficiaries after death.
Wayne Hummer & Co. (hereinafter called "Custodian") has agreed to serve as
Custodian of Depositor's Individual Retirement Account established hereunder.
The Depositor has assigned the trust the amount indicated as the initial
contribution on the Plan Agreement. Such amount and any additions thereto and
earnings thereon held by the Custodian pursuant to this agreement may be
hereafter referred to as the "Custodial Account," "Account" or "Custodial
Funds."
The Depositor and the Custodian make the following agreement:
ARTICLE I
1.1 The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
408(d)(3), of the Code or an employer contribution to a simplified employee
pension plan as described in 408(k).
ARTICLE 11
2.1 The Depositor's interest in the balance in the Custodial Account is
nonforfeitable.
ARTICLE 111
3.1 No part of the Custodial Funds may be invested in life insurance contracts,
nor may the assets of the Custodial Account be commingled with other property
except in a common trust fund or common investment fund (within the meaning of
Section 408(a)(5) of the Code).
3.2 No part of the Custodial Funds may be invested in collectibles (within the
meaning of Section 408(m) of the Code).
ARTICLE IV
4.1 The Depositor's entire interest in the Custodial Account must be or begin to
be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70-1/2. By
that date the Depositor may elect, in a manner acceptable to the Custodians to
have the balance in the Custodial Account distributed in:
a. A single sum payment.
<PAGE>
b. An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor. The payments must
begin by April 1 following the calendar year in which the Depositor reaches age
70-1/2.
c. An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor of the Depositor
and his or her designated beneficiary. The payments must begin by April 1
following the calendar year in which the Depositor reaches 70-1/2.
d. Equal or substantially equal annual payments over a specified period that may
not be longer than the Depositor's life expectancy.
e. Equal or substantially equal annual payments over a specified period that may
not be longer than the joint life and last survivor expectancy of the Depositor
and his or her designated beneficiary.
Even if distributions have begun to be made under option (d) or (e), the
Depositor may receive a distribution of the balance in the Custodial Account at
any time by giving written notice to the Custodian. If the Depositor does not
choose any of the methods of distribution described above by the April 1
following the calendar year in which he or she reaches age 70-1/2, distribution
to the Depositor will be made on that date by a single sum payment. If the
Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of Section 408(b)(1),(3), and (4) of the
Code. If the Depositor elects as a means of distribution (d) or (e) above, the
annual payment required to be made by the Depositor's required beginning date is
for the calendar year the Depositor reached age 70-1/2. Annual payments for
subsequent years, including the year the Depositor's required beginning date
occurs, must be made by December 31 of that year.
4.2 If the Depositor dies before his or her interest is distributed to him or
her, the entire remaining interest will be distributed as follows:
a. If the Depositor dies on or after the Depositor's required beginning date,
distribution must continue to be made in accordance with paragraph 4.1.
b. If the Depositor dies before the Depositor's required beginning date, the
entire remaining interest will, at the election of the beneficiary(ies), either
i. Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
ii. Be distributed in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary(ies).
The election of either (i) or (ii) must be made by December 31 of the year
following the year of the Depositor's death. If the beneficiary or beneficiaries
do not elect either of the distribution options described in (i) and ( ii),
distribution will be made in accordance with (ii) if the beneficiary is the
Depositor's surviving spouse, and in accordance with (i) if the beneficiary or
beneficiaries are or include anyone other than the surviving spouse. In the case
of distributions under (ii), distributions must commence by the December 31 of
the year following the year of the Depositor's death. If the Depositor's spouse
is the beneficiary, distributions need not commence until the December 31 of the
year the Depositor would have attained age 70-1/2, if later.
c. If the Depositor dies before his or her entire interest has been distributed
and if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
4.3 In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial Account as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever
<PAGE>
applies). In the case of distributions under paragraph 4.1, determine the
initial life expectancy (or joint life and last survivor expectancy) using the
attained ages of the Depositor and designated beneficiary as of their birthdays
in the year the Depositor reaches age 70-1/2. In the case of distribution in
accordance with paragraph 4.2(b)(ii), determine life expectancy using the
attained age of the designated beneficiary as of the beneficiary's birthday in
the year distributions are required to commence. Unless the Depositor (or
spouse) elects not to have life expectancy recalculated, the Depositor's life
expectancy (and the life expectancy of the Depositor's spouse, if applicable)
will be recalculated annually using their attained ages as of their birthdays in
the year for which the minimum annual payment is being determined. The life
expectancy of the designated beneficiary (other than the spouse) will not be
recalculated. The minimum annual payment may be made in a series of installments
(e.g., monthly, quarterly, etc.) as long as the total payments for the year made
by the date required are not less than the minimum amounts required.
ARTICLE V
5.1 Unless the Depositor dies, is disabled (as defined in Section 72(m) of the
Code), or reaches age 59-1/2 before any amount is distributed from the account,
the Custodian must receive from the Depositor a statement explaining how he or
she intends to dispose of the amount distributed.
ARTICLE VI
6.1 The Depositor agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under Section 408(i) of the Code
and the related regulations.
6.2 The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VII
7.1 Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) of the Code and
related regulations will be invalid.
ARTICLE VIII
8.1 This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Plan Agreement.
ARTICLE IX
9.1 Designation of Depository: The term "Depository" as used herein shall mean
the financial institution or securities firm designated as such. It is
permissible for the same financial institution or securities firm to serve as
both Depository and Custodian.
9.2 Investment Powers of the Custodian--Generally: The Custodian shall have the
power and authority in the administration of this Custodial Account to do all
acts conferred by law, including, but not limited to the following:
a. Pursuant to directions from the Depositor or the Depositor's agent,
1. To invest and reinvest the Custodial Account Corpus, any additional
contributions and any Custodial Account earnings as directed by the Depositor in
any form of investment authorized under law and agreed to by the Custodian.
2. To invest and reinvest all or any part of the Custodial Account in securities
obtainable through the Custodian either "Over the Counter" or on a recognized
exchange, and to invest in mutual funds, savings instruments and any other
lawful custodial investment which is administratively acceptable to
<PAGE>
the Custodian without any duty to diversify, and without regard to whether such
property is authorized by the laws of any jurisdiction for custodial investment.
b. Subject to prior approval by the Custodian:
1. To accept rollover contributions which include property other than cash as
described in Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3)
of the Code.
2. To accept assets transferred directly for the benefit of the Depositor to the
Custodial Account from the Trustee or Custodian of another Individual Retirement
Account (IRA) as described in Section 408(a) of the Code. The Custodian is
prohibited from directly or indirectly engaging in any transaction prohibited by
Section 4975 of the Code.
c. Subject to prior approval of the Depositor or the Depositor's agent, to hold
any part or all of the Custodial Fund uninvested or, pursuant to directions of
the Depositor to place the same in a savings account approved by the Custodian
or to purchase a Certificate of Deposit with an institution chosen by the
Depositor or the Depositor's agent. However, the Custodian may, but need not,
establish a program under which cash deposits in excess of a minimum set by it
will periodically be invested in a savings account or in a money market fund
without direction of the Depositor or the Depositor's agent, and the terms of
any such program may be determined and altered at the discretion of the
Custodian.
d. To hold any securities in bearer form or in the name of the Custodian;
e. To employ suitable agents and counsel and to pay their reasonable expenses
and compensation;
f. Subject to the provisions of paragraph 9.5(d), to vote in person or by proxy
upon securities held by the Custodian and to delegate its discretionary powers.
g. To consent to or participate in dissolutions, reorganizations,
consolidations, mergers, sales, leases, mortgages, transfers or other changes
affecting securities held by the Custodian;
h. The Custodian is authorized by the Depositor to purchase and sell securities
for the Depositor's account. Prior to entering any orders to purchase or sell
securities in this account, the Depositor shall approve all such orders, and
shall direct the Custodian to implement the Depositor's instructions. Selling
short, and/or executing purchases in an amount which is greater than the
available cash are each prohibited transactions. Investments in life insurance
and collectibles are not permitted. All investments outside of the brokerage
account shall be accompanied by additional written instructions.
i. In accordance with Section 404(c) of the Employee Retirement Income Security
Act ("the Act"), since the Depositor exercises control over the assets in this
Individual Retirement Custodial Account, such Depositor or such Depositor's
Beneficiary shall not be deemed to be a fiduciary by reason of the exercise of
any such control, and no person who is otherwise a fiduciary shall be liable
under this Custodial Account for any loss, or by reason of any breach, which
results from such Depositor's exercise of control.
j. The Depositor may appoint in writing an Investment Manager or Managers to
manage (including the power to acquire and dispose of) any assets of this
Custodial Account.
Any such Investment Manager shall be registered as an Investment Adviser under
the Investment Advisers Act of 1940. If investment of the Custodial Account is
to be directed by an Investment Manager, the Depositor shall deliver to the
Custodian a copy of the instruments appointing the Investment Manager and
evidencing the Investment Manager's acceptance of such appointment, an
acknowledgement by the Investment Manager that it is a fiduciary of the
Custodial Account, and a certificate evidencing the Investment Manager's current
registration under said Act. The Custodian shall be fully protected in relying
upon such instruments and certificate until otherwise notified in writing by the
Depositor.
<PAGE>
The Custodian shall follow the directions of any duly appointed Investment
Manager regarding the investment and reinvestment of the Custodial Account, or
such portion thereof as shall be under management by the Investment Manager. The
Custodian shall be under no duty or obligation to review any investment to be
acquired, held or disposed of pursuant to such directions, nor to make any
recommendations with respect to the disposition or continued retention of any
such investment or the exercise or non-exercise of the powers. Therefore, and in
accordance with Section 405(d)(1) of the Act, the Custodian shall have no
liability or responsibility for acting or not acting pursuant to the direction
of, or failing to act in the absence of any direction from, the Investment
Manager, unless the Custodian knows that by such action or failure to act it
would be itself committing or participating in a breach of fiduciary duty by the
Investment Manager. The Depositor hereby agrees to indemnify the Custodian and
to hold it harmless from and against any claim or liability which may be
asserted against the Custodian by reason of its acting or not acting pursuant to
any direction from the Investment Manager or failing to act in the absence of
any such direction.
The Investment Manager at any time and from time to time may issue orders for
the purchase or sale of securities directly to a broker; and in order to
facilitate such transaction, the Custodian upon request shall execute and
deliver appropriate trading authorizations. Written notification of the issuance
of each such order shall be given promptly to the Custodian by the Investment
Manager, and the execution of each such order shall be confirmed by written
advice via confirmations or otherwise to the Custodian by the broker.
In the event that an Investment Manager should resign or be removed by the
Depositor, the Depositor shall manage the investments pursuant to this Agreement
unless and until the Custodian shall be notified of the appointment of another
Investment Manager with respect thereto as provided in this Article.
k. Notwithstanding anything contained herein to the contrary, the Custodian
shall not lend any part of the corpus or income of the Custodial Account, pay
any compensation for personal services rendered to the Custodial Account, make
any part of its services available on a preferential basis, or acquire for the
Custodial Account any property, other than cash, from or sell any property to
any Depositor, or to any member of a Depositor's family, or to a corporation
controlled by any Depositor through the ownership, directly or indirectly, of 50
percent or more of the total combined voting power of all classes of stock
entitled to vote or 50 percent or more of the total value of shares of all
classes of stock of such corporation.
1. All contributions made by the Depositor and all investments made with such
contributions and the earnings thereon shall be credited to an account
maintained for the Depositor by the Custodian. Such account shall reflect the
amounts contributed by the Depositor.
m. The surviving spouse and/or any other beneficiary shall be bound by Article
IX and the Custodial Account regarding investments and administration of their
interest. However, should the beneficiary be a minor or in the discretion of the
Custodian be of unsound mind, the Custodian is permitted to liquidate the
interests of such beneficiary and hold such amounts in an interest bearing
account or money market account until distributed.
9.3 Investment Powers of the Custodian--Absence of Investment Authority or
Discretion
a. The Custodian shall not make any investment or dispose of any investment held
in custody, except upon the direction of the Depositor or the Depositor's Agent.
<PAGE>
b. The Custodian shall be fully protected acting upon any instrument,
certificate, or paper believed by it to be genuine and to be signed or presented
by the proper person or persons, and the Custodian shall be under no duty to
make any investigation or inquiry as to any statement contained in any such
writing but may accept the same as conclusive evidence of the truth and accuracy
of the statements therein contained.
c. The Custodian will not be liable for any loss which may result by reason of
investments made by it in accordance with the direction of a Depositor or of the
Depositor's agent.
9.4 Expenses and Compensation: The Custodian may charge against and deduct from
the Custodial Account all reasonable expenses incurred by the Custodian in the
administration of the Custodial Account. These amounts shall be collected from
the account in cash. If no free cash is available, the Custodian shall convert
into cash sufficient assets in the Custodial Account to collect such amounts.
Brokerage commissions attributable to the acquisition or distribution of assets
in the Custodial Account will be charged to the Custodial Account and may not be
reimbursed by the Depositor.
The Custodian shall also have the right to charge and deduct from the Custodial
Account an annual fee. The Custodian reserves the right to modify the schedule
of annual Custodian fees or other fees on at least 30 days advance written
notice to Depositor.
9.5 Custodian Responsibilities: The Custodian shall have such powers as may from
time to time be necessary, appropriate, or expedient for it to fulfill its
duties and responsibilities as Custodian;
a. shall receive all contributions and pay benefits from the Custodial Account;
b. shall keep adequate records of all receipts, investments, reinvestments,
disbursements and other transactions hereunder;
c. shall establish and maintain a separate account for the Depositor;
d. shall deliver, cause to be delivered to the Depositor all notices,
prospectuses, financial statements, proxies and proxy soliciting materials
relating to assets held in the Custodial Account. Full shares held in the
Custodial Account will be voted upon only as instructed in the proxy completed,
signed and returned by the Depositor;
e. shall as soon as practicable furnish the Depositor with a confirmation of
such purchases and sales made in the Custodial Account. Upon written request,
copies will be forwarded to any other person(s);
f. shall use reasonable care, skill, prudence and diligence in the
administration of the Custodial Account and in the investments allowed pursuant
to paragraphs 9.2 and 9.3. The Custodian shall be entitled to rely on
information and instructions submitted by or on behalf of the Depositor to the
Custodian, whether directly or indirectly.
9.6 Scope of the Depository's and the Custodian's Duties: If the Custodian and
the Depository are not the same entity, the Depository shall have no duty under
this Agreement and no responsibility for the administration of the Custodial
Account, except for such duties as are imposed by law with respect to Depository
Institutions as applicable.
The Custodian shall not be liable for any loss of any kind which may result from
any action taken by the Custodian in accordance with the directions of the
Depositor or the Depositor's designated agent or attorney in fact or from any
failure to act because of the absence of any such directions. The Custodian is
entitled to act upon any instrument, certificate, or form it believes is genuine
and believes is signed or presented by the proper person or persons, and the
Custodian need not investigate or inquire as to any statement contained in such
document, but may accept it as true and accurate. The Depositor shall at all
times fully indemnify and hold harmless the Custodian, and its successors or
assignees from any liability which may arise hereunder, except liability arising
from the gross negligence or willful misconduct of the Custodian.
<PAGE>
9.7 Judicial Settlement of Accounts: In the event of any dispute or uncertainty
as to the person to whom payment of any funds shall be made hereunder, the
Custodian may withhold such payment until such dispute or uncertainty shall have
been determined or resolved by a court of competent jurisdiction, or settled by
the parties concerned.
The Custodian shall have the right to apply, at any time, to a court of
competent jurisdiction for the judicial settlement of its accounts. In any such
judicial action or proceeding, only the Custodian, and the Depositor (or in the
event of the Depositor's death, his representative) shall be necessary parties,
and no other person having an interest in the Custodial Account shall be
entitled to any notice or service of process. Any judgment entered in such
proceeding or action shall be conclusive upon all persons claiming under this
Agreement. In the event that this Custodian applies for a judicial settlement of
its accounts or any individual account, all fees and disbursements it incurs,
including but not limited to legal and accounting fees, shall be paid from the
Custodial Account and shall constitute a lien upon the account until paid.
9.8 Deduction of Taxes: Any taxes, whether federal, state, local, income, gift,
estate, inheritance or other taxes of any kind whatsoever, including transfer
taxes incurred in connection with the investment or reinvestment of the assets
imposed with respect to the Depositor's account may, in the discretion of the
Custodian be deducted from and charged against such account.
9.9 Notices:
a. Any notice herein required or permitted to be given to the Custodian shall be
deemed, for all purposes of this Agreement, to have been given on the date
received by the Custodian. No notice, instruction, declaration, election,
Beneficiary Designation or change of Beneficiary Designation, required or
permitted to be made by the Depositor or any Beneficiary herein, shall be
effective unless delivered to the Custodian in writing.
b. Any notice herein required or permitted to be given to the Depositor shall be
deemed sufficient if mailed to the Depositor at the Depositor's resident address
as herein stated, or at such other address as shall be provided to the Custodian
from time to time in writing stating that such other address shall be used for
purposes of this Agreement.
c. Provided the Custodian has been notified of the Depositor's death, any notice
herein required or permitted to be given to the Depositor may be given to any
and all Beneficiaries, including the legal representative of the Depositor's
estate. Notice to a Beneficiary shall be sufficient if mailed to the address of
the Beneficiary(ies) last provided in writing to the Custodian by the Depositor
or such Beneficiary(ies).
9.10 Annual Accounting: Within 90 days after the close of each calendar year,
the Custodian shall render an accounting valuing the assets at fair market value
to the Depositor. If the Depositor fails to file any written exceptions or
objections to any such accounting within sixty (60) days after the mailing of
such accounting, the Depositor shall be deemed to have approved of such
accounting; and in such case, or upon the written approval of the Depositor of
any such accounting, the Custodian shall be released, relieved and discharged
with respect to all matters and things set forth in such accounting as though
such accounting had been determined by the decree of a court of competent
jurisdiction. No person other than the Depositor may require an accounting or
bring any action against the Custodian with respect to the Custodial Account or
its actions as Custodian.
<PAGE>
9.11 Penalties: The Custodian shall not be responsible for any tax or other
penalty resulting from any contribution, investment, or distribution selected or
required under the terms of this Agreement.
9.12 Resignation, Removal and Appointment of Custodian:
a. The Custodian may resign, and appoint as successor Custodian any "Depository
Institution or Securities Firm," by sending written notice to the Depositor;
such resignation to take effect not less than 30 days from the date of such
notice. Upon acceptance of such appointment, a successor Custodian shall be
vested with all the authority, discretionary or otherwise, and obligations of
the Custodian hereunder.
b. The Depositor may remove the Custodian or terminate the Custodial
relationship at any time, and the Custodian shall then deliver the Custodial
Account assets as directed by the Depositor.
9.13 Designation of Beneficiary:
a. The Depositor may designate and redesignate his Beneficiary(ies) in writing
on a form provided by the Custodian for such purpose. Upon the Depositor's
death, such Beneficiary(ies) shall be entitled to the balance in the Custodial
Account of the Depositor. Such designation may be changed or revoked only by
written instrument filed with the Custodian. The Custodian may rely upon the
last written designation received by it which shall supersede all prior
designations. If the Beneficiary(ies) shall predecease the Depositor, the
designation shall be ineffective. Subject to the provisions of the law, if
another designation is not made, or if no designation is in effect at the time
of the Depositor's death, his Beneficiary shall be his estate.
b. Notwithstanding anything to the contrary in paragraph 9.13(a) above, upon the
Depositor's death, a surviving spouse Beneficiary may designate and redesignate
his or her Beneficiary(ies) in writing on a form provided by the Custodian for
such purpose. In a manner similar to that provided for the Depositor in
paragraph 9.13(a) above, such Beneficiary(ies) shall be entitled to the balance
in the Custodial Fund upon the death of the surviving spouse.
9.14 Payment in the Event of Disability: If the Depositor is disabled (as
defined in Section 72(m) of the Code), he shall be entitled to the balance in
the Custodial Fund and such balance shall be distributed to him as soon as
practicable after his disability. Prior to the time that amounts are distributed
to the Depositor on account of disability, the Custodian may require such proof
of the Depositor's disability as it deems necessary.
9.15 Disposition of Funds: Except in the case of the Depositor's death or
disability (as defined in Section 72(m) of the Code) or the attainment of age
59-1/2, before distributing an amount from the account, the Depositor shall, by
written notice to the Custodian, certify that such withdrawal or benefit is
payable and, in the case of a withdrawal, shall certify the amount of withdrawal
and the Custodian shall as soon as practicable thereafter distribute such
benefit or withdrawal as the Depositor directs in writing in accordance with
Article IV.
If the distribution is made in stock or other securities, the Custodian shall
transfer such number of shares of stock or other securities as the Depositor
shall direct into the name of such Depositor and distribute such stock or other
securities to the Depositor together with any cash, including the cash
equivalent of any fractional shares credited to such Account, as may be required
in order to comply with the Depositor's written directions.
<PAGE>
If the Depositor directs that the distribution be made in cash, the Custodian
shall, in accordance with the Depositor's written instructions, sell or redeem
stock or other securities credited to the Depositor's Account (or if such
distribution is to be made in periodic installments, such lesser amounts as the
Depositor's direction shall specify) and distribute the proceeds thereof to the
Depositor together with any cash credited to such Account.
9.16 Assignment, Pledge, Attachment, etc. of Custodial Account: No interest,
right or claim in or to any part of the Custodial Fund or any payment therefrom
shall be assignable, transferable or subject to sale, mortgage, pledge,
hypothecation, commutation, anticipation, garnishment, attachment, execution, or
levy of any kind, and the Custodian shall not recognize any attempt to assign,
transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate the same,
except to the extent required by law.
9.17 Exclusive Benefit: The Custodial Account is established for the exclusive
benefit of the Depositor and his or her Beneficiary(ies).
9.18 Interpretation and Amendment:
a. This Agreement is intended to create a qualified Individual Retirement
Account within the meaning of Section 408(a) of the Internal Revenue Code, and
each provision is intended to be consistent with Section 408(a) of the Code and
the regulations thereunder. The Depositor irrevocably delegates to the Custodian
the exclusive authority to interpret the provisions of this Agreement, as from
time to time amended, and the Custodian shall exercise such authority, where
possible, to make the provisions of this Agreement consistent with Section
408(a) of the Code and the regulations thereunder.
b. The Depositor irrevocably delegates to the Custodian the power to amend this
Agreement upon 30 days prior written notice to the Depositor setting forth such
amendment.
c. If the Custodian requests the consent of the Depositor to an amendment to
this Agreement, the Depositor will be deemed to have consented to such amendment
unless the Depositor responds in writing within 30 days of the mailing of Such
request, indicating his refusal to consent.
9.19 Continuance of the Custodial Relationship: The Custodial Relationship shall
continue in effect until the Custodian shall have completed the distribution of
the Custodial Account and the accounts of the Custodian have been settled.
9.20 Governing Law: This Agreement and the Custodial Account created hereby
shall be governed by and construed, administered and enforced according to the
laws of the State in which the Custodian maintains its principal place of
business. All contributions to the Custodial Account shall be deemed to take
place in said State.
9.21 Minimum Distribution Provisions:
a. Standard Minimum Distribution Provisions
i. Pursuant to Article IV, the Depositor and/or spouse beneficiary has the
option of electing irrevocably whether or not life expectancy(ies) will be
recalculated. Such irrevocable election as is in effect by the Depositor's
required beginning date shall apply to all subsequent distributions
Notwithstanding the provisions of paragraph 4.3, if the Depositor does not make
a timely election, distribution shall be made to the Depositor and/or spouse
beneficiary, if applicable, with life expectancy(ies) not being recalculated.
<PAGE>
ii. Notwithstanding the provisions of paragraph 4.1, the Depositor does not
choose any of the methods of distribution described under paragraph 4.1 (a)
through (e) by April 1 following the calendar year in which he or she reaches
age 70-1/2, distribution to the Depositor will be made on that date by a payment
arrived at by dividing the balance in the account as of the close of business on
December 31 of the year prior to the year in which the Depositor reaches age
70-1/2, by the life expectancy based upon the Depositor's attained age in the
year in which the Depositor reaches age 70-1/2.
iii. In the case of death distributions, any beneficiary shall have the option
to elect the method of distribution pursuant to paragraph 4.2(b)(i) or (ii).
Such election must be made by December 31 of the year following the year of the
Depositor's death. If the beneficiary(ies) does not elect either of these
distribution options on a timely basis, distribution shall be made pursuant to
paragraph 4.2(b)(ii).
iv. A surviving spouse beneficiary shall have the option to elect to recalculate
his or her life expectancy. Such election must be made by December 31 of the
year during which payments are required to commence pursuant to paragraph
4.2(b). If the surviving spouse beneficiary does not make an election on a
timely basis, life expectancy shall not be recalculated.
v. The provisions of paragraph 4.2(c) above shall not apply if the Depositor's
death occurred prior to 1984.
vi. Notwithstanding the provisions of paragraph 4.2(b), if the beneficiary is
the surviving spouse, such spouse may make the election specified under
paragraph 4.2(b)(i) or (ii) by the earlier of the December 31 of the calendar
year: (1 ) which contains the 5th anniversary of the date of death of the
Depositor, or (2) in which the Depositor would have attained age 70-1/2.
b. Optional Minimum Distribution Provisions--If the Custodian does not elect to
use the Standard Minimum Distribution Provision under paragraph 9.21 (a) above,
the boxes checked below shall indicate the minimum distribution provision(s)
applicable to this IRA Custodial Account. If no provision is selected by the
Custodian under this paragraph 9.21(b), the provision of paragraph 9.21(a) shall
automatically apply
i. Before Death Distribution
[_] The Depositor shall have the option of electing whether or not life
expectancy(ies) will be recalculated. If such election is not made by the
Depositor's required beginning date, life expectancies shall automatically be
recalculated.
[_] The Depositor's life expectancy and Depositor's designated beneficiary's
life expectancy (if applicable) shall be determined in the first year in which a
minimum is required, and shall then be reduced by one for each year that passes
(i.e. no election to recalculate life expectancies shall be available).
[_] The Depositor's life expectancy and the Depositor's spouse beneficiary's
life expectancy (if applicable) shall be determined in the first year in which a
minimum is required, and such life expectancies shall then be recalculated in
each subsequent year (i.e. an election not to recalculate shall not be
available).
ii. Death Distributions
<PAGE>
[_] Any beneficiary shall have the option to elect whether distributions will be
made pursuant to paragraph 4.2(b)(i) or (ii). If such election is not made on a
timely basis, distribution shall be made pursuant to paragraph 4.2(b)(i).
[_] A surviving spouse beneficiary shall have the option to elect to recalculate
his or her life expectancy. If such election is not made on a timely basis, life
expectancy shall be recalculated.
[_] If the Depositor dies before the Depositor's required beginning date the
entire remaining interest will be distributed pursuant to paragraph 4.2(b)(i).
[_] If the Depositor dies before the Depositor's required beginning date, and
the surviving spouse is the beneficiary, such beneficiary's life expectancy
shall not be recalculated.
[_] If the Depositor dies before the Depositor's required beginning date, and
the surviving spouse is the beneficiary, such beneficiary's life expectancy
shall be recalculated.
9.22 Simplified Employee Pension Plan:
a. Annual contributions may be made by or on behalf of the Depositor into a
Simplified Employee Pension Plan - Individual Retirement Account (SEP-IRA) under
section 408(k). Contributions by the Depositor's employer(s) may not exceed the
lesser of 15% of the Depositor's compensation from each such employer or
$30,000 per employer. Employer contributions shall be made, with respect to any
year, on or before the due date for filing the employer's federal tax return for
such taxable year (including extensions thereof).
b. If otherwise eligible, in addition to any amount contributed by his
employer(s) under a SEP Plan, the Depositor may make a regular IRA contribution
into this account which may not exceed the lesser of 100% of his compensation or
$2,000.
c. When a SEP contribution is made in or for any year in which the Depositor
attains age 70-1/2, or thereafter, the minimum distribution required under
section 4.01 of this Individual Retirement Account Agreement shall be computed
in accordance with Articles IV and IX of this Agreement.
d. The Depositor shall, if required by the Custodian, deliver a written form to
the Custodian indicating that the contribution is eligible to be treated as a
SEP-IRA contribution. The Custodian may rely upon such statement and may treat
the contribution as a SEP-IRA thereafter.
e. Although the termination of the Depositor's SEP-IRA account may have an
adverse effect on the SEP Plan in which the Depositor participates, the
Custodian shall not have any liability to the Depositor and/or his employer(s)
with respect to such termination and shall not have an obligation to provide any
notice thereof.
SELF-DIRECTED INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
GENERAL
Your Individual Retirement Account ("IRA") is a Custodial Account for the
benefit of you or your beneficiaries. The Custodian of the account which you
have established is Wayne Hummer & Co.
<PAGE>
Internal Revenue Service regulations require that you be given this Disclosure
Statement to assure that you are made aware of some of the statutory rules
governing an Individual Retirement Account.
Because the rules with respect to IRAs are very complex, and because
misunderstanding or disregarding the rules may have serious tax implications,
you should consult your own tax advisor if you have questions about the
information contained in this disclosure statement. Further information can also
be obtained from any district office of the Internal Revenue Service.
REVOKING YOUR ACCOUNT
This Disclosure Statement is being furnished to you on the date on which your
IRA is being established. If, after you have read this Disclosure Statement, you
decide for any reason not to participate in this retirement savings program,
government regulations require that you be given the right to revoke this
account. Therefore, you may revoke this account at any time on or before the
seventh day after you established it and treat it as though it had never been
established. This institution will refund your contribution in full, neither
crediting your account for earnings, nor charging it with any administrative
expenses. In order to effect a timely revocation, you must notify us in writing.
Your letter must be postmarked no later than the seventh day after you
established the account and should be addressed to the person designated to
receive such notice of revocation shown on the Plan Agreement.
The following words should be used in the revocation.
"I hereby elect to revoke my IRA Account No. ___________________________
established on __________________________________
Signature _______________________________________
Print Name ________________________________ Date ______________________
Any questions regarding this procedure may be directed to this institution.
DEFINITION OF ACTIVE PARTICIPANT
Congress has changed the rules for determining the tax deductibility of
contributions to an IRA. Beginning in 1987, if you are eligible to make regular
contributions to an IRA, the deductibility of any contributions which you make
will depend upon whether or not you are an "active participant." You are
considered to be an active participant if at any time during the year you are
covered under an employer's "qualified retirement plan." A qualified retirement
plan is a:
1. Pension, profit-sharing or stock bonus plan qualified under Section 401(a)
of the Internal Revenue Code ("the Code");
2. Qualified annuity under Section 403(a) of the Code;
3. Simplified Employee Pension Plan (SEP) under Section 408(k) of the Code;
4. Retirement plan established by a government for its employees
(does not include a Section 457 plan);
5. Annuity contract purchased by certain tax exempt organizations or public
schools under Section 403(b) of the Code; and
6. Pre-1959 pension trust described in Section 501(c)(18) of the Code.
<PAGE>
It should be noted that even sole proprietors with no employees who
adopt Keogh plans or SEPs are considered to be active participants.
The Internal Revenue Service Regulations contain a series of rather complex
rules pertaining to whether an individual is an active participant. If you are
involved with any of the plans described above, we suggest that you seek
assistance from your employer or your tax advisor to determine whether you are
an active participant.
REGULAR IRAs--Persons who are not active participants.
Eligibility: You are allowed to make "regular" contributions into a
"contributory" IRA for a year only if you have received compensation during that
year from the performance of personal services. If you are unmarried and are not
an active participant you can deduct the full amount which you are allowed to
contribute. "Compensation" includes such items as salaries, bonuses,
commissions, and in the case of a self-employed person, net earnings from self-
employment. For tax years beginning after 1984, all taxable alimony and separate
maintenance payments received by an individual under a decree of divorce or a
separate maintenance agreement are treated as compensation.
You may not make regular contributions into an IRA for the taxable year in which
you attain the age of 70-1/2 or thereafter.
Regular Contributions: The law permits you to make regular contributions to your
IRA of up to 100% of your earned income, not to exceed $2,000, for each year in
which you are eligible. If you are a married taxpayer and both you and your
spouse are eligible, each of you is separately entitled to contribute up to 100%
Of your respective income, not to exceed $2,000.
REGULAR IRAs--Active Participants
The deductibility of regular IRA contributions by persons who are active
participants depends upon their marital status, tax filing status and the amount
of their adjusted gross income (AGI). If you are an active participant, the
following charts will assist you in calculating your allowable contribution and
deduction.
UNMARRIED INDIVIDUALS:
If your Adjusted Your contribution Your deduction
Gross Income is: limit is: limit is:
$25,000 or Less Lesser of 100% of Lesser of 100% of
compensation or compensation or
$2,000 $2,000
Between $25,000 and Lesser of 100% of $2,000 limit is
$35,000 compensation or reduced by .20 for
$2,000 every $1 of AGI
between $25,000 and
$35,000
$35,000 or over Lesser of 100% of No deduction
compensation or permitted
$2,000
<PAGE>
Example:
Q. Jane is a single individual who participates in her employer's plan. If
Jane's earned income is $23,000 and her AGI is $28,000, how much may she
contribute and deduct?
A. Jane may contribute up to $2,000 but she may deduct more than $1,400 computed
as follows:
Jane's AGI $28,000.00
Lower Level $25,000.00
Difference $ 3,000.00
x adjustment .20
__________
Reduction $ 600.00
Jane's $2,000 limit is reduced by $600 to $1,400. Any amount which Jane
contributes in excess of $1,400 is non-deductible. If Jane contributes less than
$1,400 only the amount contributed is deductible.
NOTE: An individual who does not live with their spouse at any time during the
year, and does not file a joint return, is treated as "unmarried" and may
utilize the calculation above to calculate his or her deduction limit.
MARRIED PERSONS FILING JOINT RETURNS:
If your Adjust Your contribution Your deduction
Gross Income is: limit is: limit is:
$40,000 or less Lesser of 100% of Lesser of 100% of
compensation or compensation or
$2,000 (applied $2,000 (applied
separately to separately to
each spouse) each spouse)
Between $40,000 and Lesser of 100% of Each spouse's $2,000
$50,000 compensation or limit is reduced by
$2,000 (applied .20 for every $1 of
separately to AGI between $40,000
each spouse) and $50,000)
$50,000 or over Lesser of 100% of No deduction
compensation or permitted
$2,000 (applied
separately to
each spouse)
Example:
Q. Bruce and Betty Bertam are a married couple. Bruce earns a salary of $30,000
and Betty earns a salary of $6,000. When their other income (such as interest or
dividends) is added to their salary, their
<PAGE>
joint AGI is $44,000. They are filing a joint Federal Income Tax return for the
year. Betty is an active participant in her employer's plan, under which her
account has been credited with a 3% contribution ($180). How much may the
Bertam's contribute and deduct for the year?
A. They may each contribute up to $2,000 (for a total up to $4,000), but
their joint deduction is limited to $2,400, computed as follows:
<TABLE>
<CAPTION>
<S> <C>
The Couple's Joint AGI $44,000.00
Lower Level $40,000.00
Difference $ 4,000.00
x adjustment .20
---------------
Reduction $800 per person
</TABLE>
Each person's $2,000 deduction limit is reduced by $800 to $1,200. The couple's
combined deduction limit is, therefore, $2,400. Any amount either spouse
contributes above the deduction limit is a non-deductible IRA contribution. If
either spouse contributes less than $1,200 only the amount contributed by that
spouse is deductible.
For example, let's say that Bruce contributed $2,000 into his IRA and Betty
contributed $1,000 into her IRA. Their deduction on the joint return would be
limited to $2,200, and Bruce will have made an $800 non-deductible contribution
to his IRA.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Actual Contribution Deduction Non-Deductible
Bruce's $2,000 $1,200 $800
Betty's $1,000 $1,000 --
------ ------ ------
$3,000 $2,200 $800
</TABLE>
Although Betty could have contributed up to $1,200 on a deductible basis, the
fact that she didn't does not increase Bruce's deduction limit.
NOTE: For Married Persons Filing Separately, refer to chart below. Married
persons filing separately are treated as covered by a plan if their spouse was
covered by a plan and they lived with their spouse at any time during the year.
MARRIED PERSONS FILING SEPARATELY:
<TABLE>
<CAPTION>
<S> <C> <C>
If your Adjusted Your contribution Your deduction
Gross Income is: limit is: limit is:
Between $0 and Lesser of 100% $2,000 limit is reduced
$10,000 of compensation by .20 for every $1 of
or $2,000 AGI between $0 and $10,000
$10,000 or over Lesser of 100% of No deduction
compensation or permitted
$2,000
</TABLE>
Example:
<PAGE>
Q. Frank and Phyllis are a married couple who live together. Frank earns $50,000
and Phyllis earns $37,000. Frank is covered under his employer's plan, but
Phyllis is not covered under any plan. If they decided to file separately,
how much will each be able to contribute and deduct?
A. Frank will be able to contribute up to $2,000, but since he is an active
participant with an AGI greater than $10,000, none of it will be deductible.
Phyllis will similarly be able to contribute up to $2,000. Although she is
not an active participant, she is "treated" as an active participant due to
her husband's status. Therefore, none of her contribution will be deductible
because her AGI exceeds $10,000.
$200 Minimum Deduction: No matter in which of the above categories you fall,
your minimum allowable deduction shall be $200 until phased out on the
appropriate chart. For example, if you are an unmarried individual with Adjusted
Gross Income of $34,800, your allowable deduction would be $200, even though by
using the reduction explained above you would arrive at a $40 deduction. You are
never allowed to deduct more than you are allowed to contribute for the year.
Rounding Your Reduction Amount: The reduction amount (.20 for every $1 of AGI
over the appropriate level--$25,000, $40,000 and $0) is rounded down to the next
lowest $10. For example, if you are Married filing jointly with adjusted gross
income of $46,255, the $2,000 limit would be reduced by $1,251 ($46,255-$40,000
= $6.255 x .20 = $1,251). Rounding down, this reduction amount would be $1,250,
leaving a higher allowable deduction for you and your spouse of $750 each
($2,000-$1,250).
SPOUSAL IRAs
Eligibility: If during the year you have received compensation and your spouse
did not receive any compensation, so long as you are eligible for an IRA (see
eligibility requirements above), you may make contributions into separate IRA
accounts for both yourself and for your unemployed spouse. These are sometimes
called Spousal IRAs. No spousal contributions may be made into either spouse's
account for the year in which he/she attains the age of 70-1/2, or thereafter.
The account which has been established for the unemployed spouse, and all
contributions to that account, are deemed to be the property of the unemployed
spouse, and such account will be subject to all deposit regulations, and laws,
as well as this institution's policies regarding Individual Retirement Accounts.
Contributions: Married persons who file joint returns who qualify may still make
"spousal contributions" of up to 100% of the compensation of the "working
spouse" not to exceed $2,250. The amount of the contribution may still be
divided between the two spouses' accounts in any way they want, so long as no
more than $2,000 goes into either spouse's account. The spousal IRA is available
if one spouse has compensation and the other spouse either (1) has no
compensation or (2) elects to be treated for the taxable year as having received
no compensation.
For example, if you earn $20,000 and your spouse receives $100, you would still
be eligible for the full spousal contribution and deduction of $2,250.
Joint Return Required: In order to claim the expanded deduction for
contributions to Spousal IRAs, the couple must file a joint federal income tax
return for the year for which the deduction is being claimed.
Working Spouse 70-1/2 or Older: If you are a working spouse and qualify for an
IRA contribution in all respects except for your age (70-1/2 or older), and you
have a non-working spouse under the age of 70-1/2, you may contribute to your
non-working spouse's IRA any amount up to the lesser of $100% of your
compensation for the year or $2,000.00.
<PAGE>
Active Participants: If you are an active participant, then your spousal IRA
deduction may be limited as follows, depending upon the amount of your adjusted
gross income:
<TABLE>
<CAPTION>
<S> <C> <C>
If your Adjusted Your contribution Your deduction
Gross Income is: limit is: limit is:
$40,000 or less Lesser of 100% of Lesser of 100% of
compensation or compensation or
$2,250 $2,250
Between $40,000 and Lesser of 100% of $2,250 limit reduced
$50.000 compensation or by .225 for every $1
$2,250 of AGI between
$40,000 and $50,000
$50,000 or over Lesser of 100% of No deduction
compensation or permitted
$2,250
</TABLE>
Example:
Q1. Mr. and Mrs. Young file a joint tax return. Each spouse earns more than
$2,000 and one is an active participant. They have a combined AGI of $44,255.
How much may the Young's contribute and deduct for the year?
A1. They may contribute up to $2,000 each for a total of $4,000, but their joint
deduction is limited to $2,300 computed as follows:
<TABLE>
<CAPTION>
<S> <C>
The Couples Joint AGI $44,255.00
Lower Level $40,000.00
Difference $ 4,255.00
x adjustment .20
-------------------
$ 851.00 per person
rounded to $ 850.00 per person
</TABLE>
Each person's separate $2,000 deduction limit is reduced by $850 to $1,150.
Therefore, although the couple's combined contribution limit is $4,000, their
combined deduction limit is $2,300.
Q2. If, in the example above, Mr. Young did not earn any compensation, or
elected to be treated as having earned no compensation, Mrs. Young could
establish a Spousal IRA (consisting of an account for herself and one for her
husband). How much may the Young's contribute and deduct for the year?
A2. They may contribute up to a total of $2,250 between their two IRAs, but
their joint deduction is limited to $1,300, computed as follows:
<TABLE>
<CAPTION>
<S> <C>
The Couples Joint AGI $44,255.00
Lower Level $40,000.00
Difference $ 4,255.00
x adjustment .225
----------
$ 957.00
</TABLE>
<PAGE>
rounded to $ 950.00
The $2,250 deduction limited is reduced by $950 to $1,300. The $1,300 can be
divided between the two accounts, but neither IRA may receive a deductible
contribution of more than $1,150 (See Q1 above for computing this dollar
amount).
NON-DEDUCTIBLE IRA CONTRIBUTIONS
All eligible individuals may make IRA contributions of up to 100% of their
earned income not to exceed $2,000. To the extent that amounts are not eligible
for federal tax deduction, these amounts may remain in the account as non-
deductible contributions.
An individual may make non-deductible IRA contributions to the following extent:
1. to make up the difference (if any) between the allowable deduction limit and
$2,000;
2. in the case of spousal IRAs, to make up the difference (if any) between the
allowable deduction limit and $2,250; or
3. where a taxpayer elects to treat otherwise deductible IRA contributions as
non-deductible.
ADDITIONAL INFORMATION REGARDING IRAs
Cash Contributions: All regular or spousal contributions to an IRA, must be made
in cash.
$2,000 Limit: Except in the case of rollover contributions or contributions to a
Simplified Employee Pension Plan ("SEP"), this institution may not accept IRA
contributions for either you or your spouse in excess of $2,000 per person for
any taxable year.
Deduction: Your contributions, to the extent deductible, may be deducted from
your gross income on your federal income tax return, even if you do not itemize
your deductions. In order to be eligible to take a deduction, you must establish
the account prior to the end of the period during which contributions are
allowed to be made.
Deadline for Contributions: Contributions must be made no later than the due
date (not including extensions) for filing your federal income tax return for
the taxable year for which they apply. Therefore, if you wish to make a
contribution for any year, the plan must be established and the contribution
must be made no later than April 15th of the following year, even if an
extension has been granted for the filing of your federal income tax return.
No Commingling: Your IRA will be clearly identified and will not be commingled
with the property of any other depositor.
No Forfeitures: Your contributions into this IRA are not subject to forfeiture.
No Life Insurance: No part of the IRA will be invested in life insurance
contracts.
No Collectibles: Generally, no part of the IRA may be invested in
"collectibles", such as works of art, rugs, antiques, metals, gems, stamps,
coins, alcoholic beverages, or other similar property. For
<PAGE>
acquisitions made after December 31, 1986, certain gold and silver coins issued
by the United States and certain state issued coins acquired by the IRA after
November 10, 1988, will no longer be included in the definition of collectibles.
Penalty on Excess Distributions: If during any taxable year beginning after
December 31, 1986, you receive total distributions from IRAs, Qualified Plans
and/or Tax-Sheltered Annuities in excess of the greater of $150,000 (unindexed)
or $112,500 (indexed beginning in 1988 for cost of living adjustments) any
amount which is received in excess of such amount may be subject to a penalty of
15%. Before taking aggregate distributions in this range you should contact your
tax advisor with respect to the proper application of these rules.
CONTRIBUTIONS TO A SIMPLIFIED EMPLOYEE PENSION PLAN
Your employer or employers may make contributions into your IRA under the rules
which pertain to Simplified Employee Pension Plans (SEPs) in amounts which do
not exceed the lesser of 15% of your compensation from each such employer or
$30,000 per employer. The contributions must be made based upon a written
allocation formula developed by your employer, a copy of which will be provided
to you. Your employer may contribute to this or any other SEP-IRA, even if you
are a participant in a qualified plan in the year for which the SEP contribution
is being made, and even if you have attained the age of 70-1/2 (the age at which
you would normally no longer be eligible to make regular IRA contributions).
EXCESS CONTRIBUTIONS
Under the Internal Revenue Code, any contributions to your IRA above the
permissible limits described above, even if subsequently withdrawn, are subject
to an annual non-deductible excise tax of 6% of the principal amount of the
excess contribution. However, the penalty may be avoided by withdrawing the
principal amount of the excess contribution, and any earnings on the excess, on
or before the due date for filing your federal income tax return for the year
for which the contribution was made (including extensions). For example, if you
make a contribution in excess of the 100% limitation, you could withdraw the
excess amount plus the earnings on the excess within the allowable time and
avoid the penalty altogether.
Under a Spousal IRA, an otherwise eligible couple makes an excess contribution
in any year in which more than $2,000 is contributed into either account or when
more than a total of $2,250 is contributed into the accounts of both spouses.
The excess contributed into either spouse's account for any year will be subject
to the 6% penalty mentioned above.
If the excess plus earnings is not withdrawn by the due date for filing your
federal income tax return, the penalty will not only be applied in the year for
which the excess is made, but it will be reapplied for each subsequent year
during which the amount in the account continues to exceed the allowable
contribution limitations. In order to avoid the initial penalty, you must
withdraw the earnings on the excess. The reapplication of the penalty may be
avoided by either withdrawing the excess, or by making reduced contributions in
subsequent years.
You may not claim a deduction for the amount of any excess contribution for the
year for which it is made.
<PAGE>
If the amount contributed into an IRA for the year exceeds $2,250, and rather
than making a reduced contribution in a later year, you withdraw the excess
after the due date for filing the return for the year for which you originally
made the excess contribution, not only will the excess be subject to the
previously mentioned 6% penalty, but the amount withdrawn will also be included
in your income in the year in which it is withdrawn. If you have not attained
the age of 59-1/2, the amount withdrawn will also be subject to the 10% penalty
on premature distributions (discussed below).
The only way to avoid (a) paying the 6% excess contribution penalty, (b) the
income inclusion, and (c) the 10% premature withdrawal penalty if you have not
reached age 59-1/2, is to remove not only the excess contribution, but the
earnings thereon on or before the due date for filing your federal income tax
return, with extensions.
Even if the excess contribution and earnings are withdrawn on or before the due
date for filing your federal income tax return, the amount earned on the excess
contribution, even if withdrawn, must be included in your income in the year in
which the excess contribution was made. If the earnings are not withdrawn within
this period, they are included in your income in the year in which you withdraw
them. Any earnings withdrawn before you attain the age of 59-1/2 may be subject
to the 10% penalty as a premature distribution. However, in no event will the
earnings be subject to the 6% excise tax on excess contributions, whether or not
they are withdrawn prior to or after the tax due date.
Except for a SEP contribution, an IRA may not accept contributions made in the
year in which you attain the age of 70-1/2, or thereafter. Any regular IRA
contributions made after that time shall be considered an excess contribution
subject to the 6% penalty referred to above. This will not preclude you from
making a rollover after you have attained the age of 70-1/2.
An excess contribution will not occur unless the 100% of compensation up to
$2,000 ($2,250 in the case of spousal contributions) limit is exceeded. In other
words, if you are an unmarried active participant with adjusted gross income of
$30,000, $2,000 is still your contribution limit, even though you may only
deduct $1,000. The remaining $1,000 is a non-deductible contribution. You will
not incur an excess contribution penalty unless more than your contribution
limit ($2,000 in this example) is contributed. If, on the other hand, your
earned income was only $1,500 and you contributed $2,000, you will have made a
$500 excess contribution.
ROLLOVER IRA
Procedure for Rollover: You may make a tax-free rollover to an IRA if:
a. you receive a "lump-sum distribution" (as defined below) from a qualified
plan or from a tax-sheltered annuity for teachers or employees of certain tax-
exempt organizations;
b. you receive a distribution of the balance in your account because of
termination of a qualified plan;
c. you receive a "partial distribution" (as defined below) from a qualified plan
or from a tax-sheltered annuity for teachers or employees of certain tax exempt
organizations;
d. you receive a distribution of your deductible voluntary employee
contributions from a qualified plan; or
e. you receive a distribution from a qualified plan pursuant to a "Qualified
Domestic Relations Order" as defined below.
<PAGE>
In order to make a tax-free rollover, you must, within 60 days of the date you
receive a distribution described above, move all or any part of the amount
received into an IRA. When you place the money in the IRA, you must make a
written, irrevocable election to treat the contribution as a rollover
contribution. This is sometimes called a "Rollover IRA." Any distribution or any
part of a distribution not rolled over will be subject to federal income tax to
the extent that it exceeds any non-deductible amounts which you contributed into
the plan from which the distribution is being received.
Definition of Lump-Sum Distribution: In order for a distribution to qualify as a
lump-sum distribution for purposes of a rollover, the entire distribution must
be received by you within one taxable year, the amount received must represent
the entire balance in your or your deceased spouse's qualified plan, and the
amount must have been paid:
a. because you separated from the service of your employer, unless you are a
self-employed individual;
b. after you attained age 59-1/2;
c. after you became disabled, if you are a self employed individual; or
d. because your spouse died.
Partial Distribution: In order for a distribution to qualify as a "partial
distribution" for purposes of a rollover, you must receive at least 50% of the
balance in your account (determined immediately prior to the distribution),
receive the distribution due to disability, death or separation from service and
make an irrevocable election to treat the contribution as a rollover
contribution. In addition, the distribution may not be one of a series of
periodic payments.
Miscellaneous Rollover Rules:
a. The amount rolled over may not include the principal amount of any non-
deductible amounts which you contributed to the qualified plan.
b. The tax which you would otherwise have had to pay on the amount rolled over
will be deferred until distributions begin from the IRA.
c. No deduction is allowed for a rollover contribution, nor is the rollover
limited to a dollar amount, or to a percentage of your income.
d. If you roll over a part of the distribution, only the portion not rolled over
will be included in your income for that year.
Rollover from a Rollover IRA: The law generally allows you to roll the amount
from your "Rollover IRA" back into a qualified pension or profit-sharing plan,
tax sheltered annuity, or into another IRA. However, if the funds in your
Rollover IRA came from a "partial distribution" (as described above), you may
roll the funds only to another IRA; you may not roll them back into a qualified
plan or tax-sheltered annuity. If you plan to use the IRA as a conduit between
plans, then qualified plan funds, "partial distribution" funds (as described
above), tax-sheltered annuity funds, and regular contributory IRA funds should
not be combined in a single account. Also, in order to roll back into either a
qualified plan or a tax-sheltered annuity the entire balance in the IRA account
must be withdrawn, and then either the entire amount or a partial amount may be
rolled over. If only part is rolled over, the portion not rolled over will be
included in your taxable income for the year in which you received the
distribution.
<PAGE>
Rollover from Contributory IRA: You may also roll over amounts between a
contributory IRA and another IRA. You may not roll over amounts from a
contributory IRA to a qualified plan or a tax-sheltered annuity.
Rollover Between IRA's: If you have made a rollover between one IRA and another,
you may not have any other rollovers between the first IRA and any other IRAs
for a 12-month period. The law does not, however, prohibit you from making a
direct transfer of funds between IRAs during this period. If you take a
distribution from an IRA, you may use the funds as you see fit for up to 60
days. If you wish to roll them back into an IRA, the amount rolled over need not
be exactly equal to the amount withdrawn from the first IRA, but any amount not
rolled over must be included in your taxable income for the year of
distribution.
Rollover Pursuant To a Qualified Domestic Relations Order: Beginning January 1,
1985, if you receive from a Qualified Plan a distribution that results from
divorce or similar proceedings, you may be able to rollover all or part of it,
tax-free, into an IRA. You can roll over the distribution if:
a. it is the balance to your credit in the plan;
b. it is made under a Qualified Domestic Relations Order;
c. you are the spouse or former spouse of the Qualified Plan Participant;
d. you receive it within one tax year (your tax year, not the plan's year);
e. you roll only part or all of the amount otherwise taxable to you into an IRA;
and
f. in the case of a distribution of property other than money, you roll over the
same property you received from the plan.
Qualified Domestic Relations Order: A "Domestic Relations Order" is a judgment,
decree or court order, including an approved property settlement agreement, that
is issued under the Domestic Relations Law of a state. A "Qualified Domestic
Relations Order" gives to a spouse, former spouse, child or dependent of a
participant in a retirement plan the right to receive all or part of the
benefits that would be payable to the participant under the plan. The order
requires certain specific information and it may not alter the amount or form of
the benefits of the plan.
Required Distributions Not Eligible for Rollover Treatment: Amounts that are
required to be distributed from a Qualified Plan, tax-sheltered annuity, or IRA
under the required distribution rules are not eligible for rollover treatment.
For example, if you are required to take a minimum distribution after having
attained age 70-1/2, the first amounts distributed to you during a taxable year
are treated as amounts required to be distributed, and are ineligible for
rollover.
DISTRIBUTIONS
Taxation of Distributions: If you take a distribution from your IRA, after
December 31, 1986, other than refunds of excess contributions and rollovers to
other IRAs or to qualified plans, the non-taxable portion of the distribution,
if any, will be a percentage based on the ratio of your previously unrecovered
non-deductible contributions to the aggregate of all IRA balances, including SEP
and rollover contributions generally as of the end of the calendar year in which
you take the distribution, plus distributions from the account during the year.
Due to the complexity of these rules, you should consult with your own tax
advisor prior to taking a distribution.
All distributions from an IRA are subject to federal income tax at ordinary
rates and are not eligible for either capital gains treatment or the elective
10/5 year averaging which is available to certain lump-sum distributions from
qualified plans.
<PAGE>
Incidental Death Benefit Rules: For years beginning after 1988, certain
incidental death benefit rules apply to IRAs. This rule specifies that benefits
provided under a retirement plan must be primarily for the benefit of a
participant rather than for the participant's beneficiaries. Rules similar to
the rules which have applied to Keogh and other qualified plans will now apply
to distributions from IRAs. This rule does not apply to IRA distributions which
must be taken by April 1, 1989 by persons who turned age 70-1/2 during the 1988
calendar year. It does apply, however, to such persons and all other
participants who are required to take distributions by December 31, 1989, with
respect to the 1989 Distribution Calendar Year; and with respect to all required
distributions for IRA participants thereafter. Since an exception to this rule
may apply in certain cases where you have designated your spouse as the
beneficiary of your IRA, before beginning your retirement distributions you
should consult with your tax advisor with respect to this rule.
Premature IRA Distribution Penalty: If you receive a distribution from your IRA,
there will be a 10% penalty tax on the taxable amount unless you:
1. attain age 59-1/2;
2. die;
3. become disabled; or
4. request distributions in the form of substantially equal periodic payments
(at least annually) in the form of a life or life expectancy annuity.
If you request a distribution in the form of periodic payments under reason #4
above, and you modify the payments before 5 years have elapsed and before
attaining age 59-1/2 you may be subject to substantial tax penalties.
DISTRIBUTIONS AT AGE 70-1/2--
STANDARD PROVISIONS
When you reach age 70-1/2 the law requires that you begin taking certain minimum
distributions from your IRA. If your 70th birthday occurs prior to July 1, you
will reach age 70-1/2 in the same calendar year as your 70th birthday. If your
70th birthday is on or after July 1, you will reach age 70-1/2 in the calendar
year that follows the calendar year in which your 70th birthday occurs. For
example, persons born on July 10, 1921, will celebrate their 70th birthday on
July 10, 1991, and will reach age 70-1/2 during 1992.
The year in which you reach age 70-1/2 is referred to as your "first
distribution calendar year." A person is required to take distribution for the
"first distribution calendar year" by April 1 of the following calendar year
(the required beginning date). Therefore, were you to attain age 70-1/2 at any
time during 1992, you would be required to take your required distribution for
the 1992 year by April 1, 1993.
The minimum amount required to be distributed with respect to your first
distribution calendar year is arrived at by dividing your IRA account balance
determined as of the close of business on December 31 of the preceding calendar
year by your life expectancy (or, by the joint life expectancy of you and your
designated beneficiary, if applicable) taken from the life expectancy table in
Sec. 172-9 of the IRS regulations.
<PAGE>
By your required beginning date you must elect to have the balance in the
Custodial Account distributed in (a) a single sum payment; (b) an annuity
contract in equal or substantially equal payments over your single life, (c) an
annuity contract in equal or substantially equal payments over the joint and
last survivor lives of yourself and your designated beneficiary; (d) equal or
substantially equal payments over a specified term not exceeding your single
life expectancy; or (e) equal or substantially equal payments over a specified
term not exceeding the joint life and last survivor expectancy of yourself and
your designated beneficiary.
If distribution is being made under either of the last two methods, you may
elect to receive any part or all of the remaining balance at any time by giving
written notice to the Custodian.
In the absence of an election you will be deemed to have elected to take your
distribution over a specified term not exceeding the joint life and last
survivor expectancy of yourself and your designated beneficiary, if there is a
designated beneficiary; and over a specified term not exceeding your single life
expectancy, if there is no designated beneficiary. However, until a formal
written election is received, the Custodian shall make distribution to you over
a specified term based upon your single life expectancy,
The distribution required to be taken for your second distribution calendar
year, and for each subsequent distribution calendar year, must be taken by
December 31 of each such year.
In determining the amount required to be withdrawn with respect to your second
distribution calendar year and each subsequent distribution calendar year, you
may either elect to recalculate your life expectancy (and your spouse's life
expectancy, if applicable), or not to recalculate.
If you elect to recalculate, the life expectancy used to determine the minimum
distribution for each year after the first distribution calendar year is arrived
at by taking the figure from the life expectancy tables based upon your attained
age (and that of your spouse, if applicable) for each such year. Since
distributions may accelerate upon your death, we suggest that you contact your
tax advisor before electing to recalculate.
If you elect not to recalculate the life expectancy, in each year after the
first distribution calendar year you reduce the life expectancy determined for
the first distribution calendar year by one for each calendar year since the
first distribution calendar year.
The elections referred to above must be made by April 1 of the year following
the first distribution calendar year. If you fail to make any election by that
time on a form prescribed by the Custodian you are deemed to have elected not to
recalculate. Any election, or failure to elect, which is in effect on this April
1 date shall be irrevocable, and shall apply to all subsequent distributions.
In any distribution calendar year you may take more than the minimum required
amount. However, if less than the minimum required amount is withdrawn with
respect to any distribution calendar year, you will be subjected to a federal
excise tax penalty of 50% of the difference between the required minimum for the
year and the amount actually withdrawn.
DISTRIBUTIONS AT AGE 70-1/2
OPTIONAL PROVISIONS
<PAGE>
The distribution provisions below shall only apply if any boxes are checked by
the Custodian. If no boxes are checked then the Standard Provisions above apply
to your IRA Account.
[_] You may elect by April 1, following the end of the year in which you reach
age 70-1/2, either to recalculate or not to recalculate your life expectancy
and/or your spouse beneficiary's life expectancy, if applicable. If you make
neither election, your life expectancy and/or your spouse's life expectancy
shall automatically be recalculated.
[_] You may elect by April 1, following the end of the year in which you reach
age 70-1/2, which method of distribution you desire. If you do not make this
election, a single sum payment will be made to you by such April 1.
[_] Your life expectancy and your designated beneficiary's life expectancy, if
applicable, shall be determined in the first year in which a minimum
distribution is required and shall then be reduced by one for each year that
passes.
[_] Your life expectancy and/or your spouse beneficiary's life expectancy, if
applicable shall be determined in the first year in which a minimum distribution
is required and such life expectancy(ies) shall then be recalculated in each
subsequent year.
DEATH DISTRIBUTIONS--STANDARD PROVISIONS
If you die before your required beginning date your beneficiary(ies) shall have
the option to elect by December 31, following the year of your death, to have
the entire account balance distributed either: (1) Within 5 years after your
death, or (2) over a period not to exceed the life expectancy of your designated
beneficiary. If your Beneficiary(ies) does not make an election, then
distribution will be made over the life expectancy of your designated
beneficiary. If your Beneficiary is your surviving spouse, he or she also has
the option of electing to recalculate his or her life expectancy. If your
surviving spouse does not make this election by December 31 following the year
of your death, your surviving spouse's life expectancy shall not be
recalculated. In addition a spouse beneficiary has the option of delaying
distributions until you would have attained age 70-1/2.
If you die on or after your required beginning date, your Beneficiary(ies) must
continue at least as rapidly the method of distribution selected by you prior to
your death.
DEATH DISTRIBUTIONS--OPTIONAL PROVISIONS
The death distribution provisions below shall only apply to the extent any boxes
are checked by the Custodian. If no boxes are checked then the Standard
Provisions above apply to your IRA Account.
[_] Your Beneficiary has the option to elect by December 31 of the year
following the year of your death whether to take a total distribution by the end
of the year which contains the 5th anniversary of your death or to take
distributions over such Beneficiary's life expectancy. If your Beneficiary does
not make either election, a total distribution must be made from your IRA to
your Beneficiary by December 31 of the year containing the 5th anniversary of
your death.
[_] If your Beneficiary is your surviving spouse, he or she has the option to
elect whether or not to recalculate his or her life expectancy. If neither
election is made by the December 31 following the year of your death, your
surviving spouse's life expectancy shall automatically be recalculated.
[_] If you die before your required beginning date, the remaining interest in
your IRA shall be paid to your Beneficiary no later than the last day of the
year containing the 5th anniversary of your death.
[_] If your surviving spouse is Beneficiary, his or her life expectancy shall
not be recalculated.
[_] If your surviving spouse is Beneficiary, his or her life expectancy shall be
recalculated.
ESTATE TAXES ON DISTRIBUTIONS UPON DEATH
<PAGE>
As a general rule, in the event of your death, the value of your account will be
includable in your gross estate for federal estate tax purposes, since there is
no specific estate tax exclusion for IRAs. Whether or not any estate taxes will
be payable with respect to your IRA will depend on the size of your taxable
estate. However, if your surviving spouse is the beneficiary of your IRA, the
amount in your IRA may qualify for the "marital deduction" under Section 2056 of
the Internal Revenue Code Designation of a beneficiary for your IRA is not
considered a transfer of property for federal gift tax purposes.
PROHIBITED TRANSACTIONS
If you or your beneficiary engage in a "prohibited transaction" as described in
Section 4975(c) of the Internal Revenue Code with respect to your IRA (such as
borrowing money from the IRA), your account will lose its tax exemption, and you
will be immediately taxed on the entire account balance. If you have not yet
attained the age of 59-1/2 at the time, the 10% penalty for premature
distributions will be applied to the entire amount in the account.
PLEDGING YOUR IRA AS SECURITY
If you pledge your IRA as security for a loan, the amount pledged will be deemed
to have been distributed to you and that amount will be includable in your gross
income in the year of the pledge. If you have not yet attained the age of 59-
1/2, the 10% penalty will be applied to the amount pledged.
WITHHOLDING ON DISTRIBUTIONS
The entire distribution (whether or not taxable) from your IRA account will be
subject to income tax withholding, at the source. This means that unless you
provide a written election to waive withholding, a part of each distribution
will be withheld and paid to the government as a prepayment of your federal
income tax liability for that year. The election to waive withholding does not
apply to any distribution which is delivered outside the United States to a U.S
citizen. Certain exceptions apply if payments are made from an IRA to non-U.S.
citizens, and the appropriate certifications are made by them.
FILING REQUIREMENTS
A Form 5329 (Return for Individual Retirement Savings Arrangement and Qualified
Retirement Plan Taxes) is required to be filed with the Internal Revenue Service
only in those years in which you are subject to a 6% penalty for excess
contributions, a 10% penalty for premature distributions, a 50% penalty for
failure to distribute at age 70-1/2, or a 15% penalty for excess distributions.
Separate Forms 5329 must be prepared for each spouse for whom an IRA account is
being maintained where any of the above referenced penalties apply. If you
receive a distribution from a qualified plan and roll all or part of that
distribution into a Rollover IRA, you have to reflect the distribution on your
tax return and indicate that part or all of the funds you received are not
subject to taxation because you rolled them into an IRA. A Form 8606
(Nondeductible IRA Contributions, IRA Basis, and Nontaxable IRA Distributions)
is required to be filed as an attachment to your federal income tax return
reflecting nondeductible contributions and nontaxable IRA distributions.
IRS APPROVAL OF PLAN'S FORMAT AND TAX STATUS
This IRA Account has been approved as to form by the Internal Revenue Service.
The Internal Revenue Service approval is a determination only as to the form of
the account, and does not represent a determination of the merits of the
account. This IRA account is exempt from tax unless you engage in a prohibited
transaction.
FINANCIAL DISCLOSURE
Growth in the Value of Your IRA: Growth in the value of your IRA is neither
guaranteed nor projected. The value of your IRA will be computed by totaling the
fair market value of the assets credited to your
<PAGE>
account. At least once a year the Custodian will send you a written report
stating the current value of your IRA assets. The Custodian shall disclose
separately a description of:
1) the type and amount of each charge;
2) the method of computing and allocating
earnings.
Charges by Custodian: The Custodian may charge reasonable compensation for its
services, and it may deduct all reasonable expenses incurred by it in the
administration of the IRA, including the cost of fiduciary insurance and counsel
fees. Any charges made by the Custodian will be separately disclosed on an
attachment hereto. Such fees may be charged to you or directly to your Custodial
Account. In addition, depending on your choice of investment vehicles, you may
incur brokerage commissions attributable to the purchase or sale of assets.
Wayne Hummer & Co.
300 South Wacker Drive
Chicago, IL 60606
Please retain
IMPORTANT INFORMATION
about your IRA
Bulk Rate
U.S. Postage
PAID
Permit No. 6724
Chicago, IL
5
<PAGE>
EXHIBIT 14(b)
===============================================================================
SIMPLIFIED
EMPLOYEE PENSION
PLAN
===============================================================================
<PAGE>
ABOUT THIS SEP PLAN
WHAT IS A SEP?
A Simplified Employee Pension (SEP) Plan is a type of retirement plan which
allows you, the employer, to provide an important employee benefit to the
employees of your business (including yourself if you perform services for the
business). An "employer" may be a sole proprietor, partnership or corporation.
Amounts you contribute for your employees under the SEP are deposited into your
employees' IRAs.
WHAT ARE THE BENEFITS OF A SEP?
TAX ADVANTAGES: SEP contributions you make to your own IRA and your employees'
IRAs are tax deductible to you, the employer. Because SEP contributions are
in an IRA, all earnings are tax-sheltered, meaning the earnings are not
taxed until they are withdrawn from the IRA. In addition, a SEP retirement
plan helps you attract and retain quality employees as you help meet the
increasing need for financial security at retirement.
ELIGIBILITY REQUIREMENTS: Not all employees have to be covered under a SEP plan.
At your option, you can exclude employees who have not reached age 21,
those who have not worked for you during at least 3 of the immediately
preceding 5 years and those who earn less than $300 per year. (This amount
is increased by the IRS each year based on changes in the cost of living.)
In addition, you may exclude employees who are nonresident aliens and
certain union members.
CONTRIBUTIONS: Each year you may decide if you want to make a SEP contribution.
The maximum contribution which can be made each year for any employee is
15% of compensation or $30,000, whichever is less.
You have until the due date for filing your business's tax return (plus
extensions) to fund your SEP plan. In addition, you and your employees may
also make regular IRA contributions of up to 100% of earned income or
$2,000, whichever is less.
PLACE OF DEPOSIT: All contributions made under the plan must be deposited into
each eligible employee's SEP-IRA. Your employees must maintain their SEP-
IRAs with the financial organization which sponsors this prototype SEP
plan.
INTEGRATION: The plan allows you to integrate your contributions with Social
Security under the "permitted disparity" rules. If your plan is integrated,
contributions made for higher paid employees may be greater (as a
percentage of their pay) than contributions made for lower paid employees.
DISTRIBUTIONS: Once SEP contributions are made, the normal IRA rules apply. For
example, all earnings are tax-sheltered until they are withdrawn from the
IRA. In addition, distributions must begin by April 1 of the year following
the year the IRA holder reaches age 70 1/2.
WHAT ABOUT SET UP?
A SEP is easy to set up and administer. As the employer, you have until the due
date for your business' tax return (plus extensions) to set up a SEP. To
establish a SEP, you must sign an adoption agreement. Once the plan is set up,
all eligible employees (including yourself) establish IRAs to receive the SEP
contributions.
Maintaining a SEP is also easy. Unlike other qualified plans and Koeghs, no
extra reporting is required. You simply take a deduction on your tax return for
the SEP contributions and notify employees of the contribution.
EMPLOYEE COMMUNICATIONS
SEP SUMMARY FOR EMPLOYEES: If you have employees, complete the SEP SUMMARY FOR
EMPLOYEES form in accordance with the elections you made on the adoption
agreement. Provide each employee with a completed copy.
EMPLOYEE INFORMATION BOOKLET: If you have employees, provide each employee with
an EMPLOYEE INFORMATION BOOKLET. whether or not he or she is currently
eligible to participate in this SEP plan.
ESTABLISH IRAs: Make sure all participating employees have established an IRA
with the Plan Sponsor.
SUMMARY
If you are interested in establishing this SEP plan, consult your tax and legal
advisors for guidance in selecting the plan features which best suit your
business's needs. Once you are ready to adopt the plan, refer to the
instructions for completing the enclosed forms and properly establishing your
plan.
<PAGE>
Instructions for Establishing
the Standard Simplified Employee Pension Plan
These instructions are designed to help you, the employer, along with
your attorney and/or tax advisor, establish your SEP plan. The
instructions are meant to be used only as a general guide and are not
intended as a substitute for qualified legal or tax advice.
ADOPTION AGREEMENT
If you wish to have us, the financial organization sponsoring this
prototype plan, help you fill out the Adoption Agreement, we will do
so. However, we recommend that you obtain the advice of your legal or
tax advisor before you sign the Adoption Agreement.
This Adoption Agreement has been designed for easy completion. There
is one page requiring your completion. It contains the original and
one carbonless copy. Insert the page into a typewriter and follow the
section instructions below to complete.
SECTION 1 EMPLOYER INFORMATION
Fill in the requested information.
SECTION 2 EFFECTIVE DATES
This SEP plan is either a new plan (an initial adoption) or an
amendment and restatement of an existing SEP plan.
If this is a new SEP plan, check Option A and fill in the effective
date. The effective date is usually the first day of the plan year in
which this Adoption Agreement is signed. For example, if an employer
maintains a plan on a calendar year basis and this Adoption Agreement
is signed on September 24, 1991, the effective date would be January
1, 1991.
If the reason you are adopting this plan is to amend and replace an
existing SEP plan, check Option B. The existing SEP plan which will
be replaced is called a "prior plan." You will need to know the
effective date of the prior plan. The best way to determine its
effective date is to refer to the prior plan Adoption Agreement. The
effective date of this amendment and restatement is usually the first
day of the plan year in which the Adoption Agreement is signed.
SECTION 3 ELIGIBILITY REQUIREMENTS
NOTE: Section 3 should be completed even if you do not have
employees.
Within limits, you as the employer can specify the number of years
your employees must work for you and the age they must attain before
they are eligible to participate in this plan. Note that the
eligibility requirements which you set up for the plan also apply to
you.
Suppose, for example, you establish a service requirement of three of
the immediately preceding five years and an age requirement of 21. In
that case, only those employees (including yourself) who have worked
for you for three of the immediately preceding five years and are at
least 21 years old are eligible to participate in this plan.
PART A. YEARS OF ELIGIBILITY SERVICE REQUIREMENT
Fill in the number of years of service (0,1,2 or 3). This number must
be either 0,1,2, or 3.
PART B. AGE REQUIREMENT
Fill in the age an employee must attain (no more than 21) to be
eligible to participate in the plan.
PART C. CLASS OF EMPLOYEES ELIGIBLE TO PARTICIPATE
1. Generally you are permitted to exclude employees covered by the
terms of a collective bargaining agreement (e.g., a union
agreement) where retirement benefits were bargained for and
those employees who are nonresident aliens with no U.S. income.
If you wish to exclude those employees, check the first box
under Section 3, Part C.
2. You are permitted to exclude those employees who have received
less than $300 (indexed for cost of living increases) of
compensation during the plan year. If you want to exclude those
employees, check the second box under Section 3, Part C.
SECTION 4 EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
PART A. CONTRIBUTION FORMULA
Because a SEP plan allows for flexible contributions, the amount of
the contribution will be determined from year to year. There are no
blanks to be completed in Part A.
PART B. ALLOCATION FORMULA
Once the contribution amount has been decided for a plan year, it
must be allocated among the participants in the plan. The
contribution can be allocated using either a pro rata formula or an
integrated formula. Check either Option 1 or 2.
OPTION 1. PRO RATA FORMULA
Check this option if you wish to have the contribution
allocated to all qualifying participants based on their
compensation for the plan year.
OPTION 2. INTEGRATED FORMULA
Check this option if the plan is to be integrated.
Generally, integration is a method of giving some
participants in the plan an extra contribution allocation.
Because of the complexity of integration, you should
consult your tax advisor regarding this issue.
SECTION 5 EMPLOYER SIGNATURE
An authorized representative of the employer must sign and date the
Adoption Agreement. In addition, the prototype sponsor must provide
its name, address and telephone number.
<PAGE>
ELIGIBILITY FORM
The following questions are designed to help you, the employer,
along with your attorney and tax advisor, determine if you are
eligible to adopt a SEP Plan. Answer the following questions:
YES NO
REQUIREMENTS [_] [_] 1. Do you own or control a business from which your
personal services are an income producing factor?
If the answer is NO, STOP. You are not eligible to
establish this Plan.
[_] [_] 2. Has your business ever maintained a defined benefit
plan which is now terminated?
If the answer is YES, STOP. You are not eligible to
establish this Plan.
[_] [_] 3. Is the business a member of a controlled group of
corporations, businesses, or trades, (whether or not
incorporated) within the meaning of IRC Section
414(b) or 414(c)?
[_] [_] 4. Is the business a member of an affiliated service
group within the meaning of IRC Section 414(m)?
[_] [_] 5. Does the business use the services of leased
employees within the meaning of IRC Section 414(n)?
If you answered any of the above questions 3 through 5 YES, you
may have to include the leased employees and/or employees of the
other business(es) in this Plan. Consult your tax advisor to
determine what additional action, if any, you must take.
SIGNATURE IMPORTANT: PLEASE READ BEFORE SIGNING:
I certify that: 1. I am an authorized representative of the
employer and the employer is eligible to
establish the SEP Plan of the Prototype
Sponsor.
2. In determining my eligibility to adopt this
Plan, I relied solely upon the advice of my
own advisors.
3. I agree not to hold the Prototype Sponsor
responsible for any liabilities I may suffer
as a result of being found ineligible to
establish this Plan.
DATE EXECUTED___________________________________________________________________
TYPE NAME OF EMPLOYER___________________________________________________________
SIGNATURE OF EMPLOYER___________________________________________________________
<PAGE>
Basic Plan Document
- --------------------------------------------------------------------------------
SECTION ONE ESTABLISHMENT AND PURPOSE OF PLAN
1.01 PURPOSE The purpose of this Plan is to provide, in accordance with its
provisions, a Simplified Employee Pension Plan providing benefits upon
retirement for the individuals who are eligible to participate hereunder.
1.02 INTENT TO QUALIFY It is the intent of the Employer that this Plan shall be
for the exclusive benefit of its Employees and shall qualify for approval
under Section 408(k) of the Internal Revenue Code, as amended from time to
time (or corresponding provisions of any subsequent Federal law at that
time in effect). In case of any ambiguity, it shall be interpreted to
accomplish such result. It is further intended that it comply with the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA)
as amended from time to time.
1.03 WHO MAY ADOPT An employer who has ever maintained a defined benefit plan
which is now terminated may not participate in this prototype Simplified
Employee Pension Plan. If, subsequent to adopting this Plan, any defined
benefit plan of the Employer terminates, the Employer will no longer
participate in this prototype plan and will be considered to have an
individually designed plan.
1.04 USE WITH IRA This prototype Simplified Employee Pension Plan must be used
with an Internal Revenue Service model IRA (Form 5305 or Form 5305-A) or an
Internal Revenue Service approved master or prototype IRA.
- --------------------------------------------------------------------------------
SECTION TWO DEFINITIONS
2.01 ADOPTION AGREEMENT Means the document executed by the Employer through
which it adopts the Plan and thereby agrees to be bound by all terms and
conditions of the Plan.
2.02 CODE Means the Internal Revenue Code of 1986 as amended.
2.03 COMPENSATION For the purposes of the $300 limit of Section 408(k)(2)(C) of
the Code shall be defined as Section 414(q)(7) Compensation.
For all other purposes, Compensation shall mean all of a Participant's
wages as defined in Section 3401(a) of the Code for the purposes of income
tax withholding at the source but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception
for agricultural labor in Section 3401(a)(2) of the Code.
For any Self-Employed Individual covered under the Plan, Compensation will
mean Earned Income.
Compensation shall include only that Compensation which is actually paid or
made available to the Participant during the Plan Year.
Compensation shall include any amount which is contributed by the Employer
pursuant to a salary reduction agreement and which is not includible in the
gross income of the Employee under Sections 125, 402(a)(8), 402(h) or
403(b) of the Code.
The annual Compensation of each Participant taken into account under the
Plan for any year shall not exceed $200,000. This limitation shall be
adjusted by the Secretary at the same time and in the same manner as under
Section 415(d) of the Code, except the dollar increase in effect on
January 1 of any calendar year is effective for years beginning in such
calendar year and the first adjustment to the $200,000 limitation is
effected on January 1, 1990. If a Plan determines Compensation on a period
of time that contains fewer than 12 calendar months, then the annual
Compensation limit is an amount equal to the annual Compensation limit for
the calendar year in which the compensation period begins multiplied by the
ratio obtained by dividing the number of full months in the period by 12.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA
'93 annual Compensation limit. The OBRA '93 annual Compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 annual
Compensation limit will be multiplied by a fraction, the numerator of which
is the number of months in the determination period, and the denominator of
which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual Compensation limit set forth in this provision.
2.04 EARNED INCOME Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net
earnings will be determined without regard to items not included in gross
income and the deductions allocable to such items. Net earnings are reduced
by contributions by the Employer to a qualified plan or to a Simplified
Employee Pension Plan to the extent deductible under Section 404 of the
Code. Net earnings shall be determined with regard to the deduction allowed
to the Employer by Section 164(f) of the Code for taxable years beginning
after December 31, 1989.
2.05 EFFECTIVE DATE Means the date the Plan becomes effective as indicated in
the Adoption Agreement.
2.06 EMPLOYEE Means any person who is a natural person employed by the Employer
as a common law employee and if the Employer is a sole proprietorship or
partnership, any Self-Employed Individual who performs services with
respect to the trade or business of the Employer. Further, any employee of
any other employer required to be aggregated under Section 414(b), (c),
(m), or (o) of the Code and any leased employee required to be treated as
an employee of the Employer under Section 414(n) of the Code shall also be
considered an Employee.
2.07 EMPLOYER Means any corporation, partnership or sole proprietorship named in
the Adoption Agreement and any successor who by merger, consolidation,
purchase or otherwise assumes the obligations of the Plan. A partnership is
considered to be the Employer of each of the partners and a sole
proprietorship is considered to be the Employer of the sole proprietor.
2.08 EMPLOYER CONTRIBUTION Means the amount contributed by the Employer to this
Plan.
2.09 IRA Means the designated Individual Retirement Account or Individual
Retirement Annuity, which satisfies the requirements of Section 408 of the
Code, and which is maintained with the Prototype Sponsor by a Participant.
2.10 PARTICIPANT Means any Employee who has met the participation requirements
of Section 3.01 and who is or may become eligible to receive an Employer
Contribution.
2.11 PLAN Means this plan document plus the corresponding Adoption Agreement as
completed and signed by the Employer.
2.12 PLAN YEAR Means the 12 consecutive month period which coincides with
Employer's taxable year or such other 12 consecutive month period as is
designated in the Adoption Agreement.
2.13 PRIOR PLAN Means a plan which was amended or replaced by adoption of this
plan document, as indicated in the Adoption Agreement.
2.14 PROTOTYPE SPONSOR Means the entity specified in the Adoption Agreement
which sponsors this prototype Plan.
2.15 SELF-EMPLOYED INDIVIDUAL Means an individual who has Earned Income for a
Plan Year from the trade or business for which the Plan is established;
also, an individual who would have had Earned Income but for the fact that
the trade or business had no net profits for the Plan Year.
2.16 SERVICE Means the performance of duties by an Employee for the Employer,
for any period of time, however short, for which the Employee is paid or
entitled to payment. When the Employer maintains the Plan of a predecessor
employer, an Employee's Service will include his service for such
predecessor employer.
2.17 TAXABLE WAGE BASE Means the maximum amount of earnings which may be
considered wages for a year under Section 3121(a)(1) of the Code in effect
as of the beginning of the Plan Year.
- --------------------------------------------------------------------------------
SECTION THREE ELIGIBILITY AND PARTICIPATION
3.01 ELIGIBILITY REQUIREMENTS Except for those Employees excluded pursuant to
Section 3.02, each Employee of the Employer who fulfills the eligibility
requirements specified in the Adoption Agreement shall, as a condition for
further employment, become a Participant. Each Participant must establish
an IRA with the Prototype Sponsor to which Employer Contributions under
this Plan will be made.
<PAGE>
3.02 EXCLUSION OF CERTAIN EMPLOYEES If the Employer has so indicated in the
Adoption Agreement, the following Employees shall not be eligible to
become a Participant in the Plan: (1) Those Employees included in a unit
of Employees covered by the terms of a collective bargaining agreement,
provided retirement benefits were the subject of good faith bargaining;
and (2) those Employees who are nonresident aliens, who have received no
earned income from the Employer which constitutes earned income from
sources within the United States.
3.03 ADMITTANCE AS A PARTICIPANT
A. PRIOR PLAN If this Plan is an amendment or continuation of a Prior
Plan, each Employee of the Employer who immediately before the
Effective Date was a participant in said Prior Plan shall be a
Participant in this Plan as of said date.
B. NOTIFICATION OF ELIGIBILITY The Employer shall notify each Employee
who becomes a Participant of his status as a Participant in the Plan
and of his duty to establish an IRA with the Prototype Sponsor to
which Employer Contributions may be made.
C. ESTABLISHMENT OF AN IRA If a Participant fails to establish an IRA
for whatever reason, the Employer may execute any necessary documents
to establish an IRA with the Prototype Sponsor on behalf of the
Participant.
3.04 DETERMINATIONS UNDER THIS SECTION The Employer shall determine the
eligibility of each Employee to be a Participant. This determination
shall be conclusive and binding upon all persons except as otherwise
provided herein or by law.
3.05 LIMITATION RESPECTING EMPLOYMENT Neither the fact of the establishment
of the Plan nor the fact that a common-law employee has become a
Participant shall give to that common-law employee any right to continued
employment; nor shall either fact limit the right of the Employer to
discharge or to deal otherwise with a common-law employee without regard
to the effect such treatment may have upon the Employee's rights under
the Plan.
________________________________________________________________________________
SECTION FOUR CONTRIBUTIONS AND ALLOCATIONS
4.01 EMPLOYER CONTRIBUTIONS
A. Allocation Formula - Employer Contributions shall be allocated in
accordance with the allocation formula selected in the Adoption
Agreement. Each Employee who has satisfied the eligibility
requirements pursuant to Section 3.01 (thereby becoming a Participant)
will share in such allocation.
Employer Contributions made for a Plan Year on behalf of any
Participant shall not exceed the lesser of 15% of Compensation or the
limitation in effect under Code Section 415(c)(1)(A) (indexed for cost
of living increases in accordance with Code Section 415(d)).
B. Integrated Allocation Formula - If the Employer has selected the
integrated allocation formula in the Adoption Agreement, then Employer
Contributions for the Plan Year will be allocated to Participants'
IRAs as follows:
STEP 1 Employer Contributions will be allocated to each Participant's IRA in the
ratio that each Participant's total Compensation bears to all
Participants' total Compensation, but not in excess of 3% of each
Participant's Compensation.
STEP 2 Any Employer Contributions remaining after the allocation in Step 1 will
be allocated to each Participant's IRA in the ratio that each
Participant's Compensation for the Plan Year in excess of the integration
level bears to the Compensation of all Participants in excess of the
integration level, but not in excess of 3%.
STEP 3 Any Employer Contributions remaining after the allocation in Step 2 will
be allocated to each Participant's IRA in the ratio that the sum of each
Participant's total Compensation and Compensation in excess of the
integration level bears to the sum of all Participants' total
Compensation and Compensation in excess of the integration level, but not
in excess of the maximum disparity rate described in the table below.
STEP 4 Any Employer Contributions remaining after the allocation in Step 3 will
be allocated to each Participant's IRA in the ratio that each
Participant's total Compensation for the Plan Year bears to all
Participants' total Compensation for that Plan Year.
The integration level shall be equal to the Taxable Wage Base or such
lesser amount elected by the Employer in the Adoption Agreement.
INTEGRATION LEVEL MAXIMUM DISPARITY RATE
Taxable Wage Base (TWB) 2.7%
More than $0 but not more than X* 2.7%
More than X* of TWB but not more
than 80% of TWB 1.3%
More than 80% of TWB but not
more than TWB 2.4%
*X mean the greater of $10,000 or 20% of TWB.
C. Timing of Employer Contribution - Employer Contributions, if any, made
on behalf of Participants for a Plan Year shall be allocated and
deposited to the IRA of each Participant no later than the due date
for filing the Employer's tax return (including extensions).
4.02 VESTING, WITHDRAWAL RIGHTS TO CONTRIBUTIONS All Employer Contributions
made under the Plan on behalf of Employees shall be fully vested and
nonforfeitable at all times. Each Employee shall have an unrestricted
right to withdraw at any time all or a portion of the Employer
Contributions made on his behalf. However, withdrawals taken are subject
to the same taxation and penalty provisions of the Code which are
applicable to IRA distributions.
4.03 SIMPLIFIED EMPLOYER REPORTS The Employer shall furnish reports, relating
to contributions made under the Plan, in the time and manner and
containing the information prescribed by the Secretary of the Treasury,
to Participants. Such reports shall be furnished at least annually and
shall disclose the amount of the contribution made under the Plan to the
Participant's IRA.
________________________________________________________________________________
SECTION FIVE AMENDMENT OR TERMINATION OF PLAN
5.01 AMENDMENT BY EMPLOYER The Employer reserves the right to amend the
elections made or not made on the Adoption Agreement by executing a new
Adoption Agreement and delivering a copy of the same to the Prototype
Sponsor. The Employer shall not have the right to amend any nonelective
provision of the Adoption Agreement nor the right to amend provisions of
this plan document. If the Employer adopts an amendment to the Adoption
Agreement or plan document in violation of the preceding sentence, the
Plan will be deemed to be an individually designed plan and may no longer
participate in this prototype Plan.
5.02 AMENDMENT BY PROTOTYPE SPONSOR By adopting this Plan, the Employer
delegates to the Prototype Sponsor the power to amend or replace the
Adoption Agreement or the Plan to conform them to the provisions of any
law, regulations or administrative rulings pertaining to Simplified
Employee Pensions and to make such other changes to the Plan, which, in
the judgment of the Prototype Sponsor, are necessary or appropriate. The
Employer shall be deemed to have consented to all such amendments;
provided however, that no changes may be made without the consent of the
Employer if the effect would be to substantially change the costs or
benefits under the Plan. The Prototype Sponsor shall not have the
obligation to exercise or not to exercise the power delegated to it nor
shall the Prototype Sponsor incur liability of any nature for any act
done or failed to be done by the Prototype Sponsor in good faith in the
exercise or nonexercise of the power delegated hereunder.
5.03 LIMITATIONS ON POWER TO AMEND No amendment by either the Employer or the
Prototype Sponsor shall reduce or otherwise adversely affect any benefits
of a Participant or Beneficiary acquired prior to such amendment unless
it is required to maintain compliance with any law, regulation or
administrative ruling pertaining to Simplified Employee Pensions.
5.04 TERMINATION While the Employer expects to continue the Plan
indefinitely, the Employer shall not be under any obligation or liability
to continue contributions or to maintain the Plan for any given length of
time. The Employer may terminate this Plan at any time by appropriate
action of its managing body. This Plan shall terminate on the occurrence
of any of the following events:
A. Delivery to the Prototype Sponsor of a notice of termination executed
by the Employer specifying the effective date of the Plan's
termination.
B. Adjudication of the Employer as bankrupt or the liquidation or
dissolution of the Employer.
5.05 NOTICE OF AMENDMENT, TERMINATION Any amendment or termination shall be
communicated by the Employer to all appropriate parties as required by
law. Amendments made by the Prototype Sponsor shall be furnished to the
Employer and communicated by the Employer to all appropriate parties as
required by law. Any filings required by the Internal Revenue Service or
any other regulatory body relating to the amendment or termination of the
Plan shall be made by the Employer.
5.06 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER A successor of the Employer
may continue the Plan and be substituted in the place of the present
Employer. The successor and present Employer (or if deceased, the
executor of the estate of a deceased Self-Employed Individual who was the
Employer) must execute a written instrument authorizing such substitution
and the successor must complete and sign a new Adoption Agreement.
<PAGE>
[LOGO OF SEP PLAN]
Simplified Employee Pension Plan
________________________________________________________________________________
ADOPTION AGREEMENT
________________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer ___________________________________________________
Address ____________________________________________________________
City ______________________________ State _____________ Zip ________
Telephone _________________________ Federal Tax Identification
Number _________________________
Income Tax Year End________________ Plan Year End __________________
(month) (day) (month) (day)
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
OPTION A: [_] This is the initial adoption of a Simplified Employee
Pension plan by the Employer.
The Effective Date of this Plan is ____________, 19__.
NOTE: The effective date is usually the first day of
the Plan Year in which this Adoption Agreement is
signed.
OPTION B: [_] This is an amendment and restatement of an existing
Simplified Employee Pension plan (a Prior Plan).
The Prior Plan was initially effective on ___________,
19____.
The Effective Date of this amendment and restatement
is ______________, 19____.
NOTE: The effective date is usually the first day of
the Plan Year in which this Adoption Agreement is
signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
PART A. Service Requirement: An Employee will be eligible to become a
Participant in the Plan after having performed Service for the
Employer during at least ____ (enter 0, 1, 2 or 3) of the
immediately preceding 5 Plan Years.
NOTE: If left blank, the Service Requirement will be deemed to be 0.
PART B. Age Requirement: An Employee will be eligible to become a
Participant in the Plan after attaining age ____ (no more than 21).
NOTE: If left blank, it will be deemed there is no age requirement
for eligibility.
PART C. Class of Employees Eligible to Participate: All Employees shall be
eligible to become a Participant in the Plan, except the following
(if checked):
[_] Certain Employees covered by a collective bargaining agreement
and nonresident aliens, as described in Section 3.02 of the
Plan.
[_] Those Employees who have received less than $300 (indexed for
cost of living increases in accordance with Section 408(k)(8) of
the Code) of Compensation from the Employer during the Plan
Year.
SECTION 4. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
PART A. Contribution Formula:
For each Plan Year the Employer will contribute an amount to be
determined from year to year.
PART B. Allocation Formula: Check Option 1 or 2
OPTION 1: [_] Pro Rata Formula. The Employer Contribution for each
Plan Year shall be allocated to the IRA of each
Participant in the same proportion as such
Participant's Compensation (not in excess of $200,000,
indexed for cost of living increases in accordance
with Section 408(k)(8) of the Code) for the Plan Year
bears to the total Compensation of all Participants
for such year. The amount allocated to each
Participant's IRA shall be limited to the lesser of 15
percent of the first $200,000 (indexed) of the
Participant's Compensation or $30,000.
OPTION 2: [_] Integrated Formula. Employer Contributions shall be
allocated in the manner described in Section 4.01(B)
of the Plan.
For purposes of the integrated formula, the
integration level shall be (Choose one):
OPTION 1: [_] The Taxable Wage Base (TWB)
OPTION 2: [_] _______% of the TWB
NOTE: If no box is checked, the integration level
shall be the Taxable Wage Base.
SECTION 5. EMPLOYER SIGNATURE
Signature for Employer ____________________ Date Signed ____________
(Type Name) ________________________________________________________
Name of Prototype Sponsor __________________________________________
Address ____________________________________________________________
Telephone Number ___________________________________________________
Note to Employer: Before signing this Adoption Agreement, you
should obtain the advice of a qualified attorney and tax advisor
regarding its completion and the legal and tax implications of
adopting this Plan.
<PAGE>
[LOGO OF SEP PLAN]
SEP Summary for Employees
________________________________________________________________________________
Please read together with your Employee Information Booklet.
________________________________________________________________________________
ESTABLISHMENT Your employer has adopted a type of employee benefit plan known
OF SEP PLAN as a Simplified Employee Pension (SEP) Plan. In order to become
a participant in the Plan, you must meet the Plan's eligibility
requirements specified below. Once you become a participant, you
are entitled to receive a certain share of the amounts your
employer contributes to the Plan. All contributions will be
deposited into a SEP-IRA for you. Contributions made to the Plan
for you are yours to keep. These features of the Plan are
explained further in the Employee Information Booklet.
The actual Plan is a complex legal document that has been written
in a manner required by the Internal Revenue Service. This
document is called a SEP Summary for Employees. It is designed to
explain and summarize the important features of the Plan. If you
have any questions or need additional information about the Plan,
consult _________________________________________________________
(Name of Employer Representative)
You may examine the Plan itself at a reasonable time by making
arrangements with the above mentioned representative of your
employer.
_________________________________________________________________
ELIGIBILITY Employer Contributions: Your employer is not required to make
REQUIREMENTS contributions to the Plan. However, if a contribution is made,
your SEP-IRA will receive a share of that contribution if you are
an "eligible" employee and if you have met the age and service
requirements set forth below.
Eligible Employees: Under the SEP Plan, all employees can
participate except the classifications of employees checked
below:
[_] Those employees covered by the terms of a collective
bargaining agreement (a union agreement) where retirement
benefits were negotiated and those employees who are
nonresident aliens.
[_] Those employees who did not earn at least $300 from the
employer during the year. (This $300 figure is increased by
the IRS each year based on changes in the cost of living.)
Age Requirement: You must be at least ______ years old.
Service Requirement: You must have worked for your employer in at
least _______ (must be 0, 1, 2 or 3) of the immediately
preceding 5 years.
_________________________________________________________________
CONTRIBUTION Any employer contribution will be allocated to your SEP-IRA in
FORMULA accordance with the formula selected below (check one):
[_] Pro Rata Formula: Each eligible employee will receive a pro
rata portion of the employer contribution equal to the ratio
of his or her compensation to the total compensation of all
eligible employees. Thus, the contribution will be the same
percentage of compensation for all employees.
[_] Integrated Formula: Integration allows contribution
percentages among eligible employees to vary. Details about
integration are provided in your Employee Information
Booklet. The integration level is (check one):
[_] The Taxable Wage Base (TWB)
[_] ______% of the TWB
_________________________________________________________________
SEP-IRA WITH Under this SEP Plan, you must maintain your SEP-IRA at the
PLAN SPONSOR following financial organization subject to the following terms:
Name and Address of Financial Organization: _____________________
INVESTMENT OPTIONS CURRENT INTEREST RATE(S):
[_] CDs or share certificates* ______% to ______%
[_] Savings or share accounts ______% to ______%
[_] Money Market accounts ______% to ______%
[_] Self-directed IRA
[_] Other ______% to ______%
FIXED VARIABLE MINIMUM INVESTMENT
[_] [_] ___________________
[_] [_] ___________________
[_] [_] ___________________
[_] [_] ___________________
*CDs or share certificates are subject to __________ loss of
interest or dividends penalty for withdrawal prior to
maturity.
Please refer to the Disclosure Statement and other documentation
given to you by the above named financial organization for the
other terms and conditions which apply to your SEP-IRA.
<PAGE>
UNIVERSAL/STANDARD SEP
- -------------------------- OBRA-93 AMENDMENT TO ---------------------------
BASIC PLAN DOCUMENTS
Section 2.03 is amended by adding the following two paragraphs after the last
paragraph thereof:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual Compensation limit. The OBRA '93 annual
Compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Section 401(a)(17)(B)
of the Internal Revenue Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall
mean the OBRA '93 annual Compensation limit set forth in this provision.
<PAGE>
27
Internal Revenue Service Department of the Treasury
Prototype SEP 002
FFN: 50459012700-002
Case: 9380142 EIN: 36-1245570 Washington, DC 20224
Letter Serial No: D420529a
WAYNE HUMMER & CO Person to Contact: Ms. Arrington
300 SOUTH WACKER DRIVE Telephone Number: (202) 566-6814
CHICAGO, IL 60606 Refer Reply to: E:EP:Q:O
Date: 08/10/93
Dear Applicant:
In our opinion, the form of your Simplified Employee Pension (SEP)
arrangement is acceptable under section 408(k) of the Internal Revenue
Code. This SEP arrangement is approved for use only in conjunction with an
Individual Retirement Arrangement (IRA) which meets the requirements of
Code section 408 and has received a favorable opinion letter, or a model
IRA (Forms 5305 and 5305-A).
Employers who adopt this approved plan will be considered to have a
retirement savings program that satisfies the requirements of Code section
408 provided that it is used in conjunction with an approved IRA. Please
provide a copy of this letter to each adopting employer.
Code section 408(l) and related regulations require that employers who
adopt this SEP arrangement furnish employees in writing certain
information about this SEP arrangement and annual reports of savings
program transactions.
Your program may have to be amended to include or revise provisions in
order to comply with future changes in the law or regulations.
If you have any questions concerning IRS processing of this case, call us
at the above telephone number. Please refer to the Letter Serial Number and
File Folder Number shown in the heading of this letter. Please provide
those adopting this plan with your phone number, and advise them to contact
your office if they have any questions about the operation of this plan.
You should keep this letter as a permanent record. Please notify us if you
terminate the form of this plan.
Sincerely yours,
/s/ John Swieca
John Swieca
Chief, Employee Plans
Qualifications Branch
<PAGE>
EXHIBIT 14c
================================================================================
QUALIFIED
RETIREMENT
PLAN
----------
ADOPTION AGREEMENT
STANDARDIZED
MONEY PURCHASE PENSION PLAN
================================================================================
<PAGE>
Instructions for Completing Adoption Agreement
Standardized Money Purchase Pension Plan and Trust
These instructions are designed to help you, the employer, along with
your attorney and/or tax advisor, complete the Adoption Agreement
for the Qualified Retirement Plan. The instructions are meant to be
used only as a general guide and are not intended as a substitute for
qualified legal and tax advisors.
SECTION 1 EMPLOYER INFORMATION
Fill in the requested information. The "Federal Tax Identification
Number" is the tax identification number assigned to your business.
If your business does not have a Federal Tax Identification Number,
complete and file an Internal Revenue Service (IRS) Form SS4 to
obtain a number. The IRS Form SS4 can be obtained from an IRS office
or from your tax advisor. If you have already filed a Form SS4,
print "Applied for" on the "Federal Tax Identification Number" line.
After you receive a tax identification number, be sure to let our
financial organization know what that number is. In the space marked
"Nature of Business," accurately describe the type of business (e.g.,
radio and TV repair, agricultural, etc.). The "Plan Sequence Number"
is used for annual reporting to the IRS. The IRS uses this number to
identify your plan. For example, if this is the fourth plan you have
ever opened, the Plan Sequence Number would be 004 and so on.
SECTION 2 EFFECTIVE DATES
This money purchase pension plan is either a new plan (an initial
adoption) or an amendment and restatement of an existing money
purchase pension plan.
If this is a new money purchase pension plan, check Option A and fill
in the effective date. The effective date is usually the first day of
the plan year in which this Adoption Agreement is signed. For
example, if an employer maintains a plan on a calendar year basis and
this Adoption Agreement is signed on September 24, 1991, the
effective date would be January 1, 1991.
If the reason you are adopting this plan is to amend and replace an
existing money purchase pension plan, check Option B. The existing
money purchase pension plan which will be replaced is called a "prior
plan." You will need to know the effective date of the prior plan.
The best way to determine its effective date is to refer to the prior
plan adoption agreement. The effective date of this amendment and
restatement is usually the first day of the plan year in which the
Adoption Agreement is signed. However, if you are adopting this
plan to update a prior plan for changes brought about by the Tax
Reform Act of 1986 (and other recent changes which apply to qualified
plans), the effective date will be the first day of the plan year
which begins in 1989 (January 1, 1989 for a calendar year plan).
SECTION 3 ELIGIBILITY REQUIREMENTS
NOTE: Section 3 should be completed even if you do not have
employees.
Within limits, you as the employer can specify the number of years
your employees must work for you and the age they must attain before
they are eligible to participate in this plan. Note that the
eligibility requirements which you set up for the plan also apply to
you.
Suppose, for example, you establish a service requirement of two
years and an age requirement of 21. In that case, only those
employees (including yourself) who have worked for you for two years
and are at least 21 years old are eligible to participate in this
plan.
Part A. Years of Eligibility Service Requirement
Fill in the number of years of service (no more than 2). This number
must be either 0, 1, or 2.
Part B. Age Requirement
Fill in the age an employee must attain (no more than 21) to be
eligible to participate in the plan.
Part C. Class of Employees Eligible to Participate
Generally you are permitted to exclude certain employees covered by
the terms of a collective bargaining agreement (e.g., a union
agreement) where retirement benefits were bargained for and
nonresident aliens who have no U.S. income. If you wish to exclude
those employees, check the box under Section 3, Part C.
SECTION 4 EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
Because a money purchase pension plan has a fixed contribution, the
percent of the contribution must be completed.
Option A. Check Option A if you wish to have the contribution allocated to all
qualifying participants based on their compensation for the plan
year.
Option B. Check Option B and complete the percentage in Step l if the plan is
to be integrated. Generally, integration is a method of giving some
participants in the plan an extra contribution allocation. Because of
the complexity of integration, you should consult your tax advisor on
this issue.
SECTION 5 VESTING
The vesting schedule determines how fast the money in a
participant's plan account becomes nonforfeitable. For example,
suppose you select the vesting schedule of Option B. If a
participant quits work after 4 years of service, the participant
would be entitled to 60% of his or her plan account. The remaining
40% would remain in the plan and become a forfeiture.
NOTE: If you choose more than 1 year of service as an eligibility
requirement in Section 3, Part A, you must choose the 100% vesting
schedule in Section 5 (Option C).
SECTION 6 NORMAL RETIREMENT AGE
Fill in the desired normal retirement age. When a participant attains
normal retirement age, he or she can request a distribution from the
plan.
<PAGE>
SECTION 7 HOURS REQUIRED
Part A. In the blank provided, fill in the number of hours of service which
shall be required to constitute a year of service for vesting and
eligibility. This can be no more than 1,000. If you fail to fill in
the blank, the number of hours required will be deemed to be 1,000.
Suppose, for example, you fill in 1,000 hours of service. This means
any employee who works at least 1,000 hours during the appropriate
period will be credited with a year of service for the purposes of
vesting, eligibility, etc. On the other hand, if the employee works
less than 1,000 hours, he or she will not be credited with a year of
service for those purposes.
Part B. In the blank provided, fill in the number of hours of service which
must be exceeded to avoid a break in service. This can be no more
than 500. If you fail to fill in the blank, the number of hours
required to avoid a break in service will be deemed to be 500.
SECTION 8 OTHER OPTIONS
Part A. Check whether or not you wish to allow loans to participants. Note
that loans cannot be made to an owner of an unincorporated business
(whether a sole proprietor or a partner) or an owner of a
Subchapter S corporation.
Part B. Check whether or not you wish to allow each participant to direct the
investment of his or her own plan account.
SECTION 9 JOINT AND SURVIVOR ANNUITY
A distribution to a participant must generally be made in the form of
a joint and survivor annuity purchased from an insurance company.
When a participant who is receiving payments under a joint and
survivor annuity dies, the participant's spouse will receive a
survivor annuity. This section determines the percentage of the
survivor annuity. If this is an amendment and restatement of a money
purchase pension plan that was subject to the joint and survivor
annuity rules, this percentage must be at least as great as the
survivor annuity percentage in the prior plan.
SECTION 10 ADDITIONAL PLANS
This plan is a standardized plan under applicable IRS procedures. An
employer who adopts a standardized plan generally does not have to
request a ruling from a Key District Office of the IRS (called a
determination letter) that the plan, under facts and circumstances
unique to that particular employer, meets the requirements for
qualification under the tax laws and regulations.
Section 10 states an exception to the procedures for standardized
plans, namely, if you maintain another plan (other than a paired
standardized profit sharing plan using the same Basic Plan Document),
you must obtain a determination letter if you wish to obtain
assurance that the plan is qualified.
SECTION 11 EMPLOYER SIGNATURE
An authorized representative of the employer must sign and date the
Adoption Agreement.
SECTION 12 TRUSTEE OR CUSTODIAN
A trustee or custodian must be named for this plan.
If the financial organization will be acting as trustee or custodian,
the financial organization should complete Option A. Section 5.03 of
the Basic Plan Document will apply if "Custodian" or "Trustee
without full trust powers" is checked. Section 5.04 of the Basic Plan
Document will apply if "Trustee with full trust power" is checked.
If an individual (e.g., the employer, partners, or an appointed
individual) will be acting as individual trustee, complete Option B.
If Option B is completed, Section 5.04 of the Basic Plan Document
will apply.
SECTION 13 PROTOTYPE SPONSOR
The prototype sponsor must fill in its name, address and telephone
number.
SECTION 14 LIMITATION ON ALLOCATIONS - MORE THAN ONE PLAN
You must read and complete this section if, in addition to this plan:
1) You ever maintained a defined benefit plan, or
2) You currently maintain an individually designed plan.
Individually designed plans are not master or prototype plans,
but rather, plans written for just one particular employer.
In addition, if you want to select a definition of compensation other
than the Internal Revenue Code Section 3401(a) wages (that is, W-2
wages), you must complete Part C.
<PAGE>
27
Internal Revenue Service Department of the Treasury
Plan Description: Prototype
Standardized Money Purchase
Pension Plan Washington, DC 20224
FFN: 50259012701-002 Case: 9307211
EIN: 36-1245570
BPD: 01 Plan: 002 Letter Serial No: D260917a
Person to Contact: Ms. Arrington
WAYNE HUMMER & CO
Telephone Number: (202) 622-8173
300 SOUTH WACKER DRIVE
Refer Reply to: E:EP:Q:ICU
CHICAGO, IL 60606
Date: 06/07/93
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
<PAGE>
WAYNE HUMMER & CO
FFN: 50259012701-002
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the continued
and interim reliance provisions of section 13 of Rev. Proc. 89-9, 1989-1, C.B.
780, are not applicable. However, solely for purposes of section 17.03 of Rev.
Proc. 89-9, you are deemed to have submitted this plan prior to March 31, 1991,
and therefore the extended reliance provisions of section 17.03 are applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/
Chief, Employee Plans Qualifications Branch
<PAGE>
QUALIFIED STANDARDIZED MONEY PURCHASE PENSION PLAN Page 1 of 3
________________________________________________________________________________
Retirement Plan ADOPTION AGREEMENT
________________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer ______________________________________________
Address _______________________________________________________
City ___________________________ State ____________ Zip _______
Telephone ______________________ Federal Tax Identification
Number _______________________
Income Tax Year End ___________________________
(month) (day)
Type of Business (Check only one)
[_] Sole Proprietorship [_] Partnership [_] Corporation
[_] Other (Specify)____________________________________________
Nature of Business (Describe) _________________________________
Plan Sequence No.________ Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if
it is the second, etc.
For a plan which covers only the owner of the business, please
provide the following information about the owner.
Social Security No. ___________________________
Date Business Established ___________________________
Date of Birth ___________________________
Marital Status ___________________________
Home Address ___________________________
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
OPTION A. [_] This is the initial adoption of a money purchase pension
plan by the Employer.
The Effective Date of this Plan is _________________,19___.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
OPTION B. [_] This is an amendment and restatement of an existing money
purchase pension plan (a Prior Plan).
The Prior Plan was initially effective on ________________,
19_____.
The Effective Date of this amendment and restatement is
________________, 19_____.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
PART A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the
Plan after completing _____ (enter 0, 1 or 2) Years of
Eligibility Service.
NOTE: If more than 1 year is selected, the immediate 100%
vesting schedule of Section 5, Option C will automatically
apply.
If left blank, the Years of Eligibility Service required will
be deemed to be 0.
PART B. Age Requirement:
An Employee will be eligible to become a Participant in the
Plan after attaining age ______ (no more than 21).
NOTE: If left blank, it will be deemed there is no age
requirement for eligibility.
Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the
Plan, except the following (if checked):
[_] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between
Employee representatives (the term "Employee
representatives" does not include any organization more
than half of whose members are Employees who are owners,
officers or executives of the Employer) and the Employer
under which retirement benefits were the subject of good
faith bargaining unless the agreement provides that such
Employees are to be included in the Plan, and except those
Employees who are non-resident aliens pursuant to Section
410(b)(3)(C) of the Code and who received no earned income
from the Employer which constitutes income from sources
within the United States.
<PAGE>
STANDARDIZED MONEY PURCHASE PENSION PLAN_____________________________Page 2 of 3
ADOPTION AGREEMENT
SECTION 4. EMPLOYER CONTRIBUTION FORMULA Check and Complete either Option
A or B
OPTION A. [_] NONINTEGRATED FORMULA:
For each Plan Year the Employer will contribute for each
qualifying Participant an amount equal to ________% (not to
exceed 25%) of the qualifying Participant's Compensation for
the Plan Year.
OPTION B. [_] INTEGRATED FORMULA:
For each Plan Year, the Employer will contribute for each
qualifying Participant an amount equal to the sum of the
amounts determined in Step 1 and Step 2:
Step 1. An amount equal to ________% (the base contribution
percentage) of the Participant's Compensation for the
Plan Year up to the integration level; plus
Step 2. An amount equal to ________% (not to exceed the base
contribution percentage by more than the lesser of:
(1) the base contribution percentage, or (2) the
money purchase maximum disparity rate as described in
Section 3.01(B)(3) of the Plan) of such Participant's
Compensation for the Plan Year in excess of the
integration level.
The integration level shall be (Choose one):
OPTION 1. [_] The Taxable Wage Base
OPTION 2. [_] $___________________ (a dollar amount less than
the Taxable Wage Base)
OPTION 3. [_] ________________% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be
the Taxable Wage Base.
SECTION 5. VESTING
A Participant shall become Vested in his or her Individual
Account attributable to Employer Contributions and Forfeitures as
follows (Choose one):
<TABLE>
<CAPTION>
______________________________________________________________________________________________________
YEARS OF VESTED PERCENTAGE
______________________________________________________________________________________
VESTING SERVICE OPTION A [_] OPTION B [_] OPTION C [_] OPTION D [_] (Complete if chosen)
______________________________________________________________________________________________________
<S> <C> <C> <C> <C>
1 0% 0% 100% ________%
2 0% 20% 100% ________% (not less than 20%)
3 100% 40% 100% ________% (not less than 40%)
4 100% 60% 100% ________% (not less than 60%)
5 100% 80% 100% ________% (not less than 80%)
6 100% 100% 100% ________% (not less than 100%)
______________________________________________________________________________________________________
NOTE: If left blank, Option C, 100% vesting, will be deemed to be selected.
</TABLE>
SECTION 6. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age ________ (not to
exceed 65).
NOTE: If left blank, the Normal Retirement Age will be deemed to
be age 59 1/2.
SECTION 7. HOURS REQUIRED Complete Parts A and B
PART A. ____ Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service or a Year of Eligibility
Service.
PART B. ____ Hours of Service (no more than 500) must be exceeded to
avoid a Break in Vesting Service or a Break in Eligibility
Service.
NOTE: The number of hours in Part A must be greater than the
number of hours in Part B.
SECTION 8. OTHER OPTIONS
Answer "Yes" or "No" to each of the following questions by
checking the appropriate box.
A. Loans: Will loans to Participants pursuant
to Section 6.08 of the Plan be permitted? [_] Yes [_] No
B. Participant Direction of Investments: Will
Participants be permitted to direct the
investment of their Individual Accounts
pursuant to Section 5.14 of the Plan? [_] Yes [_] No
SECTION 9. JOINT AND SURVIVOR ANNUITY
The survivor annuity portion of the Joint and Survivor Annuity
shall be a percentage equal to _________% (at least 50% but no
more than 100%) of the amount paid to the Participant prior to
his or her death.
<PAGE>
STANDARDIZED MONEY PURCHASE PENSION PLAN_____________________________Page 3 of 3
ADOPTION AGREEMENT
SECTION 10. ADDITIONAL PLANS
An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in Section 419(e)
of the Code, which provides post-retirement medical benefits
allocated to separate accounts for key employees as defined in
Section 419A(d)(3) of the Code or an individual medical account,
as defined in Section 415(1)(2) of the Code) in addition to this
Plan (other than a paired standardized profit sharing plan using
Basic Plan Document No. 03) may not rely on the opinion letter
issued by the National Office of the Internal Revenue Service as
evidence that this Plan is qualified under Section 401 of the
Code. If the Employer who adopts or maintains multiple plans
wishes to obtain reliance that the Employer's plan(s) are
qualified, application for a determination letter should be made
to the appropriate Key District Director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with
Basic Plan Document No. 03.
SECTION 11. EMPLOYER SIGNATURE Important: Please read before signing.
I am an authorized representative of the Employer named above
and I state the following:
1. I acknowledge that I have relied upon my own advisors
regarding the completion of this Adoption Agreement and the
legal and tax implications of adopting this Plan.
2. I understand that my failure to properly complete this
Adoption Agreement may result in disqualification of the
Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer _________________ Date Signed ___________
(Type Name) ____________________________________________________
SECTION 12. TRUSTEE OR CUSTODIAN Check and complete only one Option
[_] OPTION A. FINANCIAL ORGANIZATION AS TRUSTEE OR CUSTODIAN
CHECK ONE: [_] Custodian, [_] Trustee without full trust
powers, [_] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization _________________________
Signature ______________________________________
(Type Name) ____________________________________
[_] OPTION B. INDIVIDUAL TRUSTEE(S)
Signature ___________________ Signature _____________________
(Type Name) _________________ (Type Name) ___________________
SECTION 13. PROTOTYPE SPONSOR
Name of Prototype Sponsor ______________________
Address ________________________________________
Telephone Number _______________________________
SECTION 14. LIMITATION ON ALLOCATIONS - MORE THAN ONE PLAN
If you maintain or ever maintained another qualified plan (other
than a paired standardized profit sharing plan using Basic Plan
Document No. 03) in which any Participant in this Plan is (or
was) a Participant or could become a participant, you must
complete this section. You must also complete this section if
you maintain a welfare benefit fund, as defined in Section
419(e) of the Code, or an individual medical account, as defined
in Section 415(1)(2) of the Code, under which amounts are
treated as annual additions with respect to any Participant in
this Plan.
PART A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan:
1. [_] The provisions of Sections 3.05(B)(1) through 3.05(B)(6)
of the Plan will apply as if the other plan were a master or
prototype plan.
2. [_] Other method. (Provide the method under which the plans
will limit total annual additions to the maximum permissible
amount, and will properly reduce any excess amounts, in a
manner that precludes Employer discretion.) _________________
_____________________________________________________________
PART B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer, the Employer
will provide below the language which will satisfy the 1.0
limitation of Section 415(e) of the Code. Such language must
preclude Employer discretion. (Complete) _______________________
________________________________________________________________
PART C. Compensation will mean all of each Participant's (Choose one):
OPTION 1. [_] Section 3121(a) wages
OPTION 2. [_] Section 3401(a) wages
OPTION 3. [_] 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be
selected.
PART D. The limitation year is the following 12-consecutive month
period: ________________________________________________________
<PAGE>
================================================================================
QUALIFIED
RETIREMENT
PLAN
----------
ADOPTION AGREEMENT
SIMPLIFIED
STANDARDIZED
MONEY PURCHASE PENSION PLAN
================================================================================
<PAGE>
INSTRUCTIONS FOR COMPLETING ADOPTION AGREEMENT
SIMPLIFIED STANDARDIZED MONEY PURCHASE PENSION PLAN AND TRUST
These instructions are designed to help you, the employer, along
with your attorney and/or tax advisor, complete the Adoption
Agreement for the Qualified Retirement Plan. The instructions are
meant to be used only as a general guide and are not intended as a
substitute for qualified legal and tax advisors.
If you wish to have us, the financial organization sponsoring this
prototype plan, help you fill our the Adoption Agreement, we will
do so. However, we recommend that you obtain the advice of your
legal or tax advisor before you sign the Adoption Agreement.
This Adoption Agreement has been designed for easy completion.
There is one page (an original plus two carbonless copies) which
require your completion. Insert the adoption agreement into a
typewriter and follow the section instructions to complete. When
furnished, detach at the top and you will have three copies.
EMPLOYER Fill in the requested information. The "Federal Tax Identification
INFORMATION Number" is the tax identification number assigned to your business.
If your business does not have a Federal Tax Identification Number,
complete and file an Internal Revenue Service (IRS) Form SS4 to
obtain a number. The IRS Form SS4 can be obtained from an IRS
office or from your tax advisor. If you have already filed a Form
SS4, print "Applied for" on the "Federal Tax Identification Number"
line. After you receive a tax identification number, be sure to let
our financial organization know what that number is. In the space
marked "Nature of Business," accurately describe the type of
business (e.g., radio and TV repair, agricultural, etc.). The
"Plan Sequence Number" is used for annual reporting to the IRS. The
IRS uses this number to identify your plan. For example, if this is
the fourth plan you have ever opened, the Plan Sequence Number
would be 004 and so on.
EFFECTIVE This money purchase pension plan is either a new plan (an initial
DATES adoption) or an amendment and restatement of an existing money
purchase pension plan.
If this is a new money purchase pension plan, check Option A and
fill in the effective date. The effective date is usually the first
day of the plan year in which this Adoption Agreement is signed.
For example, if an employer maintains a plan on a calendar year
basis and this Adoption Agreement is signed on September 24, 1991,
the effective date would be January 1, 1991.
If the reason you are adopting this plan is to amend and replace an
existing money purchase pension plan, check Option B. The existing
money purchase pension plan which will be replaced is called a
"prior plan." You will need to know the effective date of the prior
plan. The best way to determine its effective date is to refer to
the prior plan adoption agreement. The effective date of this
amendment and restatement is usually the first day of the plan year
in which the Adoption Agreement is signed. However, if you are
adopting this plan to update a prior plan for changes brought about
by the Tax Reform Act of 1986 (and other recent changes which apply
to qualified plans), the effective date will be the first day of
the plan year which begins in 1989 (January 1, 1989 for a calender
year plan).
PLAN NOTE: This section should be completed even if you do not have
PROVISIONS employees.
Within limits, you as the employer can specify the number of years
your employees must work for you and the age they must attain
before they are eligible to participate in this plan. Note that the
eligibility requirements which you set up for the plan also apply
to you.
Suppose, for example, you establish a service requirement of two
years and an age requirement of 21. In that case, only those
employees (including yourself) who have worked for you for two
years and are at least 21 years old are eligible to participate in
this plan.
PART A. YEARS OF ELIGIBILITY SERVICE REQUIREMENT
Fill in the number of years of service (no more than 2).
This number must be either 0, 1, or 2.
PART B. AGE REQUIREMENT
Fill in the age an employee must attain (no more than 21)
to be eligible to participate in the plan.
PART C. CONTRIBUTION FORMULA
Fill in the percentage of each participant's compensation
which you will contribute to the plan each year.
<PAGE>
EMPLOYER An authorized representative of the employer must sign and
SIGNATURE date the Adoption Agreement.
TRUSTEE OR A trustee or custodian must be named for this plan.
CUSTODIAN
If the financial organization will be acting as trustee or
custodian, the financial organization should fill in its name.
The financial organization should check the box if it will be
acting as trustee with full trust powers.
If an individual (e.g., the employer, partners, or an appointed
individual) will be acting as individual trustee, the
individual's name and signature should be entered.
PROTOTYPE The prototype sponsor must fill in its name, address and
SPONSOR telephone number.
ADDITIONAL This plan is a standardized plan under applicable IRS
PLANS procedures. An employer who adopts a standardized plan
generally does not have to request a ruling from a Key District
Office of the IRS (called a determination letter) that the
plan, under facts and circumstances unique to that particular
employer, meets the requirements for qualification under the
tax laws and regulations.
This section states an exception to the procedures for
standardized plans, namely, if you maintain another plan (other
than a paired standardized profit sharing plan using the same
Basic Plan Document), you must obtain a determination letter
if you wish to obtain assurance that the plan is qualified.
LIMITATION ON You must read and complete this section if, in addition to the
ALLOCATIONS- plan:
MORE THAN 1. You ever maintained a defined benefit plan, or
ONE PLAN 2. You currently maintain an individually designed plan.
Individually designed plans are not master or prototype
plans, but rather, plans written for just one particular
employer.
<PAGE>
27
SIMPLIFIED
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Standardized Washington, DC 20224
Money Purchase Pension Plan
FFN: 50259012701-004 Case: 9307213 EIN: 36-1245570 Person to Contact:
BPD: 01 Plan: 004 Letter Serial No: D260919a Ms. Arrington
Telephone Number:
WAYNE HUMMER & CO (202) 622-8173
300 SOUTH WACKER DRIVE Refer Reply to:
E:EP:Q:ICU
CHICAGO, IL 60606
Date: 06/07/93
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code
section 401(a)(16) if: (1) an employer ever maintained another qualified plan
for one or more employees who are covered by this plan, other than a specified
paired plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780;
or (2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
<PAGE>
WAYNE HUMMER & CO
FFN: 50259012701-004
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the
continued and interim reliance provisions of section 13 of Rev. Proc. 89-9,
1989-1 C.B. 780, are not applicable. However, solely for purposes of section
17.03 of Rev. Proc. 89-9, you are deemed to have submitted this plan prior to
March 31, 1991, and therefore the extended reliance provisions of section 17.03
are applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ John Swi___
Chief, Employee Plans Qualifications Branch
<PAGE>
QUALIFIED SIMPLIFIED STANDARDIZED MONEY PURCHASE PENSION PLAN
________________________________________________________________________________
Retirement Plan ADOPTION AGREEMENT
________________________________________________________________________________
EMPLOYER Name of Employer _____________________ Telephone ______________
INFORMATION
Business Address ______________________________________________
City ___________________________ State ____________ Zip _______
Federal Tax Identification Number _____________________________
Income Tax Year End ___________________________________________
(month) (day)
Type of Business (Check only one)
[_] Sole Proprietorship [_] Partnership [_] Corporation
[_] Other (Specify)____________________________________________
Plan Sequence No.________ Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if
it is the second, etc.
For a plan which covers only the owner of the business, please
provide the following information about the owner:
Social Security No. _________________________________
Date Business Established ___________________________
Date of Birth _______________________________________
Marital Status ______________________________________
Home Address ________________________________________
EFFECTIVE DATES Check and complete Option A or B
OPTION A. [_] This is the initial adoption of a money purchase pension
plan by the Employer.
The Effective Date of this Plan is _________________,
19_____.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
OPTION B. [_] This is an amendment and restatement of an existing money
purchase pension plan (a prior plan). NOTE: the effective
date is usually the first day of the Plan Year in which
this Adoption Agreement is signed.
The Prior Plan was initially effective on ________________,
19_____.
The Effective Date of this amendment and restatement is
________________, 19_____.
PLAN
PROVISIONS Complete Parts A through E
PART A. Service Requirement: An Employee will be eligible to become a
Participant in the Plan after completing _____ (enter 0, 1 or
2) Years of Eligibility Service. NOTE: If left blank, the Years
of Eligibility Service required will be deemed to be 0.
PART B. Age Requirement: An Employee will be eligible to become a
Participant in the Plan after attaining age ______ (no more
than 21). NOTE: If left blank, it will be deemed there is no
age requirement for eligibility.
PART C. 100% Vesting: A Participant shall be fully Vested at all times
in his or her Individual Account.
PART D. Normal Retirement Age: The Normal Retirement Age under the Plan
is age 59 1/2.
PART E. Contribution Formula: For each Plan Year the Employer will
contribute for each qualifying Participant an amount equal to
_____% (not to exceed 25%) of the qualifying Participant's
Compensation for the Plan Year.
EMPLOYER I am an authorized representative of the Employer named above
SIGNATURE and I state the following:
Important: 1. I acknowledge that I have relied upon my own advisors
Please read regarding the completion of this Adoption Agreement and
before signing the legal and tax implications of adopting this Plan.
2. I understand that my failure to properly complete this
Adoption Agreement may result in disqualification of the
Plan.
3. I understand that the Prototype Sponsor will inform me of
any amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer ______________________________
Date signed _________________________________________
Type Name ___________________________________________
TRUSTEE OR Trustee or Custodian ________________________________
CUSTODIAN
Signature ___________________________________________
Type Name ___________________________________________
[_] Check this box only if a financial organization is named as
Trustee and it has full trust powers.
PROTOTYPE Name of Prototype Sponsor ___________________________
SPONSOR
Telephone Number ____________________________________
Address _____________________________________________
ADDITIONAL An Employer who has ever maintained or who later adopts any
PLANS plan (including a welfare benefit fund, as defined in Section
419(e) of the Code, which provides post-retirement medical
benefits allocated to separate accounts for key employees as
defined in Section 419A(d)(3) of the Code or an individual
medical account, as defined in Section 415(1)(2) of the Code)
in addition to this Plan (other than a paired standardized
profit sharing plan using Basic Plan Document No. 03) may not
rely on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple plans wishes to obtain reliance
that the Employer's plan(s) are qualified, application for a
determination letter should be made to the appropriate Key
District Director of Internal Revenue. This Adoption Agreement
may be used only in conjunction with Basic Plan Document
No. 03.
<PAGE>
Simplified Standardized Money Purchase Pension Plan_____________________________
ADOPTION AGREEMENT
LIMITATION ON More Than One Plan
ALLOCATIONS If you maintain or ever maintained another qualified plan
(other than a paired standardized profit sharing plan using
Basic Plan Document No. 03) in which any Participant in this
Plan is (or was) a participant or could become a participant,
you must complete this section. You must also complete this
section if you maintain a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account,
as defined in Section 415(1)(2) of the Code, under which
amounts are treated as annual additions with respect to any
Participant in this Plan.
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan:
1. [ ] The provisions of Sections 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other plan
were a master or prototype plan.
2. [ ] Other method. (Provide the method under which the plans
will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer
discretion.)___________________________________________
_______________________________________________________
Part B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer, the Employer
will provide below the language which will satisfy the 1.0
limitation of Section 415(e) of the Code. Such language must
preclude Employer discretion. (Complete)______________________
Part C. The limitation year is the following 12-consecutive month
period: ___________________________
<PAGE>
================================================================================
QUALIFIED
RETIREMENT
PLAN
----------
ADOPTION AGREEMENT
STANDARDIZED
PROFIT SHARING PLAN
================================================================================
<PAGE>
Instructions for Completing Adoption Agreement
Standardized Profit Sharing Plan and Trust
These instructions are designed to help you, the employer, along with
your attorney and/or tax advisor, complete the Adoption Agreement for
the Qualified Retirement Plan. The instructions are meant to be used
only as a general guide and are not intended as a substitute for
qualified legal and tax advisors.
SECTION 1 EMPLOYER INFORMATION
Fill in the requested information. The "Federal Tax Identification
Number" is the tax identification number assigned to your business.
If your business does not have a Federal Tax Identification Number,
complete and file an Internal Revenue Service (IRS) Form SS4 to
obtain a number. The IRS Form SS4 can be obtained from an IRS office
or from your tax advisor. If you have already filed a Form SS4, print
"Applied for" on the "Federal Tax Identification Number" line. After
you receive a tax identification number, be sure to let our financial
organization know what that number is. In the space marked "Nature of
Business," accurately describe the type of business (e.g., radio and
TV repair, agricultural, etc.). The "Plan Sequence Number" is used
for annual reporting to the IRS. The IRS uses this number to identify
your plan. For example, if this is the fourth plan you have ever
opened, the Plan Sequence Number would be 004 and so on.
SECTION 2 EFFECTIVE DATES
This profit sharing plan is either a new plan (an initial adoption)
or an amendment and restatement of an existing profit sharing plan.
If this is a new profit sharing plan, check Option A and fill in the
effective date. The effective date is usually the first day of the
plan year in which this Adoption Agreement is signed. For example, if
an employer maintains a plan on a calendar year basis and this
Adoption Agreement is signed on September 24, 1991, the effective
date would be January 1, 1991.
If the reason you are adopting this plan is to amend and replace an
existing profit sharing plan, check Option B. The existing profit
sharing plan which will be replaced is called a "prior plan." You
will need to know the effective date of the prior plan. The best way
to determine its effective date is to refer to the prior plan
adoption agreement. The effective date of this amendment and
restatement is usually the first day of the plan year in which the
Adoption Agreement is signed. However, if you are adopting this plan
to update a prior plan for changes brought about by the Tax Reform
Act of 1986 (and other recent changes which apply to qualified
plans), the effective date will be the first day of the plan year
which begins in 1989 (January 1, 1989 for a calendar year plan).
SECTION 3 ELIGIBILITY REQUIREMENTS
NOTE: Section 3 should be completed even if you do not have
employees.
Within limits, you as the employer can specify the number of years
your employees must work for you and the age they must attain before
they are eligible to participate in this plan. Note that the
eligibility requirements which you set up for the plan also apply to
you.
Suppose, for example, you establish a service requirement of two
years and an age requirement of 21. In that case, only those
employees (including yourself) who have worked for you for two years
and are at least 21 years old are eligible to participate in this
plan.
PART A. YEARS OF ELIGIBILITY SERVICE REQUIREMENT
Fill in the number of years of service (no more than 2). This number
must be either 0,1, or 2.
PART B. AGE REQUIREMENT
Fill in the age an employee must attain (no more than 21) to be
eligible to participate in the plan.
PART C. CLASS OF EMPLOYEES ELIGIBLE TO PARTICIPATE
Generally you are permitted to exclude certain employees covered by
the terms of a collective bargaining agreement (e.g., a union
agreement) where retirement benefits were bargained for and
nonresident aliens who have no U.s. income. If you wish to exclude
those employees, check the box under Section 3, Part C.
SECTION 4 EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
PART A. CONTRIBUTION FORMULA
Because a profit sharing plan allows for flexible contributions, the
amount of the contribution will be determined from year to year.
There are no blanks to be completed in Part A.
PART B. ALLOCATION FORMULA
Once the contribution amount has been decided for a plan year, it
must be allocated among the participants in the plan. The
contribution can be allocated using either a pro rata formula or an
integrated formula. Check either Option 1 or 2.
OPTION 1. Pro Rata Formula
Check this option if you wish to have the contribution allocated to
all qualifying participants based on their compensation for the
plan year.
OPTION 2. Integrated Formula
Check this option if the plan is to be integrated. Generally,
integration is a method of giving some participants in the plan an
extra contribution allocation. Because of the complexity of
integration, you should consult your tax advisor on this issue.
SECTION 5 VESTING
The vesting schedule determines how fast the money in a participant's
plan account becomes nonforfeitable. For example, suppose you select
the vesting schedule of Option B. If a participant quits work after 4
years of service, the participant would be entitled to 60% of his or
her plan account. The remaining 40% would remain in the plan and
become a forfeiture.
<PAGE>
NOTE: If you choose more than 1 year of service as an eligibility
requirement in Section 3, Part A, you must choose the 100% vesting
schedule in Section 5 (Option C).
SECTION 6 NORMAL RETIREMENT AGE
Fill in the desired normal retirement age. When a participant
attains normal retirement age, he or she can request a
distribution from the plan.
SECTION 7 HOURS REQUIRED
Part A. In the blank provided, fill in the number of hours of service
which shall be required to constitute a year of service for
vesting and eligibility. This can be no more than 1,000. If you
fail to fill in the blank, the number of hours required will be
deemed to be 1,000. Suppose, for example, you fill in 1,000 hours
of service. This means any employee who works at least 1,000 hours
during the appropriate period will be credited with a year of
service for the purposes of vesting, eligibility, etc. On the
other hand, if the employee works less than 1,000 hours, he or she
will not be credited with a year of service for those purposes.
Part B. In the blank provided, fill in the number of hours of service
which must be exceeded to avoid a break in service. This can be no
more than 500. If you fail to fill in the blank, the number of
hours required to avoid a break in service will be deemed to be
500.
SECTION 8 OTHER OPTIONS
Part A. Check whether or not you wish to allow loans to participants. Note
that loans cannot be made to an owner of an unincorporated
business (whether a sole proprietor or a partner) or an owner of a
Subchapter S corporation.
Part B. Check whether or not you wish to allow each participant to direct
the investment of his or her own plan account.
Part C. Check whether or not you wish to allow in-service withdrawals.
Generally, an in-service withdrawal is a distribution to a
participant who is still working for your company. If this is an
amendment and restatement of a prior plan that allowed in-service
withdrawals, this plan must also allow in-service withdrawals.
SECTION 9 JOINT AND SURVIVOR ANNUITY
Part A. As a general rule, the Retirement Equity Act requires that a
distribution from a plan to a participant be made in the form of a
joint and survivor annuity purchased from an insurance company,
unless the participant elects otherwise and his or her spouse
consents. However, the Retirement Equity Act allows employers who
maintain certain profit sharing plans to elect to have a safe
harbor rule apply. If you check "yes" indicating that the safe
harbor rule applies, then payouts from the plan to participants
and beneficiaries will not be subject to the annuity requirements.
Part B. If the safe harbor rules do not apply, you must complete Part B.
When a participant who is receiving payments under a joint and
survivor annuity dies, the participant's spouse will receive a
survivor annuity. This section determines the percentage of the
survivor annuity. If this is an amendment and restatement of a
profit sharing plan that was subject to the joint and survivor
annuity rules, this percentage must be at least as great as the
survivor annuity percentage in the prior plan.
SECTION 10 ADDITIONAL PLANS
This plan is a standardized plan under applicable IRS procedures.
An employer who adopts a standardized plan generally does not have
to request a ruling from a Key District Office of the IRS (called
a determination letter) that the plan, under facts and
circumstances unique to that particular employer, meets the
requirements for qualification under the tax laws and regulations.
Section 10 states an exception to the procedures for standardized
plans, namely, if you maintain another plan (other than a paired
standardized money purchase pension plan using the same Basic Plan
Document), you must obtain a determination letter if you wish to
obtain assurance that the plan is qualified.
SECTION 11 EMPLOYER SIGNATURE
An authorized representative of the employer must sign and date
the Adoption Agreement.
SECTION 12 TRUSTEE OR CUSTODIAN
A trustee or custodian must be named for this plan.
If the financial organization will be acting as trustee or
custodian, the financial organization should complete Option A.
Section 5.03 of the Basic Plan Document will apply if "Custodian"
or "Trustee without full trust powers" is checked. Section 5.04 of
the Basic Plan Document will apply if "Trustee with full trust
powers" is checked.
If an individual (e.g., the employer, partners, or an appointed
individual) will be acting as individual trustee, complete Option
B. If Option B is completed, Section 5.04 of the Basic Plan
Document will apply.
SECTION 13 PROTOTYPE SPONSOR
The prototype sponsor must fill in its name, address and telephone
number.
SECTION 14 LIMITATION ON ALLOCATIONS - MORE THAN ONE PLAN
You must read and complete this section if, in addition to this
plan:
1) You ever maintained a defined benefit plan, or
2) You currently maintain an individually designed plan.
Individually designed plans are not master or prototype plans,
but rather, plans written for just one particular employer.
In addition, if you want to select a definition of compensation
other than the Internal Revenue Code Section 3401(a) wages (that
is, W-2 wages), you must complete Part C.
<PAGE>
27
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Standardized Washington, DC 20224
Profit Sharing Plan
FFN: 50259012701-001 Case: 9307210 EIN: 36-1245570 Person to Contact:
BPD: 01 Plan: 001 Letter Serial No: D260916a Ms. Arrington
Telephone Number:
WAYNE HUMMER & CO (202) 622-8173
300 SOUTH WACKER DRIVE Refer Reply to:
E:EP:Q:ICU
CHICAGO, IL 60606
Date: 06/07/93
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code
section 401(a)(16) if: (1) an employer ever maintained another qualified plan
for one or more employees who are covered by this plan, other than a specified
paired plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780;
or (2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
<PAGE>
WAYNE HUMMER & CO
FFN: 50259012701-001
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5,) 401(a)(17),
401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the
continued and interim reliance provisions of section 13 of Rev. Proc. 89-9,
1989-1 C.B. 780, are not applicable. However, solely for purposes of section
17.03 of Rev. Proc. 89-9, you are deemed to have submitted this plan prior to
March 31, 1991, and therefore the extended reliance provisions of section 17.03
are applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
<PAGE>
Qualified Standardized Profit Sharing Plan Page 1 of 4
________________________________________________________________________________
Retirement Plan ADOPTION AGREEMENT
________________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer____________________________________________________
Address_____________________________________________________________
City________________________ State________________ Zip______________
Telephone__________ Federal Tax Identification Number_______________
Income Tax Year End______________________________
(month) (day)
Type of Business (Check only one)
[_]Sole Proprietorship [_]Partnership [_]Corporation
[_]Other (Specify)
____________________________________________________________________
Nature of Business (Describe)_______________________________________
Plan Sequence No.___________ Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if it is
the second, etc.
For a plan which covers only the owner of the business, please
provide the following information about the owner:
Social Security No._______________ Date Business Established________
Date of Birth_____________________ Marital Status___________________
Home Address________________________________________________________
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
OPTION A. [_] This is the initial adoption of a profit sharing plan by the
Employer.
The Effective Date of this Plan is ________________________, 19__.
NOTE: The effective date is usually the first day of the Plan Year
in which this Adoption Agreement is signed.
OPTION B. [_] This is an amendment and restatement of an existing profit
sharing plan (a Prior Plan).
The Prior Plan was initially effective on__________________, 19__.
The Effective Date of this amendment and restatement is_____________
_______________________, 19__.
NOTE: The effective date is usually the first day of the Plan Year
in which the Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
PART A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan
after completing _______ (enter 0,1 or 2) Years of Eligibility
Service.
NOTE: If more than 1 year is selected, the immediate 100% vesting
schedule of Section 5, Option C will automatically apply.
If left blank, the Years of Eligibility Service required will be
deemed to be 0.
PART B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan
after attaining age ______ (no more than 21).
NOTE: If left blank, it will be deemed there is no age requirement
for eligibility.
PART C. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except the following (if checked):
[ ] Those Employees included in a unit of Employees covered by the
terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject of
good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan, and except those Employees
who are non-resident aliens pursuant to Section 410(b)(3)(C) of the
Code and who received no earned income from the Employer which
constitutes income from sources within the United States.
<PAGE>
STANDARDIZED PROFIT SHARING PLAN------------------------------------Page 2 of 4
ADOPTION AGREEMENT
SECTION 4. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
PART A. CONTRIBUTION FORMULA:
For each Plan Year the Employer will contribute an amount to be
determined from year to year.
PART B. ALLOCATION FORMULA: (Check Option 1 or 2)
OPTION 1. [_] Pro Rata Formula. Employer Contributions and Forfeitures shall
be allocated to the Individual Accounts of qualifying
Participants in the ratio that each qualifying Participant's
Compensation for the Plan Year bears to the total Compensation
of all qualifying Participants for the Plan Year.
OPTION 2. [_] Integrated Formula. Employer Contributions and Forfeitures shall
be allocated as follows
(Start with Step 3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Contributions and Forfeitures shall first be
allocated pro rata to qualifying Participants in the
manner described in Section 4, Part B, Option 1. The
percent so allocated shall not exceed 3% of each
qualifying Participant's Compensation.
Step 2. Any Employer Contributions and Forfeitures remaining
after the allocation in Step 1 shall be allocated to
each qualifying Participant's Individual Account in the
ratio that each qualifying Participant's Compensation
for the Plan Year in excess of the integration level
bears to all qualifying Participant's Compensation in
excess of the integration level, but not in excess of
3%.
Step 3. Any Employer Contributions and Forfeitures remaining
after the allocation in Step 2 shall be allocated to
each qualifying Participant's Individual Account in the
ratio that the sum of each qualifying Participant's
total Compensation and Compensation in excess of the
integration level bears to the sum of all qualifying
Participant's total Compensation and Compensation in
excess of the integration level, but not in excess of
the profit sharing maximum disparity rate as described
in Section 3.01(B)(3) of the Plan.
Step 4. Any Employer Contributions and Forfeitures remaining
after the allocation in Step 3 shall be allocated pro
rata to qualifying Participants in the manner described
in Section 4, Part B, Option 1.
The integration level shall be (Choose one):
OPTION 1. [_] The Taxable Wage Base
OPTION 2. [_] $__________________________ (a dollar amount less
than the Taxable Wage Base)
OPTION 3. [_] __________________% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be the
Taxable Wage Base.
SECTION 5. VESTING
A Participant shall become Vested in his or her Individual Account
attributable to Employer Contributions and Forfeitures as follows
(Choose one):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
---------------------------------------------------------------------------------------
VESTING SERVICE Option A [_] Option B [_] Option C[_] Option D [_] (Complete if chosen)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 0% 0% 100% __________%
2 0% 20% 100% __________% (not less than 20%)
3 100% 40% 100% __________% (not less than 40%)
4 100% 60% 100% __________% (not less than 60%)
5 100% 80% 100% __________% (not less than 80%)
6 100% 100% 100% __________% (not less than 100%)
----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: If left blank, Option C, 100% vesting, will be deemed to be
selected.
SECTION 6. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age ________ (not to
exceed 65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be
age 59 1/2.
SECTION 7. HOURS REQUIRED Complete Parts A and B
PART A. ______ Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service or a Year of Eligibility
Service.
PART B. ______ Hours of Service (no more than 500) must be exceeded to avoid
a Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number
of hours in Part B.
<PAGE>
STANDARDIZED PROFIT SHARING PLAN_____________________________________Page 3 of 4
ADOPTION AGREEMENT
SECTION 8. OTHER OPTIONS
Answer "Yes" or "No" to each of the following questions by
checking the appropriate box.
If a box is not checked for a question, the answer will be
deemed to be "No."
A. Loans: Will loans to Participants pursuant
to Section 6.08 of the Plan be permitted? [_] Yes [_] No
B. Participant Direction of Investments: Will
Participants be permitted to direct the
investment of their Individual Accounts
pursuant to Section 5.14 of the Plan? [_] Yes [_] No
C. In-Service Withdrawals: Will Participants
be permitted to make withdrawals during
service pursuant to Section 6.01(A)(3)
of the Plan? NOTE: If the Plan is being
adopted to amend and replace a Prior Plan
which permitted in-service withdrawals you
must answer "Yes." [_] Yes [_] No
Check here if such withdrawals will be
permitted only on account of hardship [_].
SECTION 9. JOINT AND SURVIVOR ANNUITY
PART A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan
apply? (Choose only one Option)
OPTION 1. [_] Yes
OPTION 2. [_] No
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to
the joint and survivor annuity requirements.
PART B. Survivor Annuity Percentage: (Complete only if your answer in
Section 9, Part A is "No.")
The survivor annuity portion of the Joint and Survivor Annuity
shall be a percentage equal to __________%
(at least 50% but no more than 100%) of the amount paid to the
Participant prior to his or her death.
SECTION 10. ADDITIONAL PLANS
An Employer who has ever maintained or who later adopts any
plan (including a welfare benefit fund, as defined in Section
419(e) of the Code, which provides post-retirement medical
benefits allocated to separate accounts for key employees as
defined in Section 419A(d)(3) of the Code or an individual
medical account, as defined in Section 415(1)(2) of the Code)
in addition to this Plan (other than a paired standardized
money purchase pension plan using Basic Plan Document No. 03)
may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the
Employer who adopts or maintains multiple plans wishes to
obtain reliance that the Employer's plan(s) are qualified,
application for a determination letter should be made to the
appropriate Key District Director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with
Basic Plan Document No. 03.
SECTION 11. EMPLOYER SIGNATURE Important: Please read before signing.
I am an authorized representative of the Employer named above
and I state the following:
1. I acknowledge that I have relied upon my own advisors
regarding the completion of this Adoption Agreement and the
legal and tax implications of adopting this Plan.
2. I understand that my failure to properly complete this
Adoption Agreement may result in disqualification of the
Plan.
3. I understand that the Prototype Sponsor will inform me of
any amendments made to the Plan and will notify me should
it discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer ___________________ Date Signed _______
(Type Name) __________________________________________________
SECTION 12. TRUSTEE OR CUSTODIAN Check and complete only one Option
[_] OPTION A. FINANCIAL ORGANIZATION AS TRUSTEE OR CUSTODIAN
CHECK ONE: [_] Custodian [_] Trustee without full trust
powers, or
[_] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization _______________________________________
Signature ____________________________________________________
(Type Name) __________________________________________________
[_] OPTION B. INDIVIDUAL TRUSTEE(S)
Signature ____________________ Signature _________________
(Type Name) __________________ (Type Name) _______________
<PAGE>
STANDARDIZED PROFIT SHARING PLAN_____________________________________Page 4 of 4
ADOPTION AGREEMENT
SECTION 13. PROTOTYPE SPONSOR
Name of Prototype Sponsor_____________________________________
Address_______________________________________________________
Telephone Number______________________________________________
SECTION 14. LIMITATION ON ALLOCATIONS - MORE THAN ONE PLAN
If you maintain or ever maintained another qualified plan
(other than a paired standardized money purchase pension plan
using Basic Plan Document No. 03) in which any Participant in
this Plan is (or was) a Participant or could become a
participant, you must complete this section. You must also
complete this section if you maintain a welfare benefit fund,
as defined in Section 419(e) of the Code, or an individual
medical account, as defined in Section 415(1)(2) of the Code,
under which amounts are treated as annual additions with
respect to any Participant in this Plan.
PART A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan:
1. [_] The provisions of Sections 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other plan were
a master or prototype plan.
2. [_] Other method. (Provide the method under which the plans
will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer discretion.)
__________________________________________________________
______________________
PART B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer, the Employer
will provide below the language which will satisfy the 1.0
limitation of Section 415(e) of the Code. Such language must
preclude Employer discretion. (Complete) ____________________
_____________________________________________________________
PART C. Compensation will mean all of each Participant's (Choose one):
OPTION 1. [_] Section 3121(a) wages
OPTION 2. [_] Section 3401(a) wages
OPTION 3. [_] 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be
selected.
PART D. The limitation year is the following 12-consecutive month
period: _______________________________________________
<PAGE>
================================================================================
QUALIFIED
RETIREMENT
PLAN
----------
ADOPTION AGREEMENT
SIMPLIFIED
STANDARDIZED
PROFIT SHARING PLAN
================================================================================
<PAGE>
Instructions for Completing Adoption Agreement
Simplified Standardized Profit Sharing Plan and Trust
These instructions are designed to help you, the employer, along
with your attorney and/or tax advisor, complete the Adoption
Agreement for the Qualified Retirement Plan. The instructions are
meant to be used only as a general guide and are not intended as a
substitute for qualified legal and tax advisors.
If you wish to have us, the financial organization sponsoring this
prototype plan, help you fill out the Adoption Agreement, we will
do so. However, we recommend that you obtain the advice of your
legal or tax advisor before you sign the Adoption Agreement.
This Adoption Agreement has been designed for easy completion.
There is one page (an original plus two carbonless copies) which
require your completion. Insert the adoption agreement into a
typewriter and follow the section instructions to complete. When
finished, detach at the top and you will have three copies.
EMPLOYER Fill in the requested information. The "Federal Tax Identification
INFORMATION Number" is the tax identification number assigned to your
business. If your business does not have a Federal Tax
Identification Number, complete and file an Internal Revenue
Service (IRS) Form SS4 to obtain a number. The IRS Form SS4 can
be obtained from an IRS office or from your tax advisor. If you
have already filed a Form SS4, print "Applied for" on the "Federal
Tax Identification Number" line. After you receive a tax
identification number, be sure to let our financial organization
know what that number is. In the space marked "Nature of
Business," accurately describe the type of business (e.g., radio
and TV repair, agricultural, etc.). The "Plan Sequence Number" is
used for annual reporting to the IRS. The IRS uses this number to
identify your plan. For example, if this is the fourth plan you
have ever opened, the Plan Sequence Number would be 004 and so on.
EFFECTIVE This profit sharing plan is either a new plan (an initial
DATES adoption) or an amendment and restatement of an existing profit
sharing plan.
If this is a new profit sharing plan, check Option A and fill in
the effective date. The effective date is usually the first day of
the plan year in which this Adoption Agreement is signed. For
example, if an employer maintains a plan on a calendar year basis
and this Adoption Agreement is signed on September 24, 1991, the
effective date would be January 1, 1991.
If the reason you are adopting this plan is to amend and replace
an existing profit sharing plan, check Option B. The existing
profit sharing plan which will be replaced is called a "prior
plan." You will need to know the effective date of the prior plan.
The best way to determine its effective date is to refer to the
prior plan adoption agreement. The effective date of this
amendment and restatement is usually the first day of the plan
year in which the Adoption Agreement is signed. However, if you
are adopting this plan to update a prior plan for changes brought
about by the Tax Reform Act of 1986 (and other recent changes
which apply to qualified plans), the effective date will be the
first day of the plan year which begins in 1989 (January 1, 1989
for a calendar year plan).
PLAN NOTE: This section should be completed even if you do not have
PROVISIONS employees.
Within limits, you as the employer can specify the number of years
your employees must work for you and the age they must attain
before they are eligible to participate in this plan. Note that
the eligibility requirements which you set up for the plan also
apply to you.
Suppose, for example, you establish a service requirement of two
years and an age requirement of 21. In that case, only those
employees (including yourself) who have worked for you for two
years and are at least 21 years old are eligible to participate in
this plan.
Part A. Years of Eligibility Service Requirement
Fill in the number of years of service (no more than 2).
This number must be either 0, 1, or 2.
Part B. Age Requirement
Fill in the age an employee must attain (no more than 21)
to be eligible to participate in the plan.
Part F. Retirement Equity Act Safe Harbor
As a general rule, the Retirement Equity Act requires that
a distribution from a plan to a participant be made in the
form of a joint and survivor annuity purchased from an
insurance company, unless the participant elects otherwise
and his or her spouse consents. However, the Retirement
Equity Act allows employers who maintain certain profit
sharing plans to elect the have a safe harbor rule apply.
If you check "yes" indicating that the safe harbor rule
applies, then payouts from the plan to participants and
beneficiaries will not be subject to the annuity
requirements.
<PAGE>
EMPLOYER An authorized representative of the employer must sign and date
SIGNATURE the Adoption Agreement.
TRUSTEE OR A trustee or custodian must be named for this plan.
CUSTODIAN If the financial organization will be acting as trustee or
custodian, the financial organization should fill in its name. The
financial organization should check the box if it will be acting
as trustee with full trust powers.
If an individual (e.g., the employer, partners, or an appointed
individual) will be acting as individual trustee, the individual's
name and signature should be entered.
PROTOTYPE The prototype sponsor must fill in its name, address and telephone
SPONSOR number.
ADDITIONAL This plan is a standardized plan under applicable IRS procedures.
PLANS An employer who adopts a standardized plan generally does not
have to request a ruling from a Key District Office of the IRS
(called a determination letter) that the plan, under facts and
circumstances unique to that particular employer, meets the
requirements for qualification under the tax laws and regulations.
This section states an exception to the procedures for
standardized plans, namely, if you maintain another plan (other
than a paired standardized money purchase pension plan using the
same Basic Plan Document), you must obtain a determination letter
if you wish to obtain assurance that the plan is qualified.
LIMITATION ON You must read and complete this section if, in addition to the
ALLOCATIONS- plan:
MORE THAN 1. You ever maintained a defined benefit plan, or
ONE PLAN 2. You currently maintain an individually designed plan.
Individually designed plans are not master or prototype plans,
but rather, plans written for just one particular employer.
<PAGE>
27
INTERNAL REVENUE SERVICE Department of the Treasury
Plan Description: Prototype Standardized Washington, DC 20224
Profit Sharing Plan
FFN: 50259012701-003 Case: 9307212 EIN: 36-1245570 Person to Contact:
BPD: 01 Plan: 003 Letter Serial No: D260918a Ms. Arrington
Telephone Number:
WAYNE HUMMER & CO (202) 622-8173
300 SOUTH WACKER DRIVE Refer Reply to:
E:EP:Q:ICU
CHICAGO, IL 60606
Date: 06/07/93
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code
section 401(a)(16) if: (1) an employer ever maintained another qualified plan
for one or more employees who are covered by this plan, other than a specified
paired plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780;
or (2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-4(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
<PAGE>
WAYNE HUMMER & CO
FFN: 50259012701-003
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the Code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
Because you submitted this plan for approval after March 31, 1991, the
continued and interim reliance provisions of section 13 of Rev. Proc. 89-9,
1989-1 C.B. 780, are not applicable. However, solely for purposes of section
17.03 of Rev. Proc. 89-9, you are deemed to have submitted this plan prior to
March 31, 1991, and therefore the extended reliance provisions of section 17.03
are applicable.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
<PAGE>
QUALIFIED SIMPLIFIED STANDARDIZED PROFIT SHARING PLAN
________________________________________________________________________________
Retirement Plan ADOPTION AGREEMENT
________________________________________________________________________________
EMPLOYER Name of Employer _____________________ Telephone ______________
INFORMATION
Business Address ______________________________________________
City ___________________________ State ____________ Zip _______
Federal Tax Identification Number _____________________________
Income Tax Year End ___________________________________________
(month) (day)
Type of Business (Check only one)
[_] Sole Proprietorship [_] Partnership [_] Corporation
[_] Other (Specify)____________________________________________
Plan Sequence No.________ Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if
it is the second, etc.
For a plan which covers only the owner of the business, please
provide the following information about the owner:
Social Security No. _________________________________
Date Business Established ___________________________
Date of Birth _______________________________________
Marital Status ______________________________________
Home Address ________________________________________
EFFECTIVE DATES Check and complete Option A or B
OPTION A. [_] This is the initial adoption of a profit sharing plan by
the Employer. The Effective Date of this Plan is
__________________, 19_____. NOTE: The effective date is
usually the first day of the Plan Year in which this
Adoption Agreement is signed.
OPTION B. [_] This is an amendment and restatement of an existing profit
sharing plan (a prior plan). NOTE: the effective date is
usually the first day of the Plan Year in which this
Adoption Agreement is signed.
The Prior Plan was initially effective on ________________,
19_____.
The Effective Date of this amendment and restatement is
________________, 19_____.
PLAN
PROVISIONS Complete Parts A through F
PART A. Service Requirement: An Employee will be eligible to become a
Participant in the Plan after completing _____ (enter 0, 1 or
2) Years of Eligibility Service. NOTE: If left blank, the Years
of Eligibility Service required will be deemed to be 0.
PART B. Age Requirement: An Employee will be eligible to become a
Participant in the Plan after attaining age ______ (no more
than 21). NOTE: If left blank, it will be deemed there is no
age requirement for eligibility.
PART C. 100% Vesting: A Participant shall be fully Vested at all times
in his or her Individual Account.
PART D. Normal Retirement Age: The Normal Retirement Age under the Plan
is age 59 1/2.
PART E. Contribution Formula: For each Plan Year the Employer will
contribute an amount to be determined from year to year.
Such contribution shall be allocated to the Individual Accounts
of qualifying Participants in the ratio that each qualifying
Participant's Compensation for the Plan Year bears to the total
Compensation of all qualifying Participants for the Plan Year.
PART F. Retirement Equity Act Safe Harbor: Will the safe harbor
provisions of Section 6.05(F) apply? [_] Yes [_] No
NOTE: If left blank, it will be deemed, yes.
EMPLOYER I am an authorized representative of the Employer named above
SIGNATURE and I state the following:
Important: 1. I acknowledge that I have relied upon my own advisors
Please read regarding the completion of this Adoption Agreement and
before signing the legal and tax implications of adopting this Plan.
2. I understand that my failure to properly complete this
Adoption Agreement may result in disqualification of the
Plan.
3. I understand that the Prototype Sponsor will inform me of
any amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer ______________________________
Date Signed _________________________________________
Type Name ___________________________________________
TRUSTEE OR Trustee or Custodian ________________________________
CUSTODIAN
Signature ___________________________________________
Type Name ___________________________________________
[_] Check this box only if a financial organization is named as
Trustee and it has full trust powers.
PROTOTYPE Name of Prototype Sponsor ___________________________
SPONSOR
Telephone Number ____________________________________
Address _____________________________________________
ADDITIONAL An Employer who has ever maintained or who later adopts any
PLANS plan (including a welfare benefit fund, as defined in Section
419(e) of the Code, which provides post-retirement medical
benefits allocated to separate accounts for key employees as
defined in Section 419A(d)(3) of the Code or an individual
medical account, as defined in Section 415(1)(2) of the Code)
in addition to this Plan (other than a paired standardized
money purchase pension plan using Basic Plan Document No. 03)
may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the
Employer who adopts or maintains multiple plans wishes to
obtain reliance that the Employer's plan(s) are qualified,
application for a determination letter should be made to the
appropriate Key District Director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with
Basic Plan Document No. 03.
<PAGE>
SIMPLIFIED STANDARDIZED PROFIT SHARING PLAN ____________________________________
ADOPTION AGREEMENT
LIMITATION ON More Than One Plan
ALLOCATIONS If you maintain or ever maintained another qualified plan (other
than a paired standardized money purchase pension plan using
Basic Plan Document No. 03) in which any Participant in this Plan
is (or was) a participant or could become a participant, you must
complete this section. You must also complete this section if you
maintain a welfare benefit fund, as defined in Section 419(e) of
the Code, or an individual medical account, as defined in Section
415(1)(2) of the Code, under which amounts are treated as annual
additions with respect to any Participant in this Plan.
PART A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan:
1. [_] The provisions of Sections 3.05(B)(1) through 3.05(B)(6)
of the Plan will apply as if the other plan were a master
or prototype plan.
2. [_] Other method. (Provide the method under which the plans
will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer discretion.)
_________________________________________________________
_________________________________________________________
PART B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will
provide below the language which will satisfy the 1.0 limitation
of Section 415(e) of the Code. Such language must preclude
Employer discretion. (Complete)__________________________________
PART C. The limitation year is the following 12-consecutive month period:
___________________
<PAGE>
QUALIFIED
RETIREMENT
PLAN
BASIC PLAN
DOCUMENT
<PAGE>
REVENUE PROCEDURE 93-47/OBRA-93
- ------------------------- AMENDMENT TO --------------------------
BASIC PLAN DOCUMENT
DATE RECEIVED BY EMPLOYER:
---------------
Section l.06 is amended by adding the following three paragraphs after the last
paragraph thereof:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual Compensation limit. The OBRA '93 annual
Compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Section 401(a)(17)(B)
of the Internal Revenue Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall
mean the OBRA '93 annual Compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account
in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for that prior determination period is subject to the
OBRA '93 annual Compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual Compensation limit is
$150,000.
Section 6.02(B)(1) is amended by adding the following sentence to the end of the
first paragraph thereof:
If a distribution is one to which Sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under Section 1.411(a)-11(c) of
the Income Tax Regulations is given, provided that:
a. the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
b. the Participant, after receiving the notice, affirmatively elects
a distribution.
<PAGE>
==============================================================================
TABLE OF CONTENTS
SECTION ONE DEFINITIONS
1.01 Adoption Agreement......................................... 1
1.02 Basic Plan Document........................................ 1
1.03 Break In Eligibility Service............................... 1
1.04 Break In Vesting Service................................... 1
1.05 Code....................................................... 1
1.06 Compensation............................................... 1
1.07 Custodian.................................................. 2
1.08 Disability................................................. 2
1.09 Earned Income.............................................. 2
1.10 Effective Date............................................. 2
1.11 Eligibility Computation Period............................. 2
1.12 Employee................................................... 2
1.13 Employer................................................... 2
1.14 Employer Contribution...................................... 2
1.15 Entry Dates................................................ 2
1.16 ERISA...................................................... 2
1.17 Forfeiture................................................. 2
1.18 Fund....................................................... 2
1.19 Highly Compensated Employee................................ 2
1.20 Hours Of Service........................................... 3
1.21 Individual Account......................................... 3
1.22 Investment Fund............................................ 3
1.23 Key Employee............................................... 3
1.24 Leased Employee............................................ 3
1.25 Normal Retirement Age...................................... 3
1.26 Owner-Employee............................................. 3
1.27 Participant................................................ 4
1.28 Plan....................................................... 4
1.29 Plan Administrator......................................... 4
1.30 Plan Year.................................................. 4
1.31 Prior Plan................................................. 4
1.32 Prototype Sponsor.......................................... 4
1.33 Self-Employed Individual................................... 4
1.34 Separate Fund.............................................. 4
1.35 Taxable Wage Base.......................................... 4
1.36 Termination Of Employment.................................. 4
1.37 Top-Heavy Plan............................................. 4
1.38 Trustee ................................................... 4
1.39 Valuation Date............................................. 4
1.40 Vested..................................................... 4
1.41 Year Of Eligibility Service................................ 4
1.42 Year Of Vesting Service.................................... 4
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 Eligibility To Participate................................. 5
2.02 Plan Entry................................................. 5
2.03 Transfer To Or From Ineligible Class....................... 5
2.04 Return As A Participant After Break In Eligibility Service. 5
2.05 Determinations Under This Section.......................... 5
2.06 Terms of Employment........................................ 5
SECTION THREE CONTRIBUTIONS
3.01 Employer Contributions..................................... 5
3.02 Employee Contributions..................................... 7
3.03 Rollover Contributions..................................... 7
3.04 Transfer Contributions..................................... 7
3.05 Limitation On Allocations.................................. 7
<PAGE>
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS
AND VALUATION
4.01 Individual Accounts........................................ 11
4.02 Valuation Of Fund.......................................... 11
4.03 Valuation Of Individual Accounts........................... 11
4.04 Segregation Of Assets...................................... 11
4.05 Statement Of lndividual Accounts........................... 11
4.06 Modification Of Method For Valuing Individual Accounts..... 11
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 Creation Of Fund........................................... 11
5.02 Investment Authority....................................... 11
5.03 Financial Organization Custodian Or Trustee
Without Full Trust Powers.................................. 12
5.04 Financial Organization Trustee With Full Trust Powers
And Individual Trustee..................................... 12
5.05 Division Of Fund Into Investment Funds..................... 13
5.06 Compensation And Expenses.................................. 13
5.07 Not Obligated To Question Data............................. 13
5.08 Liability For Withholding On Distributions................. 13
5.09 Resignation Or Removal Of Trustee (Or Custodian)........... 13
5.10 Degree Of Care............................................. 14
5.11 Indemnification Of Prototype Sponsor And Trustee
(Or Custodian)............................................. 14
5.12 Investment Managers........................................ 14
5.13 Matters Relating To Insurance.............................. 14
5.14 Direction Of Investments By Participant.................... 15
SECTION SIX VESTING AND DISTRIBUTION
6.01 Distribution To Participant................................ 15
6.02 Form Of Distribution To A Participant...................... 17
6.03 Distributions Upon The Death Of A Participant.............. 18
6.04 Form Of Distribution To Beneficiary........................ 18
6.05 Joint And Survivor Annuity Requirements.................... 18
6.06 Distribution Requirements.................................. 21
6.07 Annuity Contracts.......................................... 23
6.08 Loans To Participants...................................... 24
6.09 Distribution In Kind....................................... 24
6.10 Direct Rollovers of Eligible Rollover Distributions........ 24
SECTION SEVEN CLAIMS PROCEDURE
7.01 Filing A Claim For Plan Distributions...................... 25
7.02 Denial Of Claim............................................ 25
7.03 Remedies Available......................................... 25
SECTION EIGHT PLAN ADMINISTRATOR
8.01 Employer Is Plan Administrator............................. 25
8.02 Powers And Duties Of The Plan Administrator................ 25
8.03 Expenses And Compensation.................................. 26
8.04 Information From Employer.................................. 26
SECTION NINE AMENDMENT AND TERMINATION
9.01 Right Of Prototype Sponsor To Amend The Plan............... 26
9.02 Right Of Employer To Amend The Plan........................ 26
9.03 Limitation On Power To Amend............................... 26
9.04 Amendment Of Vesting Schedule.............................. 27
9.05 Permanency................................................. 27
9.06 Method And Procedure For Termination....................... 27
9.07 Continuance Of Plan By Successor Employer.................. 27
9.08 Failure Of Plan Qualification.............................. 27
<PAGE>
SECTION TEN MISCELLANEOUS
10.01 State Community Property Laws............................ 27
10.02 Headings................................................. 27
10.03 Gender And Number........................................ 27
10.04 Plan Merger Or Consolidation............................. 27
10.05 Standard Of Fiduciary Conduct............................ 27
10.06 General Undertaking Of All Parties....................... 27
10.07 Agreement Binds Heirs, Etc............................... 28
10.08 Determination Of Top-Heavy Status........................ 28
10.09 Special Limitations For Owner-Employees.................. 29
10.10 Inalienability Of Benefits............................... 29
<PAGE>
QUALIFIED RETIREMENT PLAN AND TRUST
Defined Contribution Basic Plan Document 03
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SECTION ONE DEFINITIONS
The following words and phrases when used in the Plan with initial
capital letters shall, for the purpose of this Plan, have the
meanings set forth below unless the context indicates that other
meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it
adopts the Plan and Trust and thereby agrees to be bound by all
terms and conditions of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee fails to
complete more than 500 Hours of Service (or such lesser number of
Hours of Service specified in the Adoption Agreement for this
purpose).
1.04 BREAK IN VESTING SERVICE
Means a Plan Year during which an Employee fails to complete more
than 500 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
1.05 CODE
Means the Internal Revenue Code of 1986 as amended from
time-to-time.
1.06 COMPENSATION
For Plan Years beginning on or after January 1, 1989, the
following definition of Compensation shall apply:
Compensation will mean Compensation as that term is defined in
Section 3.05(E)(2) of the Plan. For any Self-Employed Individual
covered under the Plan, Compensation will mean Earned Income.
Compensation shall include only that Compensation which is
actually paid to the Participant during the applicable period.
Except as provided elsewhere in this Plan, the applicable period
shall be the Plan Year unless the Employer has selected another
period in the Adoption Agreement.
Unless otherwise indicated in the Adoption Agreement, Compensation
shall include any amount which is contributed by the Employer
pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
For years beginning after December 31, 1988, the annual
Compensation of each Participant taken into account under the Plan
for any year shall not exceed $20,000. This limitation shall be
adjusted by the Secretary at the same time and in the same manner
as under Section 415(d) of the Code, except that the dollar
increase in effect on January 1 of any calendar year is effective
for years beginning in such calendar year and the first adjustment
to the $200,000 limitation is effected on January 1, 1990. If a
Plan determines Compensation on a period of time that contains
fewer than 12 calendar months, then the annual Compensation limit
is an amount equal to the annual Compensation limit for the
calendar year in which the compensation period begins multiplied
by the ratio obtained by dividing the number of full months in
the period by 12.
In determining the Compensation of a Participant for purposes of
this limitation, the rules of Section 414(q)(6) of the Code shall
apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19
before the close of the year.
If, as a result of the application of such rules the adjusted
$200,000 limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration
level if this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined
under this Section prior to the application of this limitation.
If Compensation for any prior Plan Year is taken into account in
determining an Employee's contributions or benefits for the
current year, the Compensation for such prior year is subject to
the applicable annual Compensation limit in effect for that prior
year. For this purpose, for years beginning before January 1,
1990, the applicable annual Compensation limit is $200,000.
Unless otherwise indicated in the Adoption Agreement, where an
Employee enters the Plan (and thus becomes a Participant) on an
Entry Date other than the first Entry Date in a Plan Year, his
Compensation will include any such earnings paid to him during the
whole of such Plan Year.
Where this Plan is being adopted as an amendment and restatement
to bring a Prior Plan into compliance with the Tax Reform Act of
1986, such Prior Plan's definition of Compensation shall apply for
Plan Years beginning before January 1, 1989.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1,1994, the
annual Compensation of each Employee taken into account under the
Plan shall not exceed the OBRA '93 annual Compensation limit. The
OBRA '93 annual Compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-
of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
OBRA '93 annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA '93 annual Compensation limit set
forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the
current Plan Year, the Compensation for that prior determination
period is subject to the OBRA '93 annual Compensation limit in
effect for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994, the OBRA '93
annual Compensation limit is $150,000.
<PAGE>
1.07 CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian
or any duly appointed successor as provided in Section 5.09.
1.08 DISABILITY
Means the inability to engage in any substantial, gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not
less than 12 months. The permanence and degree of such impairment
shall be supported by medical evidence.
1.09 EARNED INCOME
Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which
personal services of the individual are a material income-
producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable
to such items. Net earnings are reduced by contributions by the
Employer to a qualified plan to the extent deductible under
Section 404 of the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable
years beginning after December 31, 1989.
1.10 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the
Adoption Agreement. However, where a separate date is stated in
the Plan as of which a particular Plan provision becomes
effective, such date will control with respect to that provision.
1.11 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the
12 consecutive month period commencing with the date such Employee
first performs an Hour of Service (employment commencement date).
His subsequent Eligibility Computation Periods shall be the 12
consecutive month periods commencing on the anniversaries of his
employment commencement date; provided, however, if pursuant to
the Adoption Agreement, an Employee is required to complete one or
less Years of Eligibility Service to become a Participant, then
his subsequent Eligibility' Computation periods shall be the
Plan Years commencing with the Plan Year beginning during his
initial Eligibility Computation Period.
1.12 EMPLOYEE
Means any person employed by the Employer maintaining the Plan or
of any other employer required to be aggregated with such Employer
under Sections 414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any Leased Employee deemed
to be an Employee of any Employer described in the previous
paragraph as provided in Sections 414(n) or (o) of the Code.
1.13 EMPLOYER
Means any corporation, partnership, sole-proprietorship or other
entity named in the Adoption Agreement and any successor who by
merger, consolidation, purchase or otherwise assumes the
obligations of the Plan. A partnership is considered to be the
Employer of each of the partners and a sole-proprietorship is
considered to be the Employer of a sole proprietor.
1.14 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as
determined under this Plan.
1.15 ENTRY DATES
Means the first day of the Plan Year and the first day of the
seventh month of the Plan Year, unless the Employer has specified
more frequent dates in the Adoption Agreement.
1.16 ERISA
Means the Employee Retirement Income Security Act of 1974 as
amended from time-to-time.
1.17 FORFEITURE
Means that portion of a Participant's Individual Account as
derived from Employer Contributions which he or she is not
entitled to receive (i.e., the nonvested portion).
1.18 FUND
Means the Plan assets held by the Trustee or Custodian for the
Participants' exclusive benefit.
1.19 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated
active employees and highly compensated former employees.
A highly compensated active employee includes any Employee who
performs service for the Employer during the determination year
and who, during the look-back year: (a) received Compensation
from the Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (b) received Compensation from the
Employer in excess of $50,000 (as adjusted pursuant to Section
415(d) of the Code) and was a member of the top-paid group for
such year; or (c) was an officer of the Employer and received
Compensation during such vear that is greater than 50% of the
dollar limitation in effect under Section 415(b)(1)(A) of the
Code. The term Highly Compensated Employee also includes: (a)
Employees who are both described in the preceding sentence if
the term "determination year" is substituted for the term "look-
back year" and the Employee is one of the 100 Employees who
received the most Compensation from the Employer during the
determination year; and (b) Employees who are 5% owners at any
time during the look-back year or determination year.
If no officer has satisfied the Compensation requirement of (c)
above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
For this purpose. the determination year shall be the Plan Year.
The look-back year shall be the 12 month period immediately
preceding the determination year.
A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to
the determination year, performs no service for the Employer
during the determination year, and was a highly compensated active
employee for either the separation year or any determination
year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year,
a family member of either a 5% owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10
most Highly Compensated Employees ranked
<PAGE>
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3
on the basis of Compensation paid by the Employer during such
year, then the family member and the 5% owner or top 10 Highly
Compensated Employee shall be aggregated. In such case, the family
member and 5% owner or top 10 Highly Compensated Employee shall be
treated as a single Employee receiving Compensation and Plan
contributions or benefits equal to the sum of such Compensation
and contributions or benefits of the family member and 5% owner or
top 10 Highly Compensated Employee. For purposes of this Section,
family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of
such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the Compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations thereunder.
1.20 HOURS OF SERVICE - Means
A. Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These
hours will be credited to the Employee for the computation
period in which the duties are performed; and
B. Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than 501
Hours of Service will be credited under this paragraph for any
single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall
be calculated and credited pursuant to Section 2530.200b-2 of
the Department of Labor Regulations which is incorporated
herein by this reference; and
C. Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under paragraph
(A) or paragraph (B), as the case may be, and under this
paragraph (C). These hours will be credited to the Employee for
the computation period or periods to which the award or
agreement pertains rather than the computation period in which
the award, agreement, or payment is made.
D. Solely for purposes of determining whether a Break in
Eligibility Service or a Break in Vesting Service has occurred
in a computation period (the computation period for purposes of
determining whether a Break in Vesting Service has occurred is
the Plan Year), an individual who is absent from work for
maternity or paternity reasons shall receive credit for the
Hours of Service which would otherwise have been credited to
such individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph, an absence from
work for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of a
birth of a child of the individual, (3) by reason of the
placement of a child with the individual in connection with the
adoption of such child by such individual, or (4) for purposes
of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service
credited under this paragraph shall be credited (1) in the
Eligibility Computation Period or Plan Year in which the
absence begins if the crediting is necessary to prevent a Break
in Eligibility Service or a Break in Vesting Service in the
applicable period, or (2) in all other cases, in the following
Eligibility Computation Period or Plan Year.
E. Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m) of
the Code), a controlled group of corporations (under Section
414(b) of the Code), or a group of trades or businesses under
common control (under Section 414(c) of the Code) of which the
adopting Employer is a member, and any other entity required to
be aggregated with the Employer pursuant to Section 414(o) of
the Code and the regulations thereunder.
Hours of Service will also be credited for any individual
considered an Employee for purposes of this Plan under Code
Sections 414(n) or 414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be
treated as service for the Employer.
G. The above method for determining Hours of Service may be
altered as specified in the Adoption Agreement.
1.21 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan
for each Participant in accordance with Section 4.01.
1.22 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section
5.05.
1.23 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under
Section 10.08.
1.24 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined
in accordance with Section 414(n)(6) of the Code) on a
substantially full time basis for a period of at least one
year, and such services are of a type historically performed by
Employees in the business field of the recipient Employer.
Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services
performed for the recipient Employer shall be treated as
provided by the recipient Employer.
A Leased Employee shall not be considered an Employee of the
recipient if: (1) such employee is covered by a money purchase
pension plan providing: (a) a nonintegrated employer
contribution rate of at least 10% of compensation, as defined
in Section 415(c)(3) of the Code, but including amounts
contributed pursuant to a salary reduction agreement which are
excludible from the employee's gross income under Section 125,
Section 402(a)(8), Section 402(h) or Section 403(b) of the
Code, (b) immediate participation, and (c) full and immediate
vesting; and (2) Leased Employees do not constitute more than
20% of the recipient's nonhighly compensated work force.
1.25 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if
the Employer enforces a mandatory retirement age which is less
than the Normal Retirement Age, such mandatory age is deemed to
be the Normal Retirement Age. If no age is specified in the
Adoption Agreement, the Normal Retirement Age shall be age
59 1/2.
1.26 OWNER-EMPLOYEE
Means an individual who is a sole proprietor, or who is a
partner owning more than 10% of either the capital or profits
interest of the partnership.
<PAGE>
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4
1.27 PARTICIPANT
Means any Employee or former Employee of the Employer who has met
the Plan's eligibility requirements, has entered the Plan and who
is or may become eligible to receive a benefit of any type from
this Plan or whose Beneficiary may be eligible to receive any such
benefit.
1.28 PLAN
Means the prototype defined contribution plan adopted by the
Employer. The Plan consists of this Basic Plan Document plus the
corresponding Adoption Agreement as completed and signed by the
Employer.
1.29 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan
Administrator in accordance with Section 8.01.
1.30 PLAN YEAR
Means the 12 consecutive month period which coincides with the
Employer's tax year or such other 12 consecutive month period as
is designated in the Adoption Agreement.
1.31 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this
Plan document, as indicated in the Adoption Agreement.
1.32 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement. Such entity
must meet the definition of a sponsoring organization set forth in
Section 3.07 of Revenue Procedure 89-9.
1.33 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable year
from the trade or business for which the Plan is established;
also, an individual who would have had Earned Income but for the
fact that the trade or business had no net profits for the taxable
year.
1.34 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that Participant.
The assets which comprise a Participant's Separate Fund are those
assets earmarked for him and those assets subject to the
Participant's individual direction pursuant to Section 5.14.
1.35 TAXABLE WAGE BASE
Means, with respect to any taxable year, the maximum amount of
earnings which may be considered wages for such year under
Section 3121(a)(1) of the Code.
1.36 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall
occur whenever his status as an Employee of such Employer ceases
for any reason other than his death. An Employee who does not
return to work for the Employer on or before the expiration of an
authorized leave of absence from such Employer shall be deemed to
have incurred a Termination of Employment when such leave ends.
1.37 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is
determined to be such pursuant to Section 10.08.
1.38 TRUSTEE
Means an individual, individuals or corporation specified in the
Adoption Agreement as Trustee or any duly appointed successor as
provided in Section 5.09. Trustee shall mean Custodian in the
event the financial organization named as Trustee does not have
full trust powers.
1.39 VALUATION DATE
Means the last day of the Plan Year and each other date designated
by the Plan Administrator which is selected in a uniform and
nondiscriminatory manner when the assets of the Fund are valued
at their then fair market value.
1.40 VESTED
Means nonforfeitable, that is, a claim which is unconditional and
legally enforceable against the Plan obtained by a Participant or
his Beneficiary to that part of an immediate or deferred benefit
under the Plan which arises from a Participant's Years of Vesting
Service.
1.41 YEAR OF ELIGIBILITY SERVICE
Means a 12-consecutive month period which coincides with an
Eligibility Computation period during which an Employee completes
at least 1,000 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
1.42 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least
1,000 Hours of Service (or such lesser number of Hours of Service
specified in the Adoption Agreement for this purpose).
In the case of a Participant who has 5 or more consecutive Breaks
in Vesting Service, all Years of Vesting Service after such Breaks
in Vesting Service will be disregarded for the purpose of
determining the Vested portion of his Individual Account derived
from Employer Contributions that accrued before such breaks. Such
Participant's prebreak service will count in vesting the
postbreak Individual Account derived from Employer Contributions
only if either:
(A)such Participant had any Vested right to any portion of his
Individual Account derived from Employer Contributions at
the time of his Termination of Employment; or
(B)upon returning to service, the number of consecutive
Breaks in Vesting Service is less than his number of
Years of Vesting Service before such breaks.
Separate subaccounts will be maintained for the Participant's
prebreak and postbreak portions of his Individual Account derived
from Employer Contributions. Both subaccounts will share in the
gains and losses of the Fund.
<PAGE>
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5
Years of Vesting Service shall not include any period of time
excluded from Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period,
Employees shall receive credit for Years of Vesting Service, in
accordance with the preceding provisions of this definition, for
each of the Plan Years (the old and new Plan Years) which overlap
as a result of such change.
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong
to a class of Employees which is excluded from participation as
indicated in the Adoption Agreement, shall be eligible to
participate in this Plan upon the satisfaction of the age and
Years of Eligibility Service requirements specified in the
Adoption Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a
Participant in said Prior Plan before the Effective Date shall
continue to be a Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the
Effective Date if he has met the eligibility requirements of
Section 2.01 as of such date. After the Effective Date, each
Employee shall become a Participant on the first Entry Date
following the date the Employee satisfies the eligibility
requirements of Section 2.01.
C. The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall furnish
him with the application form, enrollment forms or other
documents which are required of Participants. The eligible
Employee shall execute such forms or documents and make
available such information as may be required in the
administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to
participate because he is no longer a member of an eligible class
of Employees, but has not incurred a Break in Eligibility Service,
such Employee shall participate immediately upon his return
to an eligible class of Employees. If such Employee incurs a Break
in Eligibility Service, his eligibility to participate shall be
determined by Section 2.04.
An Employee who is not a member of the eligible class of
Employees will become a Participant immediately upon becoming a
member of the eligible class provided such Employee has satisfied
the age and Years of Eligibility Service requirements. If such
Employee has not satisfied the age and Years of Eligibility
Service requirements as of the date he becomes a member of the
eligible class, he shall become a Participant on the first Entry
Date following the date he satisfies said requirements.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. Employee Not Participant Before Break - If an Employee incurs a
Break in Eligibility Service before satisfying the Plan's
eligibility requirements, such Employee's Years of Eligibility
Service before such Break in Eligibility Service will not be
taken into account.
B. Nonvested Participants - In the case of a Participant who does
not have a Vested interest in his Individual Account
derived from Employer Contributions, Years of Eligibility
Service before a period of consecutive Breaks in Eligibility
Service will not be taken into account for eligibility purposes
if the number of consecutive Breaks in Eligibility Service in
such period equals or exceeds the greater of 5 or the aggregate
number of Years of Eligibility Service before such break. Such
aggregate number of Years of Eligibility Service will not
include any Years of Eligibility Service disregarded under the
preceding sentence by reason of prior breaks.
If a Participant's Years of Eligibility Service are disregarded
pursuant to the preceding paragraph, such Participant will be
treated as a new Employee for eligibility purposes. If a
Participant's Years of Eligibility Service may not be
disregarded pursuant to the preceding paragraph, such
Participant shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
C. Vested Participants - A Participant who has sustained a Break
in Eligibility Service and who had a Vested interest in all or
a portion of his Individual Account derived from Employer
Contributions shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each
Employee to be a Participant. This determination shall be
conclusive and binding upon all persons except as otherwise
provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact
that a common law Employee has become a Participant shall give to
that common law Employee any right to continued employment; nor
shall either fact limit the right of the Employer to discharge or
to deal otherwise with a common law Employee without regard to
the effect such treatment may have upon the Employee's rights
under the Plan.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute - The Employer shall make
contributions to the Plan in accordance with the contribution
formula specified in the Adoption Agreement. If this Plan is a
profit sharing plan, the Employer shall, in its sole
discretion, make contributions without regard to current or
accumulated earnings or profits.
B. Allocation Formula and the Right to Share in the Employer
Contribution -
1. General - The Employer Contribution for a Plan Year will be
allocated or contributed to the Individual Accounts of
qualifying Participants in accordance with the allocation or
contribution formula specified in the Adoption Agreement.
The Employer Contribution for any Plan Year will be
allocated to each Participant's Individual Account as of
the last day of that Plan Year.
<PAGE>
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6
Any Employer Contribution for a Plan Year must satisfy Section 401(a)(4)
and the regulations thereunder for such Plan Year.
2. Qualifying Participants - A Participant is a qualifying Participant and
is entitled to share in the Employer Contribution for any Plan Year if
(1) he was a Participant on at least one day during the Plan Year, (2) if
this Plan is a nonstandardized plan, he completes a Year of Vesting
Service during the Plan Year and (3) where the Employer has selected the
"last day requirement" in the Adoption Agreement, he is an Employee of
the Employer on the last day of the Plan Year (except that this last
requirement (3) shall not apply if the Participant has died during the
Plan Year or incurred a Termination of Employment during the Plan Year
after having reached his Normal Retirement Age or having incurred a
Disability). Notwithstanding anything in this paragraph to the contrary,
a Participant will not be a qualifying Participant for a year if he
incurs a Termination of Employment during such Plan Year with not more
than 500 Hours of Service if he is not an Employee on the last day of the
Plan Year. The determination of whether a Participant is entitled to
share in the Employer Contribution shall be made as of the last day of
each Plan Year.
3. Special Rules for Integrated Plans - If the Employer has selected the
integrated contribution or allocation formula in the Adoption Agreement,
then the maximum disparity rate shall be determined in accordance with
the following table.
MAXIMUM DISPARITY RATE
<TABLE>
<CAPTION>
Top-Heavy Nontop-Heavy
Integration Level Money Purchase Profit Sharing Profit Sharing
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but
not more than X* 5.7% 2.7% 5.7%
More than X* of TWB
but not more than
80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB
but not more than TWB 5.4% 2.4% 5.4%
*X means the greater of $10,000 or 20% of TWB.
</TABLE>
C. ALLOCATION OF FORFEITURES - Forfeitures for a Plan Year which arise as a
result of the application of Section 6.01(D) shall be allocated as follows:
1. Profit Sharing Plan - If this is a profit sharing plan, Forfeitures shall
be allocated in the manner provided in Section 3.01(B) (for Employer
Contributions) to the Individual Accounts of Participants who are entitled
to share in the Employer Contribution for such Plan Year.
2. Money Purchase Pension and Target Benefit Plan - If this Plan is a money
purchase pension plan or a target benefit plan, Forfeitures shall be
applied towards the reduction of Employer Contributions to the Plan.
However, if the Employer has indicated in the Adoption Agreement that
Forfeitures shall be allocated to the Individual Accounts of Participants,
then Forfeitures shall be allocated in the manner provided in Section
3.01(B) (for Employer Contributions) to the Individual Accounts of
Participants who are entitled to share in the Employer Contributions for
such Plan Year.
D. TIMING OF EMPLOYER CONTRIBUTION - The Employer Contribution for each Plan
Year shall be delivered to the Trustee (or Custodian, if applicable) not
later than the due date for filing the Employer's income tax return for its
fiscal year in which the Plan Year ends, including extensions thereof.
E. MINIMUM ALLOCATION FOR TOP-HEAVY PLANS - The contribution and allocation
provisions of this Section 3.01(E) shall apply for any Plan Year with respect
to which this Plan is a Top-Heavy Plan.
1. Except as otherwise provided in (3) and (4) below, the Employer
Contributions and Forfeitures allocated on behalf of any Participant who
is not a Key Employee shall not be less than the lesser of 3% of such
Participant's Compensation or (in the case where the Employer has no
defined benefit plan which designates this Plan to satisfy Section 401 of
Code) the largest percentage of Employer Contributions and Forfeitures, as
a percentage of the first $200,000 (increased by any cost of living
adjustment made by the Secretary of Treasury or his delegate) of the Key
Employee Compensation, allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even though
under other Plan provisions, the Participant would not otherwise be
entitled to receive an allocation, or would have received a lesser
allocation for the year because of (a) the Participant's failure to
complete 1,000 Hours of Service (or any equivalent provided in the Plan),
or (b) the Participant's failure to make mandatory Employee Contributions
to the Plan, or (c) Compensation less than a stated amount.
2. For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in Section 1.06 of the Plan.
3. The provision in (1) above shall not apply to any Participant who was not
employed by the Employer on the last day of the Plan Year.
4. The provision in (1) above shall not apply to any Participant to the
extent the Participant is covered under any other plan or plans of the
Employer and the Employer has provided in the Adoption Agreement that the
minimum allocation or benefit requirement applicable to Top-Heavy Plans
will be met in the other plan or plans.
5. The minimum allocation required under this Section 3.01(E) and Section
3.01(F)(1) (to the extent required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Section 411(a)(3)(B) or
411(a)(3)(D).
F. SPECIAL REQUIREMENTS FOR PAIRED PLANS - The Employer maintains paired plans
if the Employer has adopted both a standardized profit sharing plan and a
standardized money purchase pension plan using this Basic Plan Document
<PAGE>
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7
1. Minimum Allocation - The mandatory minimum allocation
provision of Section 3.01(E) shall not apply to any
Participant if the Employer maintains paired plans. Rather,
for each Plan Year, the Employer will provide a minimum
contribution equal to 3% of Compensation for each non-Key
Employee who is entitled to a minimum contribution. Such
minimum contribution will only be made to one of the Plans.
If an Employee is a Participant in only one of the Plans,
the minimum contribution shall be made to that Plan. If the
Employee is a Participant in both Plans, the minimum
contribution shall be made to the money purchase plan.
2. Only One Plan can be Integrated - If the Employer maintains
paired plans, only one of the Plans may provide for the
disparity in contributions which is permitted under Section
401(1) of the Code. In the event that both Adoption
Agreements provide for such integration, only the money
purchase pension plan shall be deemed to be integrated.
G. Return of the Employer Contribution to the Employer Under
Special Circumstances - Any contribution made by the Employer
because of a mistake of fact must be returned to the Employer
within one year of the contribution.
In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Code, any contributions made incident to that initial
qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is
denied, but only if the application for qualification is made
by the time prescribed by law for filing the Employer's return
for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.
In the event that a contribution made by the Employer under
this Plan is conditioned on deductibility and is not deductible
under Code Section 404, the contribution, to the extent of the
amount disallowed, must be returned to the Employer within one
year after the deduction is disallowed.
H. Omission of Participant
1. If the Plan is a money purchase plan or a target benefit
plan and, if in any Plan Year, any Employee who should be
included as a Participant is erroneously omitted and
discovery of such omission is not made until after a
contribution by the Employer for the year has been made and
allocated, the Employer shall make a subsequent contribution
with respect to the omitted Employee in the amount which the
Employer would have contributed with respect to that
Employee had he not been omitted.
2. If the Plan is a profit sharing plan, and if in any Plan
Year, any Employee who should be included as a Participant
is erroneously omitted and discovery of such omission is
not made until after the Employer Contribution has been made
and allocated, then the Plan Administrator must re-do the
allocation (if a correction can be made) and inform the
Employee. Alternatively, the Employer may choose to
contribute for the omitted Employee the amount which the
Employer would have contributed for him.
3.02 EMPLOYEE CONTRIBUTIONS
This Plan will not accept nondeductible employee contributions and
matching contributions for Plan Years beginning after the Plan
Year in which this Plan is adopted by the Employer. Employee
contributions for Plan Years beginning after December 31, 1986,
together with any matching contributions as defined in Section
401(m) of the Code, will be limited so as to meet the
nondiscrimination test of Section 401(m) of the Code.
A separate account will be maintained by the Plan Administrator
for the nondeductible employee contributions of each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator, withdraw the lesser of the portion of his
Individual Account attributable to his nondeductible employee
contributions or the amount he contributed as nondeductible
employee contributions.
Employee contributions and earnings thereon will be nonforfeitable
at all times. No Forfeiture will occur solely as a result of an
Employee's withdrawal of employee contributions.
The Plan Administrator will not accept deductible employee
contributions which are made for a taxable year beginning after
December 31, 1986. Contributions made prior to that date will be
maintained in a separate account which will be nonforfeitable at
all times. The account will share in the gains and losses of the
Fund in the same manner as described in Section 4.03 of the Plan.
No part of the deductible employee contribution account will be
used to purchase life insurance. Subject to Section 6.05, joint
and survivor annuity requirements (if applicable), the Participant
may withdraw any part of the deductible employee contribution
account by making a written application to the Plan Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and
nondiscriminatory manner, an Employee may contribute a rollover
contribution to the Plan; provided that such Employee submits a
written certification, satisfactory to the Trustee (or Custodian),
that the contribution qualifies as a rollover contribution.
A separate account shall be maintained by the Plan Administrator
for each Employee's rollover contributions which will be
nonforfeitable at all times. Such account will share in the income
and gains and losses of the Fund in the manner described in
Section 4.03 and shall be subject to the Plan's provisions
governing distributions.
For purposes of this Section 3.03, "rollover contribution" means a
contribution described in Sections 402(a)(5), 403(a)(4) or
408(d)(3) of the Code or in any other provision which may be added
to the Code which may authorize rollovers to the Plan.
3.04 TRANSFER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and
nondiscriminatory manner, the Trustee (or Custodian, if
applicable) may receive any amounts transferred to it from the
trustee or custodian of another plan qualified under Code Section
401(a).
A separate account shall be maintained by the Plan Administrator
for each Employee's transfer contributions which will be
nonforfeitable at all times. Such account will share in the income
and gains and losses of the Fund in the manner described in
Section 4.03 and shall be subject to the Plan's provisions
governing distributions.
3.05 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never
participated in another qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Section
419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 415(1)(2) of
the Code, maintained by the Employer, which provides an annual
addition as defined in Section 3.05(E)(1), the following rules
shall apply:
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8
1. The amount of annual additions which may be credited to the
Participant's Individual Account for any limitation year
will not exceed the lesser of the maximum permissible amount
or any other limitation contained in this Plan. If the
Employer Contribution that would otherwise be contributed
or allocated to the Participant's Individual Account would
cause the annual additions for the limitation year to exceed
the maximum permissible amount, the amount contributed or
allocated will be reduced so that the annual additions for
the limitation year will equal the maximum permissible
amount.
2. Prior to determining the Participant's actual compensation
for the limitation year, the Employer may determine the
maximum permissible amount for a Participant on the basis of
a reasonable estimation of the Participant's Compensation
for the limitation year, uniformly determined for all
participants similarly situated.
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
4. If pursuant to Section 3.05(A)(3) or as a result of the
allocation of Forfeitures there is an excess amount, the
excess will be disposed of as follows:
a. Any nondeductible voluntary employee contributions, to
the extent they would reduce the excess amount, will be
returned to the Participant;
b. If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered
by the Plan at the end of the limitation year, the excess
amount in the Participant's Individual Account will be
used to reduce Employer Contributions (including any
allocation of Forfeitures) for such Participant in the
next limitation year, and each succeeding limitation year
if necessary;
c. If after the application of paragraph (a) an excess
amount still exists, and the Participant is not covered
by the Plan at the end of a limitation year, the excess
amount will be held unallocated in a suspense account.
The suspense account will be applied to reduce future
Employer Contributions (including allocation of any
Forfeitures) for all remaining Participants in the next
limitation year, and each succeeding limitation year if
necessary;
d. If a suspense account is in existence at any time during
a limitation year pursuant to this Section, it will not
participate in the allocation of the Fund's investment
gains and losses. If a suspense account is in existence
at any time during a particular limitation year, all
amounts in the suspense account must be allocated and
reallocated to Participants' Individual Accounts before
any Employer Contributions or any Employee contributions
may be made to the Plan for that limitation year. Excess
amounts may not be distributed to Participants or former
Participants.
B. If, in addition to this Plan, the Participant is covered under
another qualified master or prototype defined contribution plan
maintained by the Employer, a welfare benefit fund, as defined
in Section 419(e) of the Code maintained by the Employer, or
an individual medical account, as defined in Section 415(1)(2)
of the Code, maintained by the Employer, which provides an
annual addition as defined in Section 3.05(E)(1), during any
limitation year, the following rules apply:
1. The annual additions which may be credited to a
Participant's Individual Account under this Plan for any
such limitation will not exceed the maximum permissible
amount reduced by the annual additions credited to a
Participant's Individual Account under the other plans and
welfare benefit funds for the same limitation year. If the
annual additions with respect to the Participant under other
defined contribution plans and welfare benefit funds
maintained by the employer are less than the maximum
permissible amount and the Employer Contribution that would
otherwise be contributed or allocated to the Participant's
Individual Account under this Plan would cause the annual
additions for the limitation year to exceed this limitation,
the amount contributed or allocated will be reduced so that
the annual additions under all such plans and funds for the
limitation year will equal the maximum permissible amount.
If the annual additions with respect to the Participant
under such other defined contribution plans and welfare
benefit funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount will be
contributed or allocated to the Participant's Individual
Account under this Plan for the limitation year.
2. Prior to determining the Participant's actual compensation
for the limitation year, the Employer may determine the
maximum permissible amount for a Participant in the manner
described in Section 3.05(A)(2).
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
4. If, pursuant to Section 3.05(B)(3) or as a result of the
allocation of Forfeitures, a Participant's annual additions
under this Plan and such other plans would result in an
excess amount for a limitation year, the excess amount
will be deemed to consist of the annual additions last
allocated, except that annual additions attributable to a
welfare benefit fund or individual medical account will be
deemed to have been allocated first regardless of the actual
allocation date.
5. If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the excess amount
attributed to this Plan will be the product of,
a. the total excess amount allocated as of such date, times
b. the ratio of (i) the annual additions allocated to the
Participant for the limitation year as of such date under
this Plan to (ii) the total annual additions allocated to
the Participant for the limitation year as of such date
under this and all the other qualified master or
prototype defined contribution plans.
6. Any excess amount attributed to this Plan will be disposed
in the manner described in Section 3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
master prototype plan, annual additions which may be credited
to the Participant's Individual Account under this Plan for any
limitation year will be limited in accordance with Sections
3.05(B)(1) through 3.05(B)(6) as though the other plan were a
master or prototype plan unless the Employer provides other
limitations in the Section of the Adoption Agreement titled
"Limitation on Allocation - More Than One Plan."
<PAGE>
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9
D. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in
this Plan, the sum of the Participant's defined benefit plan
fraction and defined contribution plan fraction will not exceed
1.0 in any limitation year. The annual additions which may be
credited to the Participant's Individual Account under this
Plan for any limitation year will be limited in accordance with
the Section of the Adoption Agreement titled "Limitation on
Allocation - More Than One Plan."
E. The following terms shall have the following meanings when
used in this Section 3.05:
1. Annual additions: The sum of the following amounts credited
to a Participant's Individual Account for the limitation
year:
a. Employer Contributions,
b. Employee contributions,
a. Forfeitures, and
d. amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Section 415(1)(2) of the
Code, which is part of a pension or annuity plan
maintained by the Employer are treated as annual
additions to a defined contribution plan. Also amounts
derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such
date, which are attributable to post-retirement medical
benefits, allocated to the separate account of a key
employee, as defined in Section 419A(d)(3) of the Code,
under a welfare benefit fund, as defined in Section
419(a) of the Code, maintained by the Employer are
treated as annual additions to a defined contribution
plan.
For this purpose, any excess amount applied under Section
3.05(A)(4) or 3.05(B)(6) in the limitation year to reduce
Employer Contributions will be considered annual
additions for such limitation year.
2. Compensation: As elected by the Employer in the Adoption
Agreement (and if no election is made, Section 3401(a) wages
will be deemed to have been selected), Compensation
shall mean all of a Participant's:
a. Section 3121 wages. Wages as defined in Section 3121(a)
of the Code, for purposes of calculating Social Security
taxes, but determined without regard to the wage base
limitation in Section 3121(a)(1), the special rules in
Section 3121(v), any rules that limit covered employment
based on the type or location of an Employee's Employer,
and any rules that limit the remuneration included in
wages based on familial relationship or based on the
nature or location of the employment or the services
performed (such as the exceptions to the definition of
employment in Section 3121(b)(1) through (20)).
b. Section 3401(a) wages. Wages as defined in Section
3401(a) of the Code, for the purposes of income tax
withholding at the source but determined without regard
to any rules that limit the remuneration included in
wages based on the nature or location of the employment
or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
c. 415 safe-harbor compensation. Wages, salaries, and fees
for professional services and other amounts received
(without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the
course of employment with the Employer maintaining the
Plan to the extent that the amounts are includable in
gross income (including, but not limited to, commissions
paid salesmen, compensation for services on the basis of
a percentage of profits, commissions on insurance
premiums, tips, bonuses fringe benefits, reimbursements,
and expense allowances), and excluding the following:
1. Employer contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year in which
contributed, or employer contributions under a
simplified employee pension plan to the extent such
contributions are deductible by the Employee or any
distributions from a plan of deferred compensation;
2. Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
3. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
4. Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity described in Section 403(b) of
the Code (whether or not the amounts are actually
excludible from the gross income of the Employee).
For any Self-Employed Individual, Compensation will
mean Earned Income. For limitation years beginning
after December 31, 1991, for purposes of applying the
limitations of this Section 3.05, compensation for a
limitation year is the compensation actually paid or
includible in gross income during such limitation
year.
Notwithstanding the preceding sentence, compensation
for a Participant in a defined contribution plan who
is permanently and totally disabled (as defined in
Section 22(e)(3) of the Code) is the compensation such
Participant would have received for the limitation
year if the Participant had been paid at the rate of
compensation paid immediately before becoming
permanently and totally disabled; such imputed
compensation for the disabled participant may be taken
into account only if the Participant is not a Highly
Compensated Employee (as defined in Section 414(q) of
the Code) and contributions made on behalf of such
Participant are nonforfeitable when made.
3. Defined benefit fraction: A fraction, the numerator of which
is the sum of the Participant's projected annual benefits
under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator
of which is the lesser of 125% of the dollar limitation
determined for the limitation year under Section 15(b) and
(d) of the Code or 140% of the highest average compensation,
including any adjustments under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125% of the sum of the annual
benefits under such plans which the participant had
accrued as of the close of the last limitation year
beginning
<PAGE>
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10
before January l, l987, disregarding any changes in the
terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of Section 415 of the Code for all limitation
years beginning before January 1, 1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as in
effect for the limitation year.
5. Defined contribution fraction: A fraction, the numerator of
which is the sum of the annual additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the
Employer for the current and all prior limitation years
(including the annual additions attributable to the
Participant's nondeductible employee contributions to all
defined benefit plans, whether or not terminated,
maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, and individual medical
accounts, as defined in Section 415(1)(2) of the Code,
maintained by the Employer), and the denominator of which
is the sum of the maximum aggregate amounts for the current
and all prior limitation years of service with the Employer
(regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate amount
in any limitation year is the lesser of 125% of the dollar
limitation determined under Section 415(b) and (d) of the
Code in effect under Section 415(c)(1)(A) of the Code or
35% of the Participant's compensation for such year.
If the Employee was a participant as of the end of the
first day of the first limitation year beginning after
December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence on
May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the terms
of this Plan. Under the adjustment, an amount equal to the
product of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they
would be computed as of the end of the last limitation year
beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the Plan made after
May 5, 1986, but using the Section 415 limitation
applicable to the first limitation year beginning on or
after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat
all employee contributions as annual additions.
6. Employer: For purposes of this Section 3.05, Employer shall
mean the Employer that adopts this Plan, and all members of
a controlled group of corporations (as defined in Section
414(b) of the Code as modified by Section 415(h)), all
commonly controlled trades or businesses (as defined in
Section 414(c) as modified by Section 415(h)) or affiliated
service groups (as defined in Section 414(m)) of which the
adopting Employer is a part, and any other entity required
to be aggregated with the Employer pursuant to regulations
under Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average compensation for
the three consecutive years of service with the Employer
that produces the highest average.
9. Limitation year: A calendar year, or the 12-consecutive
month period elected by the Employer in the Section of the
Adoption Agreement titled "Limitation on Allocation - More
Than One Plan." All qualified plans maintained by the
Employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive
month period, the new limitation year must begin on a date
within the limitation year in which the amendment is made.
10. Master or prototype plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal
Revenue Service.
11. Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any limitation year
shall not exceed the lesser of:
a. the defined contribution dollar limitation, or
b. 25% of the Participant's compensation for the limitation
year.
The compensation limitation referred to in (b) shall not
apply to any contribution for medical benefits (within
the meaning of Section 401(h) or Section 419A(f)(2) of
the Code) which is otherwise treated as an annual
addition under Section 415(1)(1) or 419A(d)(2) of the
Code.
If a short limitation year is created because of an
amendment changing the limitation year to a different
12-consecutive month period, the maximum permissible
amount will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
12. Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than a
straight life annuity or qualified joint and survivor
annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
a. the Participant will continue employment until normal
retirement age under the Plan (or current age, if
later), and
b. the Participant's compensation for the current
limitation year and all other relevant factors used to
determine benefits under the Plan will remain constant
for all future limitation years.
<PAGE>
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11
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain an
Individual Account in the name of each Participant to reflect
the total value of his interest in the Fund. Each Individual
Account established hereunder shall consist of such
subaccounts as may be needed for each Participant including:
1. a subaccount to reflect Employer Contributions and
Forfeitures allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's nondeductible
employee contributions; and
5. a subaccount to reflect a Participant's deductible
employee contributions.
Such subaccounts are primarily for accounting purposes, and do
not necessarily require a segregation of the Fund.
B. The Plan Administrator may establish additional accounts as it
may deem necessary for the proper administration of the Plan,
including, but not limited to, a suspense account for
Forfeitures as required pursuant to Section 6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's
Individual Account are invested in a Separate Fund for the
Participant, then the value of that portion of such
Participant's Individual Account at any relevant time equals
the sum of the fair market values of the assets in such
Separate Fund, less any applicable charges or penalties.
B. The fair market value of the remainder of each Individual
Account is determined in the following manner:
1. First, the portion of the Individual Account invested in
each Investment Fund as of the previous Valuation Date is
determined. Each such portion is reduced bv any withdrawal
made from the applicable Investment Fund to or for the
benefit of a Participant or his Beneficiary, further
reduced by any amounts forfeited by the Participant
pursuant to Section 6.01(D) and further reduced by any
transfer to another Investment Fund since the previous
Valuation Date and is increased by any amount transferred
from another Investment Fund since the previous Valuation
Date. The resulting amounts are the net Individual Account
portions invested in the Investment Funds.
2. Secondly, the net Individual Account portions invested in
each Investment Fund are adjusted upwards or downwards, pro
rata (i.e., ratio of each net Individual Account portion to
the sum of all net Individual Account portions) so that the
sum of all the net Individual Account portions invested in
an Investment Fund will equal the then fair market value of
the Investment Fund. Notwithstanding the previous sentence,
for the first Plan year only, the net Individual Account
portions shall be the sum of all contributions made to each
Participant's Individual Account during the first Plan
Year.
3. Thirdly, any contributions to the Plan and Forfeitures are
allocated in accordance with the appropriate allocation
provisions of Section 3. For purposes of Section 4,
contributions made by the Employer for any Plan Year but
after that Plan Year will be considered to have been made
on the last day of that Plan Year regardless of when paid
to the Trustee (or Custodian, if applicable).
Amounts contributed between Valuation Dates will not be
credited with investment gains or losses until the next
following Valuation Date.
4. Finally, the portions of the Individual Account invested in
each Investment Fund (determined in accordance with (1),
(2) and (3) above) are added together.
4.04 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a lump
sum, the Plan Administrator may place that Participant's account
balance into a segregated Investment Fund for the purpose of
maintaining the necessary liquidity to provide benefit
installments on a periodic basis.
4.05 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the Plan
Administrator shall furnish a statement to each Participant
indicating the Individual Account balances of such Participant as
of the last Valuation Date in such Plan Year.
4.06 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may establish
different or additional procedures (which shall be uniform and
nondiscriminatory) for determining the fair market value of the
Individual Accounts.
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which
shall consist of the assets of the Plan held bv the Trustee (or
Custodian, if applicable) pursuant to this Section 5. Assets
within the Fund may be pooled on behalf of all Participants,
earmarked on behalf of each Participant or be a combination of
pooled and earmarked. To the extent that assets are earmarked for
a particular Participant, they will be held in a Separate Fund for
that Participant.
No part of the corpus or income of the Fund may be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual
direction of investments by Participants), the Employer, not the
<PAGE>
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12
Trustee (or Custodian, if applicable), shall have exclusive
management and control over the investment of the Fund into any
permitted investment. Notwithstanding the preceding sentence, a
Trustee with full trust powers (under applicable law) may make an
agreement with the Employer whereby the Trustee will manage the
investment of all or a portion of the Fund. Any such agreement
shall be in writing and set forth such matters as the Trustee
deems necessary or desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST
POWERS
This Section 5.03 applies where a financial organization has
indicated in the Adoption Agreement that it will serve, with
respect to this Plan, as Custodian or as Trustee without full
trust powers (under applicable law). Hereinafter, a financial
organization Trustee without full trust powers (under applicable
law) shall be referred to as a Custodian.
A. Permissible Investments - The assets of the Plan shall be
invested only in those investments which are available through
the Custodian in the ordinary course of business which the
Custodian may legally hold in a qualified plan and which the
Custodian chooses to make available to Employers for
qualified plan investments.
B. Responsibilities of the Custodian - The responsibilities of the
Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between principal and
interest; provided, however, that nothing in this Plan shall
require the Custodian to maintain physical custody of stock
certificates (or other indicia of ownership of any type of
asset) representing assets within the Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Custodian deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Custodian as of the end of each Plan Year.
C. Powers of the Custodian - Except as otherwise provided in this
Plan, the Custodian shall have the power to take any action
with respect to the Fund which it deems necessary or advisable
to discharge its responsibilities under this Plan including,
but not limited to, the following powers:
1. To invest all or a portion of the Fund (including idle cash
balances) in time deposits, savings accounts, money market
accounts or similar investments bearing a reasonable rate of
interest in the Custodian's own savings department or the
savings department of another financial organization;
2. To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges or subscription rights and to make any payments
incidental thereto; to oppose, or to consent to, or
otherwise participate in, corporate reorganizations or other
changes affecting corporate securities, and to pay any
assessments or charges in connection therewith; and
generally to exercise any of the powers of an owner with
respect to stocks, bonds, securities or other property;
3. To hold securities or other property of the Fund in its own
name, in the name of its nominee or in bearer form; and
4. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry
out the powers herein granted.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
INDIVIDUAL TRUSTEE
This Section 5.04 applies where a financial organization has
indicated in the Adoption Agreement that it will serve as
Trustee with full trust powers. This Section also applies
where one or more individuals are named in the Adoption
Agreement to serve as Trustee(s).
A. Permissible Investments - The Trustee may invest the
assets of the Plan in property of any character, real or
personal, including, but not limited to the following:
stocks, including shares of open-end investment companies
(mutual funds); bonds; notes; debentures; options;
limited partnership interests; mortgages; real estate or
any interests therein; unit investment trusts; Treasury
Bills, and other U.S. Government obligations; common
trust funds, combined investment trusts, collective trust
funds or commingled funds maintained by a bank or similar
financial organization (whether or not the Trustee
hereunder); savings accounts, time deposits or money
market accounts of a bank or similar financial
organization (whether or not the Trustee hereunder);
annuity contracts; life insurance policies; or in such
other investments as is deemed proper without regard to
investments authorized by statute or rule of law
governing the investment of trust funds but with regard
to ERISA and this Plan.
Notwithstanding the preceding sentence, the Prototype
Sponsor may, as a condition of making the Plan available
to the Employer for adoption, limit the types of property
in which the Trustee (other than a financial organization
Trustee with full trust powers), is permitted to invest.
B. Responsibilities of the Trustee - The responsibilities of
the Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between
principal and interest; provided, however, that
nothing in this Plan shall require the Trustee to
maintain physical custody of stock certificates (or
other indicia of ownership) representing assets within
the Fund;
2. To maintain accurate records of contributions,
earnings, withdrawals and other information the
Trustee deems relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the
Plan Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of
the Trustee as of the end of each Plan Year.
C. Powers of the Trustee - Except as otherwise provided in
this Plan, the Trustee shall have the power to take any
action with respect to the Fund which it deems necessary
or advisable to discharge its responsibilities under this
Plan including, but not limited to, the following powers:
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13
1. To hold any securities or other property of the Fund in its
own name, in the name of its nominee or in bearer form;
2. To purchase or subscribe for securities issued, or real
property owned, by the Employer or any trade or business
under common control with the Employer but only if the
prudent investment and diversification requirements of ERISA
are satisfied;
3. To sell, exchange, convey, transfer or otherwise dispose of
any securities or other property held by the Trustee, by
private contract or at public auction. No person dealing with
the Trustee shall be bound to see to the application of the
purchase money or to inquire into the validity, expediency,
or propriety of any such sale or other disposition, with or
without advertisement;
4. To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges or subscription rights and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes
affecting corporate securities, and to delegate discretionary
powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities or other
property;
5. To invest any part or all of the Fund (including idle cash
balances) in certificates of deposit, demand or time
deposits, savings accounts, money market accounts or similar
investments of the Trustee (if the Trustee is a bank or
similar financial organization), the Prototype Sponsor or any
affiliate of such Trustee or Prototype Sponsor, which bear a
reasonable rate of interest;
6. To provide sweep services without the receipt by the Trustee
of additional compensation or other consideration (other than
reimbursement of direct expenses properly and actually
incurred in the performance of such services);
7. To hold in the form of cash for distribution or investment
such portion of the Fund as, at any time and from time-
to-time, the Trustee shall deem prudent and deposit such cash
in interest bearing or noninterest bearing accounts;
8. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted;
9. To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to
commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;
10. To employ suitable agents and counsel, to contract with
agents to perform administrative and recordkeeping duties and
to pay their reasonable expenses, fees and compensation, and
such agent or counsel may or may not be agent or counsel for
the Employer;
11. To cause any part or all of the Fund, without limitation as
to amount, to be commingled with the funds of other trusts
(including trusts for qualified employee benefit plans) by
causing such money to be invested as a part of any pooled,
common, collective or commingled trust fund heretofore or
hereafter created by any trustee (if the Trustee is a
bank), by the Prototype Sponsor, by any affiliate bank of
such a Trustee or the Prototype Sponsor, or by such a
Trustee, the Prototype Sponsor or such an affiliate in
participation with others; the instrument or Instruments
establishing such trust fund or funds, as amended, being made
part of this Plan and trust so long as any portion of the
Fund shall be invested through the medium thereof.
12. Generally to do all such acts, execute all such instruments,
initiate all such proceedings, and exercise all such rights
and privileges with relation to property constituting the
Fund as if the Trustee were the absolute owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian, if applicable)
from time-to-time to divide and redivide the Fund into one or more
Investment Funds. Such Investment Funds may include, but not be
limited to, Investment Funds representing the assets under the
control of an investment manager pursuant to Section 5.12 and
Investment Funds representing investment options available for
individual direction by Participants pursuant to Section 5.14.
Upon each division or redivision, the Employer may specify the
part of the Fund to be allocated to each such Investment Fund and
the terms and conditions, if any, under which the assets in such
Investment Fund shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such
reasonable compensation as may be agreed upon by the Trustee (or
Custodian) and the Employer. The Trustee (or Custodian) shall be
entitled to reimbursement by the Employer for all proper expenses
incurred in carrying out his duties under this Plan, including
reasonable legal, accounting and actuarial expenses. If not paid
by the Employer, such compensation and expenses may be charged
against the Fund.
All taxes of any kind that may be levied or assessed under
existing or future laws upon, or in respect of, the Fund or the
income thereof shall be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if
applicable) and Plan Administrator the information which each
party deems necessary for the administration of the Plan
including, but not limited to, changes in a Participant's status,
eligibility, mailing addresses and other such data as may be
required. The Trustee (or Custodian) and Plan Administrator shall
be entitled to act on such information as is supplied them and
shall have no duty or responsibility to further verify or question
such information.
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding
federal income taxes from distributions from the Plan, unless the
Participant (or Beneficiary, where applicable) elects not to have
such taxes withheld. However, the Trustee (or Custodian, if
applicable) shall act as agent for the Plan Administrator to
withhold such taxes and to make the appropriate distribution
reports, subject to the Plan Administrator's obligation to furnish
all the necessary information to so withhold to the Trustee (or
Custodian).
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any time
by giving 30 days advance written notice to the Employer. The
resignation shall become effective 30 days after receipt of such
notice unless a shorter period is agreed upon.
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14
The Employer may remove any Trustee (or Custodian) at any time by
giving written notice to such Trustee (or Custodian) and such
removal shall be effective 30 days after receipt of such notice
unless a shorter period is agreed upon. The Employer shall have
the power to appoint a successor Trustee (or Custodian).
Upon such resignation or removal, if the resigning or removed
Trustee (or Custodian) is the sole Trustee (or Custodian), he
shall transfer all of the assets of the Fund then held by him as
expeditiously as possible to the successor Trustee (or Custodian)
after paying or reserving such reasonable amount as he shall deem
necessary to provide for the expense in the settlement of the
accounts and the amount of any compensation due him and any sums
chargeable against the Fund for which he may be liable. If the
Funds as reserved are not sufficient for such purpose, then he
shall be entitled to reimbursement from the successor Trustee (or
Custodian) out of the assets in the successor Trustee's (or
Custodian's) hands under this Plan. If the amount reserved shall
be in excess of the amount actually needed, the former Trustee (or
Custodian) shall return such excess to the successor Trustee (or
Custodian).
Upon receipt of such assets, the successor Trustee (or Custodian)
shall thereupon succeed to all of the powers and responsibilities
given to the Trustee (or Custodian) by this Plan.
The resigning or removed Trustee (or Custodian) shall render an
accounting to the Employer and unless objected to by the Employer
within 30 days of its receipt, the accounting shall be deemed to
have been approved and the resigning or removed Trustee (or
Custodian) shall be released and discharged as to all matters set
forth in the accounting. Where a financial organization is serving
as Trustee (or Custodian) and it is merged with or bought by
another organization (or comes under the control of any federal or
state agency), that organization shall serve as the successor
Trustee (or Custodian) of this Plan, but only if it is the type of
organization that can so serve under applicable law.
Where the Trustee or Custodian is serving as a nonbank trustee or
custodian pursuant to Section 1.401-12(n) of the Income Tax
Regulations, the Employer will appoint a successor Trustee (or
Custodian) upon notification by the Commissioner of Internal
Revenue that such substitution is required because the Trustee (or
Custodian) has failed to comply with the requirements of Section
1.401-12(n) or is not keeping such records or making such returns
or rendering such statements as are required by forms or
regulations.
5.10 DEGREE OF CARE
Limitations of Liability - The Trustee (or Custodian, if
applicable) shall not be liable for any losses incurred by the
Fund by any lawful direction to invest communicated by the
Employer, Plan Administrator or any Participant or Beneficiary.
The Trustee (or Custodian) shall be under no liability for
distributions made or other action taken or not taken at the
written direction of the Plan Administrator. It is specifically
understood that the Trustee (or Custodian) shall have no duty or
responsibility with respect to the determination of matters
pertaining to the eligibility of any Employee to become a
Participant or remain a Participant hereunder, the amount of
benefit to which a Participant or Beneficiary shall be entitled
to receive hereunder, whether a distribution to Participant or
Beneficiary is appropriate under the terms of the Plan or the size
and type of any policy to be purchased from any insurer for any
Participant hereunder or similar matters; it being understood that
all such responsibilities under the Plan are vested in the Plan
Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
Notwithstanding any other provision herein, and except as may be
otherwise provided by ERISA, the Employer shall indemnify and hold
harmless the Trustee (or Custodian, if applicable) and the
Prototype Sponsor, their officers, directors, employees, agents,
their heirs, executors, successors and assigns, from and against
any and all liabilities, damages, judgments, settlements, losses,
costs, charges, or expenses (including legal expenses) at any time
arising out of or incurred in connection with any action taken by
such parties in the performance of their duties with respect to
this Plan, unless there has been a final adjudication of gross
negligence or willful misconduct in the performance of such
duties.
Further, except as may be otherwise provided by ERISA, the
Employer will indemnify the Trustee (or Custodian) and Prototype
Sponsor from any liability, claim or expense (including legal
expense) which the Trustee (or Custodian) and Prototype Sponsor
shall incur by reason of or which results, in whole or in part,
from the Trustee's (or Custodian's) or Prototype Sponsor's
reliance on the facts and other directions and elections the
Employer communicates or fails to communicate.
5.12 INVESTMENT MANAGERS
A. Definition of Investment Manager - The Employer may appoint one
or more investment managers to make investment decisions with
respect to all or a portion of the Fund. The investment manager
shall be any firm or individual registered as an investment
adviser under the Investment Advisers Act of 1940, a bank as
defined in said Act or an insurance company qualified under the
laws of more than one state to perform services consisting of
the management, acquisition or disposition of any assets of the
Plan.
B. Investment Manager's Authority - A separate Investment Fund
shall be established representing the assets of the Fund
invested at the direction of the investment manager. The
investment manager so appointed shall direct the Trustee (or
Custodian, if applicable) with respect to the investment of
such Investment Fund. The investments which may be acquired at
the direction of the investment manager are limited to those
described in Section 5.03(A) (for Custodians) Section 5.04(A)
(for Trustees).
C. Written Agreement - The appointment of any investment manager
shall be by written agreement between the Employer and the
investment manager and a copy of such agreement (and any
modification or termination thereof) must be given to the
Trustee (or Custodian).
The agreement shall set forth, among other matters, the
effective date of the investment manager's appointment and an
acknowledgment by the investment manager that it is a fiduciary
of the Plan under ERISA.
D. Concerning the Trustee (or Custodian) - Written notice of each
appointment of an investment manager shall be given to the
Trustee (or Custodian) in advance of the effective date of such
appointment. Such notice shall specify which portion of the
Fund will constitute the Investment Fund subject to the
investment manager's direction. The Trustee (or Custodian)
shall comply with the investment direction given to it by the
investment manager and will not be liable for any loss which
may result by reason of any action (or inaction) it takes at
the direction of the investment manager.
5.13 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a
Participant, the aggregate premium for certain life insurance
for each Participant must be less than a certain percentage of
the aggregate Employer Contributions and Forfeitures allocated
to a Participant's Individual Account at any particular time as
follows:
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15
1. Ordinary Life Insurance - For purposes of these incidental
insurance provisions, ordinary life insurance contracts are
contracts with both nondecreasing death benefits and
nonincreasing premiums. If such contracts are purchased,
less than 50% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account will be used to pay the premiums attributable to
them.
2. Term and Universal Life Insurance - No more than 25% of the
aggregate Employer Contributions and Forfeitures allocated
to any Participant's Individual Account will be used to pay
the premiums on term life insurance contracts, universal
life insurance contracts, and all other life insurance
contracts which are not ordinary life.
3. Combination - The sum of 50% of the ordinary life insurance
premiums and all other life insurance premiums will not
exceed 25% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account.
B. Any dividends or credits earned on insurance contracts for a
Participant shall be allocated to such Participant's
Individual Account.
C. Subject to Section 6.05, the contracts on a Participant's life
will be converted to cash or an annuity or distributed to the
Participant upon commencement of benefits.
D. The Trustee (or Custodian, if applicable) shall apply for and
will be the owner of any insurance contract(s) purchased under
the terms of this Plan. The insurance contract(s) must provide
that proceeds will be payable to the Trustee (or Custodian),
however, the Trustee (or Custodian) shall be required to pay
over all proceeds of the contract(s) to the Participant's
designated Beneficiary in accordance with the distribution
provisions of this Plan. A Participant's spouse will be the
designated Beneficiary of the proceeds in all circumstances
unless a qualified election has been made in accordance with
Section 6.05, Joint and Survivor Annuity Requirements, if
applicable. Under no circumstances shall the Fund retain any
part of the proceeds. In the event of any conflict between the
terms of this Plan and the terms of any insurance contract
purchased hereunder, the Plan provisions shall control.
E. The Employer may direct the Trustee (or Custodian) to sell and
distribute insurance or annuity contracts to a Participant (or
other party as may be permitted) in accordance with applicable
law or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Trustee (or Custodian, if applicable)
regarding the investment of part or all of his Individual
Account. To the extent so directed, the Employer, Plan
Administrator, Trustee (or Custodian) and all other fiduciaries
are relieved of their fiduciary responsibility under Section
404 of ERISA.
The Plan Administrator shall direct that a Separate Fund be
established in the name of each Participant who directs the
investment of part or all of his Individual Account. Each
Separate Fund shall be charged or credited (as appropriate)
with the earnings, gains, losses or expenses attributable to
such Separate Fund. No fiduciary shall be liable for any loss
which results from a Participant's individual direction. The
assets subject to individual direction shall not be invested in
collectibles as that term is defined in Section 408(m) of the
Code.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules relating to individual direction as it
deems necessary or advisable including, but not limited to,
rules describing (1) which portions of Participant's
Individual Account can be individually directed; (2) the
frequency of investment changes; (3) the forms and procedures
for making investment changes; and (4) the effect of a
Participant's failure to make a valid direction.
Subject to the approval of the Prototype Sponsor, the Plan
Administrator may, in a uniform and nondiscriminatory manner,
limit the available investments for Participants' individual
direction to certain specified investment options (including,
but not limited to, certain mutual funds, investment contracts,
deposit accounts and group trusts). The Plan Administrator may
permit, in a uniform and nondiscriminatory manner, a
Beneficiary of a deceased Participant to individually direct
in accordance with this Section.
SECTION SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. When Distributable
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account shall be distributable
to the Participant upon the occurrence of any of the
following events:
a. the Participant's Termination of Employment;
b. the Participant's attainment of Normal Retirement Age;
c. the Participant's Disability; or
d. the termination of the Plan.
2. Written Request: When Distributed - A Participant
entitled to distribution who wishes to receive a
distribution must submit a written request to the Plan
Administrator. Such request shall be made upon a form
provided by the Plan Administrator. Upon a valid request,
the Plan Administrator shall direct the Trustee (or
Custodian, if applicable) to commence distribution no
later than 90 days following the later of:
a. the close of the Plan Year within which the event
occurs which entitles the Participant to distribution;
or
b. the close of the Plan Year in which the request is
received.
3. Special Rules For Withdrawals During Service - If this is
a profit sharing plan and the Adoption Agreement so
provides, a Participant who is not otherwise entitled to
a distribution under Section 6.01(A)(1) may elect to
receive a distribution of all or a part of the Vested
portion of his Individual Account, subject to the
requirements of Section 6.05 and further subject to the
following limits:
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16
a. Participant for 5 or more years. An Employee who has been
a Participant in the Plan for 5 or more years may
withdraw up to his entire Vested portion of his
Individual Account.
b. Participant for less than 5 years. An Employee who has
been a Participant in the Plan for less than 5 years may
withdraw only the amount which has been in his Vested
Individual Account attributable to Employer Contributions
for at least 2 full Plan Years.
However, if the distribution is on account of hardship,
the Participant may withdraw up to his entire Vested
portion of his Individual Account. For purposes of the
preceding sentence, hardship is defined as an immediate
and heavy financial need of the Participant where such
Participant lacks other available resources. The
following are the only financial needs considered
immediate and heavy: expenses incurred or necessary for
medical care, described in Section 213(d) of the Code, of
the Employee, the Employee's spouse or dependents; the
purchase (excluding mortgage payments) of a principal
residence for the Employee; payment of tuition and
related educational fees for the next 12 months of post-
secondary education for the Employee, the Employee's
spouse, children or dependents; or the need to prevent
the eviction of the Employee from, or a foreclosure on
the mortgage of, the Employee's principal residence.
A distribution will be considered as necessary to satisfy
an immediate and heavy financial need of the Employee
only if:
1) The employee has obtained all distributions, other
than hardship distributions, and all nontaxable loans
under all plans maintained by the Employer;
2) The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts
necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result
from the distribution).
4. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the 60th
day after the latest of the close of the Plan Year in which:
a. the Participant attains Normal Retirement Age;
b. occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
c. the Participant incurs a Termination of Employment.
Notwithstanding the foregoing, the failure of a
Participant and spouse to consent to a distribution while
a benefit is immediately distributable, within the
meaning of Section 6.02(B), shall be deemed to be an
election to defer commencement of payment of any benefit
sufficient to satisfy this Section 6.01(A)(4).
B. Determining the Vested Portion - In determining the Vested
portion of a Participant's Individual Account, the following
rules apply:
1. Employer Contributions and Forfeitures - The Vested portion
of a Participant's Individual Account derived from Employer
Contributions and Forfeitures is determined by applying the
vesting schedule selected in the Adoption Agreement (or the
vesting schedule described in Section 6.01(C) if the Plan is
a Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is fully
Vested in his rollover contributions and transfer
contributions.
3. Fully Vested Under Certain Circumstances - A Participant is
fully Vested in his Individual Account if any of the
following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Participant incurs a Disability;
c. the Participant dies;
d. the Plan is terminated or partially terminated; or
e. there exists a complete discontinuance of contributions
under the Plan (if this Plan is a profit sharing plan).
4. Participants in a Prior Plan - If a Participant was a
participant in a Prior Plan on the Effective Date, his
Vested percentage shall not be less than it would have been
under such Prior Plan as computed on the Effective Date.
C. Minimum Vesting Schedule for Top-Heavy Plans - The following
vesting provisions apply for any Plan Year in which this Plan
is a Top-Heavy Plan.
Notwithstanding the other provisions of this Section 6.01 or
the vesting schedule selected in the Adoption Agreement (unless
those provisions or that schedule provide for more rapid
vesting), a Participant's Vested portion of his Individual
Account attributable to Employer Contributions and Forfeitures
shall be determined in accordance with the following minimum
vesting schedule:
Years of Vesting Service Vested Percentage
1 0
2 20
3 40
4 60
5 80
6 100
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17
This minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code, except those
attributable to employee contributions including benefits
accrued before the effective date of Section 416 of the Code
and benefits accrued before the Plan became a Top-Heavy Plan.
Further, no decrease in a Participant's Vested percentage may
occur in the event the Plan's status as a Top-Heavy Plan
changes for any Plan Year. However, this Section 6.01(C) does
not apply to the Individual Account of any Employee who does
not have an Hour of Service after the Plan has initially become
a Top-Heavy Plan and such Employee's Individual Account
attributable to Employer Contributions and Forfeitures will be
determined without regard to this Section.
If this Plan ceases to be a Top-Heavy Plan, then in accordance
with the above restrictions, the vesting schedule as selected
in the Adoption Agreement will govern. If the vesting schedule
under the Plan shifts in or out of top-heavy status, such shift
is an amendment to the vesting schedule and the election in
Section 9.04 applies.
D. Break in Vesting Service and Forfeitures - If a Participant
incurs a Termination of Employment, any portion of his
Individual Account which is not Vested shall be held in a
suspense account. Such suspense account shall share in any
increase or decrease in the fair market value of the assets of
the Fund in accordance with Section 4 of the Plan. The
disposition of such suspense account shall be as follows:
1. No Breaks in Vesting Service - If a Participant neither
receives nor is deemed to receive a distribution pursuant to
Section 6.01(D)(2) or (3) and the Participant returns to the
service of the Employer before incurring 5 consecutive
Breaks in Vesting Service, there shall be no Forfeiture and
the amount in such suspense account shall be recredited to
such Participant's Individual Account.
2. Cash-out of Certain Participants - If the value of the
Vested portion of such Participant's Individual Account
derived from Employee and Employer Contributions does not
exceed $3,500, the Participant shall receive a distribution
of the entire Vested portion of such Individual Account and
the portion which is not Vested shall be treated as a
Forfeiture. For purposes of this Section, if the value of
the Vested portion of a Participant's Individual Account is
zero, the Participant shall be deemed to have received a
distribution of such Vested Individual Account. A
Participant's Vested Individual Account balance shall not
include accumulated deductible employee contributions within
the meaning of Section 72(o)(5)(B) of the Code for Plan
Years beginning prior to January 1, 1989.
3. Participants Who Elect to Receive Distributions - If such
Participant elects to receive a distribution, in accordance
with Section 6.02(B), of the value of the Vested portion of
his Individual Account derived from Employee and Employer
Contributions, the portion which is not Vested shall be
treated as a Forfeiture.
4. Re-employed Participants - If a Participant receives or is
deemed to receive a distribution pursuant to Section
6.01(D)(2) or (3) above and the Participant resumes
employment covered under this Plan, the Participant's
Employer-derived Individual Account balance will be restored
to the amount on the date of distribution if the Participant
repays to the Plan the full amount of the distribution
attributable to Employer Contributions before the earlier of
5 years after the first date on which the Participant is
subsequently re-employed by the Employer, or the date the
Participant incurs 5 consecutive Breaks in Vesting Service
following the date of the distribution.
Amounts forfeited under Section 6.01(D) shall be allocated
in accordance with Section 3.01(C) as of the last day of the
Plan Year during which the Forfeiture arises. Any
restoration of a Participant's Individual Account pursuant
to Section 6.01(D)(4) shall be made from other Forfeitures,
income or gain to the Fund or contributions made by the
Employer.
E. Distribution Prior to Full Vesting - If a distribution is
made to a Participant who was not then fully Vested in his
Individual Account derived from Employer Contributions and
the Participant may increase his Vested percentage in his
Individual Account, then the following rules shall apply:
1. a separate account will be established for the
Participant's interest in the Plan as of the time of the
distribution, and
2. at any relevant time the Participant's Vested portion of
the separate account will be equal to an amount ("X")
determined by the formula: X=P (AB + (R x D))-(R x D)
where "P" is the Vested percentage at the relevant time,
"AB" is the separate account balance at the relevant
time; "D" is the amount of the distribution; and "R" is
the ratio of the separate account balance at the relevant
time to the separate account balance after distribution.
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $3,500 -
If the value of the Vested portion of a Participant's
Individual Account derived from Employee and Employer
Contributions does not exceed $3,500, distribution
from the Plan shall be made to the Participant in a
single lump sum in lieu of all other forms of
distribution from the Plan.
B. Value of Individual Account Exceeds $3,500
1. If the value of the Vested portion of a
Participant's Individual Account derived from
Employee and Employer Contributions exceeds (or at
the time of any prior distribution exceeded)
$3,500, and the Individual Account is immediately
distributable, the Participant and the
Participant's spouse (or where either the
Participant or the spouse died, the survivor) must
consent to any distribution of such Individual
Account. The consent of the Participant and the
Participant's spouse shall be obtained in writing
within the 90-day period ending on the annuity
starting date. The annuity starting date is the
first day of the first period for which an amount
is paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the
Participant's spouse of the right to defer any
distribution until the Participant's Individual
Account is no longer immediately distributable.
Such notification shall include a general
description of the material features, and an
explanation of the relative values of, the optional
forms of benefit available under the Plan in a
manner that would satisfy the notice requirements
of Section 417(a)(3) of the Code, and shall be
provided no less than 30 days and no more than 90
days prior to the annuity starting date. If a
distribution is one to which Sections 401(a)(11)
and 417 of the Internal Revenue Code do not apply
such distribution may commence less than 30 days
after the notice required under Section 1.411(a)-
11(c) of the Income Tax Regulations is given,
provided that:
a. the Plan Administrator clearly informs the
Participant that the Participant has a right to
a period of at least 30 days after receiving the
notice to consider the decision of whether or
not to elect a distribution (and, if applicable,
a particular distribution option), and
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
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18
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of
a qualified joint and survivor annuity while the Individual
Account is immediately distributable. Neither the consent of
the Participant nor the Participant's spouse shall be
required to the extent that a distribution is required to
satisfy Section 401(a)(9) or Section 415 of the Code. In
addition, upon termination of this Plan if the Plan does not
offer an annuity option (purchased from a commercial
provider), the Participant's Individual Account may, without
the Participant's consent, be distributed to the Participant
or transferred to another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code) within the same controlled group.
An Individual Account is immediately distributable if any
part of the Individual Account could be distributed to the
Participant (or surviving spouse) before the Participant
attains or would have attained (if not deceased) the later
of Normal Retirement Age or age 62.
2. For purposes of determining the applicability of the
foregoing consent requirements to distributions made before
the first day of the first Plan year beginning after
December 31, 1988, the Vested portion of a Participant's
Individual Account shall not include amounts attributable to
accumulated deductible employee contributions within the
meaning of Section 72(o)(5)(B) of the Code.
C. Other Forms of Distribution to Participant - If the value of
the Vested portion of a Participant's Individual Account
exceeds $3,500 and the Participant has properly waived the
joint and survivor annuity, as described in Section 6.05, the
Participant may request in writing that the Vested portion of
his Individual Account be paid to him in one or more of the
following forms of payment: (1) in a lump sum; (2) in
installment payments over a period not to exceed the life
expectancy of the Participant or the joint and last survivor
life expectancy of the Participant and his designated
Beneficiary; or (3) applied to the purchase of an annuity
contract.
Notwithstanding anything in this Section 6.02 to the contrary,
a Participant cannot elect payments in the form of an annuity
if the safe harbor rules of Section 6.05(F) apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Spousal Consent - Each Participant
may designate, upon a form provided by and delivered to the
Plan Administrator, one or more primary and contingent
Beneficiaries to receive all or a specified portion of his
Individual Account in the event of his death. A Participant may
change or revoke such Beneficiary designation from time to time
by completing and delivering the proper form to the Plan
Administrator.
In the event that a Participant wishes to designate a primary
Beneficiary who is not his spouse, his spouse must consent in
writing to such designation, and the spouse's consent must
acknowledge the effect of such designation and be witnessed by
a notary public. Notwithstanding this consent requirement, if
the Participant establishes to the satisfaction of the Plan
Administrator that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, no
consent shall be required. Any change of Beneficiary will
require a new spousal consent.
B. Payment to Beneficiary - If a Participant dies before his
entire Individual Account has been paid to him, such deceased
Participant's Individual Account shall be payable to any
surviving Beneficiary designated by the Participant, or, if no
Beneficiary survives the Participant, to the Participant's
estate.
C. Written Request: When Distributed - A Beneficiary of a deceased
Participant entitled to a distribution who wishes to receive
a distribution must submit a written request to the Plan
Administrator. Such request shall be made upon a form provided
by the Plan Administrator. Upon a valid request, the Plan
Administrator shall direct the Trustee (or Custodian) to
commence distribution no later than 90 days following the later
of:
1. the close of the Plan Year within which the Participant
dies; or
2. the close of the Plan Year in which the request is received.
D. Location of Participant or Beneficiary Unknown - In the event
that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the
expiration of 5 years after it becomes payable, remain unpaid
solely by reason of the inability of the Plan Administrator,
after sending a registered letter, return receipt requested, to
the last known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his
Beneficiary, the amount so distributable shall be forfeited and
allocated in accordance with the terms of the Plan. In the
event a Participant or Beneficiary is located subsequent to his
benefit being forfeited, such benefit shall be restored;
provided, however, if all or a portion of such amount has been
lost by reason of escheat under state law, the Participant or
Beneficiary shall cease to be entitled to the portion so lost.
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Does Not Exceed $3,500 - If the
value of the Participant's Individual Account derived from
Employee and Employer Contributions does not exceed $3,500,
the Plan Administrator shall direct the Trustee (or
Custodian, if applicable) to make a distribution to the
Beneficiary in a single lump sum in lieu of all other forms
of distribution from the Plan.
B. Value of Individual Account Exceeds $3,500 - If the value of a
Participant's Individual Account derived from Employee and
Employer Contributions exceeds $3,500 the preretirement
survivor annuity requirements of Section 6.05 shall apply
unless waived in accordance with that Section or unless the
safe harbor rules of Section 6.05(F) apply.
C. Other Forms of Distribution to Beneficiary - If the value of a
Participant's Individual Account exceeds $3,500 and the
Participant has properly waived the preretirement survivor
annuity, as described in Section 6.05 (if applicable), the
Beneficiary may, subject to the requirements of Section 6.06,
request in writing that the Participant's Individual Account be
paid to him as follows: (1) in a lump sum; or (2) in
installment payments over a period not to exceed the life
expectancy of such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant
who is credited with at least one Hour of Eligibility Service
with the Employer on or after August 23, 1984, and such other
participants as provided in Section 6.05(G).
<PAGE>
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19
B. Qualified Joint and Survivor Annuity - Unless an optional form
of benefit is selected pursuant to a qualified election within
the 904-day period ending on the annuity starting date, a
married Participant's Vested account balance will be paid in
the form of a qualified joint and survivor annuity and an
unmarried Participant's Vested account balance will be paid in
the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the earliest
retirement age under the Plan.
C. Qualified Preretirement Survivor Annuity - Unless an optional
form of benefit has been selected within the election period
pursuant to a qualified election, if a Participant dies before
the annuity starting date then the Participant's Vested account
balance shall be applied toward the purchase of an annuity for
the life of the surviving spouse. The surviving spouse may
elect to have such annuity distributed within a reasonable
period after the Participant's death.
D. Definitions
1. Election Period - The period which begins on the first day
of the Plan Year in which the Participant attains age 35 and
ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of
the Plan Year in which age 35 is attained, with respect to
the account balance as of the date of separation, the
election period shall begin on the date of separation.
Pre-age 35 waiver - A Participant who will not yet attain
age 35 as of the end of any current Plan Year may make a
special qualified election to waive the qualified
preretirement survivor annuity for the period beginning on
the date of such election and ending on the first day of the
Plan Year in which the Participant will attain age 35. Such
election shall not be valid unless the Participant receives
a written explanation of the qualified preretirement
survivor annuity in such terms as are comparable to the
explanation required under Section 6.05(E)(1). Qualified
preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan
Year in which the Participant attains age 35. Any new waiver
on or after such date shall be subject to the full
requirements of this Section 6.05.
2. Earliest Retirement Age - The earliest date on which, under
the Plan, the Participant could elect to receive retirement
benefits.
3. Qualified Election - A waiver of a qualified joint and
survivor annuity or a qualified preretirement survivor
annuity. Any waiver of a qualified joint and survivor
annuity or a qualified preretirement survivor annuity shall
not be effective unless: (a) the Participant's spouse
consents in writing to the election, (b) the election
designates a specific Beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not
be changed without spousal consent (or the spouse expressly
permits designations by the Participant without any further
spousal consent); (c) the spouse's consent acknowledges the
effect of the election; and (d) the spouse's consent is
witnessed by a plan representative or notary public.
Additionally, a Participant's waiver of the qualified joint
and survivor annuity shall not be effective unless the
election designates a form of benefit payment which may not
be changed without spousal consent (or the spouse expressly
permits designations by the Participant without any further
spousal consent). If it is established to the satisfaction
of a plan representative that there is no spouse or that the
spouse cannot be located, a waiver will be deemed a
qualified election.
Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be
obtained) shall be effective only with respect to such
spouse. A consent that permits designations by the
Participant without any requirement of further consent by
such spouse must acknowledge that the spouse has the right
to limit consent to a specific Beneficiary, and a specific
form of benefit where applicable, and that the spouse
voluntarily elects to relinquish either or both of such
rights. A revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any time
before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under
this provision shall be valid unless the Participant has
received notice as provided in Section 6.05(E) below.
4. Qualified Joint and Survivor Annuity - An immediate annuity
for the life of the Participant with a survivor annuity for
the life of the spouse which is not less than 50% and not
more than 100% of the amount of the annuity which is payable
during the joint lives of the Participant and the spouse and
which is the amount of benefit which can be purchased with
the Participant's vested account balance. The percentage of
the survivor annuity under the Plan shall be 50% (unless a
different percentage is elected by the Employer in the
Adoption Agreement).
5. Spouse (surviving spouse) - The spouse or surviving spouse
of the Participant, provided that a former spouse will be
treated as the spouse or surviving spouse and a current
spouse will not be treated as the spouse or surviving spouse
to the extent provided under a qualified domestic relations
order as described in Section 414(p) of the Code.
6. Annuity Starting Date - The first day of the first period
for which an amount is paid as an annuity or any other
form.
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from Employer
and Employee contributions (including rollovers), whether
Vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The
provisions of this Section 6.05 shall apply to a Participant
who is Vested in amounts attributable to Employer
Contributions, Employee contributions (or both) at the time
of death or distribution.
E. Notice Requirements
1. In the case of a qualified joint and survivor annuity, the
Plan Administrator shall no less than 30 days and not more
than 90 days prior to the annuity starting date provide
each Participant a written explanation of: (a) the terms and
conditions of a qualified joint and survivor annuity; (b)
the Participant's right to make and the effect of an
election to waive the qualified joint and survivor
annuity form of benefit; (c) the rights of a Participant's
spouse; and (d) the right to make, and the effect of, a
revocation of a previous election to waive the qualified
joint and survivor annuity.
2. In the case of a qualified preretirement survivor annuity as
described in Section 6.05(C), the Plan Administrator shall
provide each Participant within the applicable period for
such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such
manner as would be comparable to the explanation provided
for meeting the requirements of Section 6.05(E)(1)
applicable to a qualified joint and survivor annuity.
<PAGE>
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20
The applicable period for a Participant is whichever of
the following periods ends last: (a) the period beginning
with the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age
35; (b) a reasonable period ending after the individual
becomes a Participant; (c) a reasonable period ending after
Section 6.05(E)(3) ceases to apply to the Participant; (d) a
reasonable period ending after this Section 6.05 first
applies to the Participant. Notwithstanding the foregoing,
notice must be provided within a reasonable period ending
after separation from service in the case of a Participant
who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (b), (c) and (d) is the end of the two-year
period beginning one year prior to the date the applicable
event occurs, and ending one year after that date. In the
case of a Participant who separates from service before
the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior
to separation and ending one year after separation. If such
a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall
be redetermined.
3. Notwithstanding the other requirements of this Section
6.05(E), the respective notices prescribed by this
Section 6.05(E), need not be given to a Participant if (a)
the Plan "fully subsidizes" the costs of a qualified joint
and survivor annuity or qualified preretirement survivor
annuity, and (b) the Plan does not allow the Participant to
waive the qualified joint and survivor annuity or qualified
preretirement survivor annuity and does not allow a married
Participant to designate a nonspouse beneficiary. For
purposes of this Section 6.05(E)(3), a plan fully subsidizes
the costs of a benefit if no increase in cost, or decrease
in benefits to the Participant may result from the
Participant's failure to elect another benefit.
F. Safe Harbor Rules
1. If the Employer so indicates in the Adoption Agreement, this
Section 6.05(F) shall apply to a Participant in a profit
sharing plan, and shall always apply to any distribution,
made on or after the first day of the first Plan Year
beginning after December 3l, 1988, from or under a separate
account attributable solely to accumulated deductible
employee contributions, as defined in Section 72(o)(5)(B) of
the Code, and maintained on behalf of a Participant in a
money purchase pension plan, (including a target benefit
plan) if the following conditions are satisfied:
a. the Participant does not or cannot elect payments in the
form of a life annuity; and
b. on the death of a participant, the Participant's Vested
account balance will be paid to the Participant's
surviving spouse, but if there is no surviving spouse,
or if the surviving spouse has consented in a manner
conforming to qualified election, then to the
Participant's designated beneficiary. The surviving
spouse may elect to have distribution of the Vested
account balance commence within the 90-day period
following the date of the Participant's death. The
account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance
with the provisions of the Plan governing the adjustment
of account balances for other types of distributions.
This Section 6.05(F) shall not be operative with respect
to a Participant in a profit sharing plan, the plan is a
direct or indirect transferee of a defined benefit plan,
money purchase plan, a target benefit plan, stock bonus,
or profit sharing plan which is subject to the survivor
annuity requirements of Section 401(a)(11) and Section
417 of the Code. If this Section 6.05(F) is operative,
then the provisions of this Section 6.05 other than
Section 6.05(G) shall be inoperative.
2. The Participant may waive the spousal death benefit
described in this Section 6.05(F) at any time provided that
no such waiver shall be effective unless it satisfies the
conditions of Section 6.05(D)(3) (other than the
notification requirement referred to therein) that would
apply to the Participant's waiver of the qualified
preretirement survivor annuity.
3. For purposes of this Section 6.05(F), Vested account balance
shall mean, in the case of a money purchase pension plan or
a target benefit plan, the Participant's separate account
balance attributable solely to accumulated deduction
employee contributions within the meaning of Section
72(o)(5)(B) of the Code. In the case of a profit sharing
plan Vested account balance shall have the same meaning as
provided in Section 6.05(D)(7).
G. Transitional Rules
1. Any living Participant not receiving benefits on August
23,1984, who would otherwise not receive the benefits
prescribed by the previous subsections of this Section 6.05
must be given the opportunity to elect to have the prior
subsections of this Section apply if such Participant is
credited with at least one Hour of Service under this Plan
or a predecessor plan in a Plan Year beginning on or after
January 1, 1976, and such Participant had at least 10 Years
of Vesting Service when he or she separated from service.
2. Any living Participant not receiving benefits on August
23, 1984, who was credited with at least one Hour of
Service under this Plan or a predecessor plan on or after
September 2, 1974, and who is not otherwise credited with
any service in a Plan Year beginning on or after January
1, 1976, must be given the opportunity to have his or her
benefits paid in accordance with Section 6.05(G)(4).
3. The respective opportunities to elect (as described in
Section 6.05(G)(1) and (2) above) must be afforded to the
appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
4. Any Participant who has elected pursuant to Section
6.05(G)(2) and any Participant who does not elect under
Section 6.05(G)(1) or who meets the requirements of Section
6.05(G)(1) except that such Participant does not have at
least Years of Vesting Service when he or she separates from
service, shall have his or her benefits distributed in
accordance with all of the following requirements if
benefits would have been payable in the form of a life
annuity:
a. Automatic Joint and Survivor Annuity - If benefits in the
form of a life annuity become payable to a married
Participant who:
1. begins to receive payments under the Plan on or
after Normal Retirement Age; or
2. dies on or after Normal Retirement Age while still
working for the Employer; or
<PAGE>
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21
3. begins to receive payments on or after the qualified
early retirement age; or
4. separates from service on or after attaining Normal
Retirement Age (or the qualified early retirement age)
and after satisfying the eligibility requirements for the
payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this Plan in
the form of a qualified joint and survivor annuity,
unless the Participant has elected otherwise during the
election period. The election period must begin at least
6 months before the Participant attains qualified early
retirement age and ends not more than 90 days before the
commencement of benefits. Any election hereunder will be
in writing and may be changed by the Participant
at any time.
b. Election of Early Survivor Annuity - A Participant who is
employed after attaining the qualified early retirement age
will be given the opportunity to elect, during the election
period, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have
been made to the spouse under the qualified joint and
survivor annuity if the Participant had retired on the day
before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at
any time. The election period begins on the later of (1) the
90th day before the Participant attains the qualified early
retirement age, or (2) the date on which participation
begins, and ends on the date the Participant terminates
employment.
c. For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is the latest of:
a. the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
b. the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
c. the date the Participant begins participation.
2. Qualified joint and survivor annuity is an annuity for
the life of the Participant with a survivor annuity for
the life of the spouse as described in Section 6.05
6.05(D)(4) of this Plan.
6.06 DISTRIBUTION REQUIREMENTS
A. General Rules
1. Subject to Section 6.05, Joint and Survivor Annuity
Requirements, the requirements of this Section shall apply to
any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this Section 6.06
apply to calendar years beginning after December 31, 1984.
2. All distributions required under this Section 6.06 shall be
determined and made in accordance with the Income Tax
Regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the regulations.
B. Required Beginning Date - The entire interest of a Participant
must be distributed or begin to be distributed no later than the
Participant's required beginning date.
C. Limits on Distribution Periods - As of the first distribution
calendar year, distributions, if not made in a single sum, may
only be made over one of the following periods (or a combination
thereof):
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the life expectancy of
the Participant, or
4. a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
D. Determination of Amount to be Distributed Each Year - If the
Participant's interest is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on or
after the required beginning date:
1. Individual Account
a. If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy
of the Participant and the Participant's designated
Beneficiary or (2) a period not extending beyond the life
expectancy of the designated Beneficiary, the amount
required to be distributed for each calendar year, beginning
with distributions for the first distribution calendar year,
must at least equal the quotient obtained by dividing the
Participant's benefit by the applicable life expectancy.
b. For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least
50% of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
c. For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall
not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable
life expectancy or (2) if the Participant's spouse is not
the designated Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the Income Tax Regulations. Distributions
after the death of the Participant shall be distributed
using the applicable life expectancy in Section
6.06(D)(l)(a) above as the relevant divisor without regard
to regulations 1.401(a)(9)-2.
<PAGE>
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22
d. The minimum distribution required for the Participant's
first distribution calendar year must be made on or
before the Participant's required beginning date. The
minimum distribution for other calendar years, including
the minimum distribution for the distribution calendar
year in which the Employee's required beginning date
occurs, must be made on or before December 31 of that
distribution calendar year.
2. Other Forms - If the Participant's benefit is distributed in
the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with
the requirements of Section 401(a)(9) of the Code and the
regulations thereunder.
E. Death Distribution Provisions
1. Distribution Beginning Before Death - If the Participant
dies after distribution of his or her interest has begun,
the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
2. Distribution Beginning After Death - If the Participant dies
before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in
accordance with (a) or (b) below:
a. if any portion of the Participant's interest is payable
to a designated Beneficiary, distributions may be made
over the life or over a period certain not greater than
the life expectancy of the designated Beneficiary
commencing on or before December 31 of the calendar year
immediately following the calendar year in which the
Participant died;
b. if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to
begin in accordance with (a) above shall not be earlier
than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
Participant dies or (2) December 31 of the calendar year
in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to
this Section 6.06(E)(2) by the time of his or her death,
the Participant's designated Beneficiary must elect the
method of distribution no later than the earlier of (1)
December 31 of the calendar year in which distributions
would be required to begin under this Section 6.06(E)(2),
or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the
Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does not
elect a method of distribution, distribution of the
Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
3. For purposes of Section 6.06(E)(2) above, if the surviving
spouse dies after the Participant, but before payments to
such spouse begin, the provisions of Section 6.06(E)(2),
with the exception of paragraph (b) therein, shall be
applied as if the surviving spouse were the Participant.
4. For purposes of this Section 6.06(E), any amount paid to a
child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable
to the surviving spouse when the child reaches the age of
majority.
5. For purposes of this Section 6.06(E), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section
6.06(E)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to
Section 6.06(E)(2) above). If distribution in the form of an
annuity irrevocably commences to the Participant before the
required beginning date, the date distribution is considered
to begin is the date distribution actually commences.
F. Definitions
1. Applicable Life Expectancy - The life expectancy (or joint
and last survivor expectancy) calculated using the attained
age of the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in
applicable calendar year reduced by one for each calendar
year which has elapsed since the date life expectancy first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy so
recalculated. The applicable calendar year shall be the
first distribution calendar year, and if life expectancy is
being recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is designated as
the Beneficiary under the Plan in accordance with Section
401(a)(9) of the Code and the regulations thereunder.
3. Distribution Calendar Year - A calendar year for which a
minimum distribution is required. For distributions
beginning before the Participant's death, the first
distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's
required beginning date. For distributions beginning after
the Participant's death, the first distribution calendar
year is the calendar year in which distributions are
required to begin pursuant to Section 6.06(E) above
4. Life Expectancy - Life expectancy and joint and last
survivor expectancy are computed by use of the expected
multiples in Tables V and Vl of Section 1.72-9 of the Income
Tax Regulations.
Unless otherwise elected bv the Participant (or spouse, in
the case of distributions described in Section 6.06(E)(2)
above) by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or spouse) and
shall apply to all subsequent years. The life expectancy
nonspouse Beneficiary may not be recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation date in the
valuation calendar year (the calendar year immediately
preceding the distribution calendar year) increased by
the amount of any Contributions or Forfeitures allocated
to the account balance as of dates in the valuation
calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after
the valuation date.
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23
b. Exception for second distribution calendar year. For purposes
of paragraph (a) above, if any portion of the minimum
distribution for the first distribution calendar year is made
in the second distribution calendar year on or before the
required beginning date, the amount of the minimum distribution
made in the second distribution calendar year shall be treated
as if it had been made in the immediately preceding
distribution calendar year.
6. Required Beginning Date
a. General Rule - The required beginning date of a Participant
is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2.
b. Transitional Rules - The required beginning date of a
Participant who attains age 70 1/2 before January 1, 1988,
shall be determined in accordance with (1) or (2) below:
1. Non 5% Owners - The required beginning date of a
Participant who is not a 5% owner is the first day of
April of the calendar year following the calendar year in
which the later of retirement or attainment of age 70 1/2
occurs.
2. 5% Owners - The required beginning date of a Participant
who is a 5% owner during any year beginning after
December 31, 1979, is the first day of April following
the later of:
a. the calendar year in which the Participant attains age
70 1/2, or
b. the earlier of the calendar year with or within which
ends the Plan Year in which the Participant becomes a
5% owner, or the calendar year in which the
Participant retires.
The required beginning date of a Participant who is
not a 5% owner who attains age 70 1/2 during 1988 and
who has not retired as of January 1, 1989, is April 1,
1990.
c. 5% Owner - A Participant is treated as a 5% owner for
purposes of this Section 6.06(F)(6) if such
Participant is a 5% owner as defined in Section 416(i)
of the Code (determined in accordance with Section 416
but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within
the calendar year in which such owner attains age
66 1/2 or any subsequent Plan Year.
d. Once distributions have begun to a 5% owner under
this Section 6.06(F)(6) they must continue to be
distributed, even if the Participant ceases to be a 5%
owner in a subsequent year.
G. Transitional Rule
1. Notwithstanding the other requirements of this Section 6.06
and subject to the requirements of Section 6.05, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a 5% owner, may be made in accordance
with all of the following requirements (regardless of when
such distribution commences):
a. The distribution by the Fund is one which would not have
disqualified such Fund under Section 401(a)(9) of the
Code as in effect prior to amendment by the Deficit
Reduction Act of 1984.
b. The distribution is in accordance with a method of
distribution designated by the Employee whose interest in
the Fund is being distributed or, if the Employee is
deceased, by a Beneficiary of such Employee.
c. Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before
January 1, 1984.
d. The Employee had accrued a benefit under the Plan as of
December 31, 1983.
e. The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distribution
will commence, the period over which distributions will
be made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority.
2. A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with
respect to the distributions to be made upon the death of
the Employee.
3. For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will
be presumed to have designated the method of distribution
under which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in Sections 6.06(G)(l)(a) and
(e).
4. If a designation is revoked, any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of the
Code and the regulations thereunder. If a designation is
revoked subsequent to the date distributions are required to
begin, the Plan must distribute by the end of the calendar
year following the calendar year in which the revocation
occurs the total amount not yet distributed which would have
been required to have been distributed to satisfy Section
401(a)(9) of the Code and the regulations thereunder, but
for the Section 242(b)(2) election. For calendar years
beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit
requirements in Section 1.401(a)(9)-2 of the Income Tax
Regulations. Any changes in the designation will be
considered to be a revocation of the designation. However,
the mere substitution or addition of another Beneficiary
(one not named in the designation) under the designation
will not be considered to be a revocation of the
designation, so long as such substitution or addition does
not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example,
by altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one plan
to another plan, the rules in Q&A J-2 and Q&A J-3 shall
apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or
required by this Section 6) must be nontransferable. The terms of
any annuity contract purchased and distributed by the Plan to a
Participant or spouse shall comply with the requirements of the
Plan.
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24
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive
a loan from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a
reasonably equivalent basis.
B. Loans shall not be made available to Highly Compensated
Employees (as defined in Section 414(q) of the Code) in an
amount greater than the amount made available to other
Employees.
C. Loans must be adequately secured and bear a reasonable interest
rate.
D. No Participant loan shall exceed the present value of the
Vested portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse, if
any, to the use of the Individual Account as security for the
loan. Spousal consent shall be obtained no earlier than the
beginning of the 90 day period that ends on the date on which
the loan is to be so secured. The consent must be in writing,
must acknowledge the effect of the loan, and must be witnessed
by a plan representative or notary public. Such consent shall
thereafter be binding with respect to the consenting spouse or
any subsequent spouse with respect to that loan. A new consent
shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the
loan.
F. In the event of default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs
in the Plan.
G. No loans will be made to any shareholder-employee or Owner-
Employee. For purposes of this requirement, a shareholder-
employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered
as owning within the meaning of Section 318(a)(1) of the Code),
on any day during the taxable year of such corporation, more
than 5% of the outstanding stock of the corporation.
If a valid spousal consent has been obtained in accordance with
6.08(E), then, notwithstanding any other provisions of this Plan,
the portion of the Participant's Vested Individual Account used as
a security interest held by the Plan by reason of a loan
outstanding to the Participant shall be taken into account for
purposes of determining the amount of the account balance payable
at the time of death or distribution, but only if the reduction is
used as repayment of the loan. If less than 100% of the
Participant's Vested Individual Account (determined without regard
to the preceding sentence) is payable to the surviving spouse,
then the account balance shall be adjusted by first reducing the
Vested Individual Account by the amount of the security used as
repayment of the loan, and then determining the benefit payable to
the surviving spouse.
No loan to any Participant can be made to the extent that such
loan when added to the outstanding balance of all other loans to
the Participant would exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of loans
during the one year period ending on the day before the loan is
made, over the outstanding balance of loans from the Plan on the
date the loan is made, or (b) 50% of the present value of the
nonforfeitable Individual Account of the Participant or, if
greater, the total Individual Account up to $10,000. For the
purpose of the above limitation, all loans from all plans of the
Employer and other members of a group of employers described in
Sections 414(b), 414(c), and 414(m) of the Code are aggregated.
Furthermore, any loan shall by its terms require that repayment
(principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond 5
years from the date of the loan, unless such loan is used to
acquire a dwelling unit which within a reasonable time (determined
at the time the loan is made) will be used as the principal
residence of the Participant. An assignment or pledge of any
portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this
paragraph.
The Plan Administrator shall administer the loan program in
accordance with a written document. Such written document shall
include, at a minimum, the following: (i) the identity of the
person or positions authorized to administer the Participant loan
program; (ii) the procedure for applying for loans; (iii) the
basis on which loans will be approved or denied; (iv) limitations
(if any) on the types and amounts of loans offered; (v) the
procedure under the program for determining a reasonable rate of
interest; (vi) the types of collateral which may secure a
Participant loan; and (vii) the events constituting default and
the steps that will be taken to preserve Plan assets in the event
of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this Plan
to be made either in a form actually held in the Fund, or in cash
by converting assets other than cash into cash, or in any
combination of the two foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. Direct Rollover Option - This Section applies to distributions
made on or after January 1, 1993. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributer may
elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
B. Definitions
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that an
eligible rollover distribution does not include:
a. any distribution that is one of a series of substantially
equal periodic payments (not less frequently than
annually made for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten
years or more;
b. any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and
c. the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer
securities).
2. Eligible retirement plan - An eligible retirement plan is an
individual retirement account described in Section 408(b) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
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25
Section 403(a) of the Code, or a qualified trust described
in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
3. Distributee - A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under
a qualified domestic relations order, as defined in Section
414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
4. Direct rollover - A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the
Vested portion of the Participant's Individual Account shall file
a written request with the Plan Administrator on a form to be
furnished to him by the Plan Administrator for such purpose. The
request shall set forth the basis of the claim. The Plan
Administrator is authorized to conduct such examinations as may be
necessary to facilitate the payment of any benefits to which the
Participant or Beneficiary may be entitled under the terms of the
Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or
Beneficiary has been wholly or partially denied, the Plan
Administrator must furnish such Participant or Beneficiary written
notice of the denial within 60 days of the date the original claim
was filed. This notice shall set forth the specific reasons for
the denial, specific reference to pertinent Plan provisions on
which the denial is based, a description of any additional
information or material needed to perfect the claim, an
explanation of why such additional information or material is
necessary and an explanation of the procedures for appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review
by the Plan Administrator. The Participant or Beneficiary may
request that the review be in the nature of a hearing. The
Participant or Beneficiary shall have the right to representation,
to review pertinent documents and to submit comments in writing.
The Plan Administrator shall issue a decision on such review
within 60 days after receipt of an application for review as
provided for in Section 7.02. Upon a decision unfavorable to the
Participant or Beneficiary, such Participant or Beneficiary shall
be entitled to bring such actions in law or equity as may be
necessary or appropriate to protect or clarify his right to
benefits under this Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the
managing body of the Employer designates a person or persons
other than the Employer as the Plan Administrator and so
notifies the Prototype Sponsor and the Trustee (or Custodian,
if applicable). The Employer shall also be the Plan
Administrator if the person or persons so designated cease to
be the Plan Administrator.
B. If the managing body of the Employer designates a person or
persons other than the Employer as Plan Administrator, such
person or persons shall serve at the pleasure of the Employer
and shall serve pursuant to such procedures as such managing
body may provide. Each such person shall be bonded as may be
required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the
duties of the Plan Administrator among several individuals
or entities. Such appointments shall not be effective until
the party designated accepts such appointment in writing.
B. The Plan Administrator shall have the authority to control
and manage the operation and administration of the Plan. The
Plan Administrator shall administer the Plan for the
exclusive benefit of the Participants and their
Beneficiaries in accordance with the specific terms of the
Plan.
C. The Plan Administrator shall be charged with the duties of
the general administration of the Plan, including, but not
limited to, the following:
1. To determine all questions of interpretation or policy in
a manner consistent with the Plan's documents and the
Plan Administrator's construction or determination in
good faith shall be conclusive and binding on all persons
except as otherwise provided herein or by law. Any
interpretation or construction shall be done in a
nondiscriminatory manner and shall be consistent with the
intent that the Plan shall continue to be deemed a
qualified plan under the terms of Section 401(a) of the
Code, as amended from time-to-time, and shall comply with
the terms of ERISA, as amended from time-to-time;
2. To determine all questions relating to the eligibility of
Employees to become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary shall be entitled under the
Plan and to direct the Trustee (or Custodian, if
applicable) with respect to all disbursements under the
Plan, and, when requested by the Trustee (or Custodian),
to furnish the Trustee (or Custodian) with instructions,
in writing, on matters pertaining to the Plan and the
Trustee (or Custodian) may rely and act thereon;
5. To maintain all records necessary for the administration
of the Plan;
6. To be responsible for preparing and filing such
disclosure and tax forms as may be required from time-to-
time by the Secretary of Labor or the Secretary of the
Treasury; and
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26
7. To furnish each Employee, Participant or Beneficiary such
notices, information and reports under such circumstances as
may be required by law.
D. The Plan Administrator shall have all of the powers necessary
or appropriate to accomplish his duties under the Plan,
including, but not limited to, the following:
1. To appoint and retain such persons as may be necessary to
carry out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other persons
as the Plan Administrator deems necessary or advisable in
the administration of the Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules which
it deems necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory
manner which it deems necessary to correct any arithmetical
or accounting errors which may have been made for any Plan
Year; and
6. To correct any defect, supply any omission or reconcile any
inconsistency in such manner and to such extent as shall be
deemed necessary or advisable to carry out the purpose of
the Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not
limited to, those involved in retaining necessary professional
assistance may be paid from the assets of the Fund. Alternatively,
the Employer may, in its discretion, pay such expenses. The
Employer shall furnish the Plan Administrator with such clerical
and other assistance as the Plan Administrator may need in the
performance of his duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his duties, the
Employer shall supply full and timely information to the Plan
Administrator (or his designated agents) on all matters relating
to the Compensation of all Participants, their regular employment
retirement, death, Disability or Termination of Employment and
such other pertinent facts as the Plan Administrator (or his
agents) may require. The Plan Administrator shall advise the
Trustee (or Custodian, if applicable) of such of the foregoing
facts as may be pertinent to the Trustee's (or Custodian's) duties
under the Plan. The Plan Administrator (or his agents) is entitled
to rely on such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates to the
Prototype Sponsor the power but not the duty, to amend the
Plan without any further action or consent of the Employer as
the Prototype Sponsor deems necessary for the purpose of
adjusting the Plan to comply with all laws and regulations
governing pension or profit sharing plans. Specifically, it is
understood that the amendments may be made unilaterally by the
Prototype Sponsor. However, it shall also be understood that
the Prototype Sponsor shall be under no obligation to amend the
Plan documents and the Employer expressly waives any rights or
claims against the Prototype Sponsor for not exercising this
power to amend. For purposes of Prototype Sponsor amendments,
the mass submitter shall be recognized as the agent of the
Prototype Sponsor. If the Prototype Sponsor does not adopt the
amendments made by the mass submitter, it will no longer be
identical to or a minor modifier of the mass submitter plan.
B. An amendment by the Prototype Sponsor shall be accomplished by
giving written notice to the Employer of the amendment to be
made. The notice shall set forth the text of such amendment and
the date such amendment is to be effective. Such amendment
shall take effect unless within the 30 day period after such
notice is provided or within such shorter period as the notice
may specify, the Employer gives the Prototype Sponsor written
notice of refusal to consent to the amendment. Such written
notice of refusal shall have the effect of withdrawing the
Plan as a prototype plan and shall cause the Plan to be
considered an individually designed plan. The right of the
Prototype Sponsor to cause the Plan to be amended shall
terminate should the Plan cease to conform as a prototype plan
as provided in this or any other section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the
Adoption Agreement, (2) add overriding language in the Adoption
Agreement when such language is necessary to satisfy Section
415 or Section 416 of the Code because of the required
aggregation of multiple plans, and (3) add certain model
amendments published by the Internal Revenue Service which
specifically provide that their adoption still not cause the
Plan to be treated as individually designed. An Employer that
amends the Plan for any other reason, including a waiver of the
minimum funding requirement under Section 412(d) of the Code,
will no longer participate in this prototype plan and will be
considered to have an individually designed plan.
An Employer who wishes to amend the Plan to change the options
it has chosen in the Adoption Agreement must complete and
deliver a new Adoption Agreement to the Prototype Sponsor and
Trustee (or Custodian, if applicable). Such amendment shall
become effective upon execution by the Employer and Trustee (or
Custodian).
The Employer further reserves the right to replace the Plan in
its entirety by adopting another retirement plan which the
Employer designates as a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Individual
Account may be reduced to the extent permitted under Section
412(c)(8) of the Code. For purposes of this paragraph, a plan
amendment which has the effect of decreasing a Participant's
Individual Account or eliminating an optional form of benefit with
respect to benefits attributable to service before the amendment
shall be treated as reducing an accrued benefit. Furthermore, if
the vesting schedule of a Plan is amended, in the case of an
Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the Vested
percentage (determined as of such date) of such Employee's
Individual Account derived from Employer Contributions will not be
less than the percentage computed under the Plan without regard to
such amendment.
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27
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended
in any way that directly or indirectly affects the computation of
the Participant's Vested percentage, or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting
schedule, each Participant with at least 3 Years of Vesting
Service with the Employer may elect, within the time set forth
below, to have the Vested percentage computed under the Plan
without regard to such amendment.
For Participants who do not have at least 1 Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "5 Years of Vesting
Service" for "3 Years of Vesting Service" where such language
appears.
The Period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and
shall end the later of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions thereto indefinitely, but such continuance and
payment is not assumed as a contractual obligation. Neither the
Adoption Agreement nor the Plan nor any amendment or modification
thereof nor the making of contributions hereunder shall be
construed as giving any Participant or any person whomsoever any
legal or equitable right against the Employer, the Trustee (or
Custodian, if applicable), the Plan Administrator or the Prototype
Sponsor except as specifically provided herein, or as provided by
law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Emplover at any time by
appropriate action of its managing body. Such termination shall be
effective on the date specified by the Employer. The Plan shall
terminate if the Employer shall be dissolved, terminated, or
declared bankrupt. Written notice of the termination and effective
date thereof shall be given to the Trustee (or Custodian, if
applicable), Plan Administrator, Prototype Sponsor, Participants
and Beneficiaries of deceased Participants' and the required
filings (such as the Form 5500 series and others) must be made
with the Internal Revenue Service and any other regulatory body as
required by current laws and regulations. Until all of the assets
have been distributed from the Fund, the Employer must keep the
Plan in compliance with current laws and regulations by (a) making
appropriate amendments to the Plan and (b) taking such other
measures as may be required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the
Employer may continue the Plan and be substituted in the place of
the present Employer. The successor and the present Employer (or,
if deceased, the executor of the estate of a deceased Self-
Employed Individual who was the Employer) must execute a written
instrument authorizing such substitution and the successor must
complete and sign a new Adoption Agreement.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to attain or retain its qualified status, the
Plan will no longer be considered to be part of a prototype plan,
and such Employer can no longer participate under this prototype.
In such event, the Plan will be considered an individually
designed plan.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without
regard to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they
shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and whenever any
words are used herein in the singular form they shall be construed
as though they were also used in the plural form in all cases
where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or
transfer of assets or liabilities of such Plan to, any other plan,
each Participant shall be entitled to receive benefits immediately
after the merger, consolidation, or transfer (if the Plan had then
terminated) which are equal to or greater than the benefits he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated). The
Trustee (or Custodian, if applicable) has the authority to enter
into merger agreements or agreements to directly transfer the
assets of this Plan but only if such agreements are made with
trustees or custodians of other retirement plans described in
Section 401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other fiduciary
under this Plan shall discharge their duties with respect to this
Plan solely in the interests of Participants and their
Beneficiaries and with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting
in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
No fiduciary shall cause the Plan to engage in any transaction
known as a "prohibited transaction" under ERISA.
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest
whatsoever hereunder agree to perform any and all acts and execute
any and all documents and papers which may be necessary or
desirable for the carrying out of this Plan and any of its
provisions.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
28
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns, as those terms shall apply
to any and all parties hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this Plan
is a Top-Heavy Plan if any of the following conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60% and this
Plan is not part of any required aggregation group or
permissive aggregation group of plans;
2. If this Plan is part of a required aggregation group of
plans but not part of a permissive aggregation group and the
top-heavy ratio for the group of plans exceeds 60%;
3. If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top-
heavy ratio for the permissive aggregation group exceeds
60%.
For purposes of this Section 10.08, the following terms
shall have the meanings indicated below:
B. Key Employee - Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner (or
considered an owner under Section 318 of the Code) of one of
the 10 largest interests in the Employer if such individual's
compensation exceeds 100% of the dollar limitation under
Section 415(c)(1)(A) of the Code, a 5% owner of the Employer,
or a 1% owner of the Employer who has an annual compensation of
more than $150,000. Annual compensation means compensation as
defined in Section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludible from the Employee's gross income
under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code. The determination period is the Plan Year
containing the determination date and the 4 preceding Plan
Years.
The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
C. Top-heavy ratio
1. If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and
the Employer has not maintained any defined benefit plan
which during the 5-year period ending on the determination
date(s) has or has had accrued benefits, the top-heavy
ratio for this Plan alone or for the required or
permissive aggregation group as appropriate is a fraction,
the numerator of which is the sum of the account balances
of all Key Employees as of the determination date(s)
(including any part of any account balance distributed in
the 5-year period ending on the determination date(s)), and
the denominator of which is the sum of all account balances
(including any part of any account balance distributed in
the 5-year period ending on the determination date(s)), both
computed in accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and the
denominator of the top-heavy ratio are increased to reflect
any contribution not actually made as of the determination
date, but which is required to be taken into account on that
date under Section 416 of the Code and the regulations
thereunder.
2. If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and
the Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
determination date(s) has or has had any accrued benefits,
the top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the
numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with (1) above, and the
present value of accrued benefits under the aggregated
defined benefit plan or plans for all Key Employees as of
the determination date(s), and the denominator of which is
the sum of the account balances under the aggregated defined
contribution plan or plans for all Participants, determined
in accordance with (1) above, and the present value of
accrued benefits under the defined benefit plan or plans for
all Participants as of the determination date(s), all
determined in accordance with Section 416 of the Code and
the regulations thereunder. The accrued benefits under a
defined benefit plan in both the numerator and denominator
of the top-heavy ratio are increased for any distribution of
an accrued benefit made in the 5-year period ending on the
determination date.
3. For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent valuation date that falls
within or ends with the 12-month period ending on the
determination date, except as provided in Section 416 of the
Code and the regulations thereunder for the first and second
plan years of a defined benefit plan. The account balances
and accrued benefits of a Participant (a) who is not a Key
Employee but who was a Key Employee in a Prior Year, or (b)
who has not been credited with at least one Hour of
Service with any employer maintaining the plan at any time
during the 5-year period ending on the determination date
will be disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance
with Section 416 of the Code and the regulations thereunder.
Deductible employee contributions will not be taken into
account for purposes of computing the top-heavy ratio. When
aggregating plans the value of account balances and accrued
benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if any,
that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer, or (b) if
there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the
fractional rule of Section 411(b)(1)(C) of the Code.
4. Permissive aggregation group: The required aggregation group
of plans plus any other plans of the Employer which, when
considered as a group with the required aggregation group,
would continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
29
5. Required aggregation group: (a) Each qualified plan of the
Employer in which at least one Key Employee participates or
participated at any time during the determination period
(regardless of whether the Plan has terminated), and (b) any
other qualified plan of the Employer which enables a plan
described in (a) to meet the requirements of Sections
401(a)(4) or 410 of the Code.
6. Determination date: For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year.
For the first Plan Year of the Plan, the last day of that
year.
7. Valuation date: For purposes of calculating the top-heavy
ratio, the valuation date shall be the last day of each Plan
Year.
8. Present value: For purposes of establishing the "present
value" of benefits under a defined benefit plan to compute
the top-heavy ratio, any benefit shall be discounted only
for mortality and interest based on the interest rate and
mortality table specified for this purpose in the defined
benefit plan.
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan
is established and one or more other trades or businesses, this
Plan and the plan established for other trades or businesses must,
when looked at as a single plan, satisfy Sections 401(a) and (d)
of the Code for the employees of those trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must
be included in a plan which satisfies Sections 401(a) and (d) of
the Code and which provides contributions and benefits not less
favorable than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and
the individual controls a trade or business, then the
contributions or benefits of the employees under the plan of the
trade or business which is controlled must be as favorable as
those provided for him under the most favorable plan of the trade
or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or
two or more Owner-Employees, will be considered to control a trade
or business if the Owner-Employee, or two or more Owner-Employees,
together:
A. own the entire interest in a unincorporated trade or business,
or
B. in the case of a partnership, own more than 50% of either the
capital interest or the profit interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two
or more Owner-Employees, shall be treated as owning any interest
in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-
Employees, are considered to control within the meaning of the
preceding sentence.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall also apply to the creation, assignment,
or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such
order is determined to be a qualified domestic relations order, as
defined in Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified
domestic relations order until January 1, 1985. However, in the
case of a domestic relations order entered before such date, the
Plan Administrator:
(1) shall treat such order as a qualified domestic relations order
if such Plan Administrator is paying benefits pursuant to such
order on such date, and
(2) may treat any other such order entered before such date as a
qualified domestic relations order even if such order does not
meet the requirements of Section 414(p) of the Code.
<PAGE>
EXHIBIT 16
CALCULATION OF AVERAGE ANNUAL TOTAL
RETURN AND TOTAL RETURN
AVERAGE ANNUAL TOTAL RETURN:
1 Year = 994.10 - 1000.00
________________ = -5.9%
=====
1000.00
Inception (12/30/83) = N = 4.25 years
to 3/31/88
Initial Investment = $1000.00
Ending Value = 16,845.50
Average Annual Total
Return = 13.0%
=====
TOTAL RETURN:
1 Year = 994.10 - 1000.00
________________ = -5.9%
=====
1000.00
Inception (12/30/83) = 1684.45 - 1000.00
to 3/31/88 _________________ = 68.4%
=====
1000.00
<PAGE>
YIELD CALCULATION AT MARCH 31, 1988
-----------------------------------
-- 6 --
YIELD = 2 | ( A - B 1 ) - 1 |
| ( ----- + ) |
| ( C * D ) |
-- --
-- 6 --
= 2 | ( $50,808 - $26,687 + 1 ) - 1 |
| ( -------------------- ) |
| ( 1,474,481 * $13.79 ) |
-- --
6
= 2 [ ( 1.0011863 ) - 1 ]
= .014278
WHERE:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> Growth Fund
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 69,854,710
<INVESTMENTS-AT-VALUE> 94,673,328
<RECEIVABLES> 167,478
<ASSETS-OTHER> 25,066
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 94,865,872
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 96,144
<TOTAL-LIABILITIES> 96,144
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,214,977
<SHARES-COMMON-STOCK> 4,045,128
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 299,023
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 437,110
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,818,618
<NET-ASSETS> 94,769,728
<DIVIDEND-INCOME> 2,072,535
<INTEREST-INCOME> 190,476
<OTHER-INCOME> 0
<EXPENSES-NET> 964,630
<NET-INVESTMENT-INCOME> 1,298,381
<REALIZED-GAINS-CURRENT> 1,299,662
<APPREC-INCREASE-CURRENT> 8,553,581
<NET-CHANGE-FROM-OPS> 11,151,624
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,276,626)
<DISTRIBUTIONS-OF-GAINS> (862,552)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 395,513
<NUMBER-OF-SHARES-REDEEMED> (799,693)
<SHARES-REINVESTED> 96,627
<NET-CHANGE-IN-ASSETS> 2,379,047
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 721,072
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 964,630
<AVERAGE-NET-ASSETS> 90,357,220
<PER-SHARE-NAV-BEGIN> 21.23
<PER-SHARE-NII> .32
<PER-SHARE-GAIN-APPREC> 2.40
<PER-SHARE-DIVIDEND> (.31)
<PER-SHARE-DISTRIBUTIONS> (.21)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.43
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> Income Fund
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 26,516,202
<INVESTMENTS-AT-VALUE> 25,830,784
<RECEIVABLES> 484,147
<ASSETS-OTHER> 129,838
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,444,769
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 92,562
<TOTAL-LIABILITIES> 92,562
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,918,149
<SHARES-COMMON-STOCK> 1,794,131
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (880,524)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (685,418)
<NET-ASSETS> 26,352,207
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,181,578
<OTHER-INCOME> 0
<EXPENSES-NET> 267,187
<NET-INVESTMENT-INCOME> 1,914,391
<REALIZED-GAINS-CURRENT> (895,348)
<APPREC-INCREASE-CURRENT> (100,111)
<NET-CHANGE-FROM-OPS> 918,932
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,899,567)
<DISTRIBUTIONS-OF-GAINS> (7,233)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 348,438
<NUMBER-OF-SHARES-REDEEMED> (886,403)
<SHARES-REINVESTED> 103,071
<NET-CHANGE-IN-ASSETS> (7,299,599)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 141,795
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 267,187
<AVERAGE-NET-ASSETS> 26,846,559
<PER-SHARE-NAV-BEGIN> 15.10
<PER-SHARE-NII> .99
<PER-SHARE-GAIN-APPREC> (.42)
<PER-SHARE-DIVIDEND> (.98)
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.69
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1> Less than $.01 per share.
</FN>
</TABLE>
