<PAGE>
File No.: 2-10698;
811-505.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 75 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23
(Check appropriate box or boxes.)
PHILADELPHIA FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
1200 North Federal Highway, Suite 424, Boca Raton, Florida 33432
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 561-395-2155
Ronald F. Rohe, Vice President ------------
Philadelphia Fund, Inc.
1200 North Federal Highway, Suite 424, Boca Raton, Florida 33432
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering April 1, 1998
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on April 1, 1998 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.
The Registrant has registered an indefinite number of shares of common stock
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. On January 23, 1998 Registrant filed a Rule 24f-2 Notice
for Registrant's most recent fiscal year.
EXHIBIT INDEX LOCATED ON PAGE
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FORM N-1A
CROSS REFERENCE SHEET
(as required by Rule 404)
FORM N-lA PART A ITEM NO. PROSPECTUS LOCATION
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Item 1. Cover Page....................... Cover Page
Item 2. Synopsis......................... Expenses of the Fund;
Item 3. Condensed Financial Information.. Financial Highlights;
Performance
Item 4. General Description of........... Cover Page; Invest-
Registrant ment Goal and
Policy; Options
Transactions; Futures
Contracts; Investment
Limitations
Item 5. Management of the Fund........... Management of the
Fund, Back Cover
Item 6. Capital Stock and Other
Securities....................... Dividends, Capital
Gains Distributions,
and Taxes; Rights of
Ownership
Item 7. Purchase of Securities Being
Offered.......................... Purchase of Shares;
Calculation of Net
Asset Value
Item 8. Redemption or Repurchase......... Redemption of Shares
Item 9. Pending Legal Proceedings........ Not Applicable
LOCATION IN STATE-
MENT OF ADDITIONAL
FORM N-1A PART B ITEM NO. INFORMATION
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Item 10. Cover Page....................... Cover Page
Item 11. Table of Contents................ Table of Contents
Item 12. General Information and
History.......................... Not Applicable
Item 13. Investment Objectives and
Policies......................... Investment Goal and
Policy; Options
Transactions; Futures
Contracts
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Item 14. Management of the Fund........... Officers and
Directors; Additional
Information about the
Investment Advisor
Item 15. Control Persons and Principal
Holders of Securities............ Not Applicable
Item 16. Investment Advisory and
Other Services................... Officers and
Directors; Addi-
tional Information
about the Investment
Advisor
Item 17. Brokerage Allocation............. Brokerage
Item 18. Capital Stock and Other
Securities....................... Prospectus-Rights
of Ownership
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered ..... Further Information
Regarding Sale of
Shares; Redemption of
Shares; Distribution
Item 20. Tax Status....................... Prospectus-Dividends,
Capital Gains
Distributions, and
Taxes
Item 21. Underwriters..................... Principal Underwriter
Item 22. Calculations of Performance Data. Calculation of
Performance Data;
Comparisons and
Advertisements
Item 23. Financial Statements............. Financial Statements
FORM N-1A PART C ITEM NO. LOCATION IN PART C
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Item 24. Financial Statements and
Exhibits......................... Financial Statements
and Exhibits
Item 25. Persons Controlled By or Under
Common Control with Registrant... Persons Controlled by
or under Common
Control with
Registrant
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Item 26. Number of Holders of Securities.. Number of Holders
of Securities
Item 27. Indemnification.................. Indemnification
Item 28. Business and Other Connections
of Investment Advisor............ Business and Other
Connections of
Investment Advisor
Item 29. Principal Underwriters........... Principal Under-
writers
Item 30. Location of Accounts and Records. Location of
Accounts and
Records
Item 31. Management Services.............. Management Services
Item 32. Undertakings..................... Undertakings
<PAGE> 5
PART A
PHILADELPHIA FUND, INC.
1200 NORTH FEDERAL HIGHWAY
SUITE 424
BOCA RATON, FLORIDA
561-395-2155
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PROSPECTUS - APRIL 1, 1998
Philadelphia Fund is an open-end, diversified investment company offering
shares of its stock to those of the investing public whose desire and
objective is long-term growth of capital and income. The minimum initial
investment in the Fund is $1,000, and there is no minimum amount for
subsequent investments in the Fund.
The Fund, a Maryland corporation, is the surviving corporation of a merger
with the Philadelphia Fund, Inc., a Delaware corporation. On November 30,
1984, the Fund was organized for the purpose of continuing the operations of
the Delaware corporation. The sole purpose of the merger was to change the
Fund's state of incorporation from Delaware to Maryland. The Delaware
corporation was incorporated on July 5, 1945 for the purpose of acquiring and
continuing the business of the Securities Fund, an unincorporated investment
company organized in 1923.
The Securities Fund, predecessor of the Philadelphia Fund, was organized in
1923 by W. Wallace Alexander. He and his associates managed the Securities
Fund until December 1928 when W. Wallace Alexander, Inc. succeeded to the
management. That corporation remained the manager of the Securities Fund
until its acquisition by Philadelphia Fund, when Alexander Investment
Management Co. became manager. Over the years, the Fund has been managed by
several investment advisors. The current investment advisor is Baxter
Financial Corporation.
______________________________________________________________________________
This prospectus is designed to provide you with information that you
should know before investing and should be retained for future reference.
______________________________________________________________________________
A Statement of Additional Information (dated April 1, 1998) regarding the
Fund, which is incorporated in this prospectus by reference, has been filed
with the Securities and Exchange Commission and is available from the Fund,
without charge, by writing to the above address or by calling:
1-800-749-9933
The Securities and Exchange Commission maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information for this fund.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS
PAGE
----
Expenses of the Fund . . . . . . . . . . . . . . . . . . 6
Financial Highlights . . . . . . . . . . . . . . . . . . 7
Investment Goal and Policy . . . . . . . . . . . . . . . 7
Options Transactions . . . . . . . . . . . . . . . . . . 8
Futures Contracts . . . . . . . . . . . . . . . . . . . 10
Investment Limitations . . . . . . . . . . . . . . . . . 11
Management of the Fund . . . . . . . . . . . . . . . . . 11
Purchase of Shares . . . . . . . . . . . . . . . . . . . 13
Calculation of Net Asset Value . . . . . . . . . . . . . 14
Tax Sheltered Plans . . . . . . . . . . . . . . . . . . 14
Redemption of Shares . . . . . . . . . . . . . . . . . . 15
Rights of Ownership . . . . . . . . . . . . . . . . . . 16
Dividends, Capital Gains Distributions, and Taxes . . . 16
Performance. . . . . . . . . . . . . . . . . . . . . . . 16
EXPENSES OF THE FUND
--------------------
The following table has been prepared to assist the investor in
understanding the various expenses that an investor in the Fund will bear
directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES
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Maximum Sales Load Imposed on Purchases.............. none
Maximum Sales Load Imposed on Reinvested Dividends... none
Deferred Sales Load.................................. none
Redemption Fees...................................... none
ANNUAL FUND OPERATING EXPENSES
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Management Fee ...................................... .75%
Administrative Fee .................................. .25%
12b-1 Fees........................................... .26%
Other Expenses....................................... .27%
-----
Total Fund Operating Expenses................... 1.53%
=====
The following example illustrates the expenses that you would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period based on the expenses
shown above. The Fund charges no redemption fee.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Shareholder Expenses $16 $48 $83 $182
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
<PAGE> 7
shown. As a consequence of the Fund's Distribution Plan, long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the rules of the National Association of
Securities Dealers.
FINANCIAL HIGHLIGHTS
--------------------
The data set forth under the caption "Financial Highlights" in the Annual
Report to Stockholders for the fiscal year ended November 30, 1997 is
incorporated herein by reference. Such data is covered by the Independent
Auditor's Report which is contained in the Annual Report to Stockholders.
Further information regarding the Fund's investment performance is contained
in the Annual Report to Stockholders which may be obtained from the Fund
without charge.
INVESTMENT GOAL AND POLICY
--------------------------
The Fund's investment objective is to achieve long term growth of capital
and income. This goal may be changed only by the vote of a majority of the
shares of the Fund.
The shares of Philadelphia Fund, Inc. provide a convenient way for
investors to own, at a reasonable cost, an interest in a carefully selected
and supervised portfolio of investments. The risks and opportunities are
spread over many companies in different industries. The shares, in effect,
represent ownership of a program designed and managed for long-term growth of
capital and income. The Fund operates as a diversified, open-end investment
company. This means that it will not invest more than 5% of its assets in the
securities of any one company nor will it buy more than 10% of the voting
stock of any company, and stands ready to redeem its own stock for cash at net
asset value upon the request of shareholders.
The Fund's charter permits wide flexibility in the choice of securities,
however, the Fund will not purchase securities of companies in any single
industry if such purchase would cause more than 25% of the Fund's assets to be
invested in securities of companies in such industry. Most investments will
be in common stocks traded on the principal U.S. security exchanges, but
unlisted securities may be acquired as well. Normally, the Fund does not
invest in fixed income securities, except to employ temporarily uncommitted
cash balances and during periods when, in management's judgment, a more
defensive position is warranted in light of market, economic, or financial
conditions. In such circumstances the Fund may hold cash, cash equivalents,
bonds, and/or preferred stocks to the extent deemed prudent to achieve its
investment objectives. In those situations, the Fund will only invest in
fixed income securities rated Aaa, Aa, or A by Moody's Investors Service, Inc.
("Moody's") or AAA, AA, or A by Standard & Poor's Corporation ("Standard &
Poor's").
When the Fund does invest in fixed income securities which offer
opportunities for capital appreciation and income, the Fund may purchase such
securities which are rated B-2 or lower by Moody's or B- or lower by Standard
& Poor's. These fixed income debt securities are deemed to involve a higher
risk level than investment grade debt securities. The Fund may also invest in
unrated securities when Baxter Financial Corporation, the Fund's investment
<PAGE> 8
advisor ("Advisor"), believes that the terms of the security and the financial
condition of the issuer are such that the protection afforded limits risks to
a level similar to that of rated securities in which the Fund may invest.
Fixed income debt securities offer a potential for capital appreciation
because the value of the fixed income security generally fluctuates inversely
with interest rates.
The Fund has authority to invest up to 20% of its assets in the
securities of foreign companies. Investments in foreign securities involve
risks which are in addition to the usual risks inherent in domestic
investments. There may be less publicly available information about foreign
companies comparable to the reports and ratings published about companies in
the United States. Foreign companies are not generally subject to uniform
accounting, auditing, and financial reporting standards, and auditing
practices and requirements may not be comparable to those applicable to United
States companies. Foreign investments may also be affected by fluctuations in
the relative rates of exchange between the currencies of different nations, by
exchange control regulations, and by indigenous economic and political
developments. There is also the possibility of expropriation,
nationalization, or confiscatory taxation, foreign exchange controls,
political or social instability, or diplomatic developments which could affect
investments in securities of issuers in those nations.
The Fund has authority to buy securities of companies organized as real
estate investment trusts.
The Fund is authorized to invest in "restricted securities" (i.e.
securities which may not be sold without registration or an exemption from
registration under the Securities Act of 1933, as amended). Ordinarily, the
Fund does not expect to have more than 5% of the Fund's total net asset value
invested in restricted securities. The Fund will not purchase such securities
if immediately after such purchase more than 15% of the Fund's net assets will
be invested in restricted or other illiquid securities.
Securities, other than options, are bought with long-term goals in view,
however, the Advisor is free to make any portfolio changes which, in its
judgment, are in the best interests of shareholders.
Because the Fund's assets are subject to price fluctuations of the
investments owned, there can be no assurance that the Fund's investment
objectives will be achieved. Management lays no claim to infallibility, but
they endeavor to apply the flexible investment policy effectively.
OPTIONS TRANSACTIONS
--------------------
The Fund may sell covered call options (options on securities owned by
the Fund) and uncovered call options (options on securities not owned by the
Fund) which are issued by the Options Clearing Corporation and listed on
national securities exchanges, from time to time. This practice may enable
the Fund to increase its income because the buyer of the option pays the Fund
a sum of cash (a premium) for the option whether or not the buyer ultimately
exercises the option. The amount of the premium is determined on the exchange
upon which the option is traded, and will depend on various factors, such as
the market price and volatility of the underlying securities and the
expiration date and exercise price of the option.
<PAGE> 9
Ordinarily, call options would be sold on stocks whose market value is
not expected to appreciate above the option exercise price by the expiration
date of the option, or when the premium received plus the exercise price of
the option exceeds the price at which the Advisor expects the underlying
securities to be trading by the expiration date of the option. When the Fund
sells an option it is obligated to deliver the underlying securities until the
expiration date of the option (which may be one, two, three, six or nine
months from the date the option is issued) if the option is exercised. If the
option is exercised, the Fund would deliver the underlying securities to the
buyer if the option was a covered option or buy the underlying securities to
deliver to the purchaser of the option if the option was uncovered.
The sale of covered call options should enable the Fund to increase its
income through the receipt of premium income on the call options it sells.
However, the Fund risks limiting potential gains the Fund would otherwise
realize if the market value of the underlying securities of a covered call
option appreciates above the exercise price of the option because the
purchaser will then exercise the option. In the case of uncovered call
options, the Fund risks a loss upon closing its option position if the market
price of the optioned securities at the time the option is exercised exceeds
the exercise price plus the premium received by the Fund.
The Fund may purchase call options when the Advisor believes that the
market price of the underlying securities will exceed the strike price of the
option, plus the premium the Fund must pay for the option, by the option
expiration date. If the market price of the underlying securities appreciates
after the option is purchased, the price of the option also will appreciate,
thereby affording the Fund the opportunity to resell the option at a profit
or, as an alternative, to purchase the underlying securities at the option
exercise price anytime until or on the expiration date and retain or resell
the underlying securities at their appreciated value. Purchasing call
options, however, entails the risk that the market price of the underlying
securities may decrease and the market value of the call option will also
decrease, and in these circumstances, while the Fund may sell the option, the
transaction is likely to result in a loss.
The Fund may also buy and sell put options. For the sale of a put option
the Fund receives a premium, which is determined on the exchange on which the
put is traded. The amount of the premium is influenced by the same factors as
influence the market price of call options.
The sale of a put option obligates the seller to purchase the underlying
securities at the option exercise price anytime until or on the expiration
date if the option is exercised. Alternatively, the seller may satisfy its
obligation by purchasing an identical put option for delivery to the purchaser
of the put option.
The option will be exercised if the market price of the underlying
securities is less than the strike price of the option on the expiration date
of the option. The Fund may sell put options to obtain premium income on
underlying securities whose market price the Advisor expects to increase or
remain relatively constant for the duration of the option. They may also be
sold when the Advisor believes the underlying securities are an attractive
long-term investment, despite a possible short term decline in their market
value. In these circumstances, the Fund would purchase the underlying
securities pursuant to the option rather than buy an identical put option to
close the transaction, if the option is exercised by the buyer.
<PAGE> 10
The Fund also may buy put options to protect against a decline in the
market value of underlying securities that are held in the Fund's investment
portfolio. In return for paying a premium to the seller of the put option,
the Fund acquires the right to sell the underlying securities to the seller of
the option at the exercise price, thereby protecting itself against a decline
in the market price of the underlying securities. If, however, at the
expiration date of the option, the market value of the underlying securities
has not declined below the option exercise price, the Fund will not exercise
its put option.
Puts and calls also may be used in combination, to hedge investments in
underlying securities. For example, if the Fund has bought a call that
entitles it to purchase underlying securities at a specified strike price, it
may also buy a put, which enables it to sell the same securities at a
specified strike price. Put options, as well as call options, are frequently
available on identical underlying securities with identical expiration dates,
but at different strike prices. In this type of hedging transaction, the Fund
might seek to buy a put option whose strike price is higher than the strike
price of an otherwise identical call option on the same underlying securities,
thereby obtaining the right to buy the underlying securities at a lower price
than the price at which it would have the right to sell the securities.
The success of options transactions depends largely on the ability of the
Advisor to predict future stock and option movements. Further, an option
position may be closed out only on an exchange which provides a secondary
market for an option of the same series. Although the Fund will generally
purchase or sell only those options for which the Advisor believes there is an
active secondary market, there is no assurance that a liquid secondary market
on an exchange will exist for any particular option. The inability to
close-out an option position could result in a loss to the Fund.
FUTURES CONTRACTS
-----------------
The Fund may buy and sell financial futures contracts and options on such
contracts. Financial futures contracts provide for the future sale by one
party and purchase by another party of a specified amount of specific
securities or currencies at a specified future time and at a specified price.
Futures contracts which are standardized as to maturity date and the
underlying financial instruments are traded on national futures exchanges.
The Fund may use financial futures and options thereon to implement a
number of hedging strategies. For example, because the purchase of a
financial futures contract requires only a relatively small initial margin
deposit, the Fund could remain exposed to the market activity of a broad-based
number of stocks contained in the futures index, while maintaining liquidity
to meet redemptions. Also, the Fund might temporarily invest available cash
in stock index futures contracts or options pending investments in securities.
These investments entail the risk that an imperfect correlation may exist
between changes in the market price of an index futures contract and the value
of the securities that comprise the index.
There are also limited risk strategies that involve combinations of
options and futures positions. For example, the Fund might purchase a futures
contract in anticipation of higher prices while simultaneously buying an
option on a futures contract to protect against the risk of lower prices.
Further, inasmuch as the Fund may purchase foreign securities which are
<PAGE> 11
denominated in foreign currencies, the Fund may purchase foreign currency
futures contracts in order to hedge against fluctuations in foreign currency
exchange rates.
The Fund will be required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract if it is not terminated prior to the specified
settlement date. Minimum initial margin requirements are established by the
futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums.
After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
"variation" (additional) margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the Fund. Variation margin payments are made to and from the
futures broker for as long as the contract remains open. The Fund expects to
earn income on its margin deposits. The Fund will not enter into futures
contract transactions to the extent that, immediately thereafter, the sum of
its initial and variation margin deposits on open contracts exceeds 5% of the
market value of the Fund's total assets.
INVESTMENT LIMITATIONS
-----------------------
The Fund has adopted the following limitations which are designed to
reduce certain risks inherent in securities investment and which may be
changed only by a vote of the holders of the majority of the voting securities
of the Fund.
The Fund will not:
(1) invest more than 5% of its gross assets in securities of any
one issuer (except U.S. Government obligations);
(2) invest more than 25% in the securities of companies in the
same industry;
(3) buy more than 10% of the voting securities of any company;
(4) borrow or lend money; or
(5) purchase securities on margin.
MANAGEMENT OF THE FUND
----------------------
The strength of Philadelphia Fund, and any success it may achieve for
shareholders, depend chiefly upon the character, experience, and judgment of
the persons managing its activities. The Board of Directors, guided by the
recommendations of the Advisor, establish the broad investment policy and,
under Maryland law, are responsible to oversee the management of the Fund.
Baxter Financial Corporation ("BFC" or the "Advisor") provides the Fund
with investment advice and recommendations regarding the investment and
<PAGE> 12
reinvestment of the Fund's assets. Donald H. Baxter, President, Treasurer,
Director, and sole shareholder of the Advisor, is responsible for selecting
brokers to execute Fund portfolio transactions and is authorized to place Fund
securities transactions with dealers who sell shares of the Fund. Mr. Baxter
is primarily responsible for the day to day management of the Fund's
portfolio. He has been the Fund's portfolio manager since May, 1987. Mr.
Baxter is also President and Director of the Fund and Eagle Growth Shares,
Inc., a registered investment company. BFC also serves as investment advisor
to institutional and individual investors, including Eagle Growth Shares, Inc.
The Advisor receives an investment advisory fee from the Fund which, on
an annual basis, equals .75 percent of the net assets of the Fund not
exceeding $200,000,000. The rate of this annual fee is reduced to .625
percent on net assets in excess of $200,000,000 but less than $400,000,000,
and to .50 percent on net assets in excess of $400,000,000. The fee is
payable monthly, based on the month-end net asset value of the Fund, at 1/12th
of the annual fee rate. As of November 30, 1997, the net assets of the Fund
were $113,494,152. For the fiscal year ended November 30, 1997, the Fund paid
BFC total advisory fees equal on an annual basis to .75% of the average net
assets.
The Advisor is also responsible for providing the Fund with
administrative services, such as clerical and secretarial personnel and
facilities, necessary to the administrative affairs of the Fund, pursuant to
an Administration Agreement between the Fund and the Advisor. For these
services, the Fund pays the Advisor a fee which is equal on an annual basis to
.25 percent of the net assets of the Fund. All services provided by the
Advisor are subject to the approval and the overall supervision of the Fund's
Board of Directors.
Total Fund expenses for the fiscal year ended November 30, 1997 were 1.53%
of average net assets.
Under a Distribution Plan approved by the Board of Directors as amended
on January 1, 1994, the Fund may make monthly payments of not more than 1/24
of 1% (.5% annually) of the net assets of the Fund to defray: (a) expenses
associated with the sale of Fund shares and (b) services to existing
shareholders. Sales expenses may include commissions and commissions to
dealers who have sold shares of the Fund, advertising and promotional
expenses, the costs of a Fund sales office and sales personnel, printing
prospectuses, communications equipment used in the sale of Fund shares, and
such other sales expenses as may be approved by the Fund's Board of Directors.
The service fee, which may not exceed on an annual basis .25% of the average
net asset value of the Fund, is intended to defray the cost of providing
personal services to the Fund's existing shareholders. Such services may
include advice and information regarding their share accounts, the application
and use of the prototype retirement plans of the Fund, a periodic newsletter,
assistance with questions or problems regarding the Fund's transfer agent, and
other information and services designed to retain the loyalty of shareholders
to the Fund and enhance the likelihood that the shareholders will refrain from
redeeming their shares. The Fund may pay these expenses directly, or it may
make payments to BFC if BFC incurs such expenses in its capacity as an
underwriter of the Fund. For the fiscal year ended November 30, 1997, the
Fund paid distribution expenses under the Plan equal to .26% of average net
assets. The NASD has adopted a rule that became effective July 7, 1993 that
has reduced and may continue to reduce the amount the Fund may pay for sales
related expenses under the Distribution Plan.
<PAGE> 13
Baxter Financial Corporation is authorized to allocate brokerage
transactions to dealers that have sold Fund shares. Such transactions are
subject to the requirement to seek to obtain the best price and execution.
Star Bank, N.A. acts as the Fund's custodian. American Data Services,
Inc. acts as transfer agent, dividend paying agent, and provides the Fund with
certain accounting services.
PURCHASE OF SHARES
------------------
The shares of the Fund are readily available through the underwriter of
the Fund's shares by completing the Fund Account Application which should be
remitted together with payment for the shares to Star Bank, N.A., P.O. Box
640110, Cincinnati, OH 45264-0110. Investors who are interested in purchasing
shares may also contact the Fund at 1-800-749-9933. The minimum initial
investment in the Fund is $1,000, and there is no minimum amount for
subsequent investments in the Fund. The Fund retains the right to waive the
minimum initial investment at its discretion. Purchases of shares will be
made in full and fractional shares calculated to three decimal places.
Certificates for shares of stock will not be issued, except upon written
request of the shareholder submitted to American Data Services, Inc. ("ADS")
and, if requested, ADS will issue share certificates at no charge.
Certificates for fractional shares, however, will not be issued. Shares may
also be purchased and sold through securities firms which may charge a service
fee or commission for such transactions. No fee or commission is charged on
shares which are purchased from or redeemed by the Fund directly.
The Fund reserves the right, after sending shareholders at least sixty (60)
days prior written notice, to redeem the shares held by any shareholder if the
shareholder's account has been inactive for a period of six (6) months
preceding the notice of redemption and the total value of the holder's shares
does not exceed $500 as of the proposed redemption date. An account will be
considered inactive if no new purchases have been made (excluding shares
purchased through the reinvestment of dividends and capital gains) within the
specified time period. Any redemptions by the Fund pursuant to this
procedure will be at the net asset value of the shares calculated as of the
close of the New York Stock Exchange on the stated redemption date and a check
for the redemption proceeds will be sent to the shareholder not more than
seven (7) days later.
The Fund also makes available an Automatic Investment Plan which enables
shareholders to make regular monthly investments in shares through automatic
charges to their bank checking accounts. The Fund's $1,000 minimum initial
investment shall be waived for Automatic Investment Plan participants making
regular monthly payments of not less than $50.00 per month.
Once an account is established, subsequent investments should be sent to
Star Bank, N.A., P.0. Box 640110, Cincinnati, OH 45264-0110. A confirmation
will be mailed to the investor showing the shares purchased, the exact price
paid for the shares, and the total number of shares that are owned.
Fund investors who purchase or redeem shares under any of the following
fund plans: the Automatic Investment Plan or the Check Withdrawal Plan will
receive confirmations of purchases and redemptions of Fund shares on a
calendar quarter basis, not later than five business days after the end of
each calendar quarter in which a transaction takes place. The confirmation
<PAGE> 14
will show the date of each transaction during the period, number and price
paid or received for shares purchased or redeemed, including dividends and
distributions, and total number of shares owned by the investor as of the end
of the period.
CALCULATION OF NET ASSET VALUE
------------------------------
Shares are sold at net asset value per share. The net asset value per
share is equal to the current market value of the Fund's securities
investments, plus cash and other assets, less liabilities, divided by the
number of outstanding shares (adjusted to the nearest cent). Portfolio
securities traded on a securities exchange or the NASDAQ National Market
System are valued at the closing sales price on the market on which they are
principally traded. Securities traded over-the-counter, except those that are
quoted on the NASDAQ National Market System, are valued at the prevailing
quoted bid price. Other assets and securities for which no quotations are
readily available, including restricted securities, are valued at fair value,
as determined in good faith by the Board of Directors, or a delegated person
acting pursuant to the directions of the Board. The method of valuing assets
and securities for which no quotations are available, including restricted
securities, will be reviewed at appropriate intervals by the Board.
The net asset value is computed as of the close of the New York Stock
Exchange, generally 4:00 p.m., New York City time, on each day the New York
Stock Exchange is open. Orders for Fund shares received by the Fund or its
underwriter prior to that time are priced at the net asset value next
calculated, provided the order is received in proper form together with
payment for the shares by either the Fund, or the Fund's custodian, prior to
such close of the New York Stock Exchange. Orders received subsequent to the
close of the New York Stock Exchange will be priced at the net asset value
calculated at the close of the New York Stock Exchange on the next business
day. Orders received by Star Bank, N.A. directly from investors will be
priced as of the next calculation of net asset value after the properly
completed order together with payment for the shares is received by Star Bank,
N.A.
Baxter Financial Corporation, the underwriter of the Fund, makes a
continuous offering of Fund shares.
TAX SHELTERED PLANS
-------------------
For self-employed individuals, partnerships, and corporations there is
available through the Fund a prototype Profit Sharing/Money Purchase Pension
Plan which has been approved by the Internal Revenue Service. The Profit
Sharing Plan permits an employer to make tax-deductible investments in the
Fund on behalf of each participant up to the lesser of 15% of each
participant's earned income (or compensation), or $30,000. The Money Purchase
Pension Plan permits an employer to make tax-deductible contributions on
behalf of each participant up to the lesser of 25% of earned income (or
compensation), or $30,000. If an employer adopts both the Profit Sharing Plan
and the Money Purchase Pension Plan, deductible contributions to both plans,
in the aggregate, may be made on behalf of each participant up to the lesser
of 25% of earned income (or compensation), or $30,000. Also, the Fund makes
available an Individual Retirement Account (IRA) which permits tax-deductible
investments in the Fund by certain taxpayers up to $2,000 per year. All
<PAGE> 15
taxpayers may make nondeductible IRA contributions up to $2,000 to a separate
account whether or not they are eligible for a deductible contribution. The
minimum amount which must be contributed to establish an IRA account is
$1,000, and there is a $250 minimum investment amount required to establish a
Spousal IRA account. Dividends and capital gains distributions paid on Fund
shares held in a retirement plan or an IRA will be reinvested at net asset
value and accumulate free from tax until withdrawn.
Starting in 1998, the Fund makes available a new type of IRA - the "Roth
IRA" - which permits nondeductable investments in the Fund by certain
taxpayers up to $2,000 per tax year. If the Roth IRA is maintained for at
least a five-year period beginning with the first tax year for which a
contribution to the Roth IRA was made, distributions from the Roth IRA after
age 59-1/2 or under certain other circumstances will be completely tax free.
An annual limit of $2,000 applies to contributions to regular and Roth
IRAs. For example, if a taxpayer contributes $2,000 to a regular IRA for a
year, he or she may not make any contribution to a Roth IRA for that year.
Forms to establish an IRA or Profit Sharing/Money Purchase Pension Plan
are available from the Fund or Baxter Financial Corporation.
REDEMPTION OF SHARES
--------------------
Investors may redeem their shares by requesting redemption in writing to
American Data Services, Inc., 150 Motor Parkway, Suite 109, Hauppauge,, NY
11788. Upon redemption, the investor will receive the net asset value of his
shares calculated as of the next close of the New York Stock Exchange
(generally 4:00 p.m. New York City time) following the receipt of properly
tendered shares. A proper tender of shares means that if the investor holds
share certificates, they must be signed as registered and the signatures must
be guaranteed. To redeem shares for which certificates have not been issued -
those held for the account of the investor by American Data Services, Inc. -
all registered holders must sign and deliver to the Fund or to American Data
Services, Inc. a written request for redemption specifying the shares to be
redeemed with signatures guaranteed. A guarantee of signature is acceptable
if made by a member firm of the New York Stock Exchange or a regional stock
exchange, by a trust company, by a commercial bank, by an overseas bank which
has a New York City correspondent, by certain credit unions, or by certain
savings associations. Any questions regarding which institutions may
guarantee signatures should be directed to American Data Services, Inc. at
1-800-525-6201. Neither the Fund nor its underwriter charge any fee on these
transactions. The Fund's policy is to pay promptly when shares are presented
for redemption; it is obligated to pay within seven days after the date of
tender, except when the securities exchanges are closed or an emergency
exists.
The Fund has reserved the right to redeem Fund shares in kind rather than
in cash should this be necessary in accordance with the applicable rules of
the Securities and Exchange Commission.
The Fund also makes available a Check Withdrawal Plan about which further
information may be obtained by writing or calling the Fund, or by obtaining a
copy of the Statement of Additional Information.
<PAGE> 16
RIGHTS OF OWNERSHIP
-------------------
Each share of the Fund's common stock has an equal interest in the Fund's
assets, net investment income, and in any net capital gains realized by the
Fund and is entitled to one vote. The shares are non-assessable, fully
transferable, and redeemable at the option of the shareholder. They may be
sold only for cash, except to acquire the major portion of the assets of
another investment company. They have no conversion, preemptive, or other
subscription rights. Shareholders having questions about the Fund or their
accounts may call or write to the Fund at its telephone number or address
shown on the cover of this prospectus.
Ordinarily, the Fund does not intend to hold an annual meeting of
shareholders in any year except when required under the Investment Company Act
of 1940.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAXES
-------------------------------------------------
The Fund intends to continue to qualify for tax treatment under
Subchapter M of the Internal Revenue Code and to distribute to shareholders
all of its net investment income and realized net capital gains (in excess of
any available capital loss carryovers) to relieve the Fund from all Federal
income tax. The Fund will pay dividends of its net investment income on a
quarterly basis. Any capital gain distributions will be paid annually on
approximately December 31st.
Dividends and distributions paid to shareholders who are taxpayers are
subject to Federal income tax. Dividends, together with distributions of any
short-term capital gains, are taxable as ordinary income. Shareholders who
are taxpayers pay Federal income taxes at capital gains rates on realized
long-term capital gains which are distributed to them, whether or not
reinvested in the Fund and regardless of the period of time the Fund's shares
have been owned by the shareholders. Annually, the Fund will provide each
shareholder with a statement regarding the tax status of dividends and
distributions paid for the year. Dividends and capital gains distributions
paid in January ordinarily will be included in the shareholder's income for
the previous year. Shareholders may elect to receive income dividends and
capital gains distributions in additional shares of the Fund at net asset
value (calculated as of the ex-dividend date), or to receive cash.
PERFORMANCE
-----------
Total return data may from time to time be included in advertisements
pertaining to the Fund. Standardized "total return" of the Fund refers to the
average annual compounded rates of return over certain periods of time that
would equate the initial amount invested in the Fund to the ending redeemable
value of the investment, and includes reinvestment of dividends and
distributions over the period for which performance is shown. The Fund may
advertise total return figures which shall represent Fund performance over one
or more time periods, including (1) one-year to date, and (2) May 1, 1987 to
date, the latter being the date on which Mr. Donald H. Baxter assumed
exclusive portfolio management responsibilities for the Fund.
Non-standardized total return quotations may also be presented. Such
quotations may exclude certain types of deductions, such as certain Fund
expenses, which would otherwise reduce total return quotations.
<PAGE> 17
Prior to April 1, 1989, the Fund imposed the maximum sales load of 8.5%
on purchases. On April 1, 1989, the sales load was eliminated and a Plan of
Distribution was implemented. Standardized total return figures for periods
prior to, and for, fiscal year ended November 30, 1989 are calculated by
deducting the sales load, and total return figures for periods after November
30, 1989 will not reflect a sales load on purchases.
The Fund may also advertise its investment performance by comparison to
market indices such as the S&P Index and to mutual fund indices such as those
reported by Lipper Analytical Services, Inc. Such indices may group funds by
investment objective (in the Fund's case, typically in the "Growth and Income
Funds" category), or may involve a more general ranking reflecting the Fund's
overall performance as compared to any number or variety of funds, regardless
of investment objective.
<PAGE> 18
PHILADELPHIA FUND, INC. PHILADELPHIA FUND, INC.
1200 North Federal Highway APRIL 1, 1998
Suite 424
Boca Raton, Florida 33432
(561) 395-2155
SHAREHOLDER SERVICES
(800) 525-6201
INVESTMENT ADVISOR, ADMINISTRATOR, AND DISTRIBUTOR
Baxter Financial Corporation
1200 North Federal Highway, Suite 424
Boca Raton, Florida 33432
CUSTODIAN
Star Bank, N.A.
P.O. Box 640110
Cincinnati, OH 45264-0110
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
American Data Services, Inc.
150 Motor Parkway
Suite 109
Hauppauge, NY 11788
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
Great Valley Corporate Center
30 Valley Stream Parkway
Malvern, PA 19355
AUDITORS
Briggs, Bunting & Dougherty, LLP
2 Logan Square, Suite 2121
Philadelphia, PA 19103
PROSPECTUS
<PAGE> 19
PART B
------
PHILADELPHIA FUND, INC.
Statement of Additional Information
April 1, 1998
This Statement is not a prospectus, but should be read in conjunction
with the Fund's current prospectus (dated April 1, 1998). To obtain the
Prospectus please write to Philadelphia Fund, Inc., 1200 North Federal
Highway, Suite 424, Boca Raton, Florida 33432.
Or call:
Nationwide 1-800-749-9933
Florida 1-561-395-2155
Table of Contents Page
----
Investment Goal and Policy . . . . . . . . . . . . . . . . 20
Options Transactions . . . . . . . . . . . . . . . . . . . 20
Futures Contracts . . . . . . . . . . . . . . . . . . . . 21
Federal Tax Treatment of Futures Contracts . . . . . . . . 22
Investment Limitations . . . . . . . . . . . . . . . . . . 22
Further Information Regarding Sale of Shares . . . . . . . 23
Automatic Investment Plan . . . . . . . . . . . . . . . . 24
Redemption of Shares . . . . . . . . . . . . . . . . . . . 24
Check Withdrawal Plan . . . . . . . . . . . . . . . . . . 24
Officers and Directors . . . . . . . . . . . . . . . . . . 25
Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . 27
Additional Information About the Investment Advisor. . . . 28
Principal Underwriter. . . . . . . . . . . . . . . . . . . 29
Distribution . . . . . . . . . . . . . . . . . . . . . . . 29
Independent Certified Public Accountant. . . . . . . . . . 30
Calculation of Performance Data. . . . . . . . . . . . . . 31
Comparisons and Advertisements . . . . . . . . . . . . . . 32
Financial Statements . . . . . . . . . . . . . . . . . . . 32
<PAGE> 20
The following information supplements the information set forth under
"Investment Goal and Policy", "Options Transactions", "Investment Limitations"
and "Futures Contracts" in the Prospectus.
INVESTMENT GOAL AND POLICY
--------------------------
Securities will be bought with the long-term goals of the Fund in view,
and it is the practice of the Fund not to engage in selling portfolio
securities on a short-term basis. However, the Fund may dispose of any
portfolio securities acquired at any time if, in management's judgment, such
action is in the best interests of shareholders. Management will endeavor to
apply the flexible investment policy effectively -- making shifts from bonds
to stocks, and vice versa, to meet changing conditions. If, for example, all
of the portfolio securities were replaced in one year, the portfolio turnover
rate would be 100%. It is not anticipated that the Fund's portfolio turnover
rate would exceed 100%. The portfolio turnover rate (the annual rate at which
portfolio securities are replaced) for the past ten years is set forth in the
Annual Report to stockholders for the fiscal year ended November 30, 1997
under "Financial Highlights".
OPTIONS TRANSACTIONS
--------------------
The Fund may write (sell) listed call options on its portfolio securities
(covered options). In selling an option, the Fund, effectively, agrees to
deliver, for example, 100 shares of common stock held in its portfolio at a
specified price (the "strike price") prior to the expiration date of the
option if the option is exercised by the purchaser.
If, at or near the expiration date of an option, the market price of the
optioned stock exceeds the strike price of the option, the option will be
exercised. In that event, the purchaser of the option must pay to the Fund
the strike price, and the Fund must thereupon deliver the optioned stock to
the purchaser. In this event, the Fund would lose the opportunity to take
full advantage of the increase in market price of the optioned stock. If, by
the expiration date of the option, the market price of the optioned stock
fails to exceed the strike price of the option, the option will expire
unexercised. Alternatively, the Fund might purchase an identical option for
delivery to the buyer. In this event, the cost of such option might exceed
the premium for the option sold by the Fund. The Fund retains the premium
paid for the option regardless of whether the option is exercised. Premiums
received by the Fund are treated as short-term capital gains under the
Internal Revenue Code except when the optioned stock is delivered in
connection with the transaction, in which case the total amount received by
the Fund, the premium, and the strike price are added together, and any gain
or loss will be considered long-term or short-term depending on how long the
Fund held the optioned stock.
The Fund may also sell listed options on securities which it does not own
(uncovered options). Its obligation to the buyer of an uncovered option is
the same as when it sells a covered option. If the option is exercised the
Fund must either purchase the underlying securities in the market for delivery
to the seller or it must purchase an identical option for delivery to the
purchaser.
<PAGE> 21
The Fund may also buy and sell listed put options. When the Fund sells a
put option, it receives a premium from the buyer and is obligated to purchase
the optioned securities at the strike price of the option on the expiration
date of the option if the option is exercised. The premium for a put option
is determined in the same manner as the premium on a call option. Similarly,
the purchase of a put option entitles the Fund to sell the optioned securities
to the option seller at the strike price of the option anytime until or on the
option expiration date.
When the Fund sells an uncovered call option or a put option, it will be
required to maintain in a segregated account, which will be "marked to market,
" with its custodian bank cash or highly liquid, short-term U.S. government
securities in an amount equal to its obligation under the call or put option.
With respect to a put option this will be an amount equal to the price of the
underlying securities it will be obligated to buy if the option is exercised.
With respect to a call option, it would be the market value of the underlying
securities it is obligated to deliver if the option is exercised.
FUTURES CONTRACTS
-----------------
The Fund may buy and sell financial futures contracts and options on
futures contracts. Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of specific securities at
a specified future time and at a specified price. Financial futures contracts
which are standardized as to maturity date and the underlying financial
instruments are traded on national futures exchanges, and include futures
contracts on equity securities, debt securities and foreign currencies.
Although index futures contracts by their terms call for settlement in
cash, in most cases the contracts are closed out before the settlement date.
Closing out an open futures position is done by taking an opposite position
("buying") a contract which has previously been "sold" or "selling" a contract
previously purchased in an identical contract to terminate the position.
Brokerage commissions are incurred when a futures contract is bought or sold.
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Therefore, it might not be possible to close a
futures position. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments to maintain its required
margin. In such situations, if the Fund has insufficient cash, it may have to
sell portfolio securities to meet daily margin requirements at a time when it
may be disadvantageous to do so. In addition, the Fund may be required to
make delivery of the securities underlying futures contracts it holds.
The Fund will minimize the risk that it will be unable to close out a
futures contract by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts can be substantial, due to
the low margin deposits required. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss
(as well as gain) to the investor. There is also the risk of loss by the Fund
of margin deposits, in the event of bankruptcy of a broker with whom the Fund
has an open position in the futures contract or related option.
<PAGE> 22
When the Fund has a long position in a futures contract or sells a put
option, it must establish a segregated account with its custodian bank
containing cash or highly liquid, short-term U.S. government securities in an
amount equal to the purchase price of the contract or the strike price of the
put option (less any margin on deposit). When the Fund sells a call option on
a futures contract, it must establish a segregated account with its custodian
bank containing cash or highly liquid, short-term U.S. government securities
in an amount that, when added to the amount of the margin deposit, equals the
market value of the instruments underlying the call option (but are not less
than the strike price of the call option).
FEDERAL TAX TREATMENT OF FUTURES CONTRACTS
------------------------------------------
Except for transactions the Fund has identified as hedging transactions,
the Fund is required for federal income tax purposes to recognize as income
for each taxable year its net unrealized gains and losses on certain futures
contracts as of the end of the year as well as those actually realized during
the year. In most cases, any gain or loss recognized with respect to a
futures contract is considered to be 60% long-term capital gain or loss and
40% short-term capital gain or loss, without regard to the holding period of
the contract. Furthermore, sales of futures contracts which are intended to
hedge against a change in the value of securities held by the Fund may affect
the holding period of such securities and, consequently, the nature of the
gain or loss on such securities upon disposition.
In order for the Fund to continue to qualify for Federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for its taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, gains from the sale of
securities and other income derived with respect to the Fund's business of
investing in securities.
The Fund will distribute to shareholders annually any net capital gains
which have been recognized for federal income tax purposes, including
unrealized gains at the end of the Fund's fiscal year on futures transactions.
Such distributions will be combined with distributions of capital gains
realized on the Fund's other investments.
INVESTMENT LIMITATIONS
----------------------
The Investment Limitations of the Fund, including those set forth in the
Prospectus, may be changed only with the approval of the lesser of: (i) at
least 67% of the voting securities of the Fund present at a meeting if the
holders of more than 50% of the outstanding voting securities of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding
voting securities of the Fund.
In addition to the Investment Limitations stated in the Fund's
Prospectus, the Fund may not:
buy securities to exercise control or management, issue senior
securities except that the Fund may buy and sell options); make
short sales (the Fund does not consider the sale of an uncovered call
option or financial futures contracts to be short sales); mortgage;
pledge or otherwise encumber; transfer or assign its assets to secure
<PAGE> 23
debts; buy or sell real estate or real estate mortgage loans,
commodities, or commodity contracts (except the Fund may buy and sell
financial futures contracts and options thereon); acquire the
securities of any other domestic or foreign investment company or
investment fund, except in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of
such other investment company; this policy shall not prevent the Fund
from investing in the securities issued by a real estate investment
trust, provided that such Trust is not permitted to invest in real
estate or interests in real estate other than mortgages or other
security interests.
Although changes in the following restrictions are not subject to
stockholder approval, the Fund does not intend to: invest more
than 15% of its assets in so-called "restricted securities" (i.e. securities
which may not be sold without registration or an exemption from registration
under the Securities Act of 1933, as amended, securities with a legal or
contractual obligation on resale, foreign securities not listed on a
recognized domestic or foreign securities exchange, securities which do not
have a bona fide market or securities not readily marketable). In purchasing
restricted securities, the Fund may be deemed to be a statutory underwriter
unless it acquires and disposes of such securities pursuant to an exemption
available under the Securities Act of 1933. If an exemption is not available,
the Fund may be required to bear the cost of registering such securities.
Ordinarily, restricted securities may be acquired at a discount from the
market price of similar securities of the issuer and, therefore, in certain
instances, may offer greater opportunity for capital appreciation. The method
of valuing restricted securities is described in the prospectus under
"Calculation of Net Asset Value".
The Fund is authorized to lend its portfolio securities and enter into
repurchase agreements. Investments in repurchase agreements involve certain
risks. For example, if the seller of the underlying securities defaults on
its obligation to repurchase the securities at a time when their value has
declined, the Fund may incur a loss upon disposition. If the seller becomes
insolvent and subject to liquidation or reorganization under the Bankruptcy
Code or other laws, a bankruptcy court may determine that the underlying
securities are collateral not within the control of the Fund and, therefore,
subject to sale by the trustee in bankruptcy. Finally, it is possible that
the Fund may not be able to substantiate its interest in the underlying
securities. While management acknowledges these risks, it believes that they
can be controlled through stringent security selection criteria and careful
monitoring procedures.
The following information supplements the information in the Prospectus
under "Purchase of Shares":
FURTHER INFORMATION REGARDING
SALE OF SHARES
-----------------------------
The Fund calculates the net asset value per share at the close of the New
York Stock Exchange on days when the New York Stock Exchange is open. On
other days, the Fund will generally be closed and pricing calculations will
not be made. The New York Stock Exchange is scheduled to be open Monday
through Friday throughout the year except for New Year's Day, Martin Luther
King Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day,
<PAGE> 24
Labor Day, Thanksgiving Day and Christmas Day. Orders for redemption and
purchase will not be processed if received when the Fund is not open for
business.
The Fund will not knowingly sell its shares where, after the sale, such
shares would be owned directly, indirectly, or through a unit investment trust
by another investment company, whether a foreign or domestic in the amount of
3% or more, or by an individual or any kind of entity, owning directly,
indirectly, or through a unit investment trust in the amount of 5% or more of
the then outstanding shares of the Fund. However, this shall not prevent the
holding by the Custodian for Philadelphia Fund Investing Programs (a unit
investment trust for accumulation of shares of the Fund) or by Philadelphia
Fund International Limited required to service their respective security
holders.
The following information supplements the information in the Prospectus
under "Redemption of Shares."
AUTOMATIC INVESTMENT PLAN
-------------------------
The Automatic Investment Plan enables shareholders to make regular
monthly investments in shares through automatic charges to their bank checking
accounts. With shareholder authorization and bank approval, Star Bank, N.A.
will automatically charge the bank account for the amount specified, which
will be automatically invested in shares at the net asset value on the date
specified by the shareholder. Bank accounts will be charged on the day or a
few days before investments are credited, depending on the bank's
capabilities, and shareholders will receive a quarterly confirmation statement
showing the transactions during the calendar quarter. Participation in the
plan will begin within 30 days after receipt of a completed section 7 of the
Account Application and a voided check from your checking account. If your
bank account cannot be charged due to insufficient funds, a stop payment
order, or the closing of your bank account, the plan may be terminated and the
related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to American Data
Services, Inc.
REDEMPTION OF SHARES
--------------------
Payments for shares redeemed, or the right of redemption, may be
suspended for any period during which the New York Stock Exchange is closed,
other than customary week-end and holiday closings or during which, by order
of the Securities and Exchange Commission, trading on the New York Stock
Exchange is restricted, or for any period during which an emergency, as
determined by order of the Commission, exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable, or it is not
reasonably practicable for the Fund fairly to determine the values of its net
assets, or for such other periods as the Commission may, by order, permit for
the protection of security holders of the Fund.
CHECK WITHDRAWAL PLAN
---------------------
An investor with a minimum account balance of $5,000 who is not currently
participating in the Automatic Investment Plan may have sufficient Fund shares
<PAGE> 25
automatically redeemed at regular monthly or quarterly intervals to provide
payments of $25 or more. This minimum amount is not necessarily a recommended
amount. The privilege may be exercised by a written request to American Data
Services, Inc. specifying the amount of the check to be received each month
(or each quarter as desired). Share certificates cannot be issued while the
Plan is in effect. With the Custodian's approval, payment amounts may be
revised at any time by the investor. All shares owned or purchased will be
credited to the Check Withdrawal Plan and a sufficient number of shares will
be sold from the investor's account to meet the requested withdrawal payments.
All income dividends and capital gains distributions on shares held will
be reinvested in additional shares at net asset value on the ex-dividend date.
Since the withdrawal payments represent the proceeds from the sales of shares,
there will be a reduction of invested capital to the extent that the
withdrawal payments exceed the income dividends and capital gains
distributions paid and reinvested in shares held in the account. While no
charge is contemplated on each withdrawal payment at present, the right is
reserved at any future time to deduct $1.00 from each withdrawal payment. At
present, the expenses are paid by the Fund. This Plan, upon written notice to
the Custodian, can be terminated at any time without penalty. Any subsequent
investments in this type of Plan must be $1,000 or more.
The following information supplements the information in the
Prospectus under "Management of the Fund."
OFFICERS AND DIRECTORS
----------------------
The officers and directors of the Fund and their principal business
occupations are listed below. All officers and directors hold identical
positions with Eagle Growth Shares Inc., a registered investment company, and
with the Fund. Each Director who is an "interested person" of the Fund, as
defined in Section 2(a)(19) of the Investment Company Act of 1940, is
indicated by an asterisk. All of the officers and directors aggregately own
less than 1% of the securities of the Fund. Each director, except Donald H.
Baxter, receives from the Philadelphia Fund a $2,000 annual fee and $1,150 for
each quarterly Board of Director's meeting they attend. Donald H. Baxter does
not receive any annual or meeting fees as a director. Thomas J. Flaherty a
director and former officer of the Fund receives a monthly pension from the
Fund which amounted to $12,500 for the year ended November 30, 1997. Donald
P. Parson, a director of the Fund, is a partner of the firm Parson and Brown
which handles certain legal matters for the Fund. In addition, each director,
except Donald H. Baxter, receives $50 from Eagle Growth Shares for each
quarterly Board of Director's meeting they attend.
Kenneth W. McArthur, Director (62)
93 Riverwood Parkway, Toronto, Ontario, Canada, M8Y 4E4
Chairman, Shurway Capital Corp. (private investment company); formerly, Vice
President and Director, Nesbitt Investment Management; formerly President,
Chief Executive Officer, and Director, Fahnestock & Co., Inc. (securities
brokerage); formerly Senior Vice President and Chief Financial Officer,
Nesbitt Thomson Inc. (holding company).
<PAGE> 26
Donald H. Baxter, Director and President* (54)
1200 North Federal Highway, Suite 424, Boca Raton, Florida 33432
Director, President, and Treasurer, Baxter Financial Corporation; Director,
Sunol Molecular Corp. (biotechnology); Director, Great Eastern Bank; formerly
Managing Member, Crown Capital Asia Limited Liability Company (private
investment company); formerly Managing Member, Baxter Biotech Ventures Limited
Company (private investment company); formerly, Portfolio Manager, Nesbitt
Thomson Asset Management, Inc.
Donald P. Parson, Director* (56)
c/o Parson & Brown, 666 Third Avenue, New York, NY 10017
Partner, Parson & Brown, Attorney at Law; Director, ITSN, Inc. (interactive
satellite kiosks); formerly, Partner, Whitman & Ransom, Attorney at Law.
Robert A. Utting, Director (74)
c/o The Royal Bank of Canada, 1 Place Ville Marie,
Montreal, Quebec, Canada H3C 3A9
Director, R. A. Utting & Associates Inc. (investment company); Director, MICC
Investments Limited; Director, Continental Can Company, Inc.; Director, AVCORP
Industries, Inc.; Director, Cambridge Shopping Center Limited; formerly,
President, R. A. Utting & Associates Inc.; formerly, Chairman and Director,
The Mortgage Insurance Company of Canada; formerly, Vice Chairman, Royal Bank
of Canada.
Robert L. Meyer, Director (57)
c/o Ehrlich Meyer Associates, Inc., 25 Griffin Avenue,
P.O. Box 496, Bedford Hills, NY 10507
President, Ehrlich Meyer Associates, Inc.; formerly Principal Officer,
Convergent Capital Corporation (holding company); formerly Director, Vice
President, and Senior Vice President, Fahnestock & Co., Inc.
James Keogh, Director (81)
202 West Lyon Farm Drive, Greenwich, CT 06831
Writer/Editor; formerly Executive Editor, TIME (newsmagazine); formerly,
Director, United States Information Agency; formerly, Executive Director, The
Business Round Table.
Thomas J. Flaherty, Director (73)
400 Ocean Road, House No. 175, Vero Beach, FL 32963
Retired. Formerly, Executive Vice President, Philadelphia Fund, Inc.;
formerly, President Eagle Growth Shares, Inc.; formerly, President and
Director, Universal Programs, Inc. (investment advisor); formerly, partner
Fahnestock & Co.
<PAGE> 27
Ronald F. Rohe, Vice President, Secretary, and Treasurer (55)
1200 North Federal Highway, Suite 424, Boca Raton, Florida 33432
Chief Operating Officer and Marketing Director, Baxter Financial Corporation;
formerly registered representative, Paine Webber Incorporated
BROKERAGE
---------
Donald H. Baxter, President of Baxter Financial Corporation, the Fund's
investment advisor and underwriter, is responsible for the selection of
brokers to execute Fund portfolio transactions. Mr. Baxter seeks to obtain
the best price and execution of Fund portfolio transactions and selects
brokers with this goal in mind. In selecting brokers, Mr. Baxter also
considers the commission rate being paid by the Fund. Commissions on listed
securities are based on competitive rates, and Mr. Baxter seeks assurance
that the commissions paid by the Fund are reasonable in relation to the rates
paid by other similar institutions which are comparable in size and portfolio
characteristics to the Fund, and commensurate with the services being provided
by the broker. To accomplish this, Mr. Baxter negotiates commission levels
with brokers with whom the Fund does business; compares the quoted commission
level, and applies his own knowledge regarding the general levels of
commissions prevailing from time to time. He also considers the value of
research services provided to the Fund by these brokers. Mr. Baxter is
permitted to pay a higher commission than another broker might charge when, in
his good faith judgment, such commission is reasonable in relation to the
value of research or brokerage services provided by such broker. During
fiscal year ended November 30, 1997, the Fund paid total brokerage commissions
of $121,456 to brokers that provided research services.
Receipt of research information, including statistical and market
analyses, economic and financial studies from other securities firms,
electronic quotation services, and on-line electronic analysis software,
enables the advisor to supplement its own research and analysis activities by
taking available views of other securities firms and is a factor considered in
selecting brokers for the Fund. Allocations of brokerage for the receipt of
research and statistical information are made in the best judgment of Mr.
Baxter and not in accordance with any formula.
Baxter Financial Corporation serves as investment advisor to two
registered investment companies, the Fund and Eagle Growth Shares, Inc., and
to various institutional and individual investors. Receipt of research
information by Baxter Financial Corporation may also be of benefit to Eagle
Growth Shares, Inc. and these other private accounts.
During the fiscal years ended November 30, 1997, 1996, and 1995, the
Fund paid total brokerage commissions of $121,456, $78,518, and
$316,500,respectively. The increased level of commissions incurred by the
Fund in 1997 was due to the portfolio manager's decision to take profits in a
rising market. Rising prices provided the opportunity for capital gains while
other issues provided desirable alternative investment vehicles.
The decreased level of commissions incurred by the Fund in 1996
was due to the portfolio manager's strategy of maintaining positions in a
rising market to avoid taxes for Fund shareholders. When a portfolio position
is sold for a profit the shareholder becomes responsible to pay tax on the
capital gain created. In order for existing positions to be replaced, there
must be an obviously superior investment advantage in holding the new
security.
<PAGE> 28
On over-the-counter transactions the Fund generally deals with the
principal market makers and no commissions are paid to a broker except in
situations where execution through the broker is likely to result in a savings
to the Fund.
ADDITIONAL INFORMATION
ABOUT THE INVESTMENT ADVISOR
----------------------------
The following information supplements the information in the prospectus
under "Management of the Fund."
The Investment Advisory Agreement between Baxter Financial Corporation
and the Fund was approved by the Fund's shareholders on March 19, 1991 and
became effective on April 1, 1991. The agreement requires Baxter Financial
Corporation to provide the Fund with a continuous review of and
recommendations regarding investment of the Fund's assets. The agreement
continues in force until March 31, 1999, and may be continued thereafter from
year to year if renewed annually by a majority vote of the Board of Directors
of the Fund, or by a vote of the holders of a majority of the outstanding
voting securities of the Fund, but in either case, in order to effect any such
continuance the terms of the agreement must also be approved by a majority
vote, cast in person, of those Fund Directors who are not parties to the
agreement nor interested persons of any such party, as defined by the
Investment Company Act of 1940, at a meeting called for the purpose of
considering the approval of the agreement. The agreement terminates
automatically if it is transferred or assigned by either party, which would
include a change of control of the Advisor, and may be terminated by either
party without penalty on 60 days written notice.
The Fund pays all of its own operating expenses, including: custodian and
transfer agent fees, insurance premiums, registration fees, cost of Directors'
and stockholders' meetings, distribution expenses, legal and accounting fees,
printing, and postage.
During the fiscal years ended November 30, 1997, 1996,and 1995,the Fund
paid investment advisory fees to Baxter Financial Corporation totaling
$776,208, $685,222, and $644,614, respectively.
The current Administration Agreement between the Fund and Baxter
Financial Corporation requires Baxter Financial Corporation to supervise and
provide for the administrative operations of the Fund, including the provision
of office space, utilities, equipment, and clerical, secretarial, and
administrative personnel. The Administration Agreement is subject to approval
by a majority vote of disinterested directors of the Fund. It may be
terminated in the same manner, without penalty, upon 60 days written notice to
Baxter Financial Corporation, and by Baxter Financial Corporation upon 60 days
notice to the Fund.
During the fiscal years ended November 30, 1997, 1996, and 1995, the Fund
paid administration fees totaling $258,736, $228,408, and $214,871,
respectively, to Baxter Financial Corporation. American Data Services, Inc.
provides the Fund with certain accounting services.
<PAGE> 29
PRINCIPAL UNDERWRITER
---------------------
The Fund's shares are offered, without sales charge, on a continuous
basis by Baxter Financial Corporation, the Fund's principal underwriter on a
"best efforts" basis.
DISTRIBUTION
------------
The Board of Directors and stockholders of the Fund approved a Plan of
Distribution in accordance with Rule l2b-1 of the Investment Company Act of
1940 (the "Distribution Plan") which provides for payment by the Fund of
expenses related to the distribution of Fund shares. Under the Distribution
Plan the Fund may make payments in any month in an amount not greater than
1/24th of 1% of the net asset value of the Fund (.5% on an annual basis) based
on the net asset value calculated on the last business day of each month.
Distribution payments may be made by the Fund directly or to Baxter
Financial Corporation for any advertising and promotional expenses incurred
which further the sale and distribution of Fund shares, including the
incremental costs of printing prospectuses, statements of additional
information, annual reports and other periodic reports for distribution to
persons who are not shareholders of the Fund; the costs of preparing and
distributing any supplemental sales literature; costs of radio, television,
newspaper and other advertising; telecommunications expenses, including the
costs of telephones, telephone lines and other communications equipment used
in the sale of Fund shares, the salary of a Marketing Director and related
support personnel, the costs of sales seminars, the costs of maintaining an
office for the sale of the Fund's shares, and to defray the costs of such
other products or services to be used to sell, or further the sale of, Fund
shares, as may be approved by the Board of Directors of the Fund. Payments
under the Distribution Plan to Baxter Financial Corporation are for actual
costs and expenses incurred or to be incurred by Baxter Financial Corporation
in connection with the distribution of Fund shares. Payments to dealers may
include commissions and "trail commissions" or service fees for services in
connection with the sale or retention of Fund shares. Payments may not be
used to defray the overhead expense of Baxter Financial Corporation, interest,
or for the carry forward of expenses which are incurred which would be in
excess of the expense ceiling (.5% annually) in expectation of payment under
the Plan in future years.
During fiscal year ended November 30, 1997, the Fund paid out a total of
$268,479 under the Distribution Plan. Of that amount $258,737 was a service
fee to provide shareholders of the Fund (including persons who are indirect
shareholders through ownership of Philadelphia Fund Investing Programs) with
personal services, including advice and information regarding their share
accounts, such as information regarding account activity and other related
information; the application and use of the prototype retirement plans of the
Fund; a semiannual newsletter; assistance with questions or problems regarding
the Fund's transfer agent; and other information and services, including the
personnel, communications equipment, office space, and supplies to provide
such specified services. The remaining $9,742 paid out by the Fund, was
attributable to marketing salaries.
The Distribution Plan may be continued for one year terms if approved at
least annually by a majority vote, cast in person, of both the Board of
<PAGE> 30
Directors and Disinterested Directors of the Fund, at a meeting called for the
purpose of voting on the Distribution Plan. The Distribution Plan may be
terminated at any time, without penalty, by a vote of a majority of the Fund's
disinterested directors, or by vote of a majority of the outstanding voting
securities of the Fund. The Distribution Plan terminates automatically in the
event of an "assignment" of the Plan as defined in section 2(a)(4) of the
Investment Company Act of 1940. Also, while the Distribution Plan remains in
effect the nomination of the Disinterested Directors of the Fund is committed
to the discretion of such Directors.
The Board of Directors believe there is a reasonable likelihood that the
Distribution Plan will benefit the Fund and its shareholders in light of the
perceived need to increase the sale of Fund shares. The benefits that would
accrue to the Fund by an increase in the level of sales of Fund shares are
that the Fund would have the ability to expand the investment opportunities
available to it with increased cash, certain costs of operation would be
decreased in proportion to the size of the Fund, and the Fund could benefit
from a scaled-down advisory fee rate if the Fund's net assets grow to exceed
$200,000,000 (a decrease from an annual fee of .75 percent to .625 percent of
those assets in excess of $200,000,000). Mr. Baxter, President and sole
stockholder of Baxter Financial Corporation, investment advisor of the Fund
and underwriter, would benefit from increased sales of Fund Shares.
On December 9, 1993 the Board of Directors of the Fund amended the
Distribution Plan to provide, effective January 1, 1994, out of the total
maximum distribution fee payable under the Distribution Plan, which is .5% of
the net assets value of the Fund on an annual basis, that a monthly fee, equal
on an annual basis to .25% of the net asset value of the Fund, will be paid to
BFC for providing shareholders of the Fund, with personal services, including
advice and information regarding their share accounts, the application and use
of the prototype retirement plans of the Fund, a periodic newsletter,
assistance with questions or problems regarding the Fund's transfer agent, and
other information and services designed to retain the loyalty of shareholders
to the Fund and enhance the likelihood that the shareholders will refrain from
redeeming their shares. In connection with the foregoing, BFC is required to
provide personnel, communications equipment and other facilities, including
office space, supplies and the like, and, in its discretion, may make payments
to broker-dealers that are registered under the Securities Act of 1934 and
members of the National Association of Securities Dealers, Inc., for providing
shareholders of the Fund with services that are similar to those described
above.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------------------------------------
Briggs, Bunting & Dougherty, LLP, Philadelphia PA, serve as the
independent certified public accountant of the Fund. As such, that firm
conducts audits of the Fund's annual and semi-annual reports to stockholders
and prepares the Fund's tax returns.
The following information supplements the information in the prospectus
under "Performance."
<PAGE> 31
CALCULATION OF PERFORMANCE DATA
-------------------------------
Following are quotations of the annualized total returns for the one,
five, and ten year periods ended November 30, 1997 using the standardized
method of calculation pursuant to SEC Guidelines:
Average Annual Total Returns
----------------------------
One-Year..................... 27.62%
Five-Year.................... 15.56%
Ten-Year..................... 13.01%
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by
the average annual compounded rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period, less any recurring fees charged to a shareholder
account. The results are annualized and presented accordingly. The
calculation assumes that the maximum sales load is deducted from the initial
$1,000 purchase order and that all dividends and distributions are reinvested
at the net asset value on the reinvestment dates during the period. The
quotation assumes the account was completely
redeemed at the end of each one, five, and ten year period and the deduction
of all applicable charges and fees.
The SEC Guidelines provide that "average annual total return" be computed
according to the following formula:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of 1, 5, or 10 year
periods at the end of the 1, 5, or 10 year periods
(or fractional portion thereof).
Non-standardized performance figures may also be presented in connection
with Fund advertisements. Performance figures calculated in this manner may
exclude charges which might otherwise reduce return figures, including, for
example, the sales performance over periods of time other than the one, five,
and ten year periods. Non-standardized total return figures, when furnished,
shall be accompanied by standardized total return figures which shall reflect
Fund performance over the following time periods: (1) one-year to date and May
1, 1987 to date, the latter being the date on which Mr. Donald H. Baxter
assumed exclusive portfolio management responsibilities pertaining to the
Fund, or (2) one, five, and ten year periods as of the most recent fiscal year
end of the Fund. However, notwithstanding the foregoing, standardized total
<PAGE> 32
return figures for one, five, and ten year periods shall always be presented
in the Fund's Statement of Additional Information.
COMPARISONS AND ADVERTISEMENTS
------------------------------
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, Fund advertisements may discuss total
return as reported by various financial publications, or they may also compare
total return to total return as reported by other investments, indices, and
averages. Without limitation, the following publications, indices, and
averages may be used:
(a) Dow Jones Composite Average or its component averages --an
unmanaged index presently composed of 30 industrial corporation stocks (Dow
Jones Industrial Average), 15 utility company stocks and 20 transportation
company stocks. Comparisons of performance assume reinvestment of dividends.
(b) Standard & Poor's 500 Stock Index -- an unmanaged index
presently composed of 400 industrial stocks, 40 financial stocks, 40 utilities
stocks, and 20 transportation stocks. Comparisons of performance assume
reinvestment of dividends.
(c) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation, and finance
stocks listed on the New York Stock Exchange.
(d) Lipper -- Mutual Fund Performance Analysis and Lipper Mutual
Fund Indices -- measures total return and average current yield for the mutual
fund industry. Ranks individual mutual fund performance over specified time
periods assuming reinvestment of all distributions, exclusive of sales
charges.
(e) Financial publications, including Business Week, Changing
Times, Financial World, Forbes, Fortune, Money Magazine, Wall Street Journal,
Barron's, which rate fund performance over various time periods.
FINANCIAL STATEMENTS
--------------------
The financial statements of the Fund for the fiscal year ended November
30, 1997, including the Portfolio of Investments, Statement of Assets and
Liabilities, Statement of Operations, Statement of Changes in Net Assets,
Notes to Financial Statements, Financial Highlights, and Independent Auditor's
Report, as set forth in the Fund' Annual Report to Stockholders for fiscal
year ended November 30, 1997, is incorporated herein by reference.
<PAGE> 33
PART C
------
Other Information
- -----------------
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial statements:
Portfolio of Investments,
November 30, 1997
Statements of Assets and Liabilities, November 30, 1997
Statement of Operations for the year ended
November 30, 1997
Statement of Changes in Net Assets for the years
ended November 30, 1997 and 1996
Notes to Financial Statements
Independent Auditor's Report
Selected Per Share Data and Ratios Ten Years Ended
11/30/97
The financial statements described above are
contained in Registrant's Annual Report to Stockholders
for the fiscal year ended November 30, 1997, which was
filed with the Commission on January 22, 1998, and are
incorporated herein by reference.
(b) Exhibits:
(1) Certificate of Incorporation.
Incorporated herein by reference to Exhibit 24 (b)(1) to
Post-Effective Amendment No. 74 to the Registration Statement
under the Securities Act of 1933
(2) By-Laws, as amended.
(3) Not applicable.
(4) Specimen of Certificate of Common Stock.
Incorporated herein by reference to Exhibit 24 (b) (4) to
Post-Effective Amendment No. 74 to the Registration Statement
under the Securities Act of 1933
<PAGE> 34
(5) Investment Advisory Agreement.
Incorporated herein by reference to Exhibit 24 (b) (5) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(6) Distribution Agreement with Baxter Financial
Corporation.
Incorporated herein by reference to Exhibit 24 (b) (6) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(7) The former Executive Vice President who is also a
Director, receives a pension of $12,500 annually. The
pension arrangements are not set forth in formal
documents.
(8) Custody Agreement with Star Bank, N.A.
Incorporated herein by reference to Exhibit 24 (b) (8) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(9) Administration Agreement and Amendment to
Administration Agreement.
Incorporated herein by reference to Exhibit 24 (b) (9) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(9a) Transfer Agency and Service Agreement with
American Data Services, Inc.
Incorporated herein by reference to Exhibit 24 (b) (9a) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(9b) Fund Accounting Services Agreement with
American Data Services, Inc.
Incorporated herein by reference to Exhibit 24 (b) (9b) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(10) Opinion of Counsel
Filed with Rule 24f-2 Notice on January 15, 1997.
(11) Consent of Briggs, Bunting & Dougherty, LLP
Independent Certified Public Accountants.
(12) None.
(13) None.
<PAGE> 35
(14) Model retirement plans.
(a) Prototype Profit Sharing/Money Purchase Pension Retirement
Plan *
(b) Amendment to the Profit Sharing/Money Purchase Pension
Retirement Plan *
(c) Custodian Agreement with Application/Adoption Agreements *
(d) Individual Retirement Custodial Account under Sections 408(a)
of the Internal Revenue Code.
* Incorporated herein by reference to Exhibit 24 (b) (14) to
Post-Effective Amendment No. 73 to the Registration
Statement under the Securities Act of 1933
(15) Distribution Plan, as amended
Incorporated herein by reference to Exhibit 24 (b) (15) to
Post-Effective Amendment No. 73 to the Registration Statement
under the Securities Act of 1933
(16) Schedule for Computation of Performance Quotations.
Item 25. Persons Controlled by or Under Common Control with Registrant
- -------- -------------------------------------------------------------
Not applicable; no person either directly or
indirectly is controlled by or under common control
with the registrant.
Item 26. Number of Holders of Securities.
- -------- --------------------------------
As of December 31, 1997:
(1) (2)
Number of Record
Title of Class Holders
-------------- ----------------
Common Stock; $1.00 4487
par value
Item 27. Indemnification.
- -------- ----------------
Section 54 of the Registrant's By-Laws provides for
indemnification, as set forth below.
With respect to the indemnification of the Officers
and Directors of the Corporation:
<PAGE> 36
(a) The Corporation shall indemnify each Officer and
Director made party to a proceeding, by reason of
service in such capacity, to the fullest extent,
and in the manner provided, under section 2-418 of
the Maryland General Corporation law: (i) unless
it is proved that the person seeking
indemnification did not meet the standard of
conduct set forth in subsection (b)(1) of such
section; and (ii) provided, that the Corporation
shall not indemnify any Officer or Director for
any liability to the Corporation or its security
holders arising from the willful misfeasance, bad
faith, gross negligence or reckless disregard of
the duties involved in the conduct of such
person's office.
(b) The provisions of clause (i) of paragraph (a)
herein notwithstanding, the Corporation shall
indemnify each Officer and Director against
reasonable expenses incurred in connection with
the successful defense of any proceeding to which
such Officer or Director is a party by reason of
service in such capacity.
(c) The Corporation, in the manner and to the extent
provided by applicable law, shall advance to each
Officer and Director who is made party to a
proceeding by reason of service in such capacity
the reasonable expenses incurred by such person in
connection therewith.
Item 28. Business and Other Connection of Investment Advisor.
- -------- ----------------------------------------------------
Baxter Financial Corporation is investment advisor to
the Registrant, to Eagle Growth Shares, Inc., and to
institutional and individual investment accounts; and
acts as underwriter of Shares of the Fund and of
Eagle Growth Shares, Inc.
DONALD H. BAXTER - President and Treasurer, Baxter Financial Corporation;
President and Director, Eagle Growth Shares, Inc. and Philadelphia Fund, Inc.;
Director, Great Eastern Bank; Director, Sunol Molecular Corp. (biotechnology);
formerly Managing Member, Crown Capital Asia Limited Liability Company;
formerly Managing Member, Baxter Biotech Ventures Limited Company.
RONALD F. ROHE - Chief Operating Office, Baxter Financial Corporation; Vice
President, Eagle Growth Shares, Inc. and Philadelphia Fund, Inc.; formerly
Registered Representative, Paine Webber Inc.
The address of Baxter Financial Corporation, Eagle Growth Shares, Inc.
and Philadelphia Fund, Inc. is 1200 North Federal Highway, Suite 424, Boca
Raton, FL 33432.
<PAGE> 37
Item 29. Principal Underwriters.
- -------- -----------------------
(a) Baxter Financial Corporation, 1200 North Federal Highway, Suite
424, Boca Raton, FL 33432 serves as principal underwriter of
the Fund. Baxter Financial Corporation also serves as
underwriter of shares of Eagle Growth Shares, Inc. Baxter
Financial Corporation also serves as investment adviser to the
Fund, Eagle Growth Shares, Inc., and to private investment
accounts.
(b) See Item 28.
(c) Not applicable
Item 30. Location for Accounts and Records.
- -------- ----------------------------------
All books and records of the Registrant are maintained and in the
possession of The Fund, at 1200 North Federal Highway, Suite 424,
Boca Raton, Florida 33432, except those which are kept by Star
Bank, N.A., the Fund's custodian, and American Data Services, Inc.,
the Fund's transfer agent, and dividend disbursing agent.
Item 31. Management Services.
- -------- --------------------
NONE.
Item 32. Undertakings.
- -------- -------------
Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of the registrant's latest Annual
Report to Stockholders and without charge.
<PAGE> 38
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Philadelphia Fund, Inc.,
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933, and has duly caused this Post-Effective Amendment to its Registration
Statement (Commission File Nos. 2-10698 and 811-505) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca
Raton, and the State of Florida on the 9th day of March, 1998.
Philadelphia Fund, Inc.
(Registrant)
By:/s/Donald H. Baxter
----------------------------
Donald H. Baxter, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement (File No. 2-10698) has been signed below by the
following persons in the capacity and on the date indicated.
Signature Title Date
- --------- ----- ----
President, Principal
/s/Donald H.Baxter Executive Officer and March 9, 1998
- ---------------------- Director
Donald H. Baxter
/s/Ronald F. Rohe Treasurer, Principal March 9, 1998
- ---------------------- Financial Officer
Ronald F. Rohe
/s/Kenneth W. McArthur Director March 9, 1998
- ----------------------
Kenneth W. McArthur
/s/Donald P. Parson Director March 9, 1998
- ----------------------
Donald P. Parson
Director
- ----------------------
Robert A. Utting
/s/Robert L. Meyer Director March 9, 1998
- ----------------------
Robert L. Meyer
/s/James Keogh Director March 9, 1998
- ----------------------
James Keogh
/s/Thomas J. Flaherty Director March 9, 1998
- ----------------------
Thomas J. Flaherty
<PAGE> 39
EXHIBIT INDEX
-------------
PAGE
----
24(b)(2) By-Laws, as amended. 40
24(b)(11) Consent of Briggs, Bunting & Dougherty, LLP 57
24(b)(14)(d) Individual Retirement Custodial Account under
Sections 408(a) of the Internal Revenue Code. 58
24(b)(16) Schedule for Computation of
Performance Quotations 114
<PAGE> 40
PHILADELPHIA FUND, INC.
BY-LAWS
OFFICES
-------
1. The principal office shall be in the City of Baltimore, County of
Baltimore City, State of Maryland, and the name of the resident agent in
charge thereof is The Corporation Trust Incorporated.
2. The Corporation shall also have an office in Boca Raton, Florida, and
also offices at such other places as the Board of Directors may from time to
time determine as the business of the corporation may require.
STOCKHOLDERS' MEETINGS
----------------------
3. Annual Meetings, if held, shall be held at the office of the Corporation
in Boca Raton, Florida or at such other place in the United States as the
Board of Directors may determine. Meetings of stockholders for any other
purpose may be held at such place within the United States and at such time as
shall be stated in the notice of the meeting, or in a duly executed waiver of
the notice thereof.
4. The Corporation is not required to hold an Annual Meeting in any year in
which the Corporation is not required to convene a meeting to elect directors
under the Investment Company Act of 1940. If the Corporation is required
under the Investment Company Act of 1940 to hold a stockholder meeting to
elect
1
directors, the meeting shall be designated an Annual Meeting of Stockholders
for that year, and shall be held no later than 60 days after the occurrence of
the event requiring the meeting; except if an Order is granted by the
Securities and Exchange Commission exempting the Corporation from the
operation of Section 16(a) of the Investment Company Act of 1940 or a no-
action position of similar effect is obtained, then such Meeting shall be held
no later than 120 days after the occurrence of the event requiring the
Meeting. Otherwise, Annual Meetings shall be held only if called by the Board
of Directors of the Corporation and, if called, shall be held at such time as
provided in Section 5 of these By-Laws.
5. If an Annual Meeting is held for any reason other than to elect
directors pursuant to the requirements of the Investment Company Act of 1940,
such meeting shall be held on the first Wednesday of the fourth month next
succeeding the end of the fiscal year in any year in which an annual meeting
is held, if not a legal holiday, and if a legal holiday, then on the next
secular day following, at 11:00 o'clock A.M., or at such date and time as may
be fixed by the Board of Directors within a period not exceeding 16 days after
or 15 days before the first Wednesday of the fourth month next succeeding the
end of the fiscal year.
6. Written notice of annual meetings shall be served upon or mailed to each
stockholder entitled to vote thereat at such address as appears on the books
of the corporation, not more than ninety but at least ten days prior to a
meeting.
2
<PAGE> 41
7. At least ten days before every election of directors, a complete list of
the stockholders entitled to vote at said election, arranged in alphabetical
order, with the residence of each and the number of voting shares held by
each, shall be prepared by the Secretary. Such list shall be open at the
place where the election is to be held for said ten days, to the examination
of any stockholder, and shall be produced and kept at the time and place of
election during the whole time thereof, and subject to the inspection of any
stockholder who may be present.
8. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Articles of Incorporation,
may be called by the President and shall be called by the President or
Secretary at the request in writing of a majority of the Board of Directors.
Special meetings of stockholders shall be called by the Secretary upon the
written request of the holders of shares entitled to not less than twenty-five
percent of all the votes entitled to be cast at such meeting. Such request
shall state the purpose or purposes of such meeting and the matters proposed
to be acted on thereat. The Secretary shall inform such stockholders of the
reasonably estimated cost of preparing and mailing such notice of the meeting,
and upon payment to the Corporation of such costs the Secretary shall give
notice stating the purpose or purposes of the meeting to all stockholders
entitled to vote at such meeting. No special meeting will be called upon the
request of the holders of shares entitled to cast less than a majority of all
votes entitled to be cast at such meeting, to consider any matter which
3
is substantially the same as a matter voted upon at any special meeting of the
stockholders held during the preceding twelve months.
9. Written notice of a special meeting of stockholders, stating the time
and place and object thereof, shall be served upon or mailed to each
stockholder entitled to vote thereat at such address as appears on the books
of the Corporation, at least ten days before such meeting.
10. Business transacted at all special meetings shall be confined to the
objects stated in the notice.
11. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the stockholders
for the transaction of business except as otherwise provided by statute, by
the Articles of Incorporation or by these By-Laws. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have been transacted
at the meeting as originally notified.
12. When a quorum is present at any meeting, the vote of a majority of all
the votes cast, by stockholders present in person
4
<PAGE> 42
or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the Articles of Incorporation or of these By-Laws, a different
vote is required, in which case such express provision shall govern and
control the decision of such question.
13. At any meeting of the stockholders every stockholder having the right
to vote shall be entitled to vote in person, or by written proxy subscribed by
such stockholder and bearing a date not more than eleven months prior to said
meeting, unless said proxy provides for a longer period. Each stockholder
shall have one vote for each share of stock having voting power registered in
his name on the books of the Corporation, and except where the transfer books
of the Corporation shall have been closed or a date shall have been fixed as a
record date for the determination of its stockholders entitled to vote, no
share of stock shall be voted on at any election of directors which shall have
been transferred on the books of the Corporation with in twenty days next
preceding such election of directors.
DIRECTORS
---------
14. The number of directors which shall constitute the whole Board shall be
such number, not less than three, as the Board of Directors shall, by a
resolution duly adopted by a majority of the directors then in office,
specify. Subject to Section 3 of these Bylaws, the directors shall be elected
at annual meetings of the stockholders, if held, or at special
5
meetings of stockholders called for that purpose, and each director shall be
elected to serve until his successor shall have been elected and shall have
qualified.
15. The directors may hold their meetings and keep the books of the
Corporation within the State of Maryland, or at the office of the Corporation
in Boca Raton, Florida, or at such other places as they may from time to time
determine. Members of the Board of Directors or a committee of the Board may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time.
16. If the office of any director or directors becomes vacant by reason of
death, resignation, retirement, disqualification, removal from office, or
otherwise, a majority of the remaining directors may choose a successor or
successors, who shall hold office for the unexpired term in respect to which
such vacancy occurred or until the next election of directors, provided that
immediately after filling any such vacancy at least two thirds of the
directors then holding office shall have been elected by the stockholders. In
the event that at any time less than a majority of the directors then holding
office were elected by the stockholders, a meeting of the stockholders for the
purpose of electing directors to fill existing vacancies shall be called and
held promptly, and in any event within sixty days of the occurrence of such
condition.
17. The property and business of the Corporation shall be managed by its
Board of Directors which may exercise all such
6
<PAGE> 43
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders, subject, however, to
such limitations as are set forth in the Articles of Incorporation or the By-
Laws of the Corporation.
INVESTMENT RESTRICTIONS
-----------------------
18. The Corporation shall not:
(a) buy securities to exercise control or management;
(b) issue senior securities, purchase securities on margin, make short
sales, borrow or lend money, mortgage, pledge or otherwise encumber, transfer
or assign its assets to secure debts provided, however, the foregoing
restrictions shall not prohibit the Corporation from lending its portfolio
securities, or selling or buying listed put or call options, or from
purchasing debt securities commonly purchased by institutional investors, or
purchasing debt securities under repurchase agreements;
(c) buy or sell real estate, commodities, or commodity contracts,
except that the Corporation may buy and sell financial futures contracts and
options thereon; nor shall it underwrite the securities of any other issuer,
except to the extent the Corporation may be deemed to be a statutory
underwriter in connection with the acquisition of "restricted securities";
(d) invest more than 5% of its gross assets in securities of any one
issuer (except U.S. Government
7
obligations); or more than 25% of its gross assets in the securities of
companies in the same industry;
(e) buy more than 10% of the voting securities of any issuer;
(f) acquire the securities of any other domestic or foreign investment
company or investment fund except in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such
other investment company. This policy shall not prevent the Corporation from
investing in the securities issued by a Real Estate Investment Trust, provided
that such Trust is not permitted to invest in real estate or interests in real
estate other than mortgages or other security interests.
19. (a) No officer or director of the Corporation or of the manager of the
Corporation shall deal for or on behalf of the Corporation with themselves, as
principal or agent, or with any corporation or partnership in which they have
a financial interest.
(i) The prohibition contained in subsection (a) herein shall not
prohibit the following:
(1) The officers and directors of the Corporation from
having a financial interest in the Corporation, underwriter, manager of the
Corporation or any investment adviser to the manager of the Corporation.
<PAGE> 44
(2) The purchase of securities for the portfolio of the
Corporation or sale of securities owned by the Corporation through a security
dealer, any of whose officers,
8
directors, or partners is an officer or director of the Corporation, provided
such transactions are handled in the capacity of the broker only and provided
commissions charged do not exceed customary brokerage charged for such
services.
(3) The employment of legal counsel, registrar, transfer
agent, dividend disbursement agent or custodian or trustee having a partner,
officer or director who is an officer or director of the Corporation, provided
only customary fees are charged for services rendered to or for the benefit of
the Corporation.
(4) The purchase of the portfolio of the Corporation of
securities issued by an issuer having an officer, director or security holder
who is an officer or director of the Corporation or of the manager of the
Corporation.
(b) The officers and directors of the Corporation, the officers and
directors of the underwriter, and the officers and directors of any manager or
investment adviser with which the Corporation has contracted for services may
not take long or short positions in securities issued by the Corporation
provided, however, that such prohibition shall not prevent the following: (1)
the underwriter from purchasing from the Corporation shares issued by the
Corporation, provided that orders to purchase from the Corporation are entered
with the Corporation by the underwriter upon receipt by the underwriter of
purchase orders for shares of the Corporation and provided such purchases are
not in excess of purchase orders received by the underwriter, and (2) the
purchase from the Corporation of shares issued by the
9
Corporation by the officers and directors of the Corporation, underwriter or
investment adviser at the price available to the public at the moment of such
purchase, and (3) the underwriter from purchasing from stockholders shares
issued by the Corporation.
(c) Securities owned by the Corporation and cash representing the
proceeds from shares of securities owned by the Corporation and of shares
issued by the Corporation, payments of principal upon securities owned by the
Corporation or capital distribution in respect of shares owned by the
Corporation shall be held by a custodian which shall be a bank or trust
company having not less than Two Million Dollars ($2,000,000) aggregate
capital, surplus and undivided profits provided such a custodian
can be found ready and willing to act.
(d) Nothing in Section 19(c) of these By-Laws shall be construed to
mean that the Corporation may keep its cash in only one bank. The Corporation
may keep its cash in one or more banks or trust companies located within the
United States so long as such banks or trust companies have sufficient capital
in accordance with the capital requirements set forth in Section 19(c) of
these By-Laws.
<PAGE> 45
(e) Upon the resignation or inability to serve of the custodian the
Board of Directors will use its best efforts to obtain a successor custodian
and will direct that the cash and securities owned by the Corporation be
delivered directly to the successor custodian, and in the event that no
successor custodian can be found, the Board of Directors will submit to the
10
stockholders, before permitting delivery of cash and securities owned by the
Corporation to other than a successor custodian, the question of whether the
Corporation shall be liquidated or shall function without a custodian,
provided that such limitation shall not prevent the termination of any
agreement between the Corporation and a custodian by the vote of a majority of
the stockholders of the Corporation.
(f) The Board of Directors shall submit to the stockholders of the
Corporation and to any federal or state regulatory agency which may so
require, reports, not less often than semiannually, of the operations of the
Corporation, based at least annually upon an audit by independent public
accountants, which reports clearly set forth, in addition to the information
customarily furnished on a balance sheet and profit and loss statement, a
statement of all amounts paid to securities dealers, legal counsel, transfer
agent, disbursing agent, registrar or custodian, where such payments are made
to a firm, corporation, partnership, bank or trust company having a partner,
officer or director who is an officer or director of the Corporation.
COMMITTEES OF DIRECTORS
-----------------------
20. The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of two or more of the directors of the Corporation, which, to the
extent provided in said resolution or resolutions, shall have and may exercise
the powers of the Board of Directors in the management
11
of the business and affairs of the Corporation, except the power to declare
dividends, issue stock or to recommend to stockholders any action requiring
stockholder approval, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors.
COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS
-----------------------------------------------
21. Directors and members of committees, as such, shall not receive any
stated salary for their services, but by resolution of the Board a fixed sum
may be allowed for attendance at each meeting thereof; provided that nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
MEETINGS OF THE BOARD
---------------------
22. Regular meetings of the Board and organizational meetings of each newly
<PAGE> 46
elected Board may be held upon five (5) days' notice to each director either
personally or by mail or by telegram at such time and place either within or
without the State of Maryland as shall from time to time be determined by the
Board.
23. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of two directors.
12
24. At all meetings of the Board one-third of the directors then in office,
but not less than two, shall be necessary and sufficient to constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Articles of Incorporation or by these By-Laws. If a quorum
shall not be present at any meeting of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting, if a written consent
to such action is signed by all members of the Board or of such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or Committee.
NOTICES
-------
25. Whenever under the provisions of the statutes or of the Articles of
Incorporation or of these By-Laws, notice is required to be given to any
director or stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, by depositing the same in
the post office or letter box, in a post-paid sealed wrapper, addressed to
such director or stockholder at such address as appears on the books
13
of the Corporation, and such notice shall be deemed to be given at the time
when the same shall be thus mailed.
26. Whenever any notice is required to be given under the provisions of the
statutes or of the Articles of Incorporation, or of these By-Laws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. Whenever the vote of stockholders at a meeting thereof is required
or permitted to be taken in connection with any corporate action by any
provisions of the statutes or of the Articles of Incorporation or of these By-
Laws, the meeting and vote of stockholders may be dispensed with, if all the
stockholders who would have been entitled to vote upon the action if such
meeting were held, shall consent in writing to such corporate action being
taken.
<PAGE> 47
OFFICERS
--------
27. The officers of the Corporation shall be chosen by the directors and
shall be a president, a secretary and a treasurer. The Board of Directors may
also choose one or more vice presidents, assistant secretaries, and assistant
treasurers. Two or more offices, except that of president and vice-president,
may be held by the same person, provided however that where the offices of
president and secretary are held by the same person, such person shall not
hold any other office, and further provided that no person shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is
14
required by law, the Articles of Incorporation or these By-Laws to be
executed, acknowledged or verified by two or more officers.
28. The Board of Directors shall choose a president from its members, a
secretary and a treasurer, none of whom except the president need be a member
of the Board.
29. The Board may appoint such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
30. The salaries of all officers and agents of the Corporation shall be
fixed by the Board of Directors.
31. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy shall be filled by
the Board of Directors.
32. The Board of Directors may in its discretion require any officer,
employee or agent to give the Corporation a bond in such sum and with such
surety as shall be satisfactory to the Board for the faithful performance of
his duties and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money or other property of whatever kind in his possession or under
his control belonging to the Corporation.
15
THE PRESIDENT
-------------
33. The President shall be the chief executive officer of the Corporation;
he shall preside at all meetings of the stockholders and directors, shall be
ex-officio a member of all standing committees, shall have general and active
management of the business of the Corporation, and shall see that all orders
and resolutions of the Board are carried into effect. The President shall
execute bonds, mortgages and other contracts requiring a seal, under the seal
of the Corporation, except where required or permitted by law to be otherwise
<PAGE> 48
signed and executed and except where the signing and execution thereof shall
be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation.
PRESIDENT PRO TEM
-----------------
34. In the absence or disability of both the President and Vice-President,
the Board may appoint a President Pro Tem.
VICE-PRESIDENTS
---------------
35. The Vice-Presidents in the order designated by the Board of Directors
or in the absence of such designation in the order of their seniority shall,
in the absence or disability of the President, perform the duties and exercise
the powers of the President, and shall perform such other duties as the Board
of Directors shall prescribe.
16
THE SECRETARY AND ASSISTANT SECRETARIES
---------------------------------------
36. The Secretary shall attend all sessions of the Board and all meetings
of the stockholders and record all votes and the minutes of all proceedings in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or President, under whose supervision he shall be. He
shall keep in safe custody the seal of the Corporation and, when authorized by
the Board or by any officer authorized by the By-Laws to execute instruments
under seal, shall affix the same to any instrument requiring it and, when so
affixed, it shall be attested by his signature or by the signature of the
Treasurer or an Assistant Secretary.
37. The Assistant Secretaries in the order designated by the Board of
Directors or in the absence of such designation in the order of their
seniority shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors shall prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
38. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects
17
in the name and to the credit of the Corporation in such depositories as may
be designated by the Board of Directors.
<PAGE> 49
39. He shall disburse the funds of the Corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever
they may require it , an account of all his transactions as Treasurer and of
the financial condition of the Corporation. He shall have alternative
authority of equal scope with the Secretary to affix and attest the seal of
the Corporation. He shall perform such other duties as the Board of Directors
shall prescribe.
40. The Assistant Treasurers in the order of their seniority shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as the Board of
Directors shall prescribe.
ACCOUNTANTS
-----------
41. Annually within thirty days before or after the beginning of the fiscal
year or before an annual meeting of stockholders held in such fiscal year the
Board of Directors shall select an independent public accountant, individual
or firm, to act as accountants for the Corporation. Such selection shall be
submitted for ratification or rejection at the next succeeding annual meeting
of the stockholders. Any vacancy occurring between annual meetings due to the
death or resignation of the accountant may be filled by the Board of
Directors. Any
18
such appointment shall be subject to termination by vote of the holders of a
majority of the outstanding voting securities of the Corporation at any
meeting called for such purpose. In the event that any selection of an
accountant has been rejected by the stockholders or the employment thereof is
terminated in accordance herewith, the vacancy so occurring may be filled by a
vote of the holders of a majority of the outstanding voting securities of the
Corporation either at the meeting at which the rejection or termination
occurred, or if not so filled then at a subsequent meeting which shall be
called for the purpose.
SALE AND REDEMPTION OF SHARES
-----------------------------
42. The shares of the capital stock of the Corporation may be issued to
such persons and at such prices from time to time as the Board of Directors
may determine. Such issuance shall be on a non-assessable basis and, unless
it be pro rata to then existing stockholders as a stock dividend, stock split,
or stock combination, shall be only in exchange for cash or for such other
property as the Board of Directors may deem proper, which shall in no event be
less than the market value as herein defined in subsection (a) hereunder nor
the par value of such shares, whichever shall be greater. All orders for
purchase of shares shall be subject to acceptance by the Corporation or its
duly authorized representative, and the management may in its discretion
reject any order for the purchase of shares except shares purchasable with
cash dividends as hereinafter provided. The value of property received in
exchange for the issuance of
19
<PAGE> 50
shares shall be that resulting from an appraisal of such property by the Board
of Directors in such manner as shall be deemed by it to reflect its fair value
and when so determined in good faith shall be conclusive. Any excess received
by the Corporation upon the issuance and sale of the shares of the capital
stock of the Corporation over the then par value thereof shall be carried on
the books of the Corporation as paid-in surplus.
(a) The market value of a share of the capital stock of the
Corporation shall be determined as soon as possible after the close of the New
York Stock Exchange, on each business day on which the Exchange is open, such
market price to take effect as of the close of the New York Stock Exchange and
shall be applicable to all orders received prior to its effectiveness. The
market value of a share of the capital stock of the Corporation shall be the
net asset value thereof, and each of the aforesaid determinations shall be
made as set forth in subsection (d) hereunder. In addition, in its
discretion, the Board of Directors may make or cause to be made a more
frequent determination of the market value where it deems necessary or to
comply with any applicable provision of federal or state law, which
determination shall become effective at the time established by the Board of
Directors; be based on a calculation as set forth in subsection (d) hereunder;
or on an adjustment of the market value established immediately prior thereto,
such adjustment to be made in such manner as the Board of Directors shall deem
reasonable to reflect any material changes in the fair value of securities and
other assets held by the Corporation and
20
any other material changes in the assets or liabilities of the Corporation and
the number of its outstanding shares which shall have taken place since the
immediately preceding determination of market value.
(b) So long as it has assets legally available to do so and such right
is not suspended under the provisions of the Investment Company Act of 1940,
the Corporation agrees to redeem any shares of its capital stock tendered to
it at the next effective redemption price. In addition, the distributors of
the shares of the Corporation's stock (if any) may, but are not required to,
maintain a bid to repurchase the shares tendered at the next calculated and
effective redemption price. The redemption price as defined in subsection (c)
of this Section 42 shall become effective in accordance with said subsection.
Payment for such shares shall be made within seven days after the date upon
which such shares are properly tendered. If the determination of the
redemption price is postponed beyond the date on which it would normally occur
by reason of a declaration by the Board of Directors suspending determination
of net asset value pursuant to subsection (e) hereunder, the right of the
stockholder to have his shares redeemed by the Corporation shall be similarly
suspended and he may withdraw his certificate or certificates (where
certificates have been issued) or his redemption request (where no certificate
has been issued) from deposit if he so elects, or if he does not so elect, the
redemption price shall be the net asset value determined as of the close of
the New York Stock Exchange, on the first business
21
day after the suspension, upon which such a determination is made. Payment
for such shares may at the option of the Board of Directors, or such officer
or officers as they may duly authorize for the purpose, in their complete
<PAGE> 51
discretion be made in cash, or in kind, or partially in cash and partially in
kind. In case of payment in kind the Board of Directors, or their delegate,
shall have absolute discretion as to what security or securities shall be
distributed in kind and the amount of the same, and the securities shall be
valued for purposes of distribution at the figure at which they were appraised
in computing the net asset value of the Corporation's shares, provided that
any redemption in kind shall be subject to the requirements of Rule l8f-1
under the Investment Company Act of 1940.
Shares so redeemed by the Corporation shall become authorized but unissued
shares and may be resold by the Corporation.
The board of directors, from time to time, by resolution, may direct
that written notice shall be sent to all stockholders owning shares of
aggregate net asset value of $500 or less, stating that as of a date not less
than 90 days from the date of such notice all of the shares owned by such
stockholder shall be redeemed at the net asset value thereof as of such date
provided: (i)no shares of any stockholder shall be redeemed pursuant to such
notice if such stockholder delivers to the Corporation, on a timely basis, a
duly executed written objection or (ii) as of the proposed date of redemption,
the shares owned by such stockholder have an aggregate value exceeding $500.
The
22
delivery and contents of any written notice sent by the Corporation pursuant
to this paragraph shall conform to the applicable requirements of the
Investment Company Act of 1940 and the General Corporation Law of the state of
Maryland.
(c) The redemption price of a share of the capital stock of the
Corporation shall be determined and become effective each time the market
value of a share is determined and becomes effective under the provisions of
subsection (a) of this Section. Such redemption price shall be the net asset
value thereof, determined as set forth in subsection (d) hereunder.
(d) The net asset value of a share of the capital stock of the
Corporation shall be the quotient resulting from dividing the net assets of
the Corporation as of the valuation time by the number of the then outstanding
shares. The net assets of the Corporation shall be calculated as described
below.
(1) The gross assets shall be valued as follows:
(A) Portfolio securities traded on a stock exchange shall be
appraised at the most recent quoted sales price. Securities not traded on the
day of valuation and securities traded over-the-counter shall be valued at the
prevailing quoted bid price; cash and cash equivalents at face value.
Securities for which no quotation is available and "restricted securities"
shall be valued at their fair value as determined by the Board of Directors or
a specially delegated officer in good faith. Interest will be accrued and
dividends will be taken into account on ex dividend dates.
23
(B) All other assets of the Corporation including cash,
prepaid and accrued items, and other receivables, shall be appraised in such
manner as will reflect their fair value.
<PAGE> 52
(2) From the gross assets shall be deducted the liabilities of
the corporation, including accrued items, and other payables, and proper
reserves, if any, as may be determined by the Board of Directors.
(3) The resulting difference shall be the net assets of the
Corporation.
(e) The Board of Directors may declare a suspension of the
determination of net asset value for the whole or any part of any period (i)
during which the New York Stock Exchange is closed other than customary
weekend and holiday closings, (ii) during which trading on the New York Stock
Exchange is restricted, (iii) during which an emergency exists as a result of
which disposal by the Corporation of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Corporation fairly to
determine the value of its net assets, or (iv) during any other period when
the Securities and Exchange Commission (or any succeeding governmental
authority) may for the protection of security holders of the Corporation by
order permit suspension of the right of redemption or postponement of the date
of payment on redemption; provided that applicable rules and regulations of
the Securities and Exchange Commission (or any succeeding governmental
authority) shall govern as to whether the conditions prescribed in (ii), (iii)
or (iv) exist. Such
24
suspension shall take effect at such time as the Board of Directors shall
specify but not later than the close of business on the business day next
following the declaration, and thereafter there shall be no determination of
asset value until the Board of Directors shall declare the suspension at an
end, except that the suspension shall terminate in any event on the first day
on which said Stock Exchange shall have reopened or the period specified in
(ii) or (iii) shall have expired (as to which in the absence of an official
ruling by said Commission or succeeding authority), the determination of the
Board of Directors shall be conclusive.
43. The Corporation may appoint one or more distributors or agents or both
for the sale of the shares of the Corporation, and may allow such person or
persons a commission on the sale of such shares and may enter into such
contract or contracts with such person or persons as the Board of Directors of
this Corporation in its discretion may deem reasonable and proper. Any such
contract or contracts for the sale of the shares of this Corporation may be
made with any person even though such person may be an officer, other
employee, director or stockholder of this Corporation or a corporation,
partnership, trust or association in which any such officer, other employee,
partner, director or stockholder may be the investment adviser and manager
of the Corporation, provided however, the maximum load or commission to be
charged upon the sale of shares issued by the Corporation shall be not greater
than nine percent (9%) of the offering price to the public of such shares. As
used in this
25
Section, "offering price to the public" shall mean the net asset value as
defined in Section 42(d) of these By-Laws plus the load or commission charge
adjusted to the nearest full cent. Nothing herein shall be construed to
prevent the management from disposing of shares of stock of the Corporation at
no sales load or at a sales load within the limitations set forth herein in
connection with the merger, consolidation or acquisition of substantially all
the capital stock or assets of any other investment company at any time.
<PAGE> 53
CERTIFICATES OF STOCK
---------------------
44. The certificates of stock of the Corporation shall be numbered and
shall be entered in the books of the Corporation as they are issued. They
shall exhibit the holder's name and number of shares and shall be signed by
the President or a Vice-President and the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary. If any stock certificate is
signed (1) by a transfer agent or an assistant transfer agent or (2) by a
transfer clerk acting on behalf of the Corporation and a registrar, the
signature of any such officer may be facsimile. Certificates of stock shall
not be issued unless a stockholder so directs by written notice to the
Corporation.
TRANSFERS OF STOCK
------------------
45. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to
26
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
-------------------------
46. The Board of Directors may fix in advance a date, not exceeding sixty
and not less than ten days preceding the date of any meeting of stockholders,
or for the payment of any dividend, or for the allotment of rights, or when
any change or conversion or exchange of capital stock shall go into effect, or
a date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, and any adjournment there of, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital stock,
or to give such consent. If an Annual Meeting is held to elect directors
pursuant to the requirements of the Investment Company Act of 1940, the Board
shall fix the record date within the time required for holding such Annual
Meeting as provided in Section 4 of these By-Laws, but not more than 90 nor
less than 10 days prior to such Meeting. Only such stockholders who shall be
stockholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of
27
any stock on the books of the Corporation after any such record date fixed as
aforesaid.
<PAGE> 54
REGISTERED STOCKHOLDERS
-----------------------
47. The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Maryland.
LOST CERTIFICATE
----------------
48. The Board of Directors may direct a new certificate to be issued in
place of any certificate alleged to have been lost or destroyed upon
furnishing proof of such loss or destruction satisfactory to the Board and
furnishing the Corporation a bond in such sum as the Board may direct as
indemnity against any claim that may be made against the Corporation by reason
of the issue of such new certificate.
DIVIDENDS
---------
49. Dividends upon the capital stock of the Corporation, if any, may be
declared by the Board of Directors at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Articles of Incorporation and the applicable
laws of Maryland.
50. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such
28
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for such other purpose as the directors shall think conducive to
the interest of the Corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created. Whenever dividends are
paid out of sources other than accumulated undistributed net income or net
income for the current or preceding fiscal year, such fact and the basis of
such determination shall be clearly revealed to the stockholders at the time
of payment. For such purpose profits or losses realized upon the sale of
securities or other property shall be excluded from net income.
51. The Board of Directors may provide by resolution that all dividends
disbursed shall be reinvested at net asset value, except that provision shall
be made to distribute any dividend to stockholders in cash if such
stockholders so elect in writing on a form provided by the Corporation or
approved by the Board.
FISCAL YEAR
-----------
52. The fiscal year shall end on the last day in November in each year.
<PAGE> 55
SEAL
----
53. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Maryland." Said seal may be used by
29
causing it or a facsimile thereof to be impressed or affixed or reproduced
otherwise.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
-----------------------------------------
54. With respect to the indemnification of the Officers and Directors of
the Corporation:
(a) The Corporation shall indemnify each Officer and Director made
party to a proceeding, by reason of service in such capacity, to the fullest
extent, and in the manner provided, under section 2-418 of the Maryland
General Corporation law: (i) unless it is proved that the person seeking
indemnification did not meet the standard of conduct set forth in subsection
(b)(1) of such section; and (ii) provided, that the Corporation shall not
indemnify any Officer or Director for any liability to the Corporation or its
security holders arising from the willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office.
(b) The provisions of clause (i) of paragraph (a) herein
notwithstanding, the Corporation shall indemnify each Officer and Director
against reasonable expenses incurred in connection with the successful defense
of any proceeding to which such Officer or Director is a party by reason of
service in such capacity.
(c) The Corporation, in the manner and to the extent provided by
applicable law, shall advance to each Officer and Director who is made party
to a proceeding by reason of service
30
in such capacity the reasonable expenses incurred by such person in connection
therewith.
AMENDMENTS
----------
55. These By-Laws may be altered, amended, or repealed by a vote of a
majority of all the votes cast at a regular meeting of the stockholders at
which a quorum of the outstanding voting securities of the Corporation is
present in person or by proxy, or at any special meeting thereof if notice of
such alteration, amendment, or repeal be contained in the notice of such
meeting.
Section 18 of these By-Laws may be amended only by the vote at the duly
called annual or a special meeting of the stockholders of the Corporation (a)
of 67 per cent or more of the voting securities present at such meeting, if
<PAGE> 56
the holders of more than 50 per cent of the outstanding voting securities of
the Corporation are present or represented by proxy or (b) of more than 50 per
cent of the outstanding voting securities of the Corporation, whichever is the
less.
In addition, these By-Laws, except Section 18, may be altered, amended,
or repealed by a majority vote of the directors in office.
31
<PAGE> 57
Briggs,
Bunting &
Dougherty, LLP
- -----------------------------------------------------------------------------
Certified Public Accountants and Business Advisors
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information (Part B) of this amended Registration Statement on Form
N-1A of our report dated December 19, 1997 (except for Note 6 as to which the
date is December 26, 1997) relating to financial statements of Philadelphia
Fund, Inc. for the year ended November 30, 1997. We also consent to the
reference to our report under the heading "Financial Highlights" in such
amended Registration Statement.
/s/Briggs, Bunting & Dougherty, LLP
Briggs, Bunting & Dougherty, LLP
Philadelphia, Pennsylvania
March 9, 1998
P.O. Box 70, Montville, NJ 07045-0070
Tel: (973) 299-5233, Fax: (973) 299-5234
<PAGE> 58
PHILADELPHIA FUND
EAGLE GROWTH SHARES
INDIVIDUAL
[LOGO] RETIREMENT ACCOUNT [LOGO]
PHILADELPHIA FUND, INC. EAGLE GROWTH SHARES, INC.
C/O STAR BANK, N.A. ACCOUNT APPLICATION C/O STAR BANK, N.A.
P.O. BOX 640110 P.O. BOX 640115
CINCINNATI, OH 45264-0110 CINCINNATI, OH 45264-0115
The undersigned (hereinafter called the "Depositor") hereby establishes a
(check one) [] EAGLE GROWTH SHARES, INC. [] PHILADELPHIA FUND, INC.
Individual Retirement Custodial Account (hereinafter called the "Account") in
accordance with the terms of the applicable Individual Retirement Custodial
Account agreement, as described below, including Appendix A thereto, the terms
of which are incorporated herein by reference, and certifies the accuracy of
the following information in each case effective upon acceptance by STAR BANK,
N.A. as Custodian of the Account.
Name of Depositor____________________________Telephone #_____________________
Address______________________________________________________________________
City_________________________________________State____________Zip____________
Social Security Number:______________________Birthdate:______________________
1. INVESTMENT
Check appropriate type of account and fill in dollar amount of initial
contribution.
______________________________________________________________________________
| Regular IRA | | Roth IRA | | Regular
__| ----------- |__| -------- |__| IRA ROLLOVER
| | ------------
| |
$____for____ tax year | $____for____ tax year | $____(all or a portion
(if split between two | (if split between two | of an eligible rollover
years, indicate | years, indicate | distribution within 60
specific amount for | specific amount for | days of receipt), per
each year), per IRS | each year), per IRS | IRS Form 5305-A
Form 5305-A (rev. | Form 5305-RA | (rev. January 1998).
January 1998). | (January 1998). |
| Maximum $2,000 per tax |
| year. | Check One: This rollover
__ Check here if | | is from a qualified plan
Payroll deduction. | | ___(now or previously);
Maximum $2,000 per | | a SEP-IRA___; a
tax year. | | deductible / nondeduct-
| | ible IRA___.
_________________________|_________________________|__________________________
<PAGE> 59
______________________________________________________________________________
| | | | |
__| SEP-IRA |__| SIMPLE-IRA |__| TRANSFER
------- | ---------- | from existing
| | Regular IRA
Employer $____(Employer | $____, per IRS Form | -------------
contribution up to the | 5305-SA (December 1996) |
lesser of 15% of the | | $____, per IRS Form
employee's compensation | ______________________ | 5305-A (rev. January
or $30,000), per IRS | Employer Name | 1998). (Include copy of
Form 5305-A (rev. | | transfer instructions
January 1998). | Do not file IRS Form | to Current Custodian or
| 5304-SIMPLE or Form | insurance company. STAR
_______________________ | 5305-SIMPLE with the | BANK, N.A. will issue an
Employer Name | IRS or Star Bank, N.A. | acceptance letter to the
| These forms are | addressee of your
Personal $____ for tax | completed and retained | transfer instructions).
year___(if split between| by the employer. |
two years, indicate | | Check One: This transfer
specific amount for each| | is from an IRA which
year). Maximum $2,000 | | houses a preexisting
per tax year. Do not | | qualified plan
file IRS Form 5305-SEP | | distribution___; a
or 5305A-SEP with the | | SEP-IRA___;a deductible/
IRS or STAR BANK, N.A. | | nondeductible IRA___.
These forms are | |
completed and retained | |
by employer. | |
_________________________|_________________________|__________________________
| | |
__| TRANSFER from existing |__| TRANSFER from existing
Roth-IRA | SIMPLE-IRA
-------- | ----------
|
$____, per IRS Form 5305-RA | $____, per IRS Form 5305-SA
(January 1998). | (December 1996).
______________________________________|_______________________________________
Please complete both sides of this form
2. DESIGNATION OF BENEFICIARY
Primary Beneficiary: [ ]Multiple or [ ]Contingent Beneficiary
(check one):
Name:____________________________ Name:____________________________
Social Security No.______________ Social Security No.______________
Date of Birth____________________ Date of Birth____________________
Address:_________________________ Address:_________________________
Relationship_____________________ Relationship_____________________
Allocation Percentage:___________ Allocation Percentage:___________
<PAGE> 60
Complete the allocation percentage amount only if designating multiple primary
beneficiaries.
3. I hereby acknowledge receipt of the current Prospectus(es) of the fund(s)
and of the Disclosure Statement and Custodial Agreement provided to me with
this application which sets forth the Custodian's current fees. I
understand that the Individual Custodial Account Agreement Application will
not become effective until accepted by the Custodian.
Dated:_________________19____ __________________________
(Signature)
Accepted: Star Bank , N.A.
----------------
By:__________________________ Date:_____________________
4. INVESTMENT DEALER/ADVISOR (if any)
Name and Number of Dealer__________________________________________
Name and Number of Advisor_________________________________________
Address____________________________________________________________
Authorized Signature of Dealer_____________________________________
5. GENERAL INSTRUCTIONS
Mail the following to Star Bank, N.A. at the appropriate above stated
address:
- Signed application and
- Initial contribution check payable to STAR BANK, N.A., CUSTODIAN and/or
Transfer Direction.
Complete and sign the 5305-A, 5305-SA, or 5305-RA form and keep for your
records. Do not file the 5305-A, 5305-SA, or 5305-RA with the IRS or Star
Bank, N.A.
Retain all other documentation for your records.
6. CUSTODIAL FEE SCHEDULE
$15.00 Annual Maintenance Fee Per Account
(Complete detail of all IRA plan fees are located under Section XIV. A. of
the Disclosure Statement.)
Annual maintenance fees and disbursement fees may not be paid in advance.
They are deducted from the account assets when appropriate.
This application will be maintained on file by Star Bank, N.A. You may wish
to make a photocopy for your records.
<PAGE> 61
PHILADELPHIA FUND, INC.
EAGLE GROWTH SHARES, INC.
IRA TRANSFER / DIRECT
ROLLOVER FORM
COMPLETE this form to transfer funds from an existing IRA, 403(b) account or
annuity, or qualified retirement plan to an
[ ] Eagle Growth Shares, Inc. or a [ ] Philadelphia Fund, Inc. (check one)
------------------------- -----------------------
Individual Retirement Account
Part I (To be completed by shareholder and mailed to Star Bank, N.A.)
- ----------------------------------------------------------------------
If you are opening a new account, enclose an EAGLE GROWTH SHARES, INC. /
Philadelphia Fund, Inc. IRA application.
Present Custodian/Trustee/Carrier_________________________Phone_____________
Mutual Fund(if applicable)________________________________Acct.#____________
Address_____________________________________________________________________
Street City State Zip Code
To whom it may concern:
I have established an IRA account under the EAGLE GROWTH SHARES, INC. /
Philadelphia Fund, Inc. Individual Retirement Plan. Please transfer the
assets (cash only) indicated below to Star Bank, N.A. as custodian.
[ ] All Assets [ ] $____________only [ ] At maturity date of__________
[ ] Immediately (I am aware of any penalties which may
occur.)
TO: STAR BANK, N.A.
---------------
The assets received are to be invested in [check one only]
[ ] My new EAGLE GROWTH SHARES, INC./Philadelphia Fund, Inc. regular IRA
account (IRA application enclosed)
[ ] My new EAGLE GROWTH SHARES, INC./Philadelphia Fund, Inc. SIMPLE IRA
account (IRA application enclosed)
[ ] My new EAGLE GROWTH SHARES, INC./Philadelphia Fund, Inc. Roth IRA account
(IRA application enclosed)
[ ] My existing EAGLE GROWTH SHARES, INC./Philadelphia Fund, Inc. regular IRA
Account No.___________________
[ ] My existing EAGLE GROWTH SHARES, INC./Philadelphia Fund, Inc. SIMPLE IRA
Account No.___________________
[ ] My existing EAGLE GROWTH SHARES, INC./Philadelphia Fund, Inc. Roth IRA
Account No.___________________
<PAGE> 62
_______________________________________________ ________________________
Investor's Name Daytime Phone
___________________________________________________________________________
Street City State Zip Code
Investor's Signature ______________________________________________________
Important: Your resigning trustee or custodian may require your signature
to be guaranteed. Call them for requirements.
Signature Guarantor: ____________________________ _______________________
Name of Bank Signature of Officer &
Title
Please complete both sides of this form
Part II (To be completed by present custodian or employer)
- ----------------------------------------------------------
Complete only if the individual has reached his/her required beginning date -
April 1 following his/her 70 1/2 year.
Present Custodian/Trustee/Carrier or Employer:
If the individual has reached his/her required beginning date, please complete
the following information regarding his/her minimum distribution election of
payment.
Life expectancy election of individual: [ ] Single Life [ ] Joint Life
Expectancy Expectancy
Life expectancy of Individual: [ ] is [ ] is not being
recalculated
_________________________________ ____/____/____ [ ] Spouse [ ] Nonspouse
Name of Designated Beneficiary Date of Birth
If Spouse beneficiary, life expectancy [ ] is [ ] is not being recalculated
- ------------------------------------------------------------------------------
Part III (Acceptance by Star Bank, N.A.)
- -----------------------------------------
To the above named Custodian/Trustee/Carrier:
STAR BANK, N.A. accepts the transfer described in Part I, above. Please
forward a check, as directed by the investor, payable to the appropriate fund
(Philadelphia Fund or Eagle Growth Shares):
FBO________________________________________________________________________
(Please print or type full name)
<PAGE> 63
Account No._______________________(Please include this number on your check.)
Mail check and accompanying documents, if any, to:
EAGLE GROWTH SHARES, INC. PHILADELPHIA FUND, INC.
C/O STAR BANK, N.A. C/O STAR BANK, N.A.
P.O. BOX 640115 or P.O. BOX 640110
CINCINNATI, OH 45264-0115 CINCINNATI, OH 45264-0110
Star Bank, N.A.
- ---------------
Authorized Signature________________________________ Title___________________
Phone_______________________________________________ Date____________________
<PAGE> 64
EAGLE GROWTH SHARES, INC.
PHILADELPHIA FUND, INC.
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
--------------------------
I. INTRODUCTION
------------
This Disclosure Statement is distributed to you in accordance with Internal
Revenue Service regulations and is intended to provide a concise explanation
of the rules applicable to your individual retirement account (IRA). WE URGE
YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY. Due to the unfavorable tax
consequences which may result from the improper establishment of an IRA, you
may wish to confer with your attorney or other qualified tax adviser if you
would like specific advice regarding your IRA. In addition, further
information can be obtained from any district office of the Internal Revenue
Service.
There have been several changes to the rules governing IRAs enacted by the
Congress in recent years. The following is a general discussion of the
statutory requirements and tax rules governing IRAs for 1997 and beyond.
Additional information can be found in I.R.S. Publication 590, "Individual
Retirement Arrangements."
The Taxpayer Relief Act of 1997, which was signed by the President on August
5, 1997, introduced a new form of individual retirement account: the Roth
IRA. Starting in 1998, any individual whose adjusted gross income does not
exceed a certain level may make contributions to a Roth IRA of up to $2,000 or
his or her compensation for the year, whichever is less. Although
contributions to Roth IRAs are never tax deductible, if certain holding
requirements are satisfied, neither the contributions nor the earnings on the
contributions will be taxed when distributed from the Roth IRA. Roth IRAs are
discussed in detail in Section IX, below.
II. REVOCATION PROCEDURE.
---------------------
You may revoke your IRA at any time within seven (7) days after the later of
the date you receive this Disclosure Statement or the day you established this
IRA. For purposes of revocation, it will be assumed that you received the
Disclosure Statement no later than the date of your check with which you
opened your IRA. If you should choose to revoke, the entire amount of your
contribution will be refunded without adjustment for administrative expenses
or any other amount.
In order to revoke your IRA, you must mail or deliver a written notice of
revocation to: Philadelphia Fund, Inc., c/o Star Bank, N.A., P.O. Box 640110,
Cincinnati, OH 45264-0110, or Eagle Growth Fund, Inc., c/o Star Bank, N.A.,
P.O. Box 640115, Cincinnati, OH 45264-0115. If mailed, the revocation notice
shall be considered mailed on the date of postmark (or if sent by certified or
registered mail, the date of certification or registration) if it is deposited
in the mail in the United States in an envelope or other appropriate wrapper,
first class postage prepaid, properly addressed. While oral revocations are
<PAGE> 65
not accepted, you may contact Baxter Financial Corporation at 1-800-749-9933
if you have any questions with respect to this procedure.
III. INDIVIDUAL RETIREMENT ACCOUNT REQUIREMENTS.
-------------------------------------------
An Individual Retirement Account is a trust created or organized in the
United States for the exclusive benefit of an individual or his or her
beneficiaries. The written instrument creating the trust must satisfy the
following requirements:
1. Except in the case of rollover contributions or contributions to a
spousal IRA (explained below), contributions must be in cash and may not
exceed $2,000 on behalf of any individual for the taxable year;
2. The trustee must be a bank or such other person as approved by the
Secretary of the Treasury;
3. No part of the trust funds may be invested in life insurance contracts;
4. The interest of an individual in an IRA must be nonforfeitable;
5. The assets of the trust may not be commingled with other property except
in a common trust fund or common investment fund; and
6. The entire interest of an individual in an IRA must be distributed in
accordance with certain rules (explained below).
Your Eagle Growth Shares, Inc. -- Philadelphia Fund, Inc. IRA is a custodial
account which is treated as a trust for these purposes.
IV. ELIGIBILITY
-----------
You are eligible to make annual contributions to an IRA for any year in
which you work and receive compensation for such work, provided that you have
not attained age 70-1/2 in the year in question. If eligible, both a husband
and wife may each have their own separate IRA. Starting in 1997, however,
even a "non-working" spouse will be permitted to establish an IRA for himself
or herself under certain conditions (see Section V, below). Even if you are
not eligible to make annual contributions, you may, if you meet certain
requirements, establish an IRA for the purpose of transferring assets to it
from another individual retirement account, individual retirement annuity or a
qualified retirement plan maintained by your employer.
"Compensation" includes wages, salaries, professional fees, and other
amounts received for personal services, including such items as commissions
paid salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips and bonuses. Compensation
also includes earned income of a self-employed person and any amount
includable in an individual's income as alimony or separate maintenance
payments. Compensation does not include amounts derived from or received
as earnings or profits from property, such as interest, dividends and rent, or
any amount not includable in gross income.
<PAGE> 66
You may have an IRA whether or not you are covered by Social Security or are
a participant in any other retirement plan. However, if you or your spouse
are an active participant in another retirement plan, the amount of your
annual contribution which is tax deductible may be reduced. Please refer to
Section V for assistance in determining the tax deductible amount of
your annual contribution.
V. ANNUAL CONTRIBUTIONS
--------------------
Note: THE DISCUSSION IN THIS SECTION V PERTAINS EXCLUSIVELY TO
----- IRAs OTHER THAN ROTH IRAs. SEE SECTION IX, BELOW, FOR A
DISCUSSION OF THE CONTRIBUTION RULES FOR ROTH IRAs.
A. Deductible Contributions
------------------------
You may make an annual contribution to your IRA up to a maximum of $2,000 or
100% of your compensation, whichever is less, less the amount (if any)
contributed to a Roth IRA. If you are not an "active participant" in an
employer maintained retirement plan at any time during the year, the entire
amount of your contribution will be tax deductible. If you are an active
participant in an employer maintained retirement plan, but you have adjusted
gross income (AGI) below the "applicable dollar amount" your entire
contribution will be tax deductible. However, if you are an active
participant and your AGI is above the applicable dollar amount, the amount of
your contribution which is tax deductible may be reduced or eliminated.
In order to be deductible for a taxable year, annual contributions must be
made not later than the due date (without regard to extensions) of your tax
return for the year for which the deduction is claimed. Annual contributions
may be made in one or more payments, by check or money order payable to Star
Bank, N.A., Custodian. The minimum payment which may be made is the minimum
amount required for investment in the fund shares which you select for
investment of your contributions. The money earned on your investment will be
automatically reinvested in the fund shares on which the money was earned, and
is not taxable to you until the year in which you actually receive it.
2
You are an "active participant" for a year if you are covered by any of the
following retirement plans:
* A qualified plan described in Section 401(a) of the Internal Revenue
Code (hereinafter the "Code");
* An annuity plan described in Section 403(a) of the Code;
* A plan established for its employees by the United States, by a state
or local government or by an agency or instrumentality thereof (other
than an eligible deferred compensation plan as defined in Section
457(b) of the Code);
* An annuity contract or custodial account described in Section 403(b)
of the Code;
* A simplified employee pension (SEP) described in Section 408(k) of
the Code;
<PAGE> 67
* A trust described in Section 501(c)(18) of the Code; and
* Starting in 1997, a simple retirement account (SIMPLE) described in
Section 408(p) of the Code.
You are covered by a retirement plan for a year if your employer or union
has a retirement plan under which money is added to your account or you are
eligible to earn retirement credits. You are an active participant for a year
even if you are not yet vested in your retirement benefit. Also, if you make
required contributions or voluntary employee contributions to a retirement
plan, you are an active participant. In certain plans, you may be an active
participant even if you were only with the employer for part of the year.
You are not considered an active participant if you are covered by a plan
only because of your service as (1) an Armed Forces Reservist, for less than
90 days of active service; or (2) a volunteer fire fighter covered for fire
fighting service by a government plan. Of course, if you are covered in any
other plan, these exceptions do not apply.
If you would like specific advice as to whether you are an active
participant in a retirement plan, you should consult with your attorney or
other qualified tax advisor.
If you are married and file a joint tax return and either you or your spouse
are an active participant, you must calculate your combined adjusted gross
income (AGI) for the year to determine whether your IRA contribution will be
deductible. Your tax return will show you how to calculate your AGI for this
purpose. If you are at or below a certain AGI level, called the "Threshold
Level," you are treated as if you were not an active participant and can make
a deductible contribution under the same rules as a person who is not an
active participant. The Threshold Levels for married persons filing a joint
tax return for 1997 and subsequent years are as follows:
Taxable Year AGI Threshold Level
------------ -------------------
1997 $40,000
1998 $50,000
1999 $51,000
2000 $52,000
2001 $53,000
2002 $54,000
2003 $60,000
2004 $65,000
2005 $70,000
2006 $75,000
2007 and thereafter $80,000
However, starting in 1998, if a married couple files a joint income tax return
and if one spouse is an active participant in a retirement plan but the other
spouse is not, the amount of the IRA contribution made by the spouse who is
not an active participant will not be limited provided the couple's combined
AGI is not more than $150,000.
3
If you are single and you are an active participant, your AGI Threshold
Levels for 1997 and subsequent years are as follows:
<PAGE> 68
Taxable Year AGI Threshold Level
------------ -------------------
1997 $25,000
1998 $30,000
1999 $31,000
2000 $32,000
2001 $33,000
2002 $34,000
2003 $40,000
2004 $45,000
2005 and thereafter $50,000
If you are married but file a separate tax return and you or your spouse are
an active participant in a retirement plan, the Threshold Level is $0.
(However, if you and your spouse file separate tax returns and live apart at
all times during the year, you will be treated as a single individual for
purposes of the "active participation" rules.)
If your AGI is less than $10,000 above your Threshold Level ($20,000 in the
case of a joint tax return, starting in 2007), you will still be able to make
a deductible contribution, but it will be limited in amount. The amount by
which your AGI exceeds your Threshold Level (AGI minus Threshold Level) is
called your Excess AGI. The maximum allowable deduction is $2,000. You may
calculate your deduction limit by using the following formula:
$10,000 - Excess AGI x Maximum Allowable = Deduction
--------------------- Deduction Limit
$10,000
You must round up the result to the next highest $10 level (the next highest
number which ends in 0). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above $0, your
deduction limit is $200. Your deduction limit cannot, in any event, exceed
100% of your compensation.
The following examples illustrate the above formula.
EXAMPLE ONE: Bob, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. Bob has contributed $2,000
to his IRA for 1997. Bob will calculate the deductible portion of his IRA
contribution as follows:
1. Bob must first determine the amount of his Excess AGI. Excess AGI is
equal to AGI minus Threshold Level. Since Bob is a single individual his
Threshold Level is $25,000. Thus, his Excess AGI is $3,000 ($28,000 -
$25,000).
2. Bob will now determine his deduction limit as follows:
$10,000 - $3,000
---------------- x $2,000 = $1,400
$10,000
EXAMPLE TWO: For 1998, Bob's AGI is $32,000, he is still an active
participant in his employer's retirement plan, and he contributes $2,000 to
his IRA. Bob will calculate the deductible portion of his IRA contribution as
follows:
<PAGE> 69
1. Bob's Excess AGI is $2,000 ($32,000 - $30,000).
2. Bob's deduction limit is $1,600, determined as follows:
$10,000 - $2,000
---------------- x $2,000 = $1,600
$10,000
4
EXAMPLE THREE: John and Mary are a married couple who file a joint income
tax return and have a combined AGI of $45,000 for 1997. John is not covered
by any other retirement plan. Mary is an active participant in her employer's
retirement plan. John and Mary have each contributed $2,000 to their separate
IRAs. John and Mary will calculate the deductible portion of their IRA
contributions as follows:
1. John and Mary must first determine the amount of their Excess AGI. Since
they are a married couple filing a joint return their Threshold Level is
$40,000. Thus, their Excess AGI is $5,000 ($45,000 - $40,000).
2. John and Mary will each determine their individual deduction limit as
follows:
$10,000 - $5,000
---------------- x $2,000 = $1,000
$10,000
EXAMPLE FOUR: For 1998, John and Mary file a joint income tax return and
have a combined AGI of $52,000. John is not covered by any other retirement
plan, and Mary is still an active participant in her employer's retirement
plan. John and Mary each contributes $2,000 to a separate IRA. John and Mary
must calculate the deductible portions of their IRA contributions separately.
1. Because their combined AGI is not more than $150,000, the fact that Mary
is an active participant in her employer's retirement plan has no effect on
John's IRA contribution. Therefore, John may deduct his contribution of
$2,000 in full.
2. The portion of Mary's contribution which is deductible is $1,600,
determined as follows:
$10,000 - $2,000
---------------- x $2,000 = $1,600
$10,000
B. Non-Deductible Contributions
----------------------------
Even if your deduction limit is less than $2,000, you may still contribute
to an IRA up to the lesser of 100% of your compensation or $2,000. The amount
of your contribution which is not deductible will be a treated as a
nondeductible contribution to your IRA. You may also choose to treat a
contribution as nondeductible even if you could have deducted part or all of
the contribution. Interest or other earnings on your IRA contribution,
whether from deductible or nondeductible contributions, will not be taxed
until distributed to you from the IRA.
<PAGE> 70
You may make your IRA contribution at any time during the year, without
having to designate at such time how much of your contribution will be
deductible. When you complete your tax return, you must then determine how
much of your contribution is deductible. If you determine that all or a
portion of your contribution is nondeductible, you must report such amount to
the IRS as part of your tax return for the year. If you overstate the amount
of the nondeductible contribution, you may be liable for a Federal tax penalty
of $100 per overstatement.
C. Spousal IRA Contributions
-------------------------
Starting in 1997, most spouses will be able to establish and contribute to
their own IRAs, even if they do not have compensation. If you and your spouse
file a joint income tax return, you may each be able to contribute up to
$2,000 to your separate IRAs, even if one of you has less than $2,000 in
compensation for the year. The spouse with the least compensation will be
able to make an IRA contribution equal to the lesser of the following amounts:
* $2,000, or
* the sum of both spouses' compensation for the year, minus the
portion of the other spouse's IRA contribution for the year (if
any) that is deductible for tax purposes.
5
D. Excess Contributions
--------------------
If you make a contribution to your IRA in excess of the applicable
deductible and nondeductible limits, such amount is an "excess contribution."
A nondeductible excise tax is imposed upon you equal to 6% of such excess
contribution for the year in which the excess contribution is made, and also
for each following year until it is eliminated. However, the amount of the
tax for any year cannot exceed 6% of the value of your IRA as of the close of
the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the date for filing your federal tax return
for the year for which the excess contribution is made. The earnings
attributable to the excess contribution must also be withdrawn and must be
included in your gross income in the year for which the excess contribution
was made. A timely withdrawal of the excess contributions will permit you to
avoid not only the 6% excise tax but also the 10% penalty tax on premature
distributions. A withdrawal of an excess contribution after the tax return
filing date will avoid the 10% penalty tax on premature distributions,
provided that the total contribution for the year did not exceed the maximum
amount which you are allowed to contribute for 1997 and later years, and no
deduction was allowed for the excess contribution.
As an alternative to withdrawing such excess contribution, you may eliminate
such excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise
tax until the excess contribution is completely eliminated.
<PAGE> 71
E. SEP-IRA Contributions
---------------------
If your IRA is part of a Simplified Employee Pension (SEP-IRA) established
by your employer, then the maximum amount which may be contributed on your
behalf may be greater than those described previously. Your employer would be
permitted to contribute to your IRA the lesser of 15% of your compensation
for the year or $30,000.00. In addition, your employer may establish a type
of SEP-IRA which would allow you to make elective contributions to your IRA of
up to $7,000 in each calendar year (subject to cost-of-living adjustments for
years after 1987), subject to the same 15% and $30,000 limits; however, this
type of SEP-IRA may not be established after 1996.
Amounts contributed to a SEP-IRA within the above limits are excluded from
your income for Federal income tax purposes. Amounts distributed to you from
the SEP-IRA are taxed in the same manner as distributions from other IRAs.
If you (or your spouse) are a participant in a SEP-IRA, the amount of your
regular IRA contributions which is tax deductible may be reduced or
eliminated. (See Section V.A., above).
If you are a participant in a SEP-IRA your employer is required to give you
a copy of the SEP-IRA documents and certain explanatory materials concerning
SEP-IRAs, and to inform you each year of the amounts (if any) contributed on
your behalf. The specific tax rules and limitations governing SEP-IRAs are
described in the Internal Revenue Service Model SEP-IRA documents: Form 5305-
SEP ("Simplified Employee Pension-Individual Retirement Accounts Contribution
Agreement") (Rev. January 1997); and Form 5305A-SEP ("Salary Reduction and
Other Elective Simplified Employee Pension-Individual Retirement Accounts
Contribution Agreement") (Rev. April 1996).
F. SIMPLE Retirement Account Contributions.
----------------------------------------
A SIMPLE Retirement Account ("SIMPLE-IRA") is a type of IRA established
under a salary deferral plan that can be established by an employer with 100
or fewer employees. Each eligible employee selects a percentage of his or her
salary to contribute to the SIMPLE-IRA pursuant to the plan. The amount is
automatically deducted from the employee's paycheck and deposited into his or
her SIMPLE-IRA.
An employee may defer up to 100% of his or her salary to a SIMPLE-IRA, up to
$6,000 in any year. (This limit will be adjusted in future years to reflect
cost-of-living adjustments, in increments of $500.) All employees who have
had at least two years of service during which they earned at least $5,000,
and who are expected to earn at least $5,000 in the current year, must be
permitted to participate in the employer's SIMPLE-IRA plan, although the
employer may establish more liberal eligibility requirements. The employer
must make dollar-for-dollar matching contributions for each eligible employee
of up to 3% of the employee's compensation for the year. (This matching
contribution requirement may be reduced below 3% in any two out of five years,
but may not be reduced below 1%.) Alternatively, the employer must make
6
a nonelective contribution of 2% of compensation for each eligible employee
who have earned at least $5,000 in compensation for the current year, whether
or not the employee makes salary deferral contributions.
<PAGE> 72
If you are eligible to participate in a SIMPLE-IRA plan, your employer is
required to give you notice of your right to participate and certain other
information concerning the plan.
VI. ROLLOVER CONTRIBUTIONS
----------------------
Note: THE DISCUSSION IN THIS SECTION V PERTAINS EXCLUSIVELY TO IRAs
----- OTHER THAN ROTH IRAs. SEE SECTION IX, BELOW, FOR A DISCUSSION
OF THE ROLLOVER RULES FOR ROTH IRAs.
A rollover is a tax-free movement of cash or other assets from one
retirement program to another. There are two types of rollover contributions
to an IRA. The first type involves a distribution of assets from one IRA
followed by a contribution of those assets to another IRA. For purposes of
this Section VI the term "IRA" includes individual retirement accounts,
individual retirement annuities and individual retirement bonds. The second
type involves the distribution of assets from a tax-sheltered annuity or
custodial account or from a qualified retirement plan and contribution of
those assets to an IRA. For purposes of this Section VI, a qualified
retirement plan is a qualified pension, profit-sharing, stock bonus, or
annuity plan maintained by your employer.
A rollover contribution is neither includible in your income nor deductible.
Unlike annual contributions, rollover contributions are not subject to the
yearly $2,000 or 100% of compensation limitation. A rollover contribution
will be held in a separate IRA established on your behalf known as a "Rollover
Account."
A. IRA to IRA Rollover
-------------------
In order to qualify for tax-free treatment you must make a rollover
contribution to a second IRA within 60 days after you receive the distribution
from the first IRA. In addition, if the assets distributed from your IRA are
property other than cash, the identical property must be contributed to your
new IRA in order to qualify as a rollover contribution. Amounts not rolled
over within the 60 day period do not qualify for tax-free rollover treatment
and must be treated as a taxable distribution. Amounts not rolled over may
also be subject to the 10% penalty tax on premature distributions.
An IRA may only be rolled over once each year. The one-year period begins
on the date that you receive the IRA distribution and not on the date it is
rolled over into another IRA. A rollover contribution should not be confused
with a transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee. The direct transfer of assets from one
trustee (or custodian) to another is not considered to be a rollover and,
consequently, is not affected by the limitation of one rollover each year.
In order to qualify for tax-free treatment, it is not necessary to roll over
the entire amount of the distribution which you receive. It is permissible
for you to roll over a portion of the distribution and to keep the remainder.
However, the amount you retain will be taxed in the year of receipt. In
addition, the amount retained may be subject to the 10% tax on premature
distributions.
<PAGE> 73
B. Retirement Plan to IRA Rollover
-------------------------------
You will be eligible for tax-free rollover treatment when you receive an
"Eligible Rollover Distribution" from an employer-sponsored tax-qualified
retirement plan or tax-sheltered annuity or custodial account. Any
distribution from an employer-sponsored tax-qualified retirement plan or
tax-sheltered annuity or custodial account will qualify as an Eligible
Rollover Distribution unless it is one of the following:
* A distribution which is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the employee or the lives (or joint life expectancies)
of the employee and the employee's designated beneficiary, or for a
specified period of ten years or more.
7
* The portion of a distribution representing the minimum annual
distribution required after an employee attains age 70 1/2 or dies.
* The non-taxable portion of a distribution representing after-tax
contributions to the plan.
* Certain corrective distributions of elective deferrals, after-tax
contributions and matching contributions.
If an Eligible Rollover Distribution is paid to you, it will be subject to
mandatory 20% federal income tax withholding. You cannot elect to waive this
withholding tax, even if you intend to take advantage of tax-free rollover
treatment. If cash is available from some other source equal to the amount
withheld and you transfer that amount plus the net amount of the distribution
to your IRA within 60 days of the distribution, no portion of the Eligible
Rollover Distribution will be taxable to you. You may be entitled to a full
refund of the 20% withheld, depending upon your overall tax situation for the
year. If you rollover only the net amount of the distribution, you will be
taxed on the 20% withheld, and may be subject to a 10% additional tax if you
are younger than age 59 1/2 (see Section VIII.B., below).
However, the 20% withholding can be avoided by making a "Direct Rollover" to
your IRA. A Direct Rollover is a direct payment by the distributing tax-
qualified retirement plan or tax-sheltered annuity or custodial account to
your IRA rather than to you. If your Eligible Rollover Distribution is at
least $200, you must be given the option to make a Direct Rollover of your
Eligible Rollover Distribution to your IRA.
The rules in this Section B also apply to distributions to a surviving
spouse who is a beneficiary of a deceased participant. These rules also apply
to distributions to a spouse or former spouse who is an alternate payee with
respect to a participant's benefits under a qualified domestic relations
order.
VII. DISTRIBUTIONS
-------------
Note: THE DISCUSSION IN THIS SECTION V PERTAINS EXCLUSIVELY TO IRAs OTHER
----- THAN ROTH IRAs. SEE SECTION IX, BELOW, FOR A DISCUSSION OF THE
DISTRIBUTION RULES FOR ROTH IRAs.
<PAGE> 74
Your IRA is intended to provide a source of income to you upon attainment of
age 59-1/2 or if you become disabled. Distributions, other than amounts
rolled over into another IRA or qualified plan or amounts that represent
nondeductible employee contributions, are taxed as ordinary income in the year
received by you. With certain exceptions, distributions which occur prior to
age 59-1/2 will be subject to a 10% additional tax on the amount of the
premature distribution. Please refer to Section VIII for a discussion of the
distributions occurring prior to age 59-1/2 which are not subject to the 10%
tax.
While distributions from your IRA may commence without penalty at any time
after you attain age 59-1/2, such distributions MUST commence on or before the
first day of April of the year following the year in which you attain age 70-
1/2 (your "Required Beginning Date"). Distributions must be paid to you in
accordance with one of the following methods:
(i) A single lump sum payment; or
(ii) Substantially equal monthly, quarterly or annual payments over your
life (or the lives of you and your beneficiary) or over a period certain not
extending beyond your life expectancy (or the joint and last survivor life
expectancy of you and your designated beneficiary).
Notwithstanding that distributions may have commenced pursuant to option
(ii) above, you may receive a distribution of the balance in your IRA at any
time. If you elect to have your IRA distributed in other than a single
payment, the amount to be distributed each year must be at least equal to the
amount determined by dividing the entire amount of your IRA by your life
expectancy or by the joint and last survivor expectancy of you and your
designated beneficiary.
8
To enforce these requirements, the Code imposes an excise tax on you of 50%
of the amount, if any, by which the amount distributed to you in a year fails
to equal the minimum distribution necessary under these requirements. If the
failure to make the minimum distribution by the specified deadline is due to
reasonable cause and you are taking action to remedy the error, the IRS may
waive the tax in its discretion.
At the time that you establish your IRA you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the
right, prior to the complete distribution of your IRA, to change your
designation of beneficiary. If you fail to properly designate a beneficiary,
your estate shall be treated as your designated beneficiary. If your
surviving spouse is your designated beneficiary, he or she may elect to treat
the IRA as his or her own for purposes of the minimum distribution rules
described in this Section.
If you should die after your Required Beginning Date, the remaining portion
of your IRA generally must be distributed at least as rapidly as under the
method of distribution being used prior to your death. If you should die
before your Required Beginning Date, your entire interest in your IRA
generally must be distributed to your designated beneficiary(ies) within five
(5) years after your death. Similarly, if your surviving spouse is
beneficiary of your IRA and elects to treat the IRA as his or her own, but
dies before receiving the entire amount payable to him or her from your IRA,
the remaining amount generally must be distributed to your spouse's
<PAGE> 75
beneficiaries within five (5) years after your spouse's death.
To the extent that assets held in your IRA are used to purchase an endowment
contract, you will be treated as having made a rollover contribution.
However, to the extent that the assets are used to purchase life insurance
protection, you will be treated as having received a distribution and you must
include this amount in your gross income for the year it is deemed received.
VIII. TAX TREATMENT OF DISTRIBUTION
-----------------------------
Note: THE DISCUSSION IN THIS SECTION V PERTAINS EXCLUSIVELY TO IRAs OTHER
----- THAN ROTH IRAs. SEE SECTION IX, BELOW, FOR A DISCUSSION OF THE TAX
RULES APPLICABLE TO DISTRIBUTIONS FROM ROTH IRAs.
A. Income Tax
----------
As a general rule, distributions from your IRA are taxable to you as
ordinary income in the year received by you. However, if nondeductible
contributions have been made to your IRA, the portion of your IRA distribution
consisting of nondeductible contributions will not be taxed again when
received by you. If you make any nondeductible IRA contributions, each
distribution from your IRA will consist of a nontaxable portion (return of
nondeductible contributions, if any) and a taxable portion (return of
deductible contributions, if any, and all earnings). Thus, you may not take a
distribution which is entirely tax-free.
The following formula is used to determine the nontaxable portion of your
distributions for a tax year:
Nondeductible Contributions x Total Distributions = Non Taxable Distributions
- --------------------------- (for the year) (for the year)
Year-end IRA Balance
Your year-end IRA balance for this purpose is the fair market value of all
the IRAs that you maintain, other than Roth IRAs. This includes all regular
IRAs, as well as simplified employee pensions (SEP) IRAs, and rollover IRAs.
You must also add back the sum of distributions taken during the year, if any.
The following example illustrates how you will determine the nontaxable
portion of your distributions for a taxable year.
9
Example: Betty has made the following contributions to her IRA:
-------
YEAR DEDUCTIBLE NONDEDUCTIBLE
---- ---------- -------------
1994 $2,000 $0
1995 $2,000 $0
1996 $2,000 $0
1997 $1,000 $1,000
1998 $0 $2,000
------ ------
$7,000 $3,000
<PAGE> 76
During 1999, Betty receives a $1,000 distribution from her IRA. On December
31, 1999 the total value of Betty's IRA is $11,000. The nontaxable portion of
the distribution she received during 1999 is determined as follows:
$3,000
------------------ x 1,000 = $250
11,000 + 1,000
A single lump sum distribution from your IRA is not entitled to ten-year
averaging, five-year averaging or capital gains treatment accorded some lump
sum distributions from qualified employer plans.
B. Early Withdrawal Tax
--------------------
In general, distributions from your IRA which occur prior to you attaining
age 59-1/2 will be subject to adverse tax consequences. Not only will such
distributions be fully taxable to you as ordinary income, but an additional
tax equal to 10% of the taxable portion of such distributions will also be
imposed. If the distribution is from a SIMPLE-IRA within two years from
the date the employee first participated in his or her employer's SIMPLE-IRA
plan (See Section V.F., above), the additional tax is 25% of the distribution.
Distributions under any of the following circumstances, however, will not be
subject to the 10% or 25% additional tax, even if the recipient is younger
than age 59-1/2:
* distributions rolled over to another IRA;
* excess contributions returned in accordance with Section V.D., above;
* distributions on account of your death or disability (you are
considered disabled for this purpose if you are unable to engage in any
substantial gainful activity because of a medically determinable
physical or mental impairment which can be expected to result in death
or to be of long, continued and indefinite duration);
* distributions in the form of substantially equal periodic payments over
your life (or life expectancy) or the joint lives (or joint life
expectancy) of you and your designated beneficiary;
* distributions up to the amount paid during the year for medical care
for the recipient, the recipient's spouse, or the recipient's
dependents, to the extent such amount exceeds 7.5% of the recipient's
adjusted gross income for the year;
* distributions to the recipient after separation from employment for the
payment of health insurance premiums, provided (i) the recipient has
received unemployment compensation for 12 consecutive weeks under
federal or state law, (ii) the distributions are made during the year
in which the unemployment compensation was paid or the next year, and
(iii) the distributions are not made after the recipient has been
reemployed for 60 days after his or her initial separation from
employment;
* after 1997, distributions to the recipient to the extent that they do
not exceed the qualified higher education expenses of the recipient, or
the recipient's spouse, child or grandchild for the year distributed;
<PAGE> 77
"qualified higher education expenses" include tuition, fees, books,
supplies, and
10
equipment required for the enrollment or attendance at a post-secondary
educational institution, less other forms of educational assistance
received by the student which are not taxable (such as certain
scholarships); and
* after 1997, any distribution to the recipient that is used within 120
days of receipt to pay the costs of acquiring, constructing, or
reconstructing a principal residence of the recipient, or the
recipient's spouse, child, grandchild or ancestor of the recipient or
the recipient's spouse, and if that individual (and his or her spouse,
if married) had not been a homeowner within the two-year period ending
on the date the principal residence is acquired, or the construction or
reconstruction commences; distributions subject to this exception to
the 10% additional tax are subject to a lifetime limit of $10,000.
C. Gift Tax
--------
Your designation of a beneficiary or election of a form of distribution for
your IRA will not result in a "gift" for Federal Gift Tax purposes.
D. Estate Tax
----------
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal Estate Tax unless amounts are
payable to your surviving spouse.
IX. ROTH IRAs
---------
NOTE: CONTRIBUTIONS TO ROTH IRAs MAY NOT BE MADE FOR YEARS PRIOR TO 1998.
A Roth IRA is an IRA which must be designated as a Roth IRA at the time it
is established. You will satisfy this requirement by completing the forms for
establishment of a Eagle Growth Shares, Inc. -- Philadelphia Fund, Inc. Roth
IRA made available with this Disclosure Statement.
You may establish a Roth IRA either as a regular Roth IRA (see Section IX.A.,
a below) or a Roth Conversion IRA for the purpose of accepting IRA Conversion
Contributions (See Section IX.B., below). If you establish your Roth IRA as a
Roth Conversion IRA, no contributions other than IRA Conversion Contributions
may be made to your Roth IRA during the same year.
A. Annual Contributions
--------------------
Contributions to a Roth IRA are not tax deductible under any circumstances.
However, a Roth IRA can serve as a superb savings vehicle for individuals
because the earnings on those contributions will never be subject to federal
income tax if certain holding period requirements are satisfied. (See Section
IX.C., below.)
<PAGE> 78
Contributions to a Roth IRA for a year must be made by the due date of the
individual's federal income tax return for the year, not counting filing
extensions.
Any individual who has adjusted gross income (AGI) for a year that does not
exceed a certain level may make a contribution to a Roth IRA of up to $2,000
or the individual's compensation for the year, whichever is less, including
individuals who are older than 70-1/2 and individuals who are active
participants in an employer-sponsored retirement plan.
If an individual and his or her spouse file a joint federal income tax
return for the year, and the spouse has compensation for the year, the
individual may make a contribution to a Roth IRA even if he or she has little
or no compensation for the year. In this situation, the spouse with the least
compensation may make a contribution to a Roth IRA for the year equal to the
lesser of the following amounts:
11
* $2,000; or
* the sum of both spouses' compensation for the year, minus the other
spouse's contribution to a Roth IRA for the year.
For a married individual filing a joint tax return with his or her spouse
for a year, the maximum contribution to a Roth IRA for the year is $2,000,
provided the total AGI reported on the couple's tax return does not exceed
$150,000. If the couple's AGI is greater than $150,000 but less than
$160,000, the maximum contribution is reduced on a pro rata basis. If the
couple's AGI is $160,000 or more, neither spouse may make a contribution
to a Roth IRA.
A married individual filing a separate tax return from his or her spouse for
a year may make a full $2,000 contribution to a Roth IRA only if he or she has
no AGI for a year. If the individual's AGI is greater than $0 but less than
$15,000, the maximum contribution is reduced on a pro rata basis. No
contribution is permitted if the individual's AGI is $15,000 or more.
Any unmarried individual may make a full $2,000 contribution to a Roth IRA
for a year if his or her AGI does not exceed $95,000 for the year. Again, the
maximum contribution is reduced on a pro rata basis if the individual's AGI is
greater than $95,000 but less than $110,000, and no contribution is permitted
if the individual's AGI is $110,000 or more.
EXAMPLE ONE: For 1998, John and Mary file a joint income tax return and have
a combined AGI of $154,000. John and Mary may each make a contribution of
$1,200 to a Roth IRA for 1998, computed as follows:
$160,000 - $154,000
------------------- x $2,000 = $1,200
$10,000
EXAMPLE TWO: Dave is unmarried and has AGI of $98,000 for 1998. Dave may
make a contribution of $1,600 to a Roth IRA for 1998, computed as follows:
$110,000 - $98,000
------------------- x $2,000 = $1,600
$15,000
<PAGE> 79
The maximum amount which an individual may contribute to a Roth IRA for a
year is reduced by the amount which he or she has contributed to a non-Roth
IRA for the year (other than rollover contributions to the non-Roth IRA for
the year).
An individual who is not eligible to make the maximum contribution to a Roth
IRA for a year because of his or her AGI level may be able to make a
nondeductible contribution to a non-Roth IRA for the year, provided he or she
satisfies the eligibility requirements for contributions to a non-Roth IRA.
B. Rollover Contributions
----------------------
1. ROTH IRA TO ROTH IRA ROLLOVER If amounts are withdrawn from a Roth
IRA, in order to avoid any potential taxes on the amounts withdrawn, and to
preserve the tax-free treatment of future earnings on those amounts, they must
be contributed to another Roth IRA within 60 days after you receive the
distribution from the first Roth IRA. (While you do not have to make a
rollover contribution of the total amount withdrawn from the first Roth IRA,
any portion which you do not rollover to a new Roth IRA may be subject to
taxes and future earnings on that portion will not be sheltered from income
tax.)
In addition, if the assets distributed from your Roth IRA are property other
than cash, the identical property must be contributed to your new Roth IRA in
order to qualify as a rollover contribution.
An individual may engage in only one Roth IRA to Roth IRA Rollover, or one
non-Roth IRA to non-Roth IRA rollover, in any year. The one-year period
begins on the date that you receive the Roth IRA or non-Roth IRA distribution
and not on the date it is rolled over to another Roth IRA or non-Roth IRA. A
rollover contribution should not be confused with a direct transfer of Roth
IRA assets from one Roth IRA custodian or trustee to another Roth IRA
custodian or trustee,
12
or from one non-Roth IRA custodian or trustee to another non-Roth IRA
custodian or trustee. Such direct transfers are not considered rollover
contributions, and are not subject to the one-per-year limitation.
2. Non-Roth IRA to Roth IRA Rollover If amounts are withdrawn from a non-
Roth IRA and rolled over to a Roth IRA within 60 days (see Section VI.A.,
above), the amount withdrawn shall be subject to regular federal income tax in
the year of the withdrawal, as if no rollover had occurred. However, no 10%
penalty tax will be imposed on the withdrawal, even if you are younger than
age 59-1/2, and the tax rules applicable to Roth IRAs (see Section VII.,
below) will apply to the amounts rolled over and future earnings on those
amounts.
Amounts rolled over to your Roth IRA from a non-Roth IRA are referred to as
"IRA Conversion Contributions." For any year in which you make IRA Conversion
Contributions to your Roth IRA, you may not make any other types of
contributions to the same Roth IRA.
There are income limitations on the ability of an individual to engage in an
IRA Conversion Contribution. An individual whose AGI exceeds $100,000 for a
<PAGE> 80
year may not make an IRA Conversion Contribution for the year. In addition, a
married individual filing a separate tax return from his or her spouse for a
year may not make an IRA Conversion Contribution for the Year, regardless of
his or her AGI level.
SPECIAL RULE FOR IRA CONVERSION CONTRIBUTIONS DURING THE YEAR 1998: IF YOU
WITHDRAW AMOUNTS FROM YOUR NON-ROTH IRA DURING 1998 AND YOU MAKE IRA
CONVERSION CONTRIBUTIONS WITH THOSE FUNDS BY CONTRIBUTING THEM TO A ROTH IRA,
THE AMOUNT SUBJECT TO FEDERAL INCOME TAX ON ACCOUNT OF THE WITHDRAWAL WILL BE
SPLIT INTO FOUR EQUAL PIECES AND TAXABLE OVER THE FOUR-YEAR PERIOD 1998-2001.
C. Excess Contributions
--------------------
If you make a contribution to your Roth IRA in excess of the applicable
limits, such amount is an "excess contribution." A nondeductible excise tax
is imposed upon you equal to 6% of such excess contribution for the year in
which the excess contribution is made, and also for each following year until
it is eliminated. However, the amount of the tax for any year cannot exceed
6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your Roth IRA before the date for filing your federal tax
return for the year for which the excess contribution is made. The earnings
attributable to the excess contribution must also be withdrawn and must be
included in your gross income in the year for which the excess contribution
was made. A timely withdrawal of the excess contributions will permit you to
avoid not only the 6% excise tax but also the 10% penalty tax on premature
distributions. A withdrawal of an excess contribution after the tax return
filing date will avoid the 10% penalty tax on premature distributions,
provided that the total contribution for the year did not exceed the maximum
amount which you are allowed to contribute.
As an alternative to withdrawing such excess contribution, you may eliminate
such excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise
tax until the excess contribution is completely eliminated.
D. Distributions from Roth IRAs
----------------------------
1. In General Distributions from a Roth IRA will be free of regular
---------- federal income tax if they are -
* received after the individual attains age 59-1/2;
* received after the individual's death;
* received on account of the individual being disabled; or
* used within 120 days of receipt to pay the costs of acquiring,
constructing, or reconstructing a principal residence of the
recipient, or the recipient's spouse, child, grandchild or ancestor of
the recipient or the recipient's spouse, and if that individual (and
his or her spouse, if married) had not been a homeowner within the
two-year period ending on the date the
13
<PAGE> 81
principal residence is acquired, or the construction or reconstruction
commences; distributions subject to this exception are subject to a
lifetime limit of $10,000.
This applies to the entire amount of any distribution, including earnings on
amounts contributed to the Roth IRA.
However, any distribution which would otherwise be free of all federal
income taxes under the above rules will be subject to tax if it is made within
any of the five calendar years beginning with the first year for which the
individual made a contribution to a Roth IRA, including an IRA Conversion
Contribution. Because amounts contributed to a Roth IRA are never taxed when
they are withdrawn from the Roth IRA, only the portion of any withdrawal
attributable to the earnings on the contributions will be taxable. For this
purpose, amounts withdrawn from a Roth IRA will be deemed to be attributable
first to contributions - and, therefore, not taxable - until all contributions
are deemed to have been withdrawn. (PLEASE NOTE: AS OF JANUARY 1, 1998,
LEGISLATION WAS PENDING IN CONGRESS THAT WOULD CHANGE THIS ORDERING RULE IN
THE CASE OF IRA CONVERSION CONTRIBUTIONS, SUCH THAT PREMATURE WITHDRAWALS
ATTRIBUTABLE TO THOSE CONTRIBUTIONS WOULD BE DEEMED TO BE ATTRIBUTABLE FIRST
TO EARNINGS AND, THEREFORE TAXABLE.)
2. EARLY WITHDRAWAL TAX Any amount withdrawn from a Roth IRA which would
be subject to regular income tax under the rules described in Section VII.A.,
above, will also be subject to an additional tax equal to 10% of that amount,
unless one of the following exceptions applies:
* the distributions are in the form of substantially equal periodic
payments over the individual's life (or life expectancy) or the joint
lives (or joint life expectancy) of the individual and his or her
designated beneficiary;
* the distributions do not exceed the amount paid during the year for
medical care for the individual, the individual's spouse, or the
individual's dependents, to the extent such amount exceeds 7.5% of the
individual's AGI for the year;
* the distributions are made to the individual after separation from
employment for the payment of health insurance premiums, provided (i)
the individual has received unemployment compensation for 12
consecutive weeks under federal or state law, (ii) the distributions
are made during the year in which the unemployment compensation was
paid or the next year, and (iii) the distributions are not made after
the individual has been reemployed for 60 days after his or her
initial separation from employment; or
* the distributions do not exceed the qualified higher education
expenses of the recipient, or the recipient's spouse, child or
grandchild for the year distributed; "qualified higher education
expenses" include tuition, fees, books, supplies, and equipment
required for the enrollment or attendance at a post-secondary
educational institution, less other forms of educational assistance
received by the student which are not taxable (such as certain
scholarships).
3. MINIMUM ANNUAL DISTRIBUTIONS Unlike non-Roth IRAs, the tax rules do not
require that amounts be distributed from a Roth IRA starting with the year in
<PAGE> 82
which the individual for whom the Roth IRA is maintained attains age 70-1/2.
Consequently, the tax-free build-up of earnings inside a Roth IRA may continue
for as long as the individual lives.
Roth IRAs are subject to mandatory distribution rules, however, upon the
death of the individual for whom a Roth IRA is maintained. If that individual
dies before the entire balance of the Roth IRA has been distributed, the
balance must be distributed to the designated beneficiary either -
* by December 31 of the fifth calendar year following the year of the
individual's death; or
* over the life expectancy of the designated beneficiary starting no
later than December 31 of the year following the year of the
individual's death.
The above rules do not apply, however, if the individual's surviving spouse is
the sole designated beneficiary, in which case the spouse shall be treated as
the individual for whom the Roth IRA was established and maintained.
14
X. PROHIBITED TRANSACTIONS
-----------------------
You or your beneficiary may not participate in any transaction with your IRA
which is prohibited by law. Neither you nor your beneficiary may engage in
any of the following "prohibited transactions" with your IRA:
* the sale, exchange, or lending of any property;
* lending of money or other extension of credit;
* furnishing of goods, services or facilities; or
* the transfer or use of income or assets of the IRA by you or your
beneficiary.
If such transactions are engaged in, your IRA will be disqualified and will
lose its tax-exempt status. Under such circumstances, your IRA will be
considered to have been distributed to you, includable in your gross income,
and subject to the income and additional taxes discussed above. (In the case
of a Roth IRA, only the earnings on the contributions will be subject to tax.)
Similarly, you may not use your IRA as security for a loan. If you do, the
portion pledged as security will be treated as distributed to you in that
year.
XI. REPORTING REQUIREMENTS
----------------------
If a transaction has occurred upon which a special penalty tax is imposed,
such as an excess contribution, a premature distribution, or a failure to make
a timely distribution, you are required to file Form 5329 with your annual
income tax return for such year. Form 5329 need not be filed if the only
activity for the year is the making of contributions or the distribution of
permissible benefits.
<PAGE> 83
XII. IRS APPROVAL
------------
This IRA is a model IRA Account which follows the IRS approved document
considered by the IRS to meet the applicable requirements of the Internal
Revenue Code. Therefore, the Internal Revenue Service will not issue a formal
determination as to the tax qualified status of this IRA Account. Further
information can be obtained from any office of the Internal Revenue Service.
Please be aware that the Internal Revenue Service's deemed approval of a
model IRA is a determination only as to the form of the IRA and does not
represent a determination as to the merits of this IRA.
XIII. IRA BALANCE
-----------
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected.
The value of the shares is dependent upon the market values of the securities
in the mutual fund's investment portfolio, which are subject to fluctuations;
therefore, growth in the value of your IRA cannot be projected or guaranteed.
Dividends from net investment income and capital gains distributions paid by
the mutual funds selected will be reinvested in fund shares at the applicable
reinvestment price as of the respective reinvestment dates and such additional
shares will be credited to your IRA.
IV. FEES, CHARGES AND COMMISSIONS
-----------------------------
A. IRA Custodian Fees
------------------
The IRA plan fees are as follows: annual maintenance fee, $15.00; incoming
transfer from prior custodian, $12.00; distribution to participant, $15.00;
refund of excess contribution, $15.00; transfer to successor custodian, $15.00
automatic periodic distributions, $15.00/year per account. These fees will be
charged directly to the shareholder account
15
when the specified transactions are generated. These fees are applicable
regardless of the manner in which your IRA is funded. The Custodian reserves
the right to revise its fee schedule upon written notice to the IRA holder.
B. Mutual Fund Commissions
-----------------------
If you fund your IRA by the direct purchase of mutual fund shares, a sales
commission will be charged against your investment. Sales commission rates
range from a maximum of 8.5% to 0.125% of the offering price of the fund
shares. The rate applicable to an initial $1,000 contribution is 8.5%. That
rate is applicable to subsequent contributions of $1,000 until the value of
the fund shares in your IRA or the amount paid therefore is equal to or
greater than $10,000, at which time the sales commission rate is reduced to
7.75%. Commissions at lower rates are applicable on larger purchases and on
<PAGE> 84
purchases under the fund's Right of Accumulation Privilege. Effective April
1, 1989 no sales commission will be charged against an investment in shares of
Philadelphia Fund, Inc.
C. Liquidation of Securities
-------------------------
If portfolio securities of Philadelphia Fund or Eagle Growth Shares must be
liquidated to meet any repurchase or redemption, a reasonable estimate of
brokerage and other costs may be deducted from the net asset value. However,
neither Fund has found it necessary to exercise this privilege.
D. Type of Contribution
--------------------
The charges shown under "IRA Custodian Fees", "Mutual Fund Commissions" and
"Liquidation of Securities" are applicable regardless of whether your account
is established by a direct contribution or a rollover contribution.
E. Further Details
---------------
Please refer to the prospectus of the fund or funds selected as your
investment for further details.
XV. FEDERAL TAX WITHHOLDING
-----------------------
Distributions from an IRA to the depositor or to a beneficiary are subject
to Federal income tax withholding unless the depositor or beneficiary elects
to have no withholding apply. The current withholding rate for IRA
distributions (other than annuity payments) is 10%. Additional information
concerning withholding and election forms will be available when a
distribution is requested.
16
<PAGE> 85
Form 5305-A Individual Retirement Custodial Account
(Rev. January 1998) DO NOT File
(Under section 408(a) of the With the
Internal Revenue Code) Internal
Department of the Treasury Revenue Service
Internal Revenue Service
______________________________________________________________________________
Name of depositor | Date of birth of depositor | Identifying number
| | (see instructions)
| |
______________________|_______________________________|_______________________
Address of depositor |
| Check if Amendment.>[]
______________________________________________________|_______________________
Name of custodian | Address or principal place of business of custodian
|
______________________|_______________________________________________________
The depositor whose name appears above is establishing an individual
retirement account under section 408(a) to provide for his or her retirement
and for the support of his or her beneficiaries after death.
The custodian named above has given the depositor the disclosure statement
required under Regulations section 1.408-6.
The depositor has assigned the custodial account _________________ dollars
($________) in cash.
The depositor and the custodian make the following agreement:
______________________________________________________________________________
Article I
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 section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or
an employer contribution to a simplified employee pension plan as described in
section 408(k).
Article II
The depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
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)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
<PAGE> 86
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the depositor's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The depositor's entire interest in the custodial account must be, or
begin to be, distributed by the depositor's required beginning date, 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 custodian,
to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
depositor and his or her designated beneficiary.
(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.
4. If the depositor dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the depositor
or, if the depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries starting
by December 31 of the year following the year of the depositor's death. If,
however, the beneficiary is the depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the depositor would have reached age 70 1/2.
<PAGE> 87
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the depositor's
required beginning date, even though payments may actually have been made
before that date.
(d) 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.
______________________________________________________________________________
Cat. No. 11820G Form 5305-A (Rev. 1-98)
Form 5305-A (Rev. 1-98) Page 2
______________________________________________________________________________
5. In the case of a 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 applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or
joint life and last survivor expectancy) using the attained ages of the
depositor and designated beneficiary as of their birthdays in the year the
depositor reaches age 70 1/2 . In the case of a distribution in accordance
with paragraph 4(b)(ii), determine life expectancy using the attained age of
the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) and the
related regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
<PAGE> 88
______________________________________________________________________________
NOTE: The following space (Article VIII) may be used for any other provisions
you want to add. If you do not want to add any other provisions, draw a
line through this space. If you do add provisions, they must comply with
applicable requirements of state law and the Internal Revenue Code.
______________________________________________________________________________
Article VIII
ARTICLES VIII THROUGH XXIII ARE SET FORTH IN APPENDIX "A" TO THIS AGREEMENT,
WHICH ARTICLES ARE HEREBY INCORPORATED BY REFERENCE.
______________________________________________________________________________
Depositor's signature ________________________________Date _________________
Custodian's signature ________________________________Date _________________
Witness'signature ______________________________________________________
(Use only if signature of the depositor or the custodian is required to be
witnessed.)
______________________________________________________________________________
GENERAL INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
NOTE: Users of the October 1992 revision of Form 5305-A are not required to
use the January 1998 revision of the form.
Form 5305-A is a model custodial account agreement that meets the requirements
of section 408(a) and has been automatically approved by the IRS. An
individual retirement account (IRA) is established after the form is fully
executed by both the individual (depositor) and the custodian and must be
completed no later than the due date of the individual's income tax return for
the tax year (without regard to extensions). This account must be created in
the United States for the exclusive benefit of the depositor or his or her
beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to the
extent specified in those regulations.
Do not file Form 5305-A with the IRS. Instead, keep it for your records.
For more information on IRAs, including the required disclosures the
custodian must give the depositor, see PUB. 590, Individual Retirement
Arrangements (IRAs).
DEFINITIONS
CUSTODIAN. The custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to
act as custodian.
DEPOSITOR. The depositor is the person who establishes the custodial account.
<PAGE> 89
IDENTIFYING NUMBER
The depositor's social security number will serve as the identification number
of his or her IRA. An employer identification number (EIN) is required only
for an IRA for which a return is filed to report unrelated business taxable
income. An EIN is required for a common fund created for IRAs.
IRA FOR NONWORKING SPOUSE
Form 5305-A may be used to establish the IRA custodial account for a
nonworking spouse.
Contributions to an IRA custodial account for a nonworking spouse must be
made to a separate IRA custodial account established by the nonworking spouse.
SPECIFIC INSTRUCTIONS
Article IV. Distributions made under this article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the depositor reaches age 70 1/2 to ensure that the
requirements of section 408(a)(6) have been met.
Article VIII. Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the depositor and custodian to complete the
agreement. They may include, for example, definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
the custodian, custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the depositor, etc. Use additional pages if
necessary and attach them to this form.
NOTE: Form 5305-A may be reproduced and reduced in size.
______________________________________________________________________________
<PAGE> 90
EAGLE GROWTH SHARES, INC.
PHILADELPHIA FUND, INC.
INDIVIDUAL RETIREMENT ACCOUNT
------------------------------------
APPENDIX "A"
ADDITIONS TO INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(FORM 5305-A)
ARTICLE VIII
All Contributions to the custodial account made by or on behalf of the
Depositor shall be invested in accordance with proper instructions received
from time to time from the Depositor and shall be applied to purchase full and
fractional shares (hereinafter referred to as "Fund Shares") of Eagle Growth
Shares, Inc., Philadelphia Fund, Inc. and any other mutual funds for which
Baxter Financial Corporation (the "Sponsor") acts as the principal distributor
or investment advisor and Star Bank, N.A. acts as custodian and American Data
Services acts as transfer agent (a "Fund" or "Funds"). Except in the case of
rollover contributions or employer contributions to a simplified employee
pension plan as described in Article I, the Depositor shall not deposit in any
tax year an amount in excess of the lesser of one hundred percent (100%) of
the compensation includable in his/her gross income or Two Thousand and 00/100
Dollars ($2,000), and the Depositor shall be fully and solely responsible for
all taxes, interest and penalties which might accrue or be assessed by reason
of any excess deposit, and earnings if any, thereon. Any contributions made
by or on behalf of the Depositor in respect of a taxable year of the Depositor
shall be made by or on the behalf of the Depositor to the Custodian for
deposit in the custodial account no later than the due date for filing the
Depositor's tax return for such taxable year (excluding extensions), or by
such other date as from time to time provided by law. If a contribution is
intended to be a rollover contribution referred to in Article I, the Depositor
hereby certifies that the source of the contribution qualifies the
contribution as such, that no portion thereof consists of any amount
considered to have been previously contributed by the Depositor as an employee
(other than "deductible employee contributions" as defined in Section 72(o)(5)
of the Code), that the contribution is being made to the custodial account no
later than sixty (60) days after receipt by the Depositor of the distribution
giving rise to the rollover contribution, that no previous rollover
contribution has been made by the Depositor to or from another individual
retirement account or annuity within one (1) year of the date of the rollover
contribution and that the rollover is in all respects permitted by law. It
shall be the sole responsibility of the Depositor to determine the amount of
the contributions made hereunder. The Depositor shall execute such forms as
the Custodian may require in connection with any contribution hereunder.
Fund Shares held in the custodial account shall be registered in the name of
the Custodian or its nominee. The Depositor shall be the beneficial owner of
the assets held in the custodial account. All dividends and capital gains
distributions received on Fund Shares held in the Depositor's account shall,
unless received in additional shares, be reinvested in shares of the Fund
paying such dividends and distributions, which Fund Shares shall be credited
to such account. If any distributions of the Fund may be received at the
election of the Depositor in additional shares or in cash or other property,
the Custodian shall elect to receive additional shares.
<PAGE> 91
The Custodian shall forward to the Depositor any Fund notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to such
shares. The Custodian shall not vote any of the shares of the Fund held in
the account except in accordance with the written instructions of the
Depositor.
ARTICLE IX
The Custodian shall from time to time, subject to the provisions of Article
IV and V, make distributions out of the custodial account to the Depositor, in
such manner and amounts as may be specified in written instructions of the
Depositor. All such instructions shall be deemed to constitute a
certification by the Depositor that the distribution so directed is one that
the Depositor is permitted to receive. Notwithstanding the foregoing, upon
the Depositor's death the distribution rules set forth in Article IV will not
apply if the Depositor's spouse is the beneficiary and he or she elects to
treat the account as his or her own IRA. In such case, such spouse will be
deemed to be the Depositor under this Agreement. Unless the Depositor dies,
is disabled (as defined in Section 72(m) of the
Code), or reaches age 59 1/2, a declaration of the Depositor's intention as to
the disposition of an amount distributed from the custodial account shall be
in writing and given to the Custodian. The Custodian shall have no liability
with respect to any contribution to the custodial account, any investment of
assets in the custodial account or any distribution therefrom pursuant to
instructions received from the Depositor or this Agreement, or for any
consequences to the Depositor arising from such contributions, investments or
distributions including, but not limited to, excise and other taxes and
penalties which might accrue or be assessed by reason thereof, nor shall the
Custodian be under any duty to make any inquiry or investigation with respect
thereto.
ARTICLE X
If the Depositor is disabled (as defined in Section 72(m) of the Code) all or
a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The
Custodian may require such proof of disability as it deems necessary prior to
the time that amounts are distributed to the Depositor on account of such
disability.
ARTICLE XI
The Depositor may designate and redesignate his/her beneficiary or
beneficiaries on a form satisfactory to the Custodian and provided by the Fund
for such purpose. To be effective, such designation must be received by the
Custodian prior to the death of the Depositor. Such beneficiary or
beneficiaries shall be entitled to the balance in the custodial account of the
Depositor as provided in Paragraph 4 of Article IV. Unless otherwise provided
in the designation of beneficiary form, amounts payable by reason of the
Depositor's death will be paid only to the primary beneficiary or
beneficiaries who survive the Depositor in equal shares. If some but not all
primary or contingent beneficiaries, as applicable, do not survive the
Depositor, any amounts that such non-surviving beneficiaries shall have been
entitled to receive hereunder shall be divided among the surviving primary or
<PAGE> 92
contingent beneficiaries, as applicable, in proportion to the relative
interests of the surviving primary or contingent beneficiaries. If no
designation of beneficiary is in effect at the time of the Depositor's death
or if no designated beneficiary survives the Depositor, the balance in the
Custodial Account of the Depositor shall be paid to the legal representative
of the estate of the Depositor.
ARTICLE XII
Depositor acknowledges that he or she has read the information distributed to
him or her by the Custodian and agrees to assume full responsibility for all
decisions as to deposits and withdrawals, and the Depositor indemnifies the
Custodian and saves it free and harmless from any and all claims arising out
of any adverse consequences experienced by the Depositor as a result of his or
her own decision, including but not limited to excise taxes and penalties.
Any taxes which may be imposed upon the custodial account or the income
thereof, but not excise taxes imposed upon the Depositor, may, in the
discretion of the Custodian, be deducted from and charged against the
custodial account.
ARTICLE XIII
If, within sixty (60) days after the mailing by the Custodian to the
Depositor of a report pursuant to Paragraph 2 of Article V, the Depositor has
not given the Custodian written notice of any exception or objection thereto,
such report shall be deemed to have been approved in its entirety and in such
case, or upon written approval of the Depositor, the Custodian shall be
released, relieved, and discharged with respect to ail matters and statements
set forth therein as though the report had been settled by judgment or decree
of a court of competent jurisdiction.
ARTICLE XIV
The Custodian shall have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations
shall be read into this Agreement against the Custodian. The Custodian shall
not be liable under this Agreement, except for its own bad faith, gross
negligence or willful misconduct. In
2
performing its duties under this Agreement, the Custodian may hire agents,
experts and attorneys and delegate discretionary powers to, and rely upon
information and advice furnished by such agents, experts and attorneys.
ARTICLE XV
No interest right or claim in or to any part of the custodial account 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 as required by law.
<PAGE> 93
ARTICLE XVI
The Depositor hereby delegates to the Custodian the power to amend this
agreement from time to time as it deems appropriate, and hereby consents to
all such amendments, provided, however, that all such amendments are in
compliance with the provisions of the Code and the regulations promulgated
thereunder. All such amendments shall be effective as of the date specified
in a written notice of amendment which will be sent to the Depositor.
ARTICLE XVII
This account and this Agreement may be terminated at any time by the
Depositor by written instrument delivered to the Custodian. In addition, in
the event that either (a) all of the Funds available for investment hereunder
are liquidated or otherwise terminated or (b) the Sponsor of this individual
retirement account ceases to act as such without a successor assuming the
duties of the Sponsor, the account and this Agreement shall be terminated and
the assets thereof shall be delivered to the Depositor unless prior to such
payment the Depositor provides written instructions to the Custodian to
transfer such proceeds to the trustee or custodian of another individual
retirement account.
ARTICLE XVIII
The Custodian may resign without liability, cost or expense of any kind, upon
written notice furnished by the Custodian to the Depositor, such resignation
to be effective the thirtieth (30th) day following the mailing to the
Depositor of such notice. The Depositor or the Sponsor may remove the
Custodian upon thirty (30) days' written notice to that effect to the
Custodian. Upon such resignation or removal, the Depositor or the Sponsor, as
the case may be, shall appoint a successor custodian. Any successor custodian
shall satisfy the requirements of Section 408(h) of the Code. Upon receipt by
the Custodian of written acceptance of such appointment by the successor
custodian, the Custodian shall deliver the assets of the custodial account to
the successor custodian. In the event that the Depositor or the Sponsor, as
the case may be, fails to appoint a successor custodian within 30 days of the
mailing of the notice of resignation or removal, the Custodian shall terminate
the account and pay the proceeds to the Depositor. Notwithstanding the
foregoing, the Custodian may reserve such assets of the custodial account as
it may deem necessary for the payment of all of its fees, compensation, costs
and expenses and for the payment of all other liabilities which are a charge
on or against the assets of the custodial account or on or against the
Custodian and where necessary may liquidate reserved Fund Shares. Any balance
of such reserve remaining after the payment of all such items shall be paid
over by the Custodian to a successor custodian or, if the Depositor or the
Sponsor, as the case may be, has failed to appoint a successor custodian, to
the Depositor.
ARTICLE XIX
Any notice herein required or permitted to be given to the Custodian shall
not be effective unless it is mailed to and actually received by the Custodian
at the address specified in the custodial account application or at such other
address as the Custodian shall provide the Depositor from time to time in
writing, stating that such other address shall be used for purposes of this
Agreement. Any notice herein required or permitted to be given to the
Depositor shall be mailed to the Depositor at the Depositor's residence
<PAGE> 94
address specified in the custodial account application or at such other
address as he/she shall provide the Custodian from time to time in writing
stating that such other address shall be used for purposes of this Agreement,
and any such notice shall be deemed accepted by the
3
Depositor at the time it is mailed. Depositor and his/her beneficiaries will
be bound by the last address furnished to the Custodian by the Depositor or
his/her beneficiary.
ARTICLE XX
The Depositor shall be fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the
annual minimum withdrawal commencing no later than April 1st following the
calendar year in which he/she attains the age of seventy and one-half (70-1/2)
or for any year thereafter.
ARTICLE XXI
The Custodian and Depositor hereby waive and agree to waive right to trial by
jury in an action or proceeding instituted in respect to this custodial
account. The Depositor further agrees that the venue of any litigation
between him and the Custodian with respect to the custodial account shall be
in the county in which the Custodian maintains its principal place of
business.
ARTICLE XXII
This Agreement and the custodial account created hereby shall be subject to
the applicable laws, rules and regulations, as the same may from time to time
be amended, of the Federal government and the Commonwealth of Massachusetts
and the agencies and instrumentalities of each having jurisdiction thereof,
and shall be governed by and construed, administered and enforced according to
the law of the Commonwealth of Massachusetts. All contributions to the
custodial account shall be deemed to take place in the Commonwealth of
Massachusetts.
ARTICLE XXIII
Except for any excise taxes required by the Code to be paid by the Depositor,
any income tax or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect to the custodial account shall be paid from the
assets of the custodial account. Any transfer taxes incurred in connection
with the investment and reinvestment of the assets of the custodial account,
all other administrative expenses incurred by the Custodian in the performance
of its duties, including fees for legal services rendered to the Custodian,
shall be paid from the assets of the custodial account.
The Custodian shall be entitled to receive and may charge against the
Depositor's custodial account such reasonable compensation for its services in
accordance with its fee schedule as from time to time in effect, and shall
also be entitled to reimbursement of its expenses as Custodian under this
Agreement. The Custodian will notify the Depositor in writing of any change
in its fee schedule.
4
<PAGE> 95
Form 5305-RA Roth Individual Retirement Custodial Account
(January 1998) DO NOT File
(Under section 408A of the With the
Internal Revenue Code) Internal
Department of the Treasury Revenue Service
Internal Revenue Service
______________________________________________________________________________
Name of depositor | Date of birth of depositor | Social security number
| | | |
______________________|_______________________________|______|______|_________
Address of depositor | Check if Roth
| Conversion IRA >[]
| Check if Amendment.>[]
______________________________________________________|_______________________
Name of custodian | Address or principal place of business of custodian
|
______________________|_______________________________________________________
The depositor whose name appears above is establishing a Roth individual
retirement account (Roth IRA) under section 408A to provide for his or her
retirement and for the support of his or her beneficiaries after death.
The custodian named above has given the depositor the disclosure statement
required under Regulations section 1.408-6.
The depositor assigned the custodial account $__________________
The depositor and the custodian make the following agreement:
______________________________________________________________________________
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except
in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount
of $2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will be
accepted.
Article II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI of $150,000 and
$160,000; and for a married depositor who files separately, between $0 and
$10,000. In the case of a conversion, the custodian will not accept IRA
Conversion Contributions in a tax year if the depositor's AGI for that tax
year exceeds $100,000 or if the depositor is married and files a separate
return. Adjusted gross income is defined in section 408A(c)(3) and does not
include IRA Conversion Contributions.
Article III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
<PAGE> 96
Article IV
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)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article V
1. If the depositor dies before his or her entire interest is distributed to
him or her and the depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor or, if
the depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of the
depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1(b) above, 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 designated beneficiary using the attained
age of the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent
year.
3. If the depositor's spouse is the sole beneficiary on the depositor's date
of death, such spouse will then be treated as the depositor.
Article VI
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under sections 408(i) and
408A(d)(3)(E), Regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
______________________________________________________________________________
Cat. No. 25094Y Form 5305-RA (1-98)
<PAGE> 97
Form 5305-RA (1-98) Page 2
_____________________________________________________________________________
Article VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VIII
This agreement will be amended from time to time to comply with the provisions
of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
______________________________________________________________________________
NOTE: The following space (Article IX) may be used for any other provisions
you want to add. If you do not want to add any other provisions, draw a line
through this space. If you do add provisions, they must comply with applicable
requirements of state law and the Internal Revenue Code.
______________________________________________________________________________
ARTICLE IX
ARTICLES IX THROUGH XXII ARE SET FORTH IN APPENDIX "A" TO THIS AGREEMENT,
WHICH ARTICLES ARE HEREBY INCORPORATED BY REFERENCE.
______________________________________________________________________________
Depositor's signature ________________________________ Date _________________
Custodian's signature ________________________________ Date _________________
Witness' signature ________________________________ Date _________________
(Use only if signature of the depositor or the custodian is required to be
witnessed.)
______________________________________________________________________________
GENERAL INSTRUCTIONS
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE UNLESS OTHERWISE NOTED.
PURPOSE OF FORM
Form 5305-RA is a model custodial account agreement that meets the
requirements of section 408A and has been automatically approved by the IRS.
A Roth individual retirement account (Roth IRA) is established after the form
is fully executed by both the individual (depositor) and the custodian. This
account must be created in the United States for the exclusive benefit of the
depositor or his or her beneficiaries.
Do not file Form 5305-RA with the IRS. Instead, keep it for your records.
<PAGE> 98
Unlike contributions to traditional individual retirement arrangements,
contributions to a Roth IRA are not deductible from the depositor's gross
income; and distributions after 5 years that are made when the depositor is
59 1/2 years of age or older or on account of death, disability, or the
purchase of a home by a first-time homebuyer (limited to $10,000), are not
includible in gross income. For more information on Roth IRAs, including the
required disclosure the depositor can get from the custodian, see PUB. 590,
Individual Retirement Arrangements (IRAs).
This Roth IRA can be used by a despositor to hold: (1) IRA Conversion
Contributions, amounts rolled over or transferred from another Roth IRA, and
annual cash contributions of up to $2,000 from the depositor; or (2) if
designated as a Roth Conversion IRA (by checking the box on page 1), only
IRA Conversion Contributions for the same tax year.
To simplify the identification of funds distributed from Roth IRAs,
depositors are encouraged to maintain IRA Conversion Contributions for each
tax year in a separate Roth IRA.
DEFINITIONS
ROTH CONVERSION IRA. A Roth Conversion IRA is a Roth IRA that accepts only
IRA Conversion Contributions made during the same tax year.
IRA CONVERSION CONTRIBUTIONS. IRA Conversion Contributions are amounts
rolled over, transferred, or considered transferred from a nonRoth IRA to a
Roth IRA. A nonRoth IRA is an individual retirement account or annuity
described in section 408(a) or 408(b), other than a Roth IRA.
CUSTODIAN. The custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to
act as custodian.
DEPOSITOR. The depositor is the person who establishes the custodial
account.
SPECIFIC INSTRUCTIONS
ARTICLE I. The depositor may be subject to a 6 percent tax on excess
contributions if (1) contributions to other individual retirement arrangements
of the depositor have been made for the same tax year, (2) the depositor's
adjusted gross income exceeds the applicable limits in Article II for the tax
year, or (3) the depositor's and spouse's compensation does not exceed the
amount contributed for them for the tax year. The depositor should see the
disclosure statement or Pub. 590 for more information.
ARTICLE IX. - Article IX and any that follow it may incorporate additional
provisions that are agreed to by the depositor and custodian to complete the
agreement. They may include, for example, definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
the custodian, custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the depositor, etc. Use additional pages if
necessary and attach them to this form.
NOTE: FORM 5305-RA MAY BE REPRODUCES AND REDUCED IN SIZE FOR ADAPTION TO
PASSBOOK PURPOSES.
______________________________________________________________________________
<PAGE> 99
EAGLE GROWTH SHARES, INC.
PHILADELPHIA FUND, INC.
INDIVIDUAL RETIREMENT ACCOUNT
---------------------------------
APPENDIX "A"
ADDITIONS TO ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(FORM 5305-RA)
ARTICLE IX
All Contributions to the custodial account made by or on behalf of the
Depositor shall be invested in accordance with proper instructions received
from time to time from the Depositor and shall be applied to purchase full and
fractional shares (hereinafter referred to as "Fund Shares") of Eagle Growth
Shares, Inc., Philadelphia Fund, Inc. and any other mutual funds for which
Baxter Financial Corporation (the "Sponsor") acts as the principal distributor
or investment advisor and Star Bank, N.A. acts as custodian and American Data
Services acts as transfer agent (a "Fund" or "Funds"). Except in the case of
rollover contributions as described in Article I, the Depositor shall not
deposit in any tax year an amount in excess of the lesser of one hundred
percent (100%) of the compensation includable in his/her gross income or Two
Thousand and 00/100 Dollars ($2,000), and the Depositor shall be fully and
solely responsible for all taxes, interest and penalties which might accrue or
be assessed by reason of any excess deposit, and earnings if any, thereon.
Any contributions made by or on behalf of the Depositor in respect of a
taxable year of the Depositor shall be made by or on the behalf of the
Depositor to the Custodian for deposit in the custodial account no later than
the due date for filing the Depositor's tax return for such taxable year
(excluding extensions), or by such other date as from time to time provided by
law. If a contribution is intended to be a rollover contribution referred to
in Article I, the Depositor hereby certifies that the source of the
contribution qualifies the contribution as such, that the contribution is
being made to the custodial account no later than sixty (60) days after
receipt by the Depositor of the distribution giving rise to the rollover
contribution, that no previous rollover contribution has been made by the
Depositor to or from another Roth individual retirement account or annuity
within one (1) year of the date of the rollover contribution and that the
rollover is in all respects permitted by law. It shall be the sole
responsibility of the Depositor to determine the amount of the contributions
made hereunder. The Depositor shall execute such forms as the Custodian may
require in connection with any contribution hereunder.
Fund Shares held in the custodial account shall be registered in the name of
the Custodian or its nominee. The Depositor shall be the beneficial owner of
the assets held in the custodial account. All dividends and capital gains
distributions received on Fund Shares held in the Depositor's account shall,
unless received in additional shares, be reinvested in shares of the Fund
paying such dividends and distributions, which Fund Shares shall be credited
to such account. If any distributions of the Fund may be received at the
election of the Depositor in additional shares or in cash or other property,
the Custodian shall elect to receive additional shares.
The Custodian shall forward to the Depositor any Fund notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to such
shares. The Custodian shall not vote any of the shares of the Fund held in
the account except in accordance with the written instructions of the
Depositor.
<PAGE> 100
ARTICLE X
The Custodian shall from time to time, subject to the provisions of Article
V, make distributions out of the custodial account to the Depositor, in such
manner and amounts as may be specified in written instructions of the
Depositor. All such instructions shall be deemed to constitute a
certification by the Depositor that the distribution so directed is one that
the Depositor is permitted to receive. Notwithstanding the foregoing, upon
the Depositor's death the distribution rules set forth in Article V will not
apply if the Depositor's spouse is the beneficiary. In such case, such spouse
will be deemed to be the Depositor under this Agreement. Unless the Depositor
dies, is disabled (as defined in Section 72(m) of the Code), or reaches age 59
1/2, a declaration of the Depositor's intention as to the disposition of an
amount distributed from the custodial account shall be in writing and given to
the Custodian. The Custodian shall have no liability with respect to any
contribution to the custodial account, any investment of assets in the
custodial account or any distribution therefrom pursuant to instructions
received from the Depositor or this Agreement, or for any consequences to the
Depositor arising from such contributions, investments or distributions
including, but not limited to, excise and other taxes and penalties which
might accrue or be assessed by reason thereof, nor shall the Custodian be
under any duty to make any inquiry or investigation with respect thereto.
ARTICLE XI
If the Depositor is disabled (as defined in Section 72(m) of the Code) all or
a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The
Custodian may require such proof of disability as it deems necessary prior to
the time that amounts are distributed to the Depositor on account of such
disability.
ARTICLE XII
The Depositor may designate and redesignate his/her beneficiary or
beneficiaries on a form satisfactory to the Custodian and provided by the Fund
for such purpose. To be effective, such designation must be received by the
Custodian prior to the death of the Depositor. Such beneficiary or
beneficiaries shall be entitled to the balance in the custodial account of the
Depositor as provided in Paragraph 1 of Article V. Unless otherwise provided
in the designation of beneficiary form, amounts payable by reason of the
Depositor's death will be paid only to the primary beneficiary or
beneficiaries who survive the Depositor in equal shares. If some but not all
primary or contingent beneficiaries, as applicable, do not survive the
Depositor, any amounts that such non-surviving beneficiaries shall have been
entitled to receive hereunder shall be divided among the surviving primary or
contingent beneficiaries, as applicable, in proportion to the relative
interests of the surviving primary or contingent beneficiaries. If no
designation of beneficiary is in effect at the time of the Depositor's death
or if no designated beneficiary survives the Depositor, the balance in the
Custodial Account of the Depositor shall be paid to the legal representative
of the estate of the Depositor.
<PAGE> 101
ARTICLE XIII
Depositor acknowledges that he or she has read the information distributed to
him or her by the Custodian and agrees to assume full responsibility for all
decisions as to deposits and withdrawals, and the Depositor indemnifies the
Custodian and saves it free and harmless from any and all claims arising out
of any adverse consequences experienced by the Depositor as a result of his or
her own decision, including but not limited to excise taxes and penalties.
Any taxes which may be imposed upon the custodial account or the income
thereof, but not excise taxes imposed upon the Depositor, may, in the
discretion of the Custodian, be deducted from and charged against the
custodial account.
ARTICLE XIV
If, within sixty (60) days after the mailing by the Custodian to the
Depositor of a report pursuant to Paragraph 2 of Article VI, the Depositor has
not given the Custodian written notice of any exception or objection thereto,
such report shall be deemed to have been approved in its entirety and in such
case, or upon written approval of the Depositor, the Custodian shall be
released, relieved, and discharged with respect to ail matters and statements
set forth therein as though the report had been settled by judgment or decree
of a court of competent jurisdiction.
ARTICLE XV
The Custodian shall have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations
shall be read into this Agreement against the Custodian. The Custodian shall
not be liable under this Agreement, except for its own bad faith, gross
negligence or willful misconduct. In performing its duties under this
Agreement, the Custodian may hire agents, experts and attorneys and delegate
discretionary powers to, and rely upon information and advice furnished by
such agents, experts and attorneys.
2
ARTICLE XVI
No interest right or claim in or to any part of the custodial account 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 as required by law.
ARTICLE XVII
The Depositor hereby delegates to the Custodian the power to amend this
agreement from time to time as it deems appropriate, and hereby consents to
all such amendments, provided, however, that all such amendments are in
compliance with the provisions of the Code and the regulations promulgated
thereunder. All such amendments shall be effective as of the date specified
in a written notice of amendment which will be sent to the Depositor.
<PAGE> 102
ARTICLE XVIII
This account and this Agreement may be terminated at any time by the
Depositor by written instrument delivered to the Custodian. In addition, in
the event that either (a) all of the Funds available for investment hereunder
are liquidated or otherwise terminated or (b) the Sponsor of this individual
retirement account ceases to act as such without a successor assuming the
duties of the Sponsor, the account and this Agreement shall be terminated and
the assets thereof shall be delivered to the Depositor unless prior to such
payment the Depositor provides written instructions to the Custodian to
transfer such proceeds to the trustee or custodian of another individual
retirement account.
ARTICLE XIX
The Custodian may resign without liability, cost or expense of any kind, upon
written notice furnished by the Custodian to the Depositor, such resignation
to be effective the thirtieth (30th) day following the mailing to the
Depositor of such notice. The Depositor or the Sponsor may remove the
Custodian upon thirty (30) days' written notice to that effect to the
Custodian. Upon such resignation or removal, the Depositor or the Sponsor, as
the case may be, shall appoint a successor custodian. Any successor custodian
shall satisfy the requirements of Section 408(h) of the Code. Upon receipt by
the Custodian of written acceptance of such appointment by the successor
custodian, the Custodian shall deliver the assets of the custodial account to
the successor custodian. In the event that the Depositor or the Sponsor, as
the case may be, fails to appoint a successor custodian within 30 days of the
mailing of the notice of resignation or removal, the Custodian shall terminate
the account and pay the proceeds to the Depositor. Notwithstanding the
foregoing, the Custodian may reserve such assets of the custodial account as
it may deem necessary for the payment of all of its fees, compensation, costs
and expenses and for the payment of all other liabilities which are a charge
on or against the assets of the custodial account or on or against the
Custodian and where necessary may liquidate reserved Fund Shares. Any balance
of such reserve remaining after the payment of all such items shall be paid
over by the Custodian to a successor custodian or, if the Depositor or the
Sponsor, as the case may be, has failed to appoint a successor custodian, to
the Depositor.
ARTICLE XX
Any notice herein required or permitted to be given to the Custodian shall
not be effective unless it is mailed to and actually received by the Custodian
at the address specified in the custodial account application or at such other
address as the Custodian shall provide the Depositor from time to time in
writing, stating that such other address shall be used for purposes of this
Agreement. Any notice herein required or permitted to be given to the
Depositor shall be mailed to the Depositor at the Depositor's residence
address specified in the custodial account application or at such other
address as he/she shall provide the Custodian from time to time in writing
stating that such other address shall be used for purposes of this Agreement,
and any such notice shall be deemed accepted by the Depositor at the time it
is mailed. Depositor and his/her beneficiaries will be bound by the last
address furnished to the Custodian by the Depositor or his/her beneficiary.
3
<PAGE> 103
ARTICLE XXI
The Custodian and Depositor hereby waive and agree to waive right to trial by
jury in an action or proceeding instituted in respect to this custodial
account. The Depositor further agrees that the venue of any litigation
between him and the Custodian with respect to the custodial account shall be
in the county in which the Custodian maintains its principal place of
business.
ARTICLE XXII
This Agreement and the custodial account created hereby shall be subject to
the applicable laws, rules and regulations, as the same may from time to time
be amended, of the Federal government and the Commonwealth of Massachusetts
and the agencies and instrumentalities of each having jurisdiction thereof,
and shall be governed by and construed, administered and enforced according to
the law of the Commonwealth of Massachusetts. All contributions to the
custodial account shall be deemed to take place in the Commonwealth of
Massachusetts.
ARTICLE XXIII
Except for any excise taxes required by the Code to be paid by the Depositor,
any income tax or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect to the custodial account shall be paid from the
assets of the custodial account. Any transfer taxes incurred in connection
with the investment and reinvestment of the assets of the custodial account,
all other administrative expenses incurred by the Custodian in the performance
of its duties, including fees for legal services rendered to the Custodian,
shall be paid from the assets of the custodial account.
The Custodian shall be entitled to receive and may charge against the
Depositor's custodial account such reasonable compensation for its services in
accordance with its fee schedule as from time to time in effect, and shall
also be entitled to reimbursement of its expenses as Custodian under this
Agreement. The Custodian will notify the Depositor in writing of any change
in its fee schedule.
4
<PAGE> 104
Form 5305-SA SIMPLE Individual Retirement Custodial Account
(Rev. January 1998) DO NOT File
(Under section 408(p) of the With the
Internal Revenue Code) Internal
Department of the Treasury Revenue Service
Internal Revenue Service
______________________________________________________________________________
Name of participant | Date of birth of participant | Social security number
| | | |
______________________|_______________________________|______|______|_________
Address of participant | Check if transfer
| SIMPLE IRA . . . .>[]
| Check if amendment.>[]
______________________________________________________|_______________________
Name of custodian | Address or principal place of business of custodian
|
______________________|_______________________________________________________
The participant whose name appears above is establishing a savings incentive
match plan for employees of small employers individual retirement account
(SIMPLE IRA) under sections 408(a) and 408(p) to provide for his or her
retirement and for the support of his or her beneficiaries after death.
The custodian named above has given the participant the disclosure statement
required under Regulations section 1.408-6.
The participant and the custodian make the following agreement:
______________________________________________________________________________
Article I
The custodian will accept cash contributions made on behalf of the
participant by the participant's employer under the terms of a SIMPLE plan
described in section 408(p). In addition, the custodian will accept transfers
or rollovers from other SIMPLE IRAs of the participant. No other contributions
will be accepted by the custodian.
Article II
The participant's interest in the balance in the custodial account is
nonforfeitable.
Article III
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)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
<PAGE> 105
distribution of the participant's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the participant under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
participant and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The participant's entire interest in the custodial account must be, or
begin to be, distributed by the participant's required beginning date (April 1
following the calendar year end in which the participant reaches age 70 1/2).
By that date, the participant may elect, in a manner acceptable to the
custodian, to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the participant.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
participant and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the participant'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
participant and his or her designated beneficiary.
4. If the participant dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the participant dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the participant dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the participant
or, if the participant has not so elected, at the election of the beneficiary
or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the participant's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the participant's death. If,
however, the beneficiary is the participant's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the participant would have reached age 70 1/2.
<PAGE> 106
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the participant's
required beginning date, even though payments may actually have been made
before that date.
(d) If the participant 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.
_____________________________________________________________________________
Cat. No. 23698C Form 5305-SA (Rev. 1-98)
Form 5305-SA (Rev. 1-98) Page 2
______________________________________________________________________________
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the participant'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 participant (or the joint life and last survivor
expectancy of the participant and the participant's designated beneficiary, or
the life expectancy of the designated beneficiary, whichever applies). In the
case of distributions under paragraph 3, determine the initial life expectancy
(or joint life and last survivor expectancy) using the attained ages of the
participant and designated beneficiary as of their birthdays in the year the
participant reaches age 70 1/2 . In the case of a distribution in accordance
with paragraph 4(b)(ii), determine life expectancy using the attained age of
the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The participant agrees to provide the custodian with information
necessary for the custodian to prepare any reports required under sections
408(i) and 408(l)(2) and Regulations sections 1.408-5 and 1.408-6.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the participant as prescribed by the Internal Revenue Service.
3. The custodian also agrees to provide the participant's employer the
summary description described in section 408(l)(2) unless this SIMPLE IRA is a
transfer SIMPLE IRA.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with sections 408(a) and
408(p) and the related regulations will be invalid.
<PAGE> 107
Article VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
______________________________________________________________________________
NOTE: The following space (Article VIII) may be used for any other provisions
you want to add. If you do not want to add any other provisions, draw a line
through this space. If you do add provisions, they must comply with applicable
requirements of state law and the Internal Revenue Code.
______________________________________________________________________________
Article VIII
ARTICLES VIII THROUGH XXIII ARE SET FORTH IN APPENDIX "A" TO THIS AGREEMENT,
WHICH ARTICLES ARE HEREBY INCORPORATED BY REFERENCE.
______________________________________________________________________________
Participant's signature ___________________________ Date_____________________
(If an individual other than the participant signs this form for the
participant, indicate the individual's relationship to the participant.)
Custodian's signature _____________________________ Date_____________________
Witness' signature __________________________________________________________
(Use only if signature of the participant or the custodian is required to be
witnessed.)
______________________________________________________________________________
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
NOTE: Users of the December 1996 version of Form 5305-SA are not required to
use the January 1998 revision of this form.
Form 5305-SA is a model custodial account agreement that meets the
requirements of sections 408(a) and 408(p) and has been automatically approved
by the IRS. An individual retirement account (IRA) is established after the
form is fully executed by both the individual (participant) and the custodian.
This account must be created in the United States for the exclusive benefit of
the participant or his or her beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to the
extent specified in those regulations.
Do not file Form 5305-SA with the IRS. Instead, keep it for your records.
For more information on IRAs, including the required disclosures the
custodian must give the participant, see PUB. 590, Individual Retirement
Arrangements (IRAs).
<PAGE> 108
DEFINITIONS
PARTICIPANT. The participant is the person who establishes the custodial
account.
CUSTODIAN. The custodian must be a bank or savings and loan association,
as defined in section 408(n), or any person who has the approval of the IRS to
act as custodian.
TRANSFER SIMPLE IRA
This SIMPLE IRA is a "transfer SIMPLE IRA" if it is not the original recipient
of contributions under any SIMPLE plan. The summary description requirements
of section 408(l)(2) do not apply to transfer SIMPLE IRAs.
SPECIFIC INSTRUCTIONS
ARTICLE IV. Distributions made under this article may be made in a single
sum, periodic payment, or a combination of both. The distribution option
should be reviewed in the year the participant reaches age 70 1/2 to ensure
that the requirements of section 408(a)(6) have been met.
ARTICLE VIII. Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the participant and custodian to complete the
agreement. They may include, for example, definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
the custodian, custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the participant, etc. Use additional pages if
necessary and attach them to this form.
NOTE: FORM 5305-SA MAY BE REPRODUCED AND REDUCED IN SIZE.
______________________________________________________________________________
<PAGE> 109
EAGLE GROWTH SHARES, INC.
PHILADELPHIA FUND, INC.
INDIVIDUAL RETIREMENT ACCOUNT
----------------------------------
APPENDIX "A"
ADDITIONS TO SIMPLE INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(FORM 5305-SA)
ARTICLE VIII
All Contributions to the custodial account made by or on behalf of the
Depositor shall be invested in accordance with proper instructions received
from time to time from the Depositor and shall be applied to purchase full and
fractional shares (hereinafter referred to as "Fund Shares") of Eagle Growth
Shares, Inc., Philadelphia Fund, Inc. and any other mutual funds for which
Baxter Financial Corporation (the "Sponsor") acts as the principal distributor
or investment advisor and Star Bank, N.A. acts as custodian and American Data
Services acts as transfer agent (a "Fund" or "Funds"). Only those
contributions described in Article I may be made to the custodial account, and
the Depositor shall be fully and solely responsible for all taxes, interest
and penalties which might accrue or be assessed by reason of any excess
deposit, and earnings if any, thereon. Any contributions made by or on behalf
of the Depositor in respect of a taxable year of the Depositor shall be made
by or on the behalf of the Depositor to the Custodian for deposit in the
custodial account no later than the due date for filing the Depositor's tax
return for such taxable year (excluding extensions), or by such other date as
from time to time provided by law. If a contribution is intended to be a
rollover contribution referred to in Article I, the Depositor hereby certifies
that the source of the contribution qualifies the contribution as such, that
the contribution is being made to the custodial account no later than sixty
(60) days after receipt by the Depositor of the distribution giving rise to
the rollover contribution, that no previous rollover contribution has been
made by the Depositor to or from another SIMPLE individual retirement account
or annuity within one (1) year of the date of the rollover contribution and
that the rollover is in all respects permitted by law. It shall be the sole
responsibility of the Depositor to determine the amount of the contributions
made hereunder. The Depositor shall execute such forms as the Custodian may
require in connection with any contribution hereunder.
Fund Shares held in the custodial account shall be registered in the name of
the Custodian or its nominee. The Depositor shall be the beneficial owner of
the assets held in the custodial account. All dividends and capital gains
distributions received on Fund Shares held in the Depositor's account shall,
unless received in additional shares, be reinvested in shares of the Fund
paying such dividends and distributions, which Fund Shares shall be credited
to such account. If any distributions of the Fund may be received at the
election of the Depositor in additional shares or in cash or other property,
the Custodian shall elect to receive additional shares.
The Custodian shall forward to the Depositor any Fund notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to such
shares. The Custodian shall not vote any of the shares of the Fund held in
the account except in accordance with the written instructions of the
Depositor.
<PAGE> 110
ARTICLE IX
The Custodian shall from time to time, subject to the provisions of Article
IV and V, make distributions out of the custodial account to the Depositor, in
such manner and amounts as may be specified in written instructions of the
Depositor. All such instructions shall be deemed to constitute a
certification by the Depositor that the distribution so directed is one that
the Depositor is permitted to receive. Notwithstanding the foregoing, upon
the Depositor's death the distribution rules set forth in Article IV will not
apply if the Depositor's spouse is the beneficiary and he or she elects to
treat the account as his or her own IRA. In such case, such spouse will be
deemed to be the Depositor under this Agreement. Unless the Depositor dies,
is disabled (as defined in Section 72(m) of the Code), or reaches age 59 1/2,
a declaration of the Depositor's intention as to the disposition of an amount
distributed from the custodial account shall be in writing and given to the
Custodian. The Custodian shall have no liability with respect to any
contribution to the custodial account, any investment of assets in the
custodial account or any distribution therefrom pursuant to instructions
received from the Depositor or this Agreement, or for any consequences to the
Depositor arising from such contributions, investments or distributions
including, but not limited to, excise and other taxes and penalties which
might accrue or be assessed by reason thereof, nor shall the Custodian be
under any duty to make any inquiry or investigation with respect thereto.
ARTICLE X
If the Depositor is disabled (as defined in Section 72(m) of the Code) all or
a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The
Custodian may require such proof of disability as it deems necessary prior to
the time that amounts are distributed to the Depositor on account of such
disability.
ARTICLE XI
The Depositor may designate and redesignate his/her beneficiary or
beneficiaries on a form satisfactory to the Custodian and provided by the Fund
for such purpose. To be effective, such designation must be received by the
Custodian prior to the death of the Depositor. Such beneficiary or
beneficiaries shall be entitled to the balance in the custodial account of the
Depositor as provided in Paragraph 4 of Article IV. Unless otherwise provided
in the designation of beneficiary form, amounts payable by reason of the
Depositor's death will be paid only to the primary beneficiary or
beneficiaries who survive the Depositor in equal shares. If some but not all
primary or contingent beneficiaries, as applicable, do not survive the
Depositor, any amounts that such non-surviving beneficiaries shall have been
entitled to receive hereunder shall be divided among the surviving primary or
contingent beneficiaries, as applicable, in proportion to the relative
interests of the surviving primary or contingent beneficiaries. If no
designation of beneficiary is in effect at the time of the Depositor's death
or if no designated beneficiary survives the Depositor, the balance in the
Custodial Account of the Depositor shall be paid to the legal representative
of the estate of the Depositor.
<PAGE> 111
ARTICLE XII
Depositor acknowledges that he or she has read the information distributed to
him or her by the Custodian and agrees to assume full responsibility for all
decisions as to deposits and withdrawals, and the Depositor indemnifies the
Custodian and saves it free and harmless from any and all claims arising out
of any adverse consequences experienced by the Depositor as a result of his or
her own decision, including but not limited to excise taxes and penalties.
Any taxes which may be imposed upon the custodial account or the income
thereof, but not excise taxes imposed upon the Depositor, may, in the
discretion of the Custodian, be deducted from and charged against the
custodial account.
ARTICLE XIII
If, within sixty (60) days after the mailing by the Custodian to the
Depositor of a report pursuant to Paragraph 2 of Article V, the Depositor has
not given the Custodian written notice of any exception or objection thereto,
such report shall be deemed to have been approved in its entirety and in such
case, or upon written approval of the Depositor, the Custodian shall be
released, relieved, and discharged with respect to ail matters and statements
set forth therein as though the report had been settled by judgment or decree
of a court of competent jurisdiction.
ARTICLE XIV
The Custodian shall have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations
shall be read into this Agreement against the Custodian. The Custodian shall
not be liable under this Agreement, except for its own bad faith, gross
negligence or willful misconduct. In performing its duties under this
Agreement, the Custodian may hire agents, experts and attorneys and delegate
discretionary powers to, and rely upon information and advice furnished by
such agents, experts and attorneys.
2
ARTICLE XV
No interest right or claim in or to any part of the custodial account 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 as required by law.
ARTICLE XVI
The Depositor hereby delegates to the Custodian the power to amend this
agreement from time to time as it deems appropriate, and hereby consents to
all such amendments, provided, however, that all such amendments are in
compliance with the provisions of the Code and the regulations promulgated
thereunder. All such amendments shall be effective as of the date specified
in a written notice of amendment which will be sent to the Depositor.
<PAGE> 112
ARTICLE XVII
This account and this Agreement may be terminated at any time by the
Depositor by written instrument delivered to the Custodian. In addition, in
the event that either (a) all of the Funds available for investment hereunder
are liquidated or otherwise terminated or (b) the Sponsor of this individual
retirement account ceases to act as such without a successor assuming the
duties of the Sponsor, the account and this Agreement shall be terminated and
the assets thereof shall be delivered to the Depositor unless prior to such
payment the Depositor provides written instructions to the Custodian to
transfer such proceeds to the trustee or custodian of another individual
retirement account.
ARTICLE XVIII
The Custodian may resign without liability, cost or expense of any kind, upon
written notice furnished by the Custodian to the Depositor, such resignation
to be effective the thirtieth (30th) day following the mailing to the
Depositor of such notice. The Depositor or the Sponsor may remove the
Custodian upon thirty (30) days' written notice to that effect to the
Custodian. Upon such resignation or removal, the Depositor or the Sponsor, as
the case may be, shall appoint a successor custodian. Any successor custodian
shall satisfy the requirements of Section 408(h) of the Code. Upon receipt by
the Custodian of written acceptance of such appointment by the successor
custodian, the Custodian shall deliver the assets of the custodial account to
the successor custodian. In the event that the Depositor or the Sponsor, as
the case may be, fails to appoint a successor custodian within 30 days of the
mailing of the notice of resignation or removal, the Custodian shall terminate
the account and pay the proceeds to the Depositor. Notwithstanding the
foregoing, the Custodian may reserve such assets of the custodial account as
it may deem necessary for the payment of all of its fees, compensation, costs
and expenses and for the payment of all other liabilities which are a charge
on or against the assets of the custodial account or on or against the
Custodian and where necessary may liquidate reserved Fund Shares. Any balance
of such reserve remaining after the payment of all such items shall be paid
over by the Custodian to a successor custodian or, if the Depositor or the
Sponsor, as the case may be, has failed to appoint a successor custodian, to
the Depositor.
ARTICLE XIX
Any notice herein required or permitted to be given to the Custodian shall
not be effective unless it is mailed to and actually received by the Custodian
at the address specified in the custodial account application or at such other
address as the Custodian shall provide the Depositor from time to time in
writing, stating that such other address shall be used for purposes of this
Agreement. Any notice herein required or permitted to be given to the
Depositor shall be mailed to the Depositor at the Depositor's residence
address specified in the custodial account application or at such other
address as he/she shall provide the Custodian from time to time in writing
stating that such other address shall be used for purposes of this Agreement,
and any such notice shall be deemed accepted by the Depositor at the time it
is mailed. Depositor and his/her beneficiaries will be bound by the last
address furnished to the Custodian by the Depositor or his/her beneficiary.
3
<PAGE> 113
ARTICLE XX
The Depositor shall be fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the
annual minimum withdrawal commencing no later than April 1st following the
calendar year in which he/she attains the age of seventy and one-half (70-1/2)
or for any year thereafter.
ARTICLE XXI
The Custodian and Depositor hereby waive and agree to waive right to trial by
jury in an action or proceeding instituted in respect to this custodial
account. The Depositor further agrees that the venue of any litigation
between him and the Custodian with respect to the custodial account shall be
in the county in which the Custodian maintains its principal place of
business.
ARTICLE XXII
This Agreement and the custodial account created hereby shall be subject to
the applicable laws, rules and regulations, as the same may from time to time
be amended, of the Federal government and the Commonwealth of Massachusetts
and the agencies and instrumentalities of each having jurisdiction thereof,
and shall be governed by and construed, administered and enforced according to
the law of the Commonwealth of Massachusetts. All contributions to the
custodial account shall be deemed to take place in the Commonwealth of
Massachusetts.
ARTICLE XXIII
Except for any excise taxes required by the Code to be paid by the Depositor,
any income tax or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect to the custodial account shall be paid from the
assets of the custodial account. Any transfer taxes incurred in connection
with the investment and reinvestment of the assets of the custodial account,
all other administrative expenses incurred by the Custodian in the performance
of its duties, including fees for legal services rendered to the Custodian,
shall be paid from the assets of the custodial account.
The Custodian shall be entitled to receive and may charge against the
Depositor's custodial account such reasonable compensation for its services in
accordance with its fee schedule as from time to time in effect, and shall
also be entitled to reimbursement of its expenses as Custodian under this
Agreement. The Custodian will notify the Depositor in writing of any change
in its fee schedule.
4
<PAGE> 114
PHILADELPHIA FUND
10 YEAR PERFORMANCE FIGURES
8.50% LOAD
FOR THE PERIOD ENDING 11/30/97
<TABLE>
<CAPTION>
TOTAL COST VALUE SHARE
DIV+CAP DOLLARS DOLLARS SHARES NAV PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
BALANCE 11/30/87 1000.00 915.00 143.417 6.38
DIVIDEND 12/12/87 $1.81 259.58 259.58 51.710 5.02
balance 195.127
DIVIDEND 3/9/88 $0.02 3.90 3.90 0.706 5.53
balance 195.833
DIVIDEND 6/15/88 $0.02 3.92 3.92 0.706 5.55
balance 196.538
DIVIDEND 9/15/88 $0.02 3.93 3.93 0.724 5.43 86.92
BALANCE 11/30/88 1271.33 1086.92 197.262 5.51 9.50%
DIVIDEND 12/28/88 $0.185 36.49 36.49 6.575 5.55
balance 203.838
DIVIDEND 3/22/89 $0.02 4.08 4.08 0.678 6.01
balance 204.516
DIVIDEND 6/15/89 $0.02 4.09 4.09 0.567 7.22
balance 205.083
DIVIDEND 9/14/89 $0.04 8.20 8.20 1.130 7.26 404.00
BALANCE 11/30/89 1324.20 1490.92 206.213 7.23 37.17%
DIVIDEND 12/13/89 $0.95 195.90 195.90 31.344 6.25
balance 237.557
DIVIDEND 3/28/90 $0.04 9.50 9.50 1.613 5.89
balance 239.170
DIVIDEND 6/13/90 $0.04 9.57 9.57 1.556 6.15
balance 240.726
DIVIDEND 9/14/90 $0.04 9.63 9.63 1.770 5.44 -195.99
BALANCE 11/30/90 1548.80 1294.93 242.496 5.34 - 13.15%
DIVIDEND 12/26/90 $0.06 14.55 14.55 2.675 5.44
balance 245.170
DIVIDEND 3/20/91 $0.03 7.36 7.36 1.290 5.70
balance 246.461
DIVIDEND 6/12/91 $0.02 4.93 4.93 0.851 5.79
balance 247.312
DIVIDEND 9/12/91 $0.02 4.95 4.95 0.885 5.59 47.82
BALANCE 11/30/91 1580.58 1342.74 248.197 5.41 3.69%
DIVIDEND 12/23/91 $0.02 4.96 4.96 0.904 5.49
balance 249.101
DIVIDEND 3/25/92 $0.01 2.49 2.49 0.421 5.91
balance 249.523
DIVIDEND 6/16/92 $0.02 4.99 4.99 0.818 6.10
balance 250.341
<PAGE> 115
DIVIDEND 9/15/92 $0.02 5.01 5.01 0.795 6.30 294.66
BALANCE 11/30/92 1598.03 1637.40 251.135 6.52 21.94%
DIVIDEND 12/24/92 $0.11 27.62 27.62 4.186 6.60
balance 255.321
DIVIDEND 3/25/93 $0.02 5.11 5.11 0.733 6.97
balance 256.054
DIVIDEND 6/8/93 $0.02 5.12 5.12 0.739 6.93
balance 256.793
DIVIDEND 9/14/93 $0.03 7.70 7.70 1.033 7.46 301.44
BALANCE 11/30/93 1643.59 1938.85 257.825 7.52 18.41%
DIVIDEND 12/28/93 $0.683 176.09 176.09 25.228 6.98
balance 283.054
DIVIDEND 3/15/94 $0.020 5.66 5.66 0.856 6.61
balance 283.910
DIVIDEND 6/14/94 $0.020 5.68 5.68 0.880 6.45
balance 284.790
DIVIDEND 9/13/94 $0.030 8.54 8.54 1.337 6.39 -139.10
BALANCE 11/30/94 1839.56 1799.74 286.128 6.29 - 7.17%
DIVIDEND 12/28/94 $0.050 14.31 14.31 2.274 6.29
balance 288.402
DIVIDEND 3/22/95 $0.030 8.65 8.65 1.313 6.59
balance 289.715
DIVIDEND 6/13/95 $0.020 5.79 5.79 0.827 7.01
balance 290.541
DIVIDEND 9/26/95 $0.030 8.72 8.72 1.147 7.60 478.34
BALANCE 11/30/95 1877.03 2278.09 291.688 7.81 26.58%
DIVIDEND 12/27/95 $0.845 246.48 246.48 34.715 7.10
balance 326.403
DIVIDEND 3/26/96 $0.030 9.79 9.79 1.351 7.25
balance 327.754
DIVIDEND 6/24/96 $0.030 9.83 9.83 1.351 7.28
balance 329.105
DIVIDEND 9/24/96 $0.030 9.87 9.87 1.345 7.34 365.51
BALANCE 11/30/96 2153.01 2643.60 330.450 8.00 16.04%
DIVIDEND 12/24/96 $0.065 21.48 21.48 2.702 7.95
balance 333.152
DIVIDEND 3/25/97 $0.020 6.66 6.66 0.786 8.48
balance 333.937
DIVIDEND 6/24/97 $0.020 6.68 6.68 0.723 9.24
balance 334.660
DIVIDEND 9/23/97 $0.030 10.04 10.04 1.049 9.57 730.28
BALANCE 11/30/97 2197.87 3373.88 335.709 10.05 27.62%
- -----------------------------------------------------------------------------
10 YEAR TOTAL RETURN 239.89%
AVERAGE ANNUAL TOTAL RETURN 13.01%
==============================================================================
<PAGE> 116
PHILADELPHIA FUND,INC
5 YEAR PERFORMANCE FIGURES
0.00% LOAD
FOR THE PERIOD ENDING 11/30/97
</TABLE>
<TABLE>
<CAPTION>
TOTAL COST VALUE SHARE
DIV+CAP DOLLARS DOLLARS SHARES NAV PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
BALANCE 11/30/91 1000.00 1000.00 153.374 6.52
DIVIDEND 12/24/92 $0.11 16.87 16.87 2.556 6.60
balance 155.930
DIVIDEND 3/25/93 $0.02 3.12 3.12 0.447 6.97
balance 156.378
DIVIDEND 6/8/93 $0.02 3.13 3.13 0.451 6.93
balance 156.829
DIVIDEND 9/14/93 $0.03 4.70 4.70 0.631 7.46 184.10
BALANCE 11/30/93 1027.82 1184.10 157.460 7.52 18.41%
DIVIDEND 12/28/93 $0.683 107.55 107.55 15.408 6.98
balance 172.867
DIVIDEND 3/15/94 $0.020 3.46 3.46 0.523 6.61
balance 173.391
DIVIDEND 6/14/94 $0.020 3.47 3.47 0.538 6.45
balance 173.928
DIVIDEND 9/13/94 $0.030 5.22 5.22 0.817 6.39 - 84.95
BALANCE 11/30/94 1147.51 1099.14 174.745 6.29 - 7.17%
DIVIDEND 12/28/94 $0.050 8.74 8.74 1.389 6.29
balance 176.134
DIVIDEND 3/22/95 $0.030 5.28 5.28 0.802 6.59
balance 176.936
DIVIDEND 6/13/95 $0.020 3.54 3.54 0.505 7.01
balance 177.440
DIVIDEND 9/26/95 $0.030 5.32 5.32 0.700 7.60 292.14
BALANCE 11/30/95 1170.39 1391.28 178.141 7.81 26.58%
DIVIDEND 12/27/95 $0.845 150.53 150.53 21.201 7.10
balance 199.342
DIVIDEND 3/26/96 $0.030 5.98 5.98 0.825 7.25
balance 200.167
DIVIDEND 6/24/96 $0.030 6.01 6.01 0.825 7.28
balance 200.992
DIVIDEND 9/24/96 $0.030 6.03 6.03 0.821 7.34 223.23
BALANCE 11/30/96 1338.94 1614.51 201.813 8.00 16.04%
DIVIDEND 12/24/96 $0.065 13.12 13.12 1.650 7.95
balance 203.463
DIVIDEND 3/25/97 $0.020 4.07 4.07 0.480 8.48
balance 203.943
<PAGE> 117
DIVIDEND 6/24/97 $0.020 4.08 4.08 0.441 9.24
balance 204.385
DIVIDEND 9/23/97 $0.030 6.13 6.13 0.641 9.57 446.00
BALANCE 11/30/97 1366.34 2060.51 205.025 10.05 27.62%
- -----------------------------------------------------------------------------
5 YEAR TOTAL RETURN 106.05%
AVERAGE ANNUAL TOTAL RETURN 15.56%
==============================================================================
PHILADELPHIA FUND, INC.
1 YEAR PERFORMANCE FIGURES
0.00% LOAD
FOR THE PERIOD ENDING 11/30/97
</TABLE>
<TABLE>
<CAPTION>
TOTAL COST VALUE SHARE
DIV+CAP DOLLARS DOLLARS SHARES NAV PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
BALANCE 11/30/96 1000.00 1000.00 125.000 8.00
DIVIDEND 12/27/96 $0.065 8.13 8.13 1.022 7.95
balance 126.022
DIVIDEND 3/25/97 $0.020 2.52 2.52 0.297 8.48
balance 126.319
DIVIDEND 6/24/97 $0.020 2.53 2.53 0.273 9.24
balance 126.593
DIVIDEND 9/23/97 $0.030 3.80 3.80 0.397 9.57 276.24
BALANCE 11/30/97 1016.97 1276.24 126.989 10.05 27.62%
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN 27.62%
==============================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000078105
<NAME> PHILADELPHIA FUND, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 64,597,267
<INVESTMENTS-AT-VALUE> 113,052,201
<RECEIVABLES> 281,941
<ASSETS-OTHER> 290,927
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 113,625,069
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130,917
<TOTAL-LIABILITIES> 130,917
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55,609,713
<SHARES-COMMON-STOCK> 11,292,031
<SHARES-COMMON-PRIOR> 12,161,782
<ACCUMULATED-NII-CURRENT> 240,444
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,189,061
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 48,454,934
<NET-ASSETS> 113,494,152
<DIVIDEND-INCOME> 1,779,429
<INTEREST-INCOME> 856,723
<OTHER-INCOME> 0
<EXPENSES-NET> 1,577,132
<NET-INVESTMENT-INCOME> 1,059,020
<REALIZED-GAINS-CURRENT> 9,197,530
<APPREC-INCREASE-CURRENT> 15,173,415
<NET-CHANGE-FROM-OPS> 25,429,965
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,234,269
<DISTRIBUTIONS-OF-GAINS> 362,363
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32,832
<NUMBER-OF-SHARES-REDEEMED> 1,054,871
<SHARES-REINVESTED> 152,288
<NET-CHANGE-IN-ASSETS> 16,193,837
<ACCUMULATED-NII-PRIOR> 415,693
<ACCUMULATED-GAINS-PRIOR> 353,894
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 776,208
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,581,142
<AVERAGE-NET-ASSETS> 103,017,988
<PER-SHARE-NAV-BEGIN> 8.00
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 2.10
<PER-SHARE-DIVIDEND> 0.105
<PER-SHARE-DISTRIBUTIONS> 0.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.05
<EXPENSE-RATIO> 1.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
