As filed with the Securities and Exchange Commission on October 28, 1997
Securities Act registration no. 33-23997
Investment Company Act file no. 811-5602
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 9 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 11 [X]
FASCIANO FUND, INC.
(Registrant)
190 S. LaSalle Street, Suite 2800
Chicago, Illinois 60603
Telephone number: 312/444-6050
Michael F. Fasciano Janet D. Olsen
Fasciano Company, Inc. Bell, Boyd & Lloyd
Suite 2800 Suite 3200
190 S. LaSalle Street 70 West Madison Street
Chicago, Illinois 60603 Chicago, Illinois 60602
(Agents for service)
Amending Parts A, B and C and filing exhibits
It is proposed that this filing will become effective:
----- immediately upon filing pursuant to paragraph (b) of
rule 485
--X-- on October 28, 1997 pursuant to paragraph (b) of rule 485
----- 60 days after filing pursuant to paragraph (a)(1) rule 485(a)
----- on -------- pursuant to paragraph (a)(1) rule 485(a)
----- 75 days after filing pursuant to paragraph (a)(2) of
rule 485
----- on ---------- pursuant to paragraph (a)(2) of rule 485
Registrant filed its Rule 24f-2 Notice for the fiscal year ended June 30, 1997
on August 29, 1997.
FASCIANO FUND, INC.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Item Location or caption*
- ---- -------------------
Part A (prospectus)
------------------
1(a) & (b) Front cover
2(a) Fund Expenses
(b)-(c) Not applicable
3(a) Financial Highlights
(b) Not applicable
(c)-(d) Performance Information
4(a)(i) Other Information
(a)(ii)&(b) Investment Objectives and Policies;
Investment Restrictions
(c) Investment Risks
5(a) Management of the Fund
(b) Management of the Fund; back cover
(c) Management of the Fund
(d) Management of the Fund
(e) Back cover
(f) Management of the Fund
(g) Not applicable
5A The information called for is contained in the fund's
annual report.
6(a) Other Information
(b)-(d) Not applicable
(e) Other Information
(f) Dividends and Distributions
(g) Taxation
7 Purchasing Shares
(a) Not Applicable
(b) Purchasing Shares; Net Asset Value
(c) Purchasing Shares
(d) Purchasing Shares; front cover
(e)-(f) Not Applicable
8(a) Redeeming Shares
(b) Purchasing Shares
(c) & (d) Redeeming Shares
9 Not applicable
Part B (Statement of Additional Information)
-------------------------------------------
10(a) & (b) Front cover
11 Table of Contents
12 History of the Fund
13(a)-(c) Investment Policies; Investment Restrictions
(d) Not applicable
14(a) & (b) Directors and Officers
(c) Not applicable
15(a) Not applicable
(b) Certain Shareholders
(c) Directors and Officers
16(a) & (b) Investment Adviser
(c) Not applicable
(d) Administrator, Custodian and Transfer Agent
(e)-(g) Not applicable
(h) Administrator, Custodian and Transfer Agent,
Independent Public Accountants
(i) Not applicable
17(a) Portfolio Transactions
(b) Not applicable
(c) & (d) Portfolio Transactions
(e) Not applicable
18 Not applicable
19(a) Purchasing and Redeeming Shares
(b) Purchasing and Redeeming Shares;
Financial Statements
(c) Purchasing and Redeeming Shares
20 Additional Tax Information
21(a)-(c) Not applicable
22(a) Not applicable
(b) Performance Information
23 Financial Statements
Part C (Other Information)
-------------------------
24 Financial statements and exhibits
25 Persons controlled by or under common control
with registrant
26 Number of holders of securities
27 Indemnification
28 Business and other connections of
investment adviser
29 Principal underwriters
30 Location of accounts and records
31 Management services
32 Undertakings
PROSPECTUS
FASCIANO FUND, INC.
(FASCIANO FUND LOGO)
CHICAGO, ILLINOIS
OCTOBER 28, 1997
<PAGE>
PROSPECTUS
FASCIANO FUND, INC.
A No-Load Fund October 28, 1997
(FASCIANO FUND LOGO)
190 South LaSalle Street
Suite 2800
Chicago, Illinois 60603
(312) 444-6050
(800) 848-6050
INVESTMENT OBJECTIVE: LONG-TERM CAPITAL GROWTH
NO SALES OR 12b-1 CHARGES
MINIMUM INVESTMENT PLANS AVAILABLE
------------------ ----------------
REGULAR AND IRA ACCOUNTS: O INDIVIDUAL RETIREMENT ACCOUNT (IRA)
Initial investment: $1,000
Subsequent investments: $100 o AUTOMATIC INVESTMENT PLAN
AUTOMATIC INVESTMENT PLAN: O SYSTEMATIC WITHDRAWAL PLAN
No initial investment required
Each automatic investment: $50
This prospectus sets forth concisely information you should know before
investing. Please read it carefully and retain it for future reference. A
Statement of Additional Information dated the date of this prospectus, and
containing more information about the Fund, has been filed with the Securities
and Exchange Commission and (together with any supplements thereto) is
incorporated herein by reference. The Statement of Additional Information is
available without charge at the address and telephone number set forth above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
FUND EXPENSES 1
FINANCIAL HIGHLIGHTS 2
INVESTMENT OBJECTIVES AND POLICIES 3
INVESTMENT RISKS 3
INVESTMENT RESTRICTIONS 4
PERFORMANCE INFORMATION 4
PURCHASING SHARES 4
REDEEMING SHARES 6
ACCOUNT REGISTRATION 7
NET ASSET VALUE 8
IRA PLAN 8
MANAGEMENT OF THE FUND 9
DIVIDENDS AND DISTRIBUTIONS 9
TAXATION 10
OTHER INFORMATION 10
SHARE PURCHASE APPLICATION 11
<PAGE>
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder of
the Fund will bear.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees (a) None
(a)A shareholder requesting payment of redemption proceeds by wire must
pay the cost of the wire (currently $12). That charge and any similar
service fee may be changed without prior notice to shareholders.
ANNUAL FUND OPERATING EXPENSES
(stated as a percentage of average net assets)
Management Fees 1.0%
12b-1 Fees None
Other Expenses 0.4%
-----
Total Fund Operating Expenses 1.4%
EXAMPLE
You would pay the following expenses on a $1,000 investment in the Fund,
assuming (1) a 5% annual rate of return (as required by the Securities and
Exchange Commission for purposes of this example), (2) the same operating
expense percentage that the Fund experienced in the past fiscal year, (3)
reinvestment of all dividends and capital gain distributions and (4) redemption
at the end of each period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ------------ ---------- ----------
$14 $44 $77 $168
The table and example are intended to help you understand the costs and
expenses that an investor in the Fund bears, directly or indirectly. THIS
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Although information such as that shown above is useful in reviewing the
Fund's expenses and in providing a basis for comparison with other mutual funds,
it should not be used for comparison with other investments using different
assumptions or time periods.
<PAGE>
FINANCIAL HIGHLIGHTS
The table below reflects the results of the Fund's operations for a share
outstanding throughout the periods shown below and has been audited by Arthur
Andersen LLP, the Fund's independent public accountants. This table should be
read in conjunction with the Fund's financial statements and notes thereto,
which are incorporated by reference into the Statement of Additional Information
and which may be obtained from the Fund upon request without charge.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989(a)<F2>
----- ------ ------ ------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of year $24.33 $20.17 $17.34 $17.74 $16.30 $15.67 $14.20 $12.72 $11.22
Income from investment
operations
Net investment income (loss) (0.03) (0.05) (0.24) (0.05) (0.05) 0.03 0.11 0.11 0.25
Net realized and unrealized
gain on securities 3.82 5.55 4.21 0.65 1.95 0.99 1.87 1.57 1.94
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 3.79 5.50 3.97 0.60 1.90 1.02 1.98 1.68 2.19
Less distributions:
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00 (0.02) (0.12) (0.12) (0.12)
Distributions from
realized gains
on securities (0.59) (1.34) (1.14) (1.00) (0.46) (0.36) (0.38) (0.03) (0.56)
Provision for income tax on
realized gains 0.00 0.00 0.00 0.00 0.00 (0.01) (0.01) (0.05) (0.01)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions
and taxes (0.59) (1.34) (1.14) (1.00) (0.46) (0.39) (0.51) (0.20) (0.69)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value at end of year $27.53 $24.33 $20.17 $17.34 $17.74 $16.30 $15.67 $14.20 $12.72
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return 15.8% 28.3% 24.1% 3.3% 11.8% 6.5% 14.8% 12.9% 30.4%*<F1>
Ratios/Supplemental Data:
Net assets at end
of year
(in thousands) $42,121 $28,981 $20,868 $16,582 $15,458 $10,564 $ 7,445 $ 5,196 $ 3,574
Expenses, excluding
provision for taxes, to
average net assets (b)<F3> 1.4% 1.5% 1.7% 1.7% 1.7% 1.7% 1.9% 2.0% 0.6%*<F1>
Net investment
income (loss) before taxes
to average net assets (c)<F4> (0.4)% (0.3)% (0.6)% (0.3)% (0.3)% 0.2% 0.7% 0.9% 3.3%*<F1>
Portfolio turnover rate 41.0% 45.6% 37.9% 99.0% 43.2% 29.0% 7.7% 57.2% 25.1%
Average commission
rate per share $0.0634 N/A N/A N/A N/A N/A N/A N/A N/A
*<F1>Annualized.
(a)<F2>From November 10, 1988, the date on which shares were first offered for
sale to the public.
(b)<F3>If the Fund had paid all of its expenses, excluding provision for Federal
income tax, and there had been no reimbursement by the investment adviser, this
ratio would have been 2.7% for the period ended June 30, 1989 and 2.1% for the
year ended June 30, 1990.
(c)<F4>If the Fund had paid all of its expenses, excluding provision for Federal
income tax, and there had been no reimbursement by the investment adviser, this
ratio would have been 1.2% for the period ended June 30, 1989 and 0.8% for the
year ended June 30, 1990.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is long-term capital growth.
Current income is considered in selecting securities, but its importance is
secondary to capital growth. There can be no assurance that the Fund will
achieve its investment objective.
The Fund invests in common stocks based on their potential for capital
appreciation, as determined by the Fund's investment adviser, Fasciano Company,
Inc. (the "Adviser"). The Adviser selects common stocks based on qualitative
and quantitative parameters, including market capitalization, business
opportunities, financial condition, and insider ownership. Ultimately,
investments selected for the Fund are those that are determined by the Adviser
to offer the greatest value or growth potential relative to price.
In the opinion of the Adviser, smaller companies (having market
capitalizations of less than one billion dollars) are more likely to sustain
higher long-term rates of growth, and therefore present better opportunities for
long-term capital growth than larger companies. Furthermore, smaller companies
are not as widely followed by institutional investors and are more likely to be
undervalued. However, the Fund may invest in larger companies that present
attractive opportunities for long-term capital growth.
The Fund invests in companies on a long-term basis and emphasizes long-term
investment performance. The Adviser has an investment time horizon of three to
five years. Prospective investors should invest in the Fund with a time horizon
of three years or longer to be consistent with the Adviser. From time to time,
however, the Fund may invest on a short-term basis or may sell within a few
months securities purchased on a long-term basis.
The Fund is ordinarily substantially fully invested and does not attempt to
invest based on a market timing strategy. The Fund expects that the major
portion of its portfolio will at all times be invested in common stocks and
securities having common stock characteristics, including securities convertible
into common stocks, and rights and warrants to purchase common stocks. The Fund
may invest in corporate or government obligations or hold cash or cash
equivalents if a temporary defensive position is considered advisable.
INVESTMENT RISKS
All investments, including those in mutual funds, have risks and the Fund is
not intended to present a balanced investment program. The Fund is designed for
long-term investors who can accept the fluctuations in portfolio value and other
risks associated with seeking Long-term capital growth through investments in
securities. The securities in which the Fund invests are subject to individual
market fluctuations.
The securities of small companies, as a class, have shown market behavior
which has had periods of favorable results and other periods of less favorable
results relative to larger companies as a class. Stocks of small companies tend
to be more volatile and less liquid than stocks of large companies. Small
companies, as compared to larger companies, may have a shorter history of
operations, may not have as great an ability to raise additional capital, may
have a less diversified product line making them susceptible to market pressure,
and may have a smaller public market for their shares.
The Fund's investment objective may be changed by the board of directors
without shareholder approval. The Fund will notify shareholders at least 30
days prior to a change in the Fund's investment objective. If there is a change
in the Fund's investment objective, you should consider whether the Fund remains
an appropriate investment in light of your then current financial position and
needs. There can be no assurance that the Fund will achieve its objective.
<PAGE>
INVESTMENT RESTRICTIONS
The Fund will not:
1. Invest more than 5% of its assets (valued at the time of investment) in
securities of any one issuer, except in U.S. government obligations;
2. Acquire securities of any one issuer which at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have a
value greater than 10% of the value of the outstanding securities of the issuer;
3. Invest more than 10% of its net assets (valued at the time of investment)
in securities for which there is no ready market (including restricted
securities and repurchase agreements maturing in more than seven days); or
4. Borrow, except in amounts up to 10% of its total assets, provided (i) that
the total of reverse repurchase agreements and such borrowings will not exceed
5% of the Fund's total assets and (ii) the Fund will not purchase securities
when its borrowings exceed 5% of total assets.
These restrictions cannot be changed without the approval of a "majority of
the outstanding" shares of the Fund as defined in the Investment Company Act of
1940. All of the Fund's investment restrictions are listed in the Statement of
Additional Information.
PERFORMANCE INFORMATION
From time to time, in advertisements or sales literature, the Fund may
present information about its performance, including "total return" and "average
annual total return" on a hypothetical investment in Fund shares.
Total return for a period is the percentage change in value during the period
of an investment in Fund shares, including the value of shares acquired through
reinvestment of all dividends and capital gain distributions. Average annual
total return is the average annual compounded rate of change in value
represented by the total return for the period. The effect of income taxes will
not be taken into account. Performance information supplied by the Fund may not
provide a basis of comparison with other investments using different
reinvestment assumptions or time periods.
The Fund may also compare its performance to various stock indices (groups of
unmanaged common stocks), such as the S&P 500, the NASDAQ Composite (OTC) and
the Russell 2000, or to the Consumer Price Index or groups of comparable mutual
funds, including ranking determined by Lipper Analytical Services, Inc., an
independent service that monitors the performance of over 1,000 mutual funds,
Morningstar, Inc., or another service.
Performance of the Fund will vary from time to time, and past results are not
necessarily indicative of future results. Information about the Fund's
performance is contained in the Fund's annual report which may be obtained free
of charge by calling (800) 848-6050.
PURCHASING SHARES
You may purchase shares of the Fund at net asset value by check, by wire or
through the Fund's Automatic Investment Plan. There are no sales commissions or
underwriting discounts. The minimum initial investment is $1,000 (except for an
Automatic Investment Plan) and minimum subsequent investments are $100
(excluding reinvestments of dividends and capital gain distributions), or $50
under the Automatic Investment Plan described below. The purchase price of Fund
shares is the net asset value per share next determined after your Share
Purchase Application (for a new account) and funds are received in proper order
and accepted by the Fund or its authorized agent. See "Net Asset Value."
<PAGE>
Purchasing shares by check. To purchase shares by check, complete and sign the
Share Purchase Application at the back of this prospectus and mail it, with a
check in U.S. dollars drawn on a U.S. bank for the total purchase price, to the
Fund's transfer agent, FIRSTAR TRUST COMPANY, P. O. BOX 701, MILWAUKEE,
WISCONSIN 53201-0701.
Purchasing shares by wire. You may also pay for Fund shares by wire transfer of
the purchase price. Before wiring funds, call Firstar Trust Company ("Firstar")
at (800) 982-3533 to ensure prompt and accurate handling of your investment.
Then instruct your bank to wire the purchase price to "Firstar Bank-Milwaukee
N.A., ABA number 075000022, Credit Firstar Trust Company, Account 112-952-137,
Further Credit: Fasciano Fund, Inc., Attention: Mutual Fund Department
(shareholder name; account number)". Your bank may charge you a fee for sending
the wire. The Fund is not responsible for the consequences of delays, including
delays in the banking or Federal Reserve wire system.
Automatic Investment Plan. The Automatic Investment Plan allows you to purchase
shares by an electronic transfer of funds at regular monthly intervals from your
bank checking account, money market account, NOW account or savings account.
There is no minimum initial investment if you enroll in the Automatic
Investment Plan when you open your account. Your account will be debited and
shares will be purchased at regular monthly intervals of your choosing. You may
join the Automatic Investment Plan by completing that portion of the Share
Purchase Application or filling out a separate Automatic Investment Plan
Application which you may obtain from the Fund or the transfer agent. You may
cancel your participation in the Plan or change the amount of purchase or the
day each month on which shares are purchased at any time by calling (800) 982-
3533 or by writing to the Fund c/o FIRSTAR TRUST COMPANY, P. O. BOX 701,
MILWAUKEE, WISCONSIN 53201-0701. The change or cancellation will be effective
five business days following receipt. For details on how to change your Plan
options or terminate the Plan by telephone, see "Account Registration."
Each investment through the Automatic Investment Plan must be at least $50
and not more than $50,000. For you to participate in the Plan, your bank or
other financial institution must be an Automated Clearing House member. It will
take about 15 days for Firstar to process your Automatic Investment Plan
enrollment. The Fund may modify or terminate the Automatic Investment Plan at
any time or charge a service fee, although no such fee is currently
contemplated.
General. Each investment in shares of the Fund, including dividends and capital
gain distributions reinvested in Fund shares, is acknowledged by a statement
showing the number of shares purchased, the net asset value at which the shares
are purchased, and the new balance of Fund shares owned. Generally the Fund
does not issue stock certificates for the shares, although stock certificates in
full share amounts will be furnished upon your written request. Fractional
shares, if any, will be carried on the books of the Fund without the issuance of
certificates.
The Fund reserves the right not to accept purchase orders under circumstances
or in amounts considered disadvantageous to existing shareholders, or which do
not include properly certified social security or taxpayer identification
numbers. In addition to any loss sustained by the Fund, Firstar will charge a
fee (currently $15) against any person whose check is returned for insufficient
funds.
The Fund does not consider the U.S. Postal Service or other independent
delivery services to be its agents. Therefore, deposit in the mail or with such
services of purchase applications and redemption requests does not constitute
receipt by Firstar Trust company or the Fund. Do not mail letters by overnight
courier to the post office box address. CORRESPONDENCE SENT BY OVERNIGHT
COURIER should be addressed to Firstar Trust Company, Third Floor, 615 East
Michigan Street, Milwaukee, Wisconsin 53202.
<PAGE>
Purchases and redemptions through dealers. You may purchase or redeem shares of
the Fund through some broker-dealers, banks or other institutions that have made
Fund shares available to their customers ("financial services companies"). Some
financial services companies may charge fees to their customers, including fees
on purchases or redemptions of Fund shares. Those charges, if imposed, could
constitute a substantial portion of a smaller account and may not be in your
best interest. Some financial services companies charge no fees or fewer fees
to their customers. However, for accounting and shareholder services provided
by such company with respect to Fund shares held by that company for its
customers, the company may charge a fee (currently up to 0.35%) of the annual
average value of those accounts.
The Fund may also enter into an arrangement with some financial services
companies authorizing the company to process purchase orders or redemption
requests on behalf of the Fund on an expedited basis, including requesting share
redemptions by telephone (an "authorized agent"). Receipt of a purchase order
or redemption request by an authorized agent will be deemed to be receipt by the
Fund for purposes of determining the net asset value of Fund shares to be
purchased or redeemed.
For purchase orders placed through an authorized agent, a shareholder will
pay the Fund's net asset value per share next computed after the receipt by the
authorized agent of such purchase order, plus any applicable transaction charge
imposed by the agent. For redemption orders placed through an authorized agent,
a shareholder will receive redemption proceeds which reflect the net asset value
per share next computed after the receipt by the authorized agent of the
redemption order, less any redemption fees imposed by the agent.
REDEEMING SHARES
The Fund will redeem all or any part of your shares upon your written request
delivered to the Fund's transfer agent, Firstar Trust Company, P. O. Box 701,
Milwaukee, Wisconsin 53201-0701, or to an authorized agent of the Fund, as
described above.
Your redemption request must:
(1) specify the number of shares or the dollar amount to be redeemed, unless
all shares are to be redeemed;
(2) be signed by all owners exactly as their names appear on the account;
(3) include a signature guarantee if the shares to be redeemed have a value of
more than $25,000, or if the redemption proceeds are to be sent to an address
different from the address in the Fund's records; the guarantor must be a bank,
member firm of a national securities exchange, savings and loan association,
credit union or other entity authorized by state law to guarantee signatures (a
notary public is not an acceptable guarantor); and
(4) be accompanied by properly endorsed stock certificates representing the
shares to be redeemed, if they are represented by certificates.
In the case of shares held by a corporation, the redemption request must be
signed in the name of the corporation by an officer whose title must be stated,
and a certified bylaw provision or resolution of the board of directors
authorizing the officer to so act must be furnished. In the case of a trust or
a partnership, the signature must include the name of the registered shareholder
and the title of the person signing on its behalf. Redemption requirements for
shares held under a Fasciano Fund IRA are described in separate disclosure
information for the plan. Under certain circumstances, before the shares can be
redeemed, additional documents may be required in order to verify the authority
of the person seeking to redeem.
<PAGE>
Systematic Withdrawal Plan. The Systematic Withdrawal Plan allows you to set up
automatic redemptions at regular intervals from your account if you have a
$10,000 minimum account balance. You may join the Systematic Withdrawal Plan by
completing that portion of the Share Purchase Application or filling out a
separate Systematic Withdrawal Plan Application which you may obtain from the
Fund or the transfer agent. You may cancel your participation in the Plan or
change the amount of withdrawal at any time by calling (800) 982-3533 or by
writing to the Fund at, c/o FIRSTAR TRUST COMPANY, P.O. BOX 701, MILWAUKEE,
WISCONSIN 53201-0701. The change or cancellation will be effective five
business days following receipt. The Systematic Withdrawal Plan does not apply
to Fund shares held in Individual Retirement Accounts. For details on how to
change your Plan options or terminate the Plan by telephone, see "Account
Registration."
If you need more information on redemption procedures, including redemption
of shares held in IRA and other retirement accounts, please call Firstar, the
Fund's transfer agent, toll-free at (800) 982-3533.
The redemption price per share is the net asset value determined as described
under "Net Asset Value." There is no redemption charge imposed by the Fund or by
Firstar. However, certain financial services companies through which you redeem
your Fund shares may charge you a transaction fee for their services. See
"Purchasing Shares." The redemption value of the shares may be more or less than
your cost depending upon the value of the Fund's portfolio securities at the
time of redemption.
You may not cancel or revoke your redemption order once instructions have
been received and accepted. Payment for shares redeemed is made within seven
days after receipt of a request for redemption in proper form by Firstar or by
an authorized agent of the Fund. However, redemption payments for shares that
were purchased by check may be delayed until the Fund can verify that the
payment for the shares has been collected, which may take several days. The
Fund reserves the right to suspend or postpone redemptions during any period
when (a) trading on the New York Stock Exchange is restricted, as determined by
the Securities and Exchange Commission, or that exchange is closed for other
than customary weekend and holiday closings, (b) the Commission has by order
permitted such suspension, or (c) an emergency, as determined by the Commission,
exists making disposal of portfolio securities or valuation of net assets of the
Fund not reasonably practicable.
If the Fund sends you a check (as payment of redemption proceeds, systematic
withdrawal payment or a dividend or capital gain distribution you elected to
receive in cash) and the check is returned "undeliverable" or remains uncashed
for six months, the check will be canceled and the proceeds will be reinvested
in the Fund at the net asset value per share on the date of cancellation. In
addition, after that six-month period, your systematic withdrawal payments will
be canceled and future withdrawals will occur only when requested, or your cash
election will automatically be changed and future dividends and distributions
will be reinvested in your account.
ACCOUNT REGISTRATION
ADDRESS CHANGES on your account may be made by calling (800) 982-3533. The
Fund will send you a written statement of the account to both your new and old
addresses. Any written redemptions received within 15 days after the address
change must be accompanied by a signature guarantee.
AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN CHANGES may be made
by telephone. Plan changes that may be made by telephone include increasing or
decreasing investment (withdrawal) amounts, changing the frequency of investment
(withdrawal) or terminating either Plan.
<PAGE>
DIVIDEND AND CAPITAL GAIN DISTRIBUTION CHANGES may also be made by telephone.
A telephone request changing the reinvestment of dividend and capital gain
distributions to the receipt of payment, will be honored only if the proceeds
are to be sent to the address of record on the account. For more details, see
"Dividends and Distributions."
The Fund reserves the right to record all account registration changes made
by telephone.
NET ASSET VALUE
Share purchase and redemption orders will be priced at the Fund's net asset
value next computed after such orders are received and accepted by: (i)
Firstar, as transfer agent for the Fund; or (ii) an authorized agent of the
Fund. The price per share for a purchase order or redemption request is the net
asset value next determined after receipt of the order or request in proper
form. The net asset value of a share of common stock of the Fund is determined
as of the time of the close of regular session trading on the New York Stock
Exchange on any day on which that exchange is open for trading. Closing time is
generally 3:00 p.m. Central time, but is sometimes earlier. The net asset value
of a share of the Fund is the value of the Fund's assets, less its liabilities,
divided by the number of shares outstanding.
Securities traded on a stock exchange are ordinarily valued on the basis of
the last sale price on the date of valuation or, in the absence of any sale on
that day, the closing bid price. Other securities are generally valued at the
current bid price. Any securities for which there are no readily available
market quotations and all assets other than securities will be valued at a fair
value, as determined in good faith by the board of directors.
IRA PLAN
The Fund has a master individual retirement account (IRA) plan which allows
you to invest in the Fund. Income and capital gains earned by an IRA are
sheltered from taxation until withdrawal. There is $1,000 initial minimum
investment. The plan also permits you to "roll over" to a Fasciano Fund IRA a
lump sum distribution from a qualified pension or profit-sharing plan, including
by a direct transfer from the plan trustee, thereby postponing your federal
income tax on the distribution if rolled over within 60 days. Many
distributions from qualified plans are subject to income tax withholding unless
transferred directly from the plan to an IRA or another plan.
Small business owners or those with self-employment income may establish a
Simplified Employee Pension Plan (SEP-IRA), which allows tax-deductible
contributions of up to 15% of the first $160,000 of compensation per year for
themselves and any eligible employees, subject to special rules designed to
avoid discrimination. Savings Incentive Match Plan IRAs (SIMPLE IRAs) may be
established by an employer (including a self-employed person) and enable all
employees of the employer to elect to have up to $6,000 per year deducted from
their paychecks on a before-tax basis and deposited directly into an account
maintained for the individual employee. The employer is also generally required
to make a contribution for each employee who elects to contribute.
Detailed information about IRAs, SEP-IRAs and SIMPLE IRAs, including related
documents and charges of Firstar, as custodian, may be obtained from the Fund.
<PAGE>
The Fund may also be used as an investment in other kinds of retirement
plans, including Keogh or corporate profit-sharing and money purchase plans,
403(b) plans and 401(k) plans. All of these type of accounts must be
established by the trustee of the plan. The Fund does not offer prototypes of
these plans.
MANAGEMENT OF THE FUND
Directors and Investment Adviser.
The board of directors has overall responsibility for the conduct of the
Fund's affairs. Subject to the authority of the board of directors, the
investment adviser, Fasciano Company, Inc. (the "Adviser"), furnishes continuous
investment supervision and management to the Fund under an investment advisory
agreement. The Adviser is a registered investment adviser wholly-owned by
Michael F. Fasciano. As of the date of this prospectus, the Fund is the
Adviser's only investment advisory client.
Mr. Fasciano, who is president of the Fund and the Adviser, has been
responsible for management of the Fund's portfolio since the Fund began
operations. Mr. Fasciano is a Chartered Financial Analyst and has been employed
in the securities industry since 1978. Before organizing the Adviser in 1986,
Mr. Fasciano was a securities analyst and portfolio manager.
Administrator.
Firstar Trust Company, Milwaukee, Wisconsin ("Firstar") is the Fund's
administrator, custodian, transfer agent and fund accounting service provider.
Under the supervision of the Adviser and the Fund's board of directors, Firstar
generally assists the Fund in all aspects of its administration and operations.
Firstar receives a monthly fee at the annual rate of 0.06% of the Fund's average
daily net assets, subject to certain minimum annual fees described in the
Statement of Additional Information.
Fees and Expenses.
The Adviser manages the investment and reinvestment of the Fund's assets. At
its own expense, the Adviser provides office space to the Fund and all necessary
facilities, equipment and personnel for managing the assets of the Fund. For
these services, the Adviser receives a monthly fee at the annual rate of 1% of
the Fund's average daily net assets. The annual rate of fee is higher than that
paid by most mutual funds. The Fund pays all of its operating expenses not
specifically assumed by the Adviser, which amounted to 1.4% of the Fund's
average net assets during the fiscal year ended June 30, 1997, including the
advisory fee. The Fund's investment advisory agreement also includes the
conditions under which the Fund may use "Fasciano" in its name.
Portfolio Transactions.
The Adviser places the orders for the purchase and sale of the Fund's
portfolio securities. In doing so, the Adviser seeks to obtain the best
combination of net price and execution, which involves a number of judgmental
factors. When the Adviser believes that more than one broker or dealer is
capable of providing the best combination of price and execution in a particular
portfolio transaction, the Adviser often selects a broker or dealer that has
furnished it with research services.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all its net investment income
and any net capital gain realized from sales of the Fund's portfolio securities
at least annually. Dividends and capital gain distributions, if any, are
reinvested in additional shares of the Fund unless you have requested in writing
or on your Share Purchase Application to have them paid to you by check or by
automatic deposit to your bank account. For details on how to change your
distribution option by telephone, see "Account Registration."
<PAGE>
TAXATION
The Fund intends to continue to qualify, as it has since it began offering
its shares to the public, as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), in order to avoid payment of
federal income tax on its net investment income and net capital gains to the
extent that it distributes such amounts to shareholders.
Dividends from net investment income and net short-term capital gains are
taxable to you as ordinary income, whether received in cash or reinvested in
additional shares of the Fund. Distributions of net long-term capital gains are
taxable to you as long-term capital gains regardless of the length of time you
have held your shares in the Fund.
If you purchase shares shortly before the record date for a distribution you
will, in effect, receive a return of a portion of your investment, but the
distribution will be taxable to you even if the net asset value of your shares
is reduced below your cost. However, for federal income tax purposes your
original cost would continue as your tax basis. If you realize a loss on the
sale of Fund shares held for six months or less, your short-term loss is
recharacterized as long-term to the extent of any long-term capital gain
distributions you have received with respect to those shares.
The Taxpayer Relief Act of 1997 reduced from 28% to 20% the maximum tax rate
on long-term capital gains. This reduced rate generally applies to securities
held more than 18 months and sold after July 28, 1997, and securities held for
more than one year and sold between May 6, 1997 and July 29, 1997.
If you fail to furnish your social security or other taxpayer identification
number or to certify properly that it is correct, the Fund may be required to
withhold up to 31% federal income tax ("backup withholding") from dividend,
capital gain and redemption payments to you. Your dividend and capital gain
payments may also be subject to backup withholding if you fail to certify
properly that you are not subject to backup withholding due to the
underreporting of certain income. These certifications are contained in the
Share Purchase Application which you complete and return to the Fund when you
make your initial investment.
OTHER INFORMATION
The Fund was incorporated in Maryland on May 28, 1987, and commenced
operations as a private investment company on August 1, 1987 at $10.00 per
share. On June 30, 1988 the Fund registered as a diversified open-end manage-
ment investment company under the Investment Company Act of 1940 and began
offering its shares to the public on November 10, 1988. Each share of the
Fund's capital stock, $.01 par value, is entitled to share pro rata in any
dividends and other distributions on shares declared by the board of directors,
to one vote per share in elections of directors and other matters presented to
shareholders, and to equal rights per share in the event of liquidation.
As a Maryland corporation registered as an investment company under the
Investment Company Act of 1940, the Fund is not required to hold routine annual
meetings and does not expect to do so. Maryland law permits shareholders to
remove directors under certain circumstances and requires the Fund to assist in
shareholder communications.
Inquiries about purchases and redemptions of Fund shares, or about your
account should be directed to Firstar, the Fund's transfer agent. Other
inquiries regarding the Fund should be directed to the Fund. The addresses and
telephone numbers of the Fund and Firstar are shown on the back cover.
<PAGE>
FASCIANO FUND, INC.
(FASCIANO FUND LOGO)
SHARE PURCHASE APPLICATION
NOTE: Please read the application and the terms below carefully. THIS
APPLICATION IS NOT TO BE USED FOR IRA ACCOUNTS. Make checks payable to, and mail
to: Fasciano Fund, Inc., c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0107
A. PURCHASE
Purchase by:
o Check for $-------------------- ($1,000 minimum for new account)
o Automatic Investment Plan transfer of $-------------------------
(please complete the Automatic Investment Plan section below)
o Wire for $------------------- to Firstar Bank-Milwaukee N.A., ABA number
075000022, Credit Firstar Trust Company, Account Number 112-952-137, Further
Credit: Fasciano Fund, Inc., Attention: Mutual Fund Department (shareholder
name, account number)
B. REGISTRATION (CHECK ONE)
o Individual or Joint Account:------------------------ ----------------------
(Individual) (Joint Tenant, if any)
o Corporations, Trusts or Others:---------------------------------------------
(Trustee(s), corporation, partnership or other entity)
o Transfers (Gifts) to Minors:---------------- Custodian for------------------
(Custodian) (Minor)
Under the Uniform Transfers Gifts to Minors Act of--------------------------
(State)
SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER:----------------------------
(If this is a Uniform Transfers (Gifts) to Minors account, use the minor's
Social Security number)
I AM A CITIZEN OF ---- U.S. ---- OTHER (SPECIFY)------------------
(If shares are to be registered jointly, all owners must sign. Any
registration in the names of two or more co-owners will, unless otherwise
specified, be as joint tenants with right of survivorship and not as tenants in
common.)
C. ADDRESS OF RECORD---------------------------------------------------------
Zip Code---------------------Telephone (--------)-----------------------------
D. DIVIDEND ELECTION
All dividends and capital gain distributions on all shares held by you will be
reinvested in additional shares, as set forth in the prospectus, unless you
check this box.
o Dividends and capital gain distribution in cash. Attach an unsigned voided
check (for checking accounts) or a savings account deposit slip for your bank
account, and your cash payment will be directly deposited to this account.
E. AUTOMATIC INVESTMENT PLAN
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your application.
Please start my Automatic Investment Plan as described in the prospectus
beginning: ----------------- (Month and Year). I hereby instruct Firstar Trust
Company, Transfer Agent for the Fund, to automatically transfer $-------------
(minimum $50, maximum $50,000) directly from my checking, NOW or savings account
named below on the ----------- of each month or the first business day
thereafter. I understand that I will be assessed a $15 fee if the automatic
purchase cannot be made due to insufficient funds, stop payment, or for any
other reason.
Name(s) on Bank Account------------------------------------------------------
Bank Name-------------------------- Bank Routing Number---------------------
Bank Address-----------------------------------------------------------------
Signature of Bank Account Owner----------------------------------------------
Signature of Joint Owner-----------------------------------------------------
F. SYSTEMATIC WITHDRAWAL PLAN
A balance of at least $10,000 is required for this option.
I would like to withdraw $------------------------ ($100 minimum) as follows:
o I would like to have payments made to me on or about the ------------- day
of each month, OR
o I would like to have payments made on or about the -------------- day of the
months that I have circled below:
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
o I would like to have my payments automatically deposited to my checking or
savings account. I have attached a voided check or deposit slip. (A check will
be mailed to the above Account registration address if this box is not checked)
G. SIGNATURE AND CERTIFICATION REQUIRED BY THE INTERNAL REVENUE SERVICE
I am (We are) of legal age, have received and read a current prospectus of
Fasciano Fund, Inc., and agree to the terms therein.
Under the penalty of perjury, I certify that (1) the Social Security Number or
Taxpayer Identification Number shown on this form is my correct Taxpayer
Identification Number, and (2) I am not subject to backup withholding either
because I have not been notified by the Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to backup
withholding. The IRS does not require your consent in my provision of this
document other than the certifications required to avoid backup withholding.
I (We) certify that (we) have full authority and legal capacity to purchase Fund
shares.
- ---------------------------------------- ------------------------------------
Signed*<F5> Signature of Co-Owner, If Any
- ----------------------------------------
Date
*<F5>If shares are to be registered: 1) in joint names, both persons should
sign; 2) by a custodian for a minor, the custodian should sign; 3) by a trust,
the trustee(s) should sign; or 4) by a corporation or other entity, an officer
should sign and indicate title.
INVESTMENT ADVISER
Fasciano Company, Inc.
ADDRESS OF FUND AND ADVISER
190 South LaSalle Street
Suite 2800
Chicago, Illinois 60603
(312) 444-6050
(800) 848-6050
TRANSFER AGENT, DIVIDEND
DISBURSING AGENT AND CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201
(414) 765-4124
(800) 982-3533
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
Chicago, Illinois
LEGAL COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
MEMBER OF
100% NO-LOAD MUTUAL FUND COUNCIL
(RECYCLE LOGO)
Printed on Recycled Paper
STATEMENT OF ADDITIONAL INFORMATION
October 28, 1997
FASCIANO FUND, INC.
190 S. LaSalle Street
Suite 2800
Chicago, Illinois 60603
(312) 444-6050
(800) 848-6050
This statement of additional information is not a prospectus, but provides
information about Fasciano Fund, Inc. (the "Fund") that should be read in
conjunction with the Fund's prospectus dated October 28, 1997 (and any
supplements thereto) and the Fund's financial statements included in its annual
report to shareholders for the fiscal year ended June 30, 1997, a copy of which
accompanies this statement of additional information.
The prospectus and additional copies of the annual report may be obtained
without charge by writing or telephoning the Fund at the address or telephone
number set forth above.
TABLE OF CONTENTS
Page
----
History of the Fund.........................................B- 2
Investment Policies.........................................B- 2
Investment Restrictions.....................................B- 7
Performance Information.....................................B- 9
Investment Adviser..........................................B-10
Directors and Officers......................................B-11
Certain Shareholders........................................B-12
Purchasing and Redeeming Shares.............................B-13
Additional Tax Information..................................B-14
Portfolio Transactions......................................B-16
Administrator, Custodian and Transfer Agent.................B-17
Independent Public Accountants..............................B-18
Financial Statements........................................B-18
Appendix....................................................B-19
HISTORY OF THE FUND
The Fund began operations as a private investment company, not registered
under the Investment Company Act of 1940 (the "1940 Act"), on August 1, 1987.
The Fund registered under the 1940 Act on June 30, 1988 and began offering its
shares to the public on November 10, 1988.
INVESTMENT POLICIES
The primary investment objective of the Fund is long-term capital growth.
Current income is considered in selecting securities for the portfolio, but its
importance is secondary to capital growth. The Fund's investment objective may
be changed by the board of directors without shareholder approval.
DEBT SECURITIES
The Fund may invest in debt securities, including debt securities that are
not rated or are rated below investment grade by the recognized rating agencies
(i.e., BBB or higher by Standard & Poor's Corporation ("S&P") or Baa or higher
by Moody's Investor Services, Inc. ("Moody's")). There are no restrictions as
to the ratings of debt securities acquired by the Fund or the portion of the
Fund's assets that may be invested in debt securities in a particular ratings
category, except that the Fund will not invest more than 5% of its assets in
securities rated below investment grade ("junk bonds"). The Fund has no present
intention of investing in junk bonds.
Securities rated BBB or Baa are considered to be medium grade and to have
speculative characteristics. Lower-rated debt securities are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Investment in medium- or lower-quality debt securities involves
greater investment risk, including the possibility of issuer default or
bankruptcy. An economic downturn could severely disrupt the market for such
securities and adversely affect the value of such securities. In addition,
lower-quality bonds are less sensitive to interest rate changes than higher-
quality instruments and generally are more sensitive to adverse economic changes
or individual corporate developments. During a period of adverse economic
changes, including a period of rising interest rates, issuers of such bonds may
experience difficulty in servicing their principal and interest payment
obligations.
To the extent the Fund invests in lower-rated debt securities, achievement
by the Fund of its investment objective will be more dependent on the Adviser's
credit analysis than would be the case if the Fund were investing in higher-
quality debt securities. Since the ratings of rating services (which evaluate
the safety of principal and interest payments, not market risks) are used only
as preliminary indicators of investment quality, the Adviser employs its own
credit research and analysis. These analyses may take into consideration such
quantitative factors as an issuer's present and potential liquidity,
profitability, internal capability to generate funds, debt/equity ratio and debt
servicing capabilities, and such qualitative factors as an assessment of
management, industry characteristics, accounting methodology, and foreign
business exposure.
Medium- and lower-quality debt securities tend to be less marketable than
higher-quality debt securities because the market for them is less broad. The
market for unrated debt securities is even narrower. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and the Fund may have greater difficulty selling its
portfolio securities. The market value of these securities and their liquidity
may be affected by adverse publicity and investor perceptions. At June 30, 1997
the Fund held no debt securities other than short-term demand notes.
A description of the ratings used by S&P and Moody's is included as an
appendix to this statement of additional information.
FOREIGN SECURITIES
The Fund may invest in foreign securities, which may entail a greater
degree of risk (including risks relating to exchange rate fluctuations, exchange
controls, tax provisions, political instability, expropriation of assets, other
governmental restrictions and regulations and less available financial
information) than does investment in securities of domestic issuers.
The Fund will not invest more than 5% of its assets in foreign securities
and will not invest in securities traded only or primarily in emerging markets.
For this purpose, foreign securities do not include American Depository Receipts
(ADRs) or securities guaranteed by a United States person. ADRs are receipts
typically issued by an American bank or trust company evidencing ownership of
the underlying securities. As of June 30, 1997, the Fund held no foreign
securities.
To the extent positions in portfolio securities are denominated in foreign
currencies, the Fund's investment performance is affected by the strength or
weakness of the U.S. dollar against these currencies. For example, if the
dollar falls in value relative to the Japanese yen, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. (See discussion of
transaction hedging under "Currency Exchange Transactions.")
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, which are generally
denominated in foreign currencies, and utilization of forward foreign currency
exchange contracts involve both risks and opportunities not typically associated
with investing in U.S. securities. These considerations include: fluctuations
in exchange rates of foreign currencies; possible imposition of exchange control
regulation or currency restrictions that would prevent cash from being brought
back to the United States; less public information with respect to issuers of
securities; less governmental supervision of stock exchanges, securities
brokers, and issuers of securities; lack of uniform accounting, auditing, and
financial reporting standards; lack of uniform settlement periods and trading
practices; less liquidity and frequently greater price volatility in foreign
markets than in the United States; possible imposition of foreign taxes;
possible investment in securities of companies in developing as well as
developed countries; and sometimes less advantageous legal, operational, and
financial protections applicable to foreign sub-custodial arrangements.
Although the Fund intends to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social, or
diplomatic developments that could affect investment in these nations.
Currency Exchange Transactions. Currency exchange transactions may be
------------------------------
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through forward
currency exchange contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks and broker-
dealers, are not exchange traded, and are usually for less than one year, but
may be renewed.
Forward currency transactions may involve currencies of the different
countries in which the Fund may invest and serve as hedges against possible
variations in the exchange rate between these currencies. The currency
transactions of the Fund are limited to transaction hedging involving specific
transactions. Transaction hedging is the purchase or sale of forward contracts
with respect to specific receivables or payables of a Fund accruing in connec-
tion with the purchase and sale of its portfolio securities or the receipt of
dividends or interest thereon. The Fund's intention not to invest more than 5%
of its assets in foreign securities effectively limits the extent of its
transactions in foreign currencies.
If the Fund enters into a forward contract, the Fund's custodian will
segregate assets of the Fund having a value equal to the Fund's commitment under
such forward contract. At the maturity of the forward contract, the Fund may
either sell the portfolio security related to the contract and deliver the
currency, or it may retain the security and either acquire the currency on the
spot market or terminate its contractual obligation to deliver the currency by
purchasing an offsetting contract with the same currency trader obligating it to
purchase on the same maturity date the same amount of the currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for the Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the value of a portfolio security traded in that currency or
prevent a loss if the value of the security declines. Hedging transactions also
preclude the opportunity for gain if the value of the hedged currency should
rise. Moreover, it may not be possible for the Fund to hedge against a
devaluation that is so generally anticipated that the Fund is not able to
contract to sell the currency at a price above the devaluation level it
anticipates. The cost to the Fund of engaging in currency exchange transactions
varies with such factors as the currency involved, the length of the contract
period, and prevailing market conditions. Since currency exchange transactions
are usually conducted on a principal basis, no fees or commissions are involved.
SHORT SALES
The Fund may make short sales of securities if at all times when a short
position is open the Fund owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in amount to, the
securities sold short. This technique is called selling short "against the
box." Although permitted by its investment restrictions, the Fund does not
currently intend to sell securities short.
In a short sale against the box, the Fund does not deliver from its
portfolio the securities sold and does not receive immediately the proceeds from
the short sale. Instead, the Fund borrows the securities sold short from a
broker-dealer through which the short sale is executed, and the broker-dealer
delivers such securities, on behalf of the Fund, to the purchaser of such
securities. Such broker-dealer is entitled to retain the proceeds from the
short sale until the Fund delivers to such broker-dealer the securities sold
short. In addition, the Fund is required to pay to the broker-dealer the amount
of any dividends paid on shares sold short. Finally, to secure its obligation
to deliver to such broker-dealer the securities sold short, the Fund must
deposit and continuously maintain in a separate account with the Fund's
custodian an equivalent amount of the securities sold short or securities
convertible into or exchangeable for such securities without the payment of
additional consideration. The Fund is said to have a short position in the
securities sold until it delivers to the broker-dealer the securities sold, at
which time the Fund receives the proceeds of the sale. Because the Fund
ordinarily will want to continue to hold securities in its portfolio that are
sold short, the Fund will normally close out a short position by purchasing on
the open market and delivering to the broker-dealer an equal amount of the
securities sold short, rather than by delivering portfolio securities.
Short sales may protect the Fund against the risk of losses in the value of
its portfolio securities because any unrealized losses with respect to such
portfolio securities should be wholly or partially offset by a corresponding
gain in the short position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding loss in the
short position. The extent to which such gains or losses are offset will depend
upon the amount of securities sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the conversion premium. The Fund will incur transaction
costs in connection with short sales.
In addition to enabling the Fund to hedge against market risk, short sales
may afford a Fund an opportunity to earn additional current income to the extent
the Fund is able to enter into arrangements with broker-dealers through which
the short sales are executed to receive income with respect to the proceeds of
the short sales during the period the Fund's short positions remain open.
The Taxpayer Relief Act of 1997 (the "Act") imposed constructive sale
treatment for Federal income tax purposes on certain hedging strategies with
respect to appreciated securities. Under these rules taxpayers will recognize
gain, but not loss, with respect to securities if they enter into short sales of
"offsetting notional principal contracts" (as defined by the Act) with respect
to the same or substantially identical property, or if they enter into such
transactions and then acquire the same or substantially identical property.
These changes generally apply to constructive sales after June 8, 1997.
Furthermore, the Secretary of the Treasury is authorized to promulgate
regulations that will treat as constructive sales certain transactions that have
substantially the same effect as short sales.
UNSEASONED ISSUERS
The Fund has the authority to invest up to 10% of its total assets in the
securities of unseasoned issuers, but has no present intention of investing more
than 5% of its total assets in such securities. An unseasoned issuer is an
issuer that, together with predecessors, has been in operation less than three
years. The Adviser believes that investment in securities of unseasoned issuers
may provide opportunities for long-term capital growth, although the risks of
investing in such securities are greater than with common stocks of more
established companies because unseasoned issuers have only a brief operating
history and may have more limited markets and financial resources. At June 30,
1997, the Fund held no securities of unseasoned issuers.
ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets, taken at market value, in
securities for which there is no ready market ("illiquid securities"), including
any securities that are not readily marketable either because they are
restricted securities or for other reasons. Restricted securities are
securities that have not been registered under the Securities Act of 1933 and
are thus subject to restrictions on resale. A position in restricted securities
might adversely affect the liquidity and marketability of a portion of the
Fund's portfolio, and the Fund might not be able to dispose of its holdings in
such securities promptly or at reasonable prices. In those instances where the
Fund is required to have restricted securities held by it registered prior to
sale by the Fund and the Fund does not have a contractual commitment from the
issuer or seller to pay the costs of such registration, the gross proceeds from
the sale of securities would be reduced by the registration costs and
underwriting discounts. Any such registration costs are not included in the 10%
limitation on the Fund's investment in restricted securities. The Fund does not
expect to invest in illiquid securities during the next fiscal year.
REPURCHASE AGREEMENTS
The Fund may enter into "repurchase agreements" pertaining to U.S. Government
securities with member banks of the Federal Reserve System or primary dealers
(as designated by the Federal Reserve Bank of New York) in such securities. A
repurchase agreement arises when the Fund purchases a security and
simultaneously agrees to resell it to the vendor at an agreed upon future date.
The resale price is greater than the purchase price, reflecting an agreed upon
market rate of return that is effective for the period of time the Fund holds
the security and that is not related to the coupon rate on the purchased
security. Such agreements generally have maturities of no more than seven days
and could be used to permit the Fund to earn interest on assets awaiting long
term investment. The Fund requires continuous maintenance by the custodian for
the Fund's account in the Federal Reserve/Treasury Book Entry System of
collateral in an amount equal to, or in excess of, the market value of the
securities that are the subject of a repurchase agreement. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying securities and
losses, including (i) possible decline in the value of the collateral during the
period while the Fund seeks to enforce its rights thereto, (ii) possible
subnormal levels of income and lack of access to income during this period, and
(iii) expenses of enforcing its rights. The Fund will monitor the
creditworthiness of firms with which it enters into repurchase agreements.
Repurchase agreements maturing in more than seven days are considered illiquid
securities. The Fund does not intend to invest in repurchase agreements during
the next fiscal year.
PORTFOLIO TURNOVER
The Fund normally invests on a long-term basis with an investment time
horizon of three to five years. The Fund's portfolio turnover rates for its
fiscal years ended June 30, 1997 and 1996 were 41.0% and 45.6%,
respectively.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions,
which cannot be changed without the approval of the holders of a majority of its
shares, as defined in the Investment Company Act of 1940:
1. The Fund will not invest more than 5% of its assets (valued at the
time of investment) in securities of any one issuer, except in U.S. government
obligations.
2. The Fund will not acquire securities of any one issuer which at the
time of investment (a) represent more than 10% of the voting securities of the
issuer or (b) have a value greater than 10% of the value of the outstanding
securities of the issuer.
3. The Fund will not invest more than 10% of its assets (valued at the
time of investment) in securities of issuers with less than three years'
operation (including predecessors).
4. The Fund will not invest more than 10% of its net assets (valued at
the time of investment) in securities for which there is no ready market
(including restricted securities and repurchase agreements maturing in more than
seven days).
5. The Fund will not participate in a joint trading account, purchase
securities on margin or sell securities short (unless the Fund owns an equal
amount of such securities, or owns securities that are convertible or
exchangeable, without payment of further consideration, into an equal amount of
such securities).1<F1>
6. The Fund will not act as an underwriter or distributor of securities
other than its own capital stock, except insofar as it may be deemed an
underwriter for purposes of the Securities Act of 1933 on disposition of
securities acquired subject to legal or contractual restrictions on resale.
7. The Fund will not lend money, but this restriction shall not prevent
the Fund from investing in (i) a portion of an issue of publicly distributed
debt securities or (ii) repurchase agreements.
8. The Fund will not purchase or sell real estate or interests in real
estate, although it may invest in marketable securities of issuers that invest
in real estate or interests in real estate.
9. The Fund will not borrow, except that the Fund may borrow from banks
as a temporary measure amounts up to 10% of its total assets (at the lower of
cost or market at the time of the borrowing), provided (I) that the total of
reverse repurchase agreements2<F2> and such borrowings will not exceed 10% of
the Fund's total assets and (ii) the Fund will not purchase securities when its
borrowings exceed 5% of total assets.
10. The Fund will not pledge any of its assets, except to secure
indebtedness permitted by the Fund's investment restrictions.
11. The Fund will not invest for the purpose of exercising control or
management of any company.
12. Not more than 25% of the value of the Fund's total assets, taken at
market value at the time of the investment, will be concentrated in companies of
any one industry.
13. The Fund will not purchase and sell commodities or commodity
contracts, except that it may enter into forward contracts to hedge securities
transactions made in foreign currencies.
1<F1>The Fund does not currently intend to sell securities short even under the
conditions described in investment restriction 5.
2<F2>The Fund does not currently intend to enter into reverse repurchase
agreements.
In addition to the fundamental restrictions listed above, the 1940 Act
provides that the Fund may neither purchase more than 3% of the voting
securities of any one investment company nor invest more than 10% of the Fund's
assets (valued at time of investment) in all investment company securities
purchased by the Fund.
PERFORMANCE INFORMATION
From time to time the Fund may give information about its performance by
quoting total return figures in advertisements and sales literature. "Total
return" for a period is the percentage change in value of an investment in Fund
shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average annual total return" is the
average annual compounded rate of change in value represented by the total
return for the period.
Average annual total return is computed as follows:
n
ERV = P(1+T)
Where: P = the amount of an assumed initial investment in Fund shares
T = average annual total return
n = number of years from initial investment to the end of the
period
ERV = ending redeemable value of shares held at the end of the
period
The Fund's Total Return and Average Annual Total Return for various
periods ended June 30, 1997 is shown below:
Average Annual
Total Return Total Return
------------ -------------
1 year 15.8% 15.8%
5 years 112.8% 16.3%
Life of Fund*<F3> 249.6% 15.6%
*<F3>from November 10, 1988 (commencement of operations)
The Fund imposes no sales charges and pays no distribution expenses.
Income taxes payable by shareholders are not taken into account. The Fund's
performance is a result of conditions in the securities markets, portfolio
management, and operating expenses. Although information such as that described
above may be useful in reviewing the Fund's past performance and in providing
some basis for comparison with other investment alternatives, it is not
necessarily indicative of future performance and should not be used for
comparison with other investments using different reinvestment assumptions or
time periods.
The Fund may also compare its performance to various stock indices (groups
of unmanaged common stocks), including the New York Stock Exchange Composite
Index, Standard & Poor's 500 Stock Index, the NASDAQ Composite (OTC) Index, the
Russell 2000 Index and the Dow Jones Industrial Average, or to the Consumer
Price Index or groups of comparable mutual funds, including rankings determined
by Lipper Analytical Services, Inc., an independent service that monitors the
performance of mutual funds, or that of another independent service, including
Morningstar, Inc.
The Fund may cite its rating, recognition, or other mention by Morningstar
or any other entity. Morningstar's rating system is based on risk-adjusted
total return performance and is expressed in a star-rating format. The risk-
adjusted number is computed by subtracting a fund's risk score (which is a
function of the fund's monthly returns less the 3-month T-bill return) from the
fund's load-adjusted total return score. This numerical score is then
translated into rating categories, with the top 10% labeled five star, the next
22.5% labeled four star, the next 35% labeled three star, the next 22.5% labeled
two star, and the bottom 10% one star. A high rating reflects either above-
average returns or below-average risk or both.
INVESTMENT ADVISER
The Fund's investment adviser, Fasciano Company, Inc. (the "Adviser"),
furnishes continuing investment supervision to the Fund and is responsible for
overall management of the Fund's business affairs. It furnishes office space,
equipment, and personnel to the Fund and assumes the expenses of printing and
distributing the Fund's prospectus and reports to prospective investors. The
Fund pays all of its expenses except those specifically assumed by the Adviser,
including but not limited to printing and postage charges; securities
registration, custodian and transfer agency fees; accounting services fees and
audit and legal fees.
For its services, the Adviser receives a monthly fee at an annual rate of
1% of the average daily net asset value of the Fund. The Investment Advisory
Agreement provides that the Adviser will reimburse the Fund to the extent that
its total annual operating expenses exceed 2%, exclusive of (i) taxes, (ii)
interest charges, (iii) litigation and other extraordinary expenses, and (iv)
brokers' commissions and other charges relating to the purchase and sale of the
Fund's portfolio securities.
The investment advisory fees of the Fund for the fiscal years ended June
30, 1997, 1996, and 1995 were $334,647, $247,479 and $183,008, respectively.
During those fiscal years, the Fund operated within all applicable expense
limitations without reimbursement by the Adviser.
The Adviser is a registered investment adviser organized in November 1986.
Michael F. Fasciano is the sole shareholder of the Adviser.
DIRECTORS AND OFFICERS
The directors and officers of the Fund and their principal business
activities during the past five years are:
Positions Held Principal Occupations
Name, Address and Age with Fund and other Affiliations
- --------------------- -------------- ----------------------
Michael F. Fasciano*<F4> Director, President Director, President and
Suite 2800 and Treasurer Treasurer of Fasciano Company,
190 South LaSalle St. Inc. since November 1986. Mr.
Chicago, Illinois 60603 Fasciano is a Chartered
Age 42 Financial Analyst.
Susan N. Fasciano*<F4> Secretary Private investor.
Suite 2800
190 South LaSalle Street
Chicago, Illinois 60603
Age 38
David R. Long Director Vice President - Investments of
The Gallagher Center Arthur J. Gallagher & Co.,
Two Pierce Place Inc., a New York Stock Exchange
Itasca, Illinois 60143- listed international insurance
3141 and risk management services
Age 45 firm, since May 1989.
Mark B. Mandich Director Executive Vice President -
PPM America, Inc. Finance and Administration,
225 West Wacker and Director, PPM America,Inc.,
Suite 1200 an investment management firm,
Chicago, Illinois 60606 since May 1993; Experienced
Age 37 Manager, Arthur Andersen & Co.,
public ccountants, prior thereto.
Joseph C. Neuberger Assistant Secretary Vice President, Firstar Trust
Firstar Trust Company Company, since 1994; Manager,
615 East Michigan Street Arthur Andersen LLP, prior
Milwaukee, WI 53202 thereto.
Age 35
Michael T. Karbouski Assistant Secretary Trust Officer, Firstar
Firstar Trust Company Trust Company, since 1995;
615 East Michigan Street Business Development
Milwaukee, WI 53202 Representative, Portico
Age 32 Funds, prior thereto.
*<F4>Michael F. Fasciano and Susan N. Fasciano are "interested persons" of the
Fund as defined in the 1940 Act. Michael Fasciano and Susan Fasciano are hus-
band and wife.
Mr. Fasciano and Ms. Fasciano serve as members of the Executive Committee
of the Board of Directors. The Executive Committee, which meets between regular
meetings of the Board, is authorized to exercise all of the powers of the Board
of Directors. The Executive Committee did not meet during the fiscal year ended
June 30, 1997.
The only compensation paid to directors and officers of the Fund for their
services as such consists of $2,000 paid to directors who are not interested
persons of the Fund or the Adviser. The Fund has no retirement or pension
plans.
The following table sets forth compensation paid by the Fund during the
fiscal year ended June 30, 1997 to each of the directors of the Fund. The Fund
is not part of a fund complex and has no retirement or other benefit plans for
directors.
AGGREGATE
COMPENSATION
NAME OF DIRECTOR FROM THE FUND
- ---------------- -------------
Michael F. Fasciano $ 0
Susan N. Fasciano 0
David R. Long 2,000
Mark B. Mandich 460
At September 30, 1997 the directors and officers as a group owned
beneficially 43,489 shares, or 2.6% of the outstanding shares of the Fund.
CERTAIN SHAREHOLDERS
As of September 30, 1997, the only persons known by the Fund to own beneficially
5% or more of the outstanding shares of the Fund were:
Outstanding Shares Owned
------------------------
Number Percent
--------- ---------
Albert O. Nicholas 258,962 15.7%
6002 North Highway 83
Hartland, Wisconsin 53209
Nancy J. Nicholas 392,213 23.8%
6002 North Highway 83
Hartland, Wisconsin 53209
Firwood 82,779 5.0%
c/o Amcore Trust Co.
P. O. Box 4599
Rockford, Illinois 61110
PURCHASING AND REDEEMING SHARES
You may purchase or redeem shares of the Fund through some broker-dealers,
banks or other institutions that have made Fund shares available to their
customers ("financial services companies"). Some financial services companies
may charge fees to their customers, including fees on purchases or redemptions
of Fund shares. Those charges, if imposed, could constitute a substantial
portion of a smaller account and may not be in your best interest.
Some financial services companies charge no fees or fewer fees to their
customers. However, for accounting and shareholder services provided by such
company with respect to Fund shares held by that company for its customers, the
company may charge a fee (currently up to 0.35%) of the annual average value of
those accounts.
The Fund may enter into an arrangement with some financial services
companies authorizing the financial services company to process purchase orders
or redemption requests on behalf of the Fund on an expedited basis, including
requesting share redemptions by telephone ("authorized agents"). Receipt of a
purchase order or redemption request by an authorized agent will be deemed to be
receipt by the Fund for purposes of determining the net asset value of Fund
shares to be purchased or redeemed. For purchase orders placed through those
authorized agents, a shareholder will pay the Fund's net asset value per share
next computed after the receipt by the authorized agent of such purchase order,
plus any applicable transaction charge imposed by the agent. For redemption
orders placed through an authorized agent, a shareholder will receive redemption
proceeds which reflect the net asset value per share next computed after the
receipt by the authorized agent of the redemption order, less any redemption
fees imposed by the agent.
Net Asset Value. Share purchase and redemption orders will be priced at
the Fund's net asset value next computed after such orders are received and
accepted by: (i) Firstar, as transfer agent for the Fund; (ii) an authorized
agent of the Fund. The net asset value of the shares of the Fund is determined
as of the close of regular session trading on the New York Stock Exchange
("NYSE") (currently 3:00 p.m., Central time) each day the NYSE is open for
trading. The Fund's net asset value will not be determined on any day on which
the New York Stock Exchange is not open for trading. That Exchange is regularly
closed on Saturdays and Sundays and on New Year's Day, the third Monday in
January, the third Monday in February, Good Friday, the last Monday in May,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If one of
these holidays falls on a Saturday or Sunday, the Exchange will be closed on the
preceding Friday or the following Monday, respectively.
For purposes of computing the net asset value of a share of the Fund,
securities traded on securities exchanges, or in the over-the-counter market in
which transaction prices are reported, are valued at the last sales prices at
the time of valuation or lacking any reported sales on that day, at the most
recent bid quotations. Other securities traded over-the-counter are also valued
at the most recent bid quotations. Securities for which quotations are not
available and any other assets are valued at a fair value as determined in good
faith by the board of directors. Money market instruments having a maturity of
60 days or less from the valuation date are valued on an amortized cost basis.
Calculations of net asset value are performed by Firstar Trust Company, the
Fund's custodian.
The Fund has elected to be governed by Rule 18f-1 under the 1940 Act,
pursuant to which it is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund during any 90-day
period for any one shareholder. Redemptions in excess of the above amounts will
normally be paid in cash, but may be paid wholly or partly by a distribution in
kind of securities.
Because it can be more expensive for the Fund to maintain small accounts,
the Fund has reserved the right, on 60 days' written notice to the shareholder,
to redeem shares in any account and send the proceeds to the owner, if the
account has a value of less than a stated minimum. It is the Fund's current
policy not to exercise its right to redeem small accounts. No change in that
policy would be implemented without advance notice having been given to
shareholders.
ADDITIONAL TAX INFORMATION
The Fund intends to continue to qualify, as it has done since it first
offered its shares to the public, as a regulated investment company under
Subchapter M of the Internal Revenue Code and thus not be subject to federal
income taxes on amounts it distributes to shareholders.
In order for the Fund to qualify for federal income tax treatment as a
regulated investment company, at least 90% of its gross income for a taxable
year must be derived from qualifying income; i.e., dividends, interest, income
derived from loans of securities, and gains from the sale of securities or other
income. In addition, for tax years beginning before August 5, 1997, gains
realized on the sale or other disposition of securities held less than three
months must be less than 30% of the Fund's annual gross income. In order to
avoid realizing excessive gains on securities held less than three months, the
Fund may be required to defer the closing out of certain positions beyond the
time when it would otherwise be advantageous to do so.
The Fund intends to distribute to shareholders annually any capital gains
that have been recognized for federal income tax purposes (including year-end
mark-to-market gains) on Fund investments, to the extent such gains exceed
recognized capital losses and any net capital loss carryovers of the Fund.
Shareholders will be advised of the nature of such capital gain distributions.
Your distributions will be taxable to you, under income tax law, whether
received in cash or reinvested in additional shares. For federal income tax
purposes, any distribution that is paid in January but was declared in the prior
calendar year is deemed paid in the prior calendar year.
You will be subject to income tax at ordinary rates on income dividends and
distributions of net short-term capital gain. Distributions of net long-term
capital gain will be taxable to you as long-term capital gain regardless of the
length of time you have held your shares. You will be advised annually as to
the source of distributions for tax purposes. If you are not subject to tax on
your income, you will not be required to pay tax on these amounts.
If you realize a loss on the sale of Fund shares held for six months or
less, your short-term loss is recharacterized as long-term to the extent of any
long-term capital gain distributions you have received with respect to those
shares.
The Taxpayer Relief Act of 1997 reduced from 28% to 20% the maximum tax
rate on long-term capital gains. This reduced rate generally applies to
securities held more than 18 months and sold after July 28, 1997, and securities
held more than one year and sold between May 6, 1997 and July 29, 1997.
The Fund may be required to withhold federal income tax ("backup
withholding") from certain payments to you, generally redemption proceeds.
Backup withholding may be required if:
You fail to furnish your properly certified social security or other tax
identification number;
You fail to certify that your tax identification number is correct or
that you are not subject to backup withholding due to the underreporting
of certain income;
The IRS informs the Fund that your tax identification number is
incorrect.
These certifications are contained in the application that you complete
when you open your Fund account. The Fund must promptly pay the the IRS all
amounts withheld. Therefore, it is not usually possible for the Fund to
reimburse you for amounts withheld. You may, however, claim the amount withheld
as a credit on your federal income tax return.
This section is not intended to be a full discussion of present or proposed
federal income tax laws and the effect of such laws on the Fund or an investor.
Investors are urged to consult their own tax advisers for a complete review of
the tax ramifications of an investment in the Fund.
PORTFOLIO TRANSACTIONS
The Adviser has discretion to select brokers and dealers to execute
portfolio transactions initiated by the Adviser and to select the markets in
which such transactions are to be executed. The primary responsibility regarding
portfolio transactions is to seek the best combination of net price and
execution for the Fund. When executing transactions for the Fund, the Adviser
will consider all factors it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of the
commission. Transactions of the Fund in the over-the-counter market are
executed with primary market makers acting as principal except where it is
believed that better prices and execution may be obtained otherwise.
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Adviser is authorized
to consider "brokerage and research services" (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934), statistical quotations,
specifically the quotations necessary to determine the Fund's asset value, and
other information provided to the Fund or the Adviser. The Adviser is also
authorized to cause the Fund to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction. The Adviser must
determine in good faith, however, that such commission was reasonable in rela-
tion to the value of the brokerage and research services provided, viewed in
terms of that particular transaction or in terms of all the accounts over which
the Adviser exercises investment discretion. It is possible that certain of the
services received by the Adviser attributable to a particular transaction will
benefit one or more other accounts for which investment discretion is exercised
by the Adviser.
In valuing research services, the Adviser makes a judgment of the
usefulness of research and other information provided by a broker to the Adviser
in managing the Fund's investment portfolio. In some cases, the information,
e.g., data or recommendations concerning particular securities, relates to the
specific transaction placed with the broker, but for the greater part the
research consists of a wide variety of information concerning companies, in-
dustries, investment strategy, and economic, financial and political conditions
and prospects, useful to the Adviser in advising the Fund.
The Adviser is the principal source of information and advice to the Fund
and is responsible for making and initiating the execution of investment
decisions by the Fund. However, the board of directors of the Fund recognizes
that it is important for the Adviser, in performing its responsibilities to the
Fund, to continue to receive and evaluate the broad spectrum of economic and
financial information that many securities brokers have customarily furnished in
connection with brokerage transactions, and that in compensating brokers for
their services, it is in the interest of the Fund to take into account the value
of the information received for use in advising the Fund. The extent, if any,
to which the obtaining of such information may reduce the expenses of the
Adviser in providing management services to the Fund is not determinable. In
addition, it is understood by the board of directors that other clients of the
Adviser might also benefit from the information obtained for the Fund, in the
same manner that the Fund might also benefit from the information obtained by
the Adviser in performing services for others.
For the fiscal years ended June 30, 1997, 1996, and 1995, the Fund paid
brokerage commissions, not including the gross underwriting spread on securities
purchased in underwritten public offerings, aggregating $20,095, $18,363 and
$13,160, respectively.
Although investment decisions for the Fund would be made independently from
those for other investment advisory clients of the Adviser, if any, it might
develop that the same investment decision is made for both the Fund and one or
more other advisory clients. If both the Fund and other clients purchase or
sell the same class of securities on the same day, the transactions will be
allocated as to amount and price in a manner considered equitable to each.
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
Administrator. Firstar Trust Company ("Firstar"), 615 East Michigan
--------------
Street, Milwaukee, Wisconsin 53202 serves as the Fund's Administrator. Firstar
is not an affiliate of the Adviser or its affiliates. The Fund Administration
Servicing Agreement entered into between the Fund and Firstar relating to the
Fund (the "Administration Agreement") will remain in effect until terminated by
either party. The Administration Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the Fund upon
the giving of ninety (90) days' written notice to Firstar, or by Firstar upon
the giving of ninety (90) days' written notice to the Fund.
Under the Administration Agreement, Firstar shall exercise reasonable care
and is not liable for any error or judgment or mistake of law or for any loss
suffered by the Corporation in connection with the performance of the
Administration Agreement, except a loss resulting from willful misfeasance, bad
faith or negligence on the part of Firstar in the performance of its duties
under the Administration Agreement.
The Fund will pay Firstar a monthly fee at the annual rates of 0.06% of the
Fund's average daily net assets up to $200 million, 0.05% of the next $500
million of average daily net assets, and 0.03% of average daily net assets in
excess of $700 million, subject to the minimum annual fees described herein.
For the fiscal year ending June 30, 1998, the minimum annual fee will be
$24,000, and for the fiscal year ending June 30, 1999, the minimum annual fee
will be $27,000; provided that the minimum annual fee will rise to $30,000 at
the earlier of (i) the time the assets of the Fund reach $50 million and (ii)
July 1, 1999.
Custodian and Fund Accounting Agent. Firstar also acts as custodian of the
-----------------------------------
securities and other assets of the Fund. As custodian, Firstar is responsible
for, among other things, safeguarding and controlling the Fund's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Fund's investments. Firstar also performs
portfolio accounting services for the Fund. The custodian's address is P.O. Box
701, Milwaukee, Wisconsin 53201.
In addition, the Fund has entered into a Fund Accounting Servicing
Agreement with Firstar pursuant to which Firstar has agreed to maintain the
financial accounts and records of the Fund and provide other accounting services
to the Fund.
Transfer Agent. Firstar also serves as transfer agent and dividend
--------------
disbursing agent for the Fund under a Shareholder Servicing Agent Agreement. As
transfer and dividend disbursing agent, Firstar has agreed to (i) issue and
redeem shares of the Fund, (ii) make dividend and other distributions to
shareholders of the Fund, (iii) respond to correspondence by Fund shareholders
and others relating to its duties, (iv) maintain shareholder accounts, and (v)
make periodic reports to the Fund.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 33 West Monroe Street, Chicago, Illinois 60603, audits
and reports on the Fund's annual financial statements, reviews certain
regulatory reports, prepares the Fund's income tax returns, and performs other
professional accounting, auditing, tax, and advisory services when engaged to do
so by the Fund.
FINANCIAL STATEMENTS
The Fund's annual report for its fiscal year ended June 30, 1997, a copy of
which accompanies this statement of additional information, contains financial
statements, notes thereto and a report of independent public accountants, all of
which (but no other part of the annual report) is incorporated herein by
reference.
Additional copies of the annual report may be obtained without charge by
writing or telephoning the Fund at the address or telephone number shown on the
front cover of this statement of additional information.
APPENDIX
--------
DESCRIPTION OF BOND RATINGS
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Fund's investment adviser believes that the quality of
debt securities in which the Fund invests should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the ratings services from other sources which they consider reliable. Ratings
may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of rating used by Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P").
Ratings by Moody's
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt-edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high degree.
Such bonds are often in default or have other marked shortcomings.
S&P Ratings
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest and
differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation among such bonds and CC the highest
degree of speculation. Although such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial statements:
--------------------
(i) Financial statements included in Part A of
this registration statement: Financial Highlights.
(ii) Financial statements included in Part B of
this registration statement -- incorporated by
reference to the following portions of Registrant's
annual report to Shareholders
for the fiscal year ended June 30, 1997, filed with
the Commission on September 5, 1997:
- Report of independent public accountants
- Schedule of Portfolio Investments at
June 30, 1997
- Statement of Assets and Liabilities at June 30, 1997
- Statement of Operations for the year ended
June 30, 1997
- Statement of Changes in Net Assets for the
years ended June 30, 1997 and 1996
- Financial Highlights
- Notes to financial statements
(iii) Financial statements included in Part C of
this amendment: none
Note: - Schedule I - the required information is presented
in the Schedule of Portfolio Investments at
June 30, 1997
- Schedules II, III, IV, and V have been omitted
as the required information is not present.
(b) Exhibits:
--------
No. EDGAR Exhibit
- --- ----- -------
1 Ex 99.B1 Restated articles of incorporation4<F9>
2 Ex 99.B2 Bylaws4<F9>
3 Ex 99.B3 None
4 Ex 99.B4 Form of common stock certificate1<F6>
5 Ex 99.B5 Investment advisory agreement with Fasciano
Company, Inc.4<F9>
6 Ex 99.B6 None
7 Ex 99.B7 None
8 Ex 99.B8 Custody agreement with Firstar Trust Company
(formerly First Wisconsin Trust Company)4<F9>
9 Ex 99.B9A Shareholder servicing agreement with Firstar Trust
Company (formerly First Wisconsin Trust Company)4<F9>
9.1 Ex 99.B9B Accounting Services Agreement with Firstar Trust
Company4<F9>
10 Ex 99.B10 Opinion of Bell, Boyd & Lloyd dated October 25,
1996 4<F9>
11 Ex 99.B11 Consent of independent public accountants
12 Ex 99.B12 None
13.1 Ex 99.B13A Initial 1987 Subscription Agreement for
Individuals2<F7>
13.2 Ex 99.B13B Initial 1987 Subscription Agreement for
Corporations,2<F7> Trusts and Partnerships
13.3 Ex 99.B13C Initial 1988 Subscription Agreement2<F7>
13.4 Ex 99.B13D Second 1988 Subscription Agreement2<F7>
13.5 Ex 99.B13E Third 1988 form of Subscription Agreement2<F7>
14 Ex 99.B14 Individual Retirement Account Prototype Plan,
Disclosure Statement and applications2<F7>
14.1 Ex 99.B14.1 Amended Individual Retirement Account Prototype
Plan, Disclosure Statement and applications
14.2 Ex 99.B14.2 SIMPLE-IRA Supplement to Individual Retirement
Account Prototype Plan, dated January 1, 1997
15 Ex 99.B15 None
16 Ex 99.B16 Schedule for computation of performance
quotations3<F8>
17 Ex 27 Financial Data Schedule
1<F6>Incorporated by reference to the exhibit of the same number filed with pre-
effective amendment No. 2 to registrant's statement on form N-1A, no. 33-23997
(the "Registration Statement").
2<F7>Incorporated by reference to the exhibit of the same number filed with the
Registration Statement.
3<F8>Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 2 to the Registration Statement.
4<F9>Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 8 to the Registration Statement.
Item 25. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
The registrant does not consider that there are any persons directly
or indirectly controlling, controlled by, or under common control with, the reg-
istrant within the meaning of this item. The information in the prospectus
under the caption "Management of the Fund" and in the Statement of Additional
Information under the caption "Management" is incorporated by reference.
Item 26. Number of Holders of Securities
-------------------------------
As of September 30, 1997 there were 2,025 record holders of
registrant's capital stock. Registrant has no other class of securities.
Item 27. Indemnification
---------------
Section 2-418 of the General Corporation Law of Maryland authorizes
the registrant to indemnify its directors and officers under specified circum-
stances. Article Ninth of the Charter of the registrant (exhibit 1 to this
amendment, which is incorporated herein by reference) provides in effect that
the registrant shall provide certain indemnification of its directors and
officers. In accordance with section 17(h) of the Investment Company Act, this
provision of the charter shall not protect any person against any liability to
the registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securi-
ties Act of 1933 may be permitted to trustees, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the regis-
trant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The information in the prospectus under the caption "Management of the
Fund - Directors and Investment Adviser" is incorporated by reference. Except
as noted therein, neither Fasciano Company, Inc., nor any of its directors or
officers, has at any time during the past two years been engaged in any other
business, profession, vocation or employment of a substantial nature either for
its or his own account or in the capacity of director, officer, employee,
partner or trustee.
Item 29. Principal Underwriters
----------------------
(a) None
(b) None
(c) None
Item 30. Location of Accounts and Records
--------------------------------
Michael F. Fasciano
President
Fasciano Fund, Inc.
190 S. LaSalle St., Suite 2800
Chicago, Illinois 60603
Item 31. Management Services
-------------------
None
Item 32. Undertakings
------------
(a) Not applicable
(b) Not applicable
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
rule 485(b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Chicago, Illinois on October 28, 1997.
FASCIANO FUND, INC.
By /s/ Michael F. Fasciano
---------------------------------
Michael F. Fasciano, President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Michael F. Fasciano Director, President and )
- ---------------------------
Michael F. Fasciano Treasurer (principal )
executive, financial, )
and accounting )
officer) )
)
)
/s/ David R. Long Director ) October 28, 1997
- ---------------------------
David R. Long )
)
)
/s/ Mark B. Mandich Director )
- ---------------------------
Mark B. Mandich )
INDEX OF EXHIBITS FILED WITH THIS AMENDMENT
Exhibit
Number EDGAR Exhibit
- ------ ------ -------
11 Ex 99.B11 Consent of independent public accountants
14.1 Ex 99.B14.1 Amended Individual Retirement Account Prototype
Plan, Disclosure Statement and applications
14.2 Ex 99.B14.2 SIMPLE-IRA Supplement to Individual Retirement
Account Prototype Plan, dated January 1, 1997
17 Ex 27 Financial Data Schedule
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated August 15, 1997, and to all references to our Firm included in or made
a part of this Registration Statement on Form N-1A of Fasciano Fund, Inc.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 23, 1997
FASCIANO FUND
INDIVIDUAL
RETIREMENT
ACCOUNT
FASCIANO FUND, INC.
190 S. LaSalle Street
SUITE 2800
CHICAGO, ILLINOIS 60603
1-800-848-6050
CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-982-3533
THIS BOOKLET IS AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED
BY A CURRENT FASCIANO FUND , INC. PROSPECTUS.
1/1/97
TABLE OF CONTENTS PAGE
----------------- ----
How To Open A Fasciano fund IRA Account .............................1
Minimum Contribution.................................................1
Custodian Fees.......................................................1
Types of Accounts (General Information)..............................2
Regular IRA.....................................................2
SEP-IRA.........................................................2
SIMPLE-IRA......................................................2
Rollover IRA....................................................3
Transfer From a Qualified Retirement Plan to a Fasciano Fund IRA.....3
Transfer To a Fasciano Fund IRA From Another IRA.....................3
Tax Benefits.........................................................4
When Can an Account be Opened?.......................................4
Automatic Investment Plan............................................4
Do I Pay Tax on Dividends and Distributions?.........................4
When May I Make Withdrawals?.........................................4
What If I Make A Withdrawal Before Age 591/2?........................5
How Are Distributions Made After My Death?...........................5
Disclosure Statement.................................................7
IRA Custodial Agreement.............................................19
Forms...............................................................25
Application and Beneficiary Forms..............................25
Transfer Form:.................................................26
FASCIANO FUND, INC. IRA PLAN
January 1, 1997
190 S. LaSalle Street, Suite 2800 . Chicago, Illinois 60603 . 1-800-848-6050
HOW TO OPEN A FASCIANO FUND IRA ACCOUNT
Fill out the application and beneficiary form at the back of this booklet and
mail it, together with your check, to Firstar Trust Company at the address shown
on the application.
If you and your spouse are each setting up an IRA, two separate accounts
will be required, even if your spouse's contribution to his or her IRA is based
on your compensation. (see below). Have your spouse fill out the extra
application and beneficiary form, and return it along with yours to Firstar
Trust Company.
If you are making an IRA contribution for more than one year at this time,
please indicate the years and the amount for each year.
MINIMUM CONTRIBUTION
The initial contribution must be at least $1,000. Subsequent investments
must be at least $100. However, you are not required to make a contribution
every year.
CUSTODIAN FEES
Acceptance fee .......................................... no charge
Transfer to successor trustee ........................... $15.00
Annual maintenance fee .................................. $12.50
Distribution to a participant ........................... $15.00
Refund of excess contribution ........................... $15.00
Any outgoing wire ....................................... $12.00
Note: Each IRA account is subject to the above fees, including accounts
for spouses and each of multiple accounts for the same participant.
The $12.50 annual maintenance fee will be charged to each account by the end
of September for each year and enough Fund shares will be redeemed to cover this
fee. You may also pay this fee by mailing a check for $12.50 made payable to
Firstar Trust Company before September 15th.
REGULAR IRA
Who qualifies? You qualify in any year when you have earnings from
employment or self-employment. You qualify even if you are also covered by a
retirement program of your employer or a Keogh plan. However, if you and/or
your spouse are active participants in such a plan, your deduction for your IRA
contribution may be reduced or eliminated depending on your income. See the
Disclosure Statement, Section (2), "Deductible Contributions" and "Nondeductible
Contributions."
You may contribute up to $2,000 or 100% of your earned income, whichever is
less. Alimony and separate maintenance payments are treated as earned income
for this purpose.
You may not contribute to your regular IRA for any year if you are over age
70 1/2 before the end of the year.
If your spouse has less than $2,000 in earned income and you file a joint
return, you may jointly contribute up to the lesser of $4,000 or 100% of your
combined earned income. The contribution may be divided between your IRA and
your spouse's IRA in any way you decide, so long as the portion allocated to
either one does not exceed $2,000. (If you are making a contribution for 1996,
the combined limit is the lesser of $2,250 or your earned income.)
SEP-IRA
Your employer may set up a simplified employee pension plan (SEP) and
contribute to your IRA and the IRA of each other eligible employee up to $30,000
or 15% of compensation, whichever is less. The employer contribution must be
based on a written formula, which cannot discriminate in favor of officers,
shareholders or self-employed or highly compensated individuals.
You can have a Regular IRA, even if you have a SEP-IRA, too. See Disclosure
Statement, Section 1(c), "SEP-IRAs" for more details.
SIMPLE-IRA
Up until 1997, employers with up to 25 employees could allow eligible
employees to elect to have a portion of their pay withheld and contributed to a
special type of SEP-IRA called a "salary reduction SEP", or SAR-SEP. Beginning
in 1997, SAR-SEPs have been abolished, and a new type of IRA, called a SIMPLE-
IRA, has been established in their place for employers with up to 100 employees.
In a SIMPLE-IRA, you can elect to have up to $6,000 of your compensation in any
year withheld and deposited in an IRA, and your employer must generally make an
additional contribution to your account as well. SIMPLE-IRAs are otherwise very
similar to SEP-IRAs. See Disclosure Statement, Section 1(d), "SIMPLE-IRAs" for
more details.
The Fasciano Fund IRA Application Form cannot be used for a SIMPLE-IRA. Call
Firstar Trust Company at 1-800-982-3533 for the necessary forms if you or your
employer is interested in this type of plan.
ROLLOVER IRA
If you receive a distribution from the qualified retirement plan of a former
employer, you may be eligible to roll over the distribution to an IRA free of
tax. You may under certain circumstances make a rollover again to the profit
sharing or pension plan of a new employer. If you want to have that right,
however, your rollover IRA derived from an employer's qualified plan must be
kept separate from any other IRA you may have. Qualified retirement plans are
required to withhold 20% of most distributions to you for payment of income
taxes unless your plan balance is transferred directly to an IRA or another
qualified plan. This means that a direct transfer may be preferable to a
rollover for moving your qualified plan balance to a Fasciano Fund IRA. See
"Transfer From a Qualified Retirement Plan to a Fasciano Fund IRA," below.
You may also make a rollover to a Fasciano Fund IRA from another IRA.
However, a rollover of the same funds from one IRA to another may be made no
more than once during a 12-month period. An amount withdrawn from a SIMPLE-IRA
during the first two years of participation may only be rolled over into another
SIMPLE-IRA.
Any rollover must be made within 60 days after receipt of the distribution
from your employer's qualified plan or your previous IRA. Otherwise, the
distribution will be subject to tax for the year you receive it.
See Disclosure Statement, Section 1(b), "Rollover IRAs."
TRANSFER FROM A QUALIFIED RETIREMENT PLAN TO A FASCIANO FUND IRA
You may also make a direct transfer of funds from your employer's qualified
retirement plan to a Fasciano Fund IRA. Retirement plans are required to
transfer distributions directly to an IRA if the employee directs, and are also
required to withhold 20% of the distribution for taxes if a distribution is not
transferred directly to an IRA or another plan. Generally speaking, these rules
regarding direct transfers apply to any distribution that could be rolled over
into an IRA.
The procedure for making a direct transfer from a retirement plan into a
Fasciano Fund IRA is the same as the procedure for a direct transfer from
another IRA, discussed below.
TRANSFER TO A FASCIANO FUND IRA FROM ANOTHER IRA
You may also make a direct transfer of funds from another IRA to a Fasciano
Fund IRA. The 12-month restriction on IRA rollovers does not apply to direct
transfers. The transfer must be direct from your existing IRA to a Fasciano
Fund IRA without your having physical contact with the funds transferred. To
make a transfer:
1) Follow the procedure for opening an account.
2) Complete the enclosed Transfer Form to instruct your present custodian
or trustee to transfer the assets of your present account to Firstar
Trust Company as successor custodian. Have your signature guaranteed
if required by your present custodian.
3) Send the completed transfer form, along with the Fasciano Fund IRA
application and beneficiary form, to Firstar Trust Company.
4) Firstar Trust Company and your present custodian or trustee will
complete the details of transferring your funds to your Fasciano Fund
IRA.
TAX BENEFITS
You may be able to deduct part or all of the yearly contributions to your IRA
from your gross income, depending on whether you and/or your spouse are active
participants in a retirement program of your employer or a Keogh plan, and
depending on your income. See the Disclosure Statement, Section (2),
"Deductible Contributions." You may claim such a deduction even if you do not
itemize your deductions. The Fasciano Fund IRA is in the form of IRS Form 5305-
A, which is automatically deemed acceptable by the Internal Revenue Service.
The approval by the IRS relates only to the form of the account and not to the
merits of using the account as a retirement plan.
WHEN CAN AN ACCOUNT BE OPENED?
You can open your account and make a contribution for any year at any time up
to the due date of your federal income tax return for that year (excluding
extensions). Rollovers and direct transfers from other IRAs or retirement plans
can be made at any time during the year, so long as a rollover contribution is
made within 60 days after the distribution from the other IRA or retirement plan
is received by you. A distribution from a qualified plan may be subject to
income tax even if the distribution is rolled over to an IRA. See "Rollover
IRA" and "Transfer From a Qualified Plan to a Fasciano Fund IRA," above.
AUTOMATIC INVESTMENT PLAN
Fasciano Fund offers an Automatic Investment Plan that permits you to guy
shares of the Fund automatically each month by electronic transfer of money from
your bank account. Under the Automatic Investment Plan, each investment must be
at least $50.
DO I PAY TAX ON DIVIDENDS AND DISTRIBUTIONS?
No, all dividends and distributions accumulate tax-free. Tax is paid when
you (or your beneficiary) withdraw your retirement benefits. See the Disclosure
Statement, Section (5), "Income and Penalty Taxes."
WHEN MAY I MAKE WITHDRAWALS?
Withdrawals can start after age 59 1/2, and must start by April 1 after the
end of the year in which you (or your spouse, in the case of a spousal account)
reach age 70 1/2. Withdrawals can be made in a lump sum or in installments. The
Internal Revenue Code imposes complex limits on the length of time over which
withdrawals from an IRA can be made. See the Disclosure Statement, Section (4),
"Distributions from your IRA." Withdrawals are subject to tax as ordinary
income, except for any portion rolled over to another IRA or considered to be a
return of nondeductible contributions. See Disclosure Statement, Section (5),
"Income and Penalty Taxes."
WHAT IF I MAKE A WITHDRAWAL BEFORE AGE 59 1/2?
A withdrawal can be made without penalty before age 59 1/2 only in case of
death or permanent disability, in the case of certain periodic payments, or to
pay certain medical expenses (including medical insurance premiums if you are
unemployed). Otherwise, a withdrawal before age 59 1/2 is a premature
withdrawal and is subject to a penalty tax of 10% of the portion that is
included in your income, in addition to the regular income tax. But neither
the regular income tax nor the 10% penalty tax applies to any portion rolled
over to another IRA or considered as a return of your nondeductible
contributions. If you make a withdrawal from a SIMPLE-IRA during the first
two years of your participation, the penalty tax is 25% instead of 10%.
HOW ARE DISTRIBUTIONS MADE AFTER MY DEATH?
If you die on or after April 1 of the year after you reach age 70 1/2, the
remaining balance of your IRA will continue to be distributed to your designated
beneficiary at least as rapidly as under the method of distribution in effect
before your death.
If you die before April 1 of the year after you reach age 70 1/2, the entire
balance of your IRA account must be distributed by December 31 of the year in
which the 5th anniversary of your death occurs. However, distribution need not
be made within this 5-year period if your beneficiary receives payments over a
period measured by his or her life or life expectancy beginning no later than
December 31 of the year following the year in which you die.
If the beneficiary is your spouse, those installment payments don't have to
begin until the later of December 31 of the year following the year in which you
die or December 31 of the year in which you would have reached age 70 1/2. In
addition, a distribution need not be made within 5 years of your death if your
spouse is your beneficiary and he or she elects to treat the entire interest in
the IRA (or the remaining part of such interest if distribution has already
begun) as his or her own IRA subject to the regular IRA distribution re-
quirements. In such a case, your spouse will be considered to be the covered
individual under the IRA.
If you die before the entire IRA has been distributed to you and your spouse
is not your beneficiary, no additional cash contributions or rollover
contributions may be accepted by the IRA.
If distributions are made from your IRA to your surviving spouse (or to a
trust of which your surviving spouse is the income beneficiary), the amount
which your surviving spouse or the trust is entitled to receive in each year
must be at least equal to the income of your IRA (or of the portion of your IRA
which benefits your surviving spouse or the trust) for that year.
You have the right to elect the manner in which your life expectancy and the
life expectancy of your beneficiary will be calculated. This election must
generally be made by the April 1 of the year following the year in which you
reach age 70 1/2, and can have a significant effect on your tax and estate
planning. If you have a substantial balance in your IRA, you should consult a
qualified tax advisor before deciding how to calculate life expectancies.
The Fasciano Fund IRA Plan is sponsored by Fasciano Fund, Inc. This brief
outline of the Plan is not intended as a full explanation of the Individual
Retirement Plan, but we hope that we have answered some of the questions that
occur to you.
WE URGE YOU TO READ THE ENCLOSED MATERIAL THOROUGHLY.
FASCIANO FUND INDIVIDUAL RETIREMENT ACCOUNT
Disclosure Statement
--------------------
(January 1, 1997)
This Disclosure Statement is being given to you to assure that you are
informed and understand the nature of an Individual Retirement Account ("IRA").
This disclosure statement explains the rules governing IRAs.
Your Right to Revoke this IRA. You may revoke this IRA at any time
within seven days after the later of the date you received 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 or transfer direction with which you opened your IRA. To
revoke the IRA, you must either mail or deliver a notice of revocation to the
following address:
Firstar Trust Company, Custodian
Fasciano Fund
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
If a notice of revocation is mailed, it will be deemed mailed on the
date of the postmark (or if sent by certified or registered mail, the date of
certification or registration) if it is deposited in the mail in the United
States, first class postage prepaid and properly addressed. If you revoke your
IRA, you are entitled to a return of the entire amount contributed.
(1) TYPES OF INDIVIDUAL RETIREMENT ACCOUNTS; ELIGIBILITY
In General. There are several types of IRAs. For example, there is a
"Regular IRA" to which you may make contributions for yourself or for your
spouse. There is a "Rollover IRA" which you can set up to receive assets from a
qualified plan, annuity or another IRA. There is a SEP-IRA (which is also known
as a Simplified Employee Pension Plan) which your employer can establish for
you. Finally, there is a SIMPLE-IRA (also known as a Salary Incentive Match
Plan IRA) which an employer can use for a salary reduction plan. Following is a
general description of the rules which apply to each of these types of IRAs and
who is eligible to establish them.
(a) REGULAR IRA. You may contribute up to the lesser of $2,000 or
100% of your compensation if you have not reached age 70 1/2 during the taxable
year. You may make this contribution even if you or your spouse is an active
participant in a qualified employer plan. However, as explained below, the
amount of the contribution which you may deduct may be limited. Compensation
includes wages, salary, commissions, bonuses, tips, etc. but does not include
income from interest, dividends or other earnings or profits from property, or
amounts not includible in your gross income.
If your spouse's compensation in a year is less than $2,000, your
spouse may still be able to make a contribution to an IRA if you file a joint
income tax return for the year. Under such an arrangement, you and your spouse
may qualify for a total contribution equal to the lesser of $4,000 (beginning in
1997) or 100% of your combined compensation for the taxable year. You can
determine how to divide the contribution between the two accounts but you cannot
contribute more than $2,000 annually into either one. While you cannot
contribute to your IRA in the taxable year in which you reach 70 1/2, you can
still contribute to your spouse's IRA if he or she has not reached 70 1/2. A
spousal IRA does not involve the creation of a joint account. The account of
each spouse is separately owned and treated independently from the account of
the other spouse.
For years prior to 1997, the maximum combined contribution to your
IRA and your spouse's IRA is $2,250, and a spousal IRA can be established only
if your spouse either had no earned income for the year, or elects to be treated
as having no earned income for this purpose. Your spouse's election for years
prior to 1997 is made by claiming a spousal IRA deduction on your tax return.
(b) ROLLOVER IRAs. All or a portion of certain distributions from
qualified retirement plans, annuities and other IRAs may be "rolled over" tax-
free without regard to the limits on annual contributions to a Regular IRA, but
no deduction is allowed with respect to such a contribution. There are three
basic types of rollovers: rollovers from a qualified pension or profit-sharing
plan, rollovers from another IRA, and rollovers from a tax-sheltered annuity.
All distributions must be rolled over within 60 days after you receive the
distribution to receive tax-free treatment.
From a Qualified Plan. In general, you may roll over any portion of a
distribution that you receive from a qualified employer-sponsored pension or
profit-sharing plan (including a 401(k) plan), except that you cannot roll over
(1) one of a series of substantially equal periodic payments (such as an
annuity), (2) a minimum distribution required to be made after you reach the age
of 70 1/2, or (3) the portion of a distribution that represents the return of
your own after-tax contributions. If you receive a distribution of property
rather than cash, you can sell the property and roll over the sale proceeds, as
long as you complete the rollover within 60 days from the original date of
distribution.
If you make a rollover from a qualified employer plan to an IRA, you
may in turn, under certain circumstances, make a rollover from the IRA into the
qualified plan of a subsequent employer. To preserve that right, however, you
must keep the rollover IRA separate from any other IRA you may have, since you
cannot make a rollover to an employer plan from an IRA to which you have made
yearly contributions.
Instead of receiving a distribution from a qualified plan and rolling
it over, you may also direct the trustee or custodian of any qualified retire-
ment plan to transfer a distribution from the plan directly to an IRA. If a
distribution from a plan can be rolled over, the plan is required by law to
transfer the distribution directly to an IRA, or another employer's plan, if you
so direct. If you do not direct the distribution to be transferred directly to
an IRA or another plan, the plan making the distribution will be required to
withhold 20% of the distribution for the payment of income taxes, even if you
subsequently roll over the distribution.
Rollover amounts you receive from a qualified employer plan may not be
deposited in your spouse's IRA, but if you should die while still a participant
in a qualified plan, in certain cases your spouse may be allowed to make a tax-
free rollover to an IRA. The amount of the death payout rolled over by a spouse
into an IRA may not subsequently be rolled over into another employer's
qualified plan or annuity. Beneficiaries other than your spouse are not allowed
to roll over distributions they receive after your death.
From Another IRA. In general, any distribution or withdrawal that you
receive from an IRA can be rolled over into another IRA within 60 days, except
that (1) you cannot roll over the minimum distributions you are required to
receive after age 70 1/2, (2) you can only make a rollover from one IRA to
another once in any twelve-month period, and (3) a distribution from a SIMPLE-
IRA that is made within the first two years after you first begin to participate
in the SIMPLE-IRA can only be rolled over to another SIMPLE-IRA. You may also
request the trustee or custodian of an IRA to make a direct transfer to the
trustee or custodian of another IRA. Such direct transfers are not limited to
one in a twelve month period. Unlike the trustees of qualified retirement
plans, trustees of IRAs are not legally required to make direct transfers, but
most of them do. Your spouse may generally roll over distributions that he or
she receives from your IRA after your death, but no beneficiaries other than
your spouse may do so.
Tax Sheltered Annuities. Tax-sheltered annuity plans, sometimes
called "403(b) plans", are a retirement benefit offered by certain governmental
and not-for-profit employers, such as schools and hospitals. If you receive a
distribution from a tax sheltered annuity plan other than in the form of an
annuity, it may generally be rolled over to an IRA under rules similar to those
that apply to distributions from qualified employer plans, as described above.
As with a rollover distribution from an employer plan, you should keep a
rollover from a tax sheltered annuity plan in a separate IRA account and not
make any other contributions to it (including rollovers from other types of
plans) if you wish to preserve the right to roll over to another tax sheltered
annuity plan in the future. Distributions from other types of governmental
retirement plans may or may not be eligible for a rollover depending on whether
the employer has chosen to comply with IRS guidelines. Distributions from
voluntary deferred compensation plans maintained by government and not-for-
profit employers, sometimes known as "Section 457 plans", are not eligible for a
rollover to an IRA.
Strict requirements must be met to qualify for tax-free rollover
treatment. You should consult your personal tax advisor in connection with
rollovers to and from your IRA.
(c) SIMPLIFIED EMPLOYEE PENSION PLAN (SEP-IRA). An employer may
adopt a SEP-IRA and contribute to your SEP-IRA even if you are covered by
another retirement plan. The Code permits an employer to contribute to your
SEP-IRA up to 15% of your compensation (computed without regard to the
contribution) or $30,000 (or such other amount as may be prescribed by the
Secretary of the Treasury), whichever is less. The contributions are deductible
by the employer and are generally not includible in your income until you
receive distributions. Employer contributions must be made under a written
allocation formula which cannot discriminate in favor of so-called "highly
compensated employees" (as defined in the Code). Employer contributions are
considered discriminatory unless they bear a uniform relationship to the first
$160,000 of each participant's compensation.
An employer must cover each employee who has attained age 21 and has
performed service for the employer during at least three of the immediately
preceding five calendar years, but employees who earn less than $300 in the year
in question, employees covered by certain collective bargaining agreements and
certain nonresident aliens may be excluded. "Leased employees" (i.e., those
individuals who are not the employer's employees, who are hired through a
"leasing organization", are under the primary direction or control of the
employer, and who provide services on a substantially full-time basis for more
than a year) must be treated as regular employees for the purposes of making
SEP-IRA contributions, unless the leasing organization provides prescribed
minimum pension benefits to the leased employees. Any SEP-IRA contribution made
by the leasing organization attributable to services performed for the employer
may be used to reduce the employer's contribution to a leased employee's SEP-
IRA.
Generally, if the employer does not maintain an integrated plan at any
time during the taxable year, Old Age and Survivor Disability Insurance
("OASDI") contributions may be taken into account as contributions by the
employer to the employee's SEP-IRA but only if such OASDI contributions are
taken into account with respect to each employee maintaining a SEP-IRA. If the
SEP-IRA is part of a top-heavy plan as defined in the Code, the employer must
make a minimum contribution to each non-key employee's SEP-IRA for each year
that the plan is top-heavy. Generally, a plan is top-heavy if the aggregate of
the accounts of key employees as defined in Code Section 416 (i.e., certain
officers, owners and highly compensated individuals) exceeds 60% of the
aggregate of the accounts of all employees. If the employer maintains more than
one plan, such plans may, or under certain circumstances must, be aggregated for
purposes of determining whether the SEP-IRA is top-heavy. Generally, the
minimum contribution required to be made to the SEP-IRA of each non-key employee
in a top-heavy year is 3% of the employee's compensation.
(d) SIMPLE-IRAs. Up until 1997, employers with up to 25 eligible
employees could allow employees to elect to have a portion of their pay withheld
and contributed to a special type of SEP-IRA, called a "salary reduction SEP",
or SAR-SEP. Beginning in 1997, SAR-SEPs have been abolished, and a new type of
IRA, called a SIMPLE-IRA, has been established instead. Although new SAR-SEPs
cannot be established after 1996, SAR-SEPs that were in existence on December
31, 1996, can remain in existence and continue to receive contributions in
future years, including contributions for new employees. Beginning in 1997,
employers with up to 100 eligible employees can establish SIMPLE-IRAs. In a
SIMPLE-IRA, you can elect to have up to $6,000 of your compensation in any year
withheld and deposited in an IRA, and your employer must generally make an
additional contribution to match the amount that you have withheld, up to a
maximum of 3% of your compensation. The employer may elect to lower the maximum
matching contribution to as low as 1% in some years, but may not lower the
maximum match in more than two years out of every five. The employer may also
elect to make a contribution equal to 2% of compensation for all eligible
employees in any year instead of making matching contributions. All employees
who have been paid at least $5,000 in two prior years and expect to be paid
$5,000 in the current year must eligible to participate (excluding nonresident
aliens and union workers whose collective bargaining agreement does not provide
for them to participate). SIMPLE-IRAs are otherwise very similar to SEP-IRAs.
Although SEP-IRAs and SIMPLE-IRAs are primarily intended to be adopted
by employers for the benefit of their employees, these types of IRAs can also be
established by a self-employed person for his own benefit, which may enable him
to make a larger deductible contribution than would be permitted using a Regular
IRA. The rules governing SEP-IRAs and SIMPLE-IRAs are complex. We suggest that
you discuss them with your tax advisor.
You may contribute to a Regular IRA even if you participate in a SEP-
IRA or SIMPLE-IRA (although the deductibility of your contribution may be
limited as described below). Except as otherwise noted, your SEP-IRA or SIMPLE-
IRA generally is subject to the rules governing a Regular IRA. Your rights to
withdraw amounts held in a SEP-IRA or SIMPLE-IRA cannot be restricted by your
employer.
(2) CONTRIBUTIONS
In General. As explained in this part, the amount of your IRA
contributions which you can deduct is subject to limits. All contributions and
transfers to your Fasciano Fund IRA must be in cash, except that a rollover
contribution may be made either in cash or in shares of Fasciano Fund.
Contributions to your or your spouse's Regular IRA may be made up to the due
date for filing your tax return for the taxable year (excluding extensions
thereof) even if you file before the due date. In making contributions, you
must indicate the tax year to which the contribution applies. If no tax year is
designated, the custodian will assume that the contribution is intended to apply
to the calendar year in which it is received. The time limit for designating
the applicable tax year is April 15.
Contributions made by an employer to your SEP-IRA or SIMPLE-IRA for a
calendar year may be made no later than the due date of your employer's tax
return (including extensions). In making a SEP-IRA or SIMPLE-IRA contribution,
the tax year to which the contribution relates must also be specified or it will
be deemed to relate to the calendar year in which it is received. In a SEP-IRA
or SIMPLE-IRA, this designation of the tax year of a contribution must be made
by the due date for contributions described above.
Deductible Contributions. If you are single and are not an "active
participant" in a retirement plan maintained by your employer, you can deduct
the full amount of your IRA contribution up to the lesser of $2,000 or 100% of
your compensation for the year. If you are married, you can deduct the full
amount of your IRA contribution so long as neither you nor your spouse is an
"active participant" in a retirement plan maintained by your respective
employers. These plans include qualified pension, profit-sharing, stock bonus
or money purchase plans, 401(k) plans, SEP-IRAs, SIMPLE-IRAs, qualified annuity
plans, tax-sheltered annuities and pension or retirement plans of governmental
agencies (but not voluntary deferred compensation plans known as "Section 457
plans"). In general, you are considered to be an active participant in a plan
if an employer contribution or forfeiture was credited to your account during
the year in the case of a defined contribution plan or, in the case of a defined
benefit plan, you are eligible to participate even if you choose not to. You
are considered to be an active participant in a plan if you make a contribution
to the plan during a year even if your employer does not. For active
participation, it does not matter whether any interest you have in a plan is
vested or unvested.
If you or your spouse is an active participant in a plan, the amount
of the deduction you can claim for an IRA contribution is reduced or totally
denied depending upon the amount by which your adjusted gross income for the
year exceeds the "applicable dollar amount." The applicable dollar amount is
$25,000 for single people and $40,000 for married individuals filing a joint tax
return. If you are married but are filing separate tax returns, your applicable
dollar amount is $0.
If your adjusted gross income exceeds your applicable dollar amount by
more than $10,000, you may not deduct any portion of your IRA contribution.
However, if it is between $0 and $10,000 more than your applicable dollar
amount, you can claim a tax deduction for your contribution. To determine the
amount of the deduction, follow these steps. First, determine the amount of the
contribution you can make. If, for example, you have compensation in excess of
$2,000 you could make a $2,000 contribution to your Regular IRA. Next, subtract
the applicable dollar amount from your adjusted gross income. If you are single
and your adjusted gross income is $30,000, the difference would be $5,000.
Next, divide this difference by $10,000. In the example $5,000/$10,000 equals
1/2. Accordingly, you may deduct 1/2 of your contribution. If the deduction
limitation is not a multiple of $10, round the deduction to the next $10. If
your adjusted gross income does not exceed $35,000 and you are single or $50,000
and you are married, you can deduct $200 regardless of how the computation comes
out.
Married persons who file separate returns are treated as unmarried for
purposes of these rules if they did not live together at any time during the
year.
Nondeductible Contributions. Even though you may not be entitled to
claim a deduction for contributions to your IRA, you are still allowed to make
the contributions to the extent described in "Types of IRAs" above. To the
extent that the amount of your contribution exceeds the deduction limit, it is
considered a nondeductible contribution. Earnings on these contributions are
not taxed until distributed, just like the earnings on deductible contributions.
It may therefore be worthwhile making nondeductible contributions.
You are required to report the amount of your nondeductible
contributions on Form 8606 and attach it to your income tax return. If you
overstate this amount, you may be liable for a tax penalty of $100 per
overstatement.
(3) INVESTMENT AND HOLDING OF CONTRIBUTIONS
Contributions to your IRA, and the earnings thereon, are invested in
shares of Fasciano Fund, Inc. The assets in your account are held in a
custodial account exclusively for your benefit and the benefit of such
beneficiaries as you may designate in writing delivered to the Custodian. The
balance in your IRA represents a separate account which is clearly identified as
your property and generally may not be combined for investment with the property
of another individual. Your right to the entire balance in your account is non-
forfeitable. No part of the assets of your account may be invested in life
insurance contracts or in collectibles such as works of art, antiques, coins,
stamps, etc.
(4) DISTRIBUTIONS FROM YOUR IRA
Distribution During Your Life. The law permits distributions to be
made from an IRA at any time after you attain age 59 1/2 without penalty, and
requires that distributions commence no later than April 1 following the
calendar year in which you attain age 70 1/2. Distributions may be in the form
of a single payment or, in accordance with regulations, in substantially equal
monthly, quarterly or annual payments over your life or the joint lives of you
and your designated 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. However, if your beneficiary is not your spouse,
the law imposes an additional requirement called the minimum distribution
incidental benefit requirement. In general, this requirement puts a further
limit on the maximum payout period. This further limit is based on a table in
the income tax regulations, and if this limit applies to you, you should consult
your tax advisor to determine your minimum distribution.
If you direct distributions over your life or the joint lives of you
and your designated beneficiary, the Custodian will use your IRA balance to
purchase an immediate annuity contract from an insurance company you choose and
your payments will be made under the annuity. You must provide a completed
annuity application from the insurance company of your choosing.
Any distribution instruction must specify the reason for the
distribution. Examples of such reasons are: premature distributions (i.e.,
distributions before age 59 1/2), rollovers, disability, death, normal (59 1/2
or over), excess contribution returns and other.
Distributions After Your Death. If you die after the April 1 after
you reach age 70 1/2, but before the entire amount of your IRA has been
distributed to you, the balance of your IRA must be distributed to your
designated beneficiary at least as rapidly as under the method of distribution
in effect before your death.
If you die before the April 1 following the year in which you reach
age 70 1/2, the entire balance of the account must be distributed by December 31
of the year in which the 5th anniversary of your death occurs. However,
distribution need not be made within this 5-year period if your beneficiary
receives payments over a period measured by his or her life or the life
expectancy beginning no later than December 31 of the year following the year in
which you die. If the beneficiary is your spouse, those installment payments
don't have to begin until the later of December 31 of the year following the
year in which you die or December 31 of the year in which you would have reached
age 70 1/2. In addition, a distribution need not be made within 5 years of your
death if your spouse is your beneficiary and he or she elects to treat the
entire interest in the IRA (or the remaining part of such interest if distribu-
tion has already begun) as his or her own IRA subject to the regular IRA
distribution requirements. In such a case, your spouse will be considered to be
the covered individual under the IRA. If you die before the entire IRA has been
distributed to you and your spouse is not your beneficiary, no additional cash
contributions or rollover contributions may be accepted by the IRA.
If distributions are made from your IRA to your surviving spouse (or
to a trust of which your surviving spouse is the income beneficiary), the amount
which your surviving spouse or the trust is entitled to receive in each year
must be at least equal to the income of your IRA (or of the portion of your IRA
which benefits your surviving spouse or the trust) for that year.
Calculations of Life Expectancy. As discussed above, the minimum
amount that you or your beneficiary must withdraw from your IRA is in many cases
determined by your life expectancy or your beneficiary's life expectancy. In
general, life expectancies are determined based on actuarial tables issued by
the IRS in the year, and are recalculated in each year in which you or your
beneficiary is required to receive a distribution. If you die before reaching
age 70 1/2 and your beneficiary is your surviving spouse, your spouse will also
generally redetermine his or her life expectancy for each year. Since life
expectancies go up as people get older, recalculating your or your spouse's life
expectancy each year will ordinarily result in a lower required annual
distribution. However, it can also result in an acceleration of the amount that
must be distributed, and the tax that must be paid, when you or you and your
primary beneficiary die. To avoid this, you (or your surviving spouse) may
elect instead to calculate your life expectancy at the time that you are
required to begin receiving mandatory distributions. This election must be made
before the date on which mandatory distributions must begin, and can't be
changed after that date. Accordingly, if you have a substantial balance in your
account, it is very important that you consult a qualified tax advisor before
you are required to begin receiving distributions.
(5) INCOME AND PENALTY TAXES
Income Tax Treatment. Income tax on deductible IRA contributions and
earnings on both deductible and nondeductible IRA contributions is generally
deferred until you receive distributions. If you have made both deductible and
nondeductible contributions to IRAs you maintain, a portion of each distribution
you receive from any IRA (whether or not it is the one to which you made
nondeductible contributions) will be considered to be a return of nondeductible
contributions and therefore not included in your income for tax purposes. The
balance of each distribution will be taxed as ordinary income regardless of its
original source. The amount of any distribution which is considered to be a
return of nondeductible contributions (and therefore not taxed) is determined by
multiplying the amount of the distribution by a fraction. The numerator of the
fraction is the aggregate amount of nondeductible contributions you have made to
all of your IRAs over the years and the denominator is the balance in all your
IRAs at the end of the year (after adding back any distributions you received
during the year). The aggregate amount which can be excluded from income for
all years cannot exceed the amount of nondeductible contributions that you made
in those years.
Taxable distributions from your account are taxed as ordinary income
regardless of their original source. They are not eligible for special tax
treatment that may apply to lump sum distributions from qualified employer
plans.
Penalty Tax for Premature Distributions. Your IRA is intended to
provide income for you upon retirement. Accordingly, the law generally imposes
a penalty on premature distributions. If you receive a taxable distribution
from the IRA before reaching age 59 1/2 and do not roll it over, a nondeductible
10% penalty will be imposed on the portion of the distribution which is included
in your gross income. (If you withdraw funds from a SIMPLE-IRA within the first
two years after you begin to participate, the penalty is 25% rather than 10%.)
This penalty is in addition to any income tax you must pay on the distribution
itself. The penalty does not apply to the extent that the distribution is
considered a return of nondeductible contributions or a return of an excess
contribution which is permitted tax-free (see below). The penalty also will not
apply if the distribution is made due to your permanent disability or death or
if the distribution is one of a series of substantially equal periodic payments
made over your life (or life expectancy) or over the joint lives (or life
expectancies) of you and your beneficiary. Beginning in 1997, the penalty does
not apply to certain withdrawals used to pay medical insurance premiums after
you have unemployed for at least 12 weeks, or certain larger medical bills.
Penalty Tax for Excess Contributions. Contributions to an IRA above
the permissible limits are nondeductible and are subject to an annual
nondeductible excise tax of 6% of the amount of such excess contributions for
each year that the excess is not withdrawn or eliminated. The tax is paid by
the person to whom a deduction is allowed or in the case of a Rollover IRA, by
the person for whose benefit it is established. If the person who contributed
the excess takes no deduction for it and withdraws the excess amount plus the
net earnings attributable to such excess on or before the due date (including
extensions) for filing the Federal income tax return for the year for which the
contribution was made, the 6% excise tax will not be applied but the 10% tax on
premature distributions will be applied to the amount of net earnings.
Generally, if the excess is withdrawn after the due date (including extensions)
for filing the tax return for the year for which the contribution was made, not
only will the excess contribution be subject to the 6% excise tax, but the
amount of such excess and the net income attributable to it will also be
includible in income; and if you have not attained the age of 59 1/2, or are not
disabled, you will also be subject to the previously mentioned 10% penalty tax
on premature distributions. The law provides, however, that if an individual
has made a contribution to an IRA for a year which does not exceed $2,000
(excluding rollover amounts), all or part of which is an excess contribution for
which he did not claim a deduction, and he does not correct the excess
contribution before the due date (including extensions) for filing his tax
return for the year, he nevertheless may withdraw the excess amount contributed
(without the net income attributable thereto) at any time without incurring the
10% penalty tax on premature distributions or being required to include the
amount withdrawn in income. The 6% excise tax will be imposed even in this
special situation for the year of the excess contribution and each subsequent
year until the excess is withdrawn or eliminated.
The rules discussed above generally apply to SEP-IRAs and SIMPLE-IRAs
as well. The law also allows you to withdraw tax-free and without penalty an
excess contribution, regardless of the amount, made with respect to a rollover
contribution (including an attempted rollover contribution), if the excess
contribution occurred because you reasonably relied on erroneous information
required to be supplied by the plan, trust or institution making the distri-
bution that was the subject of the rollover.
As an alternative to withdrawing excess contributions made to an IRA,
such amounts may be eliminated by making reduced contributions; however, you
will be required to pay the 6% excise tax on the amount of the excess for the
year of the contribution and for each subsequent year until the amount of the
excess is deducted in a later year for which you have not contributed the
maximum deductible amount. If a contribution is made to your account in an
amount less than the permissible limit in order to correct an excess
contribution for a previous year for which you did not claim a deduction, you
may under certain circumstances, taking into account the limits on
contributions, be allowed to treat the amount of the reduction in the current
year's contribution as an additional contribution for the current taxable year.
Penalty Tax for Under-Distribution. If after April 1 following the
year in which you attain age 70 1/2, the amount distributed is less than the
minimum amount required by law to be distributed, a 50% excise tax may be
imposed on any such deficiency. The minimum amount required by law to be
distributed is generally based on your life expectancy or the joint and survivor
life expectancy of you and your beneficiary. However, if your beneficiary is
not your spouse, the law imposes an additional requirement which is called the
minimum distribution incidental benefit requirement. In general, this
requirement is designed to prevent you from naming a beneficiary who is much
younger than yourself in order to extend your payout period. You should consult
your tax advisor to determine your maximum distribution.
The Internal Revenue Service may waive the penalty tax for under-
distribution if the deficiency was due to reasonable error and reasonable steps
are being taken to correct the deficiency.
Penalty Tax for Excess Distributions and Accumulations. A 15% penalty
tax is generally imposed on annual distributions from retirement arrangements
(including IRAs) to the extent that such distributions in a year are considered
"excess distributions." A distribution is an "excess distribution" if it exceeds
$160,000 (or such higher amount as may be specified by the IRS) during any
calendar year. In addition, upon your death, your estate may be subject to a
tax of 15% of the excess of the balance in all such retirement arrangements over
an amount equal to the present value of an annuity of $160,000 per year. The
tax on excess distributions (but not the additional estate tax on excess
accumulations) has been suspended for distributions received during 1997, 1998
and 1999. You should discuss how these rules apply to you with your tax
advisor.
Prohibited Transactions and Pledging Account Assets. If during any
taxable year you engage in a so-called "prohibited transaction" with respect to
your IRA, the account will lose its tax-exempt status. In this event, the fair
market value of all account assets, valued as of the first day of such taxable
year, will be deemed distributed to you and includible in your gross income.
These prohibited transactions would include borrowing money from your account.
If you pledge your account or any portion thereof as security for a loan, such
pledged portion will be deemed distributed to you and, to the extent that it
does not represent a return of nondeductible contributions, includible in your
gross income. If you have not yet attained age 59 1/2, the 10% or 25% penalty
tax on premature distributions discussed above will also apply. If your spouse
engages in a prohibited transaction with respect to his or her account, the
results will be the same.
(6) MISCELLANEOUS
Federal Income Tax Withholding. Distributions from an IRA to the
covered individual or to a beneficiary are subject to Federal income tax
withholding unless the covered individual or beneficiary elects to have no
withholding apply. The current withholding rate required by the Internal
Revenue Code is 10%. Additional information concerning withholding and election
forms will be available no later than at the time a distribution is requested.
Federal Estate and Gift Taxes. Generally, your IRA will be included
in your estate for Federal estate tax purposes. If your spouse is your
beneficiary, your IRA may qualify for a deduction for purposes of that tax. An
election under an IRA to have a distribution payable to a beneficiary on the
death of the covered individual will not be treated as a gift subject to Federal
gift tax.
Reports to the Internal Revenue Service. You are not required to file
Form 5329 with the IRS unless you owe one of the IRA penalty taxes. These are
the taxes on excess contributions, premature distributions, prohibited
transactions and under distributions after age 70 1/2.
Financial Information. The growth in value of the mutual fund shares
held in your account can neither be guaranteed nor projected.
Plan Sponsor. Fasciano Fund, Inc. is the sponsor of the Fasciano Fund
IRA and performs most of the ministerial functions in connection with the
maintenance of the accounts established under the Fasciano Fund IRA.
Custodian Fees. Firstar Trust Company as the Custodian of your IRA
currently charges an annual maintenance fee of $12.50 per account. You should
refer to the fee schedule for other fees which may be applicable. Note that
IRAs for spouses require separate accounts, even if only one spouse makes the
contributions. Each spouse's account is subject to the above fees.
The $12.50 annual maintenance fee will be deducted from your account
by the end of September for each year and enough Fund shares will be redeemed to
cover this fee. You may also pay this fee by mailing a check for $12.50 payable
to Firstar Trust Company before September 15.
The Custodian may change any of the above fees from time to time.
Requirements for Tax Qualification. In order to qualify for tax-
exempt status, an IRA must be a trust or custodial account created in the United
States for the exclusive benefit of the depositor and his beneficiaries, and the
trust or custodial agreement must meet the following requirements: (1) annual
contributions must be limited as described above; (2) the trustee or custodian
must either be a bank, or another financial institution that has been approved
by the IRS; (3) no part of the IRA can be invested in life insurance contracts;
(4) the interest of the depositor must be nonforfeitable; (5) the assets of the
IRA cannot be commingled with other property except in a common trust fund or
common investment fund; and (6) the IRA must satisfy the minimum distribution
requirements summarized above. The Fasciano Fund IRA is in the form of IRS Form
5305-A, which is automatically deemed acceptable by the IRS as to form. The
approval by the IRS relates only to the form of the account and not to the
merits of using the account as a retirement plan.
Additional Information. You may obtain additional information
regarding the taxation of IRAs from any district office of the Internal Revenue
Service.
Form 5305-A
(Rev. October, 1992)
Department of the Treasury
Internal Revenue Service
FASCIANO FUND INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT
(Under Section 408(a) of the Internal Revenue Code)
(January 1, 1997)
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) (but only after December 31, 1992),
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). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 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 and silver coins and
coins issued under the laws of any state.
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 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 turned age 70 1/2.
(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.
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 section 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 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.
ARTICLE VIII
1. Definitions.
------------
"Investment Company" shall mean an investment company as defined in
Internal Revenue Code Section 851(a), shares of which Fasciano Fund has agreed
to offer for investment under this Account. "Investment Company Shares" or
"Shares" shall mean shares of beneficial interest or capital stock of the
Investment Company.
2. Investment of Account Assets.
----------------------------
(a) Each contribution forwarded by the Depositor to the Custodian shall
identify the Depositor's account number and be accompanied by a statement signed
by the Depositor identifying the Investment Company Shares in which that
contribution is to be invested. The Custodian may return to the Depositor,
without liability for interest thereon, any contributions which are not
accompanied by adequate account identification or an appropriate signed
statement directing investment of those contributions.
(b) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner in which such shares are then
being publicly offered by the Investment Company. All distributions received on
Investment Company Shares held in the Custodial Account shall be reinvested in
like Shares and credited to such Account. If any distribution of Investment
Company Shares may be received at the election of the shareholder in additional
like Shares or in cash or other property, the Custodian shall elect to receive
such distribution in additional like Investment Company Shares.
(c) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its registered nominee. The
Depositor shall be the beneficial owner of all Investment Company Shares held in
the Custodial Account and the Custodian shall not vote any of such shares,
except upon written direction of the Depositor. The Custodian agrees to forward
to every Depositor a then current Prospectus, reports, notices, proxies and
related proxy soliciting materials applicable to Investment Company Shares
received by the Custodian.
(d) The Depositor may at any time, by a manually signed direction
delivered to the Custodian, redeem any number of Investment Company Shares held
for his account and reinvest the proceeds in the Shares of any other Investment
Company. Telephone redemptions and reinvestments shall be done at the price and
in the manner in which such Shares are then being redeemed or offered by the
respective Investment Companies.
3. Amendment and Termination.
--------------------------
(a) Fasciano Fund, Inc. may, with the written approval of the Custodian,
amend the Custodial Account in whole or in part (including retroactive
amendments) by delivering to the Depositor written notice of such amendment
setting forth the substance and effective date of the amendment. The Depositor
shall be deemed to have consented to any such amendments not objected to in
writing by the Depositor within thirty (30) days of receipt of the notice,
provided that no amendment shall cause or permit any part of the assets of the
Custodial Account to be diverted to purposes other than for the exclusive
benefit of the Depositor or his beneficiaries, nor shall any amendment be made
except in accordance with the applicable law and regulations affecting this
Custodial Account.
(b) The Depositor may at any time terminate the Custodial Account by
delivering to the Custodian a written notice of such termination setting forth
the effective date thereof, together with any required withholding information.
(c) The Custodial Account created by this Agreement shall automatically
terminate upon distribution to the Depositor or the beneficiary designated under
Paragraph 6 of Article VIII hereof of the entire balance in the Custodial
Account.
(d) The Custodian may be removed by the Depositor at any time upon
thirty (30) days written notice to the Custodian. The Custodian may elect to
terminate the Custodial Account upon thirty (30) days written notice to the
Depositor.
(e) In the event that the assets of any Investment Company in which the
Custodial Account is invested are transferred to or acquired by any other
investment company or other commingled investment fund which is a permissible
investment for an individual retirement account, by merger or otherwise, the
Custodian may make such amendments to this Agreement, or take such other action,
as it may determined to be necessary or appropriate to accomplish such
transaction and the exchange of Investment Company Shares for shares or other
appropriate units of ownership in such successor fund. The consent of the
Depositor shall not be required for any such amendment or action, but the
Depositor shall be promptly notified thereof, and shall have the right to
withdraw the funds in the Custodial Account without fee, charge, load or penalty
of any kind.
4. Taxes and Custodial Fees. Any income taxes or other taxes of any kind
-------------------------
whatsoever that may be levied or assessed upon or in respect of the assets of
the Custodial Account, or the income arising therefrom, any transfer taxes
incurred, all other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the Custodian's compensation, shall be paid from the Custodial
Account. Unusual administrative responsibilities not contemplated by the fee
schedule will result in such additional charges as will reasonably compensate
the Custodian for the services performed.
The custodian fee listed in the fee schedule will be deducted by the
Custodian from the initial contribution received from the Depositor. The annual
maintenance fee will be deducted on the last business day in September for each
year and enough fund shares will be redeemed to cover this fee. Fees as listed
on the fee schedule will be deducted from the refund or redemption proceeds
at the time of distribution or redemption and the remaining balance will be
remitted to the Depositor in the case of distribution, or will be reinvested in
accordance with the Depositor's instructions.
5. Reports and Notices.
-------------------
(a) The Custodian shall keep adequate records of transactions it is
required to perform hereunder. No later than sixty (60) days after the close of
each calendar year, or after the Custodian's resignation or removal pursuant to
Article VIII, Paragraph 3, the Custodian shall render to Depositor a written
report or reports reflecting the transactions effected by it during such period
and the assets and liabilities of the Custodial Account at the close of the
period.
(b) All communications or notices required or permitted to be given herein
shall be deemed to be given upon receipt by the Custodian at P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, the Investment Company and Fasciano Fund at
P.O. Box 701, Milwaukee, Wisconsin 53201-0701, or the Depositor at his most
recent address shown in the Custodian's records. The Depositor agrees to advise
the Custodian promptly, in writing, of any change of address.
6. Designation of Beneficiary. The Depositor shall have the right, by written
--------------------------
notice to the Custodian, to designate a beneficiary or beneficiaries, primary
and contingent, to receive any benefit to which such Depositor may be entitled
in the event of his death prior to the complete distribution of such benefit.
In the event the Depositor has not designated any beneficiaries, or if all
beneficiaries shall predecease the Depositor, the following persons shall take
in the order named:
(a) Spouse of the Depositor;
(b) If the spouse shall predecease the Depositor, then in equal shares to
any children surviving the Depositor and to the descendants then living of a
deceased child, by the right of representation, or
(c) If the Depositor shall leave neither spouse nor descendants surviving,
then to the personal representative of the Depositor's estate.
The determination of the Custodian as to the person entitled to receive any
distribution from the Custodial Account following the death of the Depositor, if
made in good faith, shall be conclusive and binding on all persons claiming an
interest in the Depository Account; provided that nothing provided herein shall
be construed to preclude the Custodian from filing an action in the nature of
interpleader or other appropriate proceeding in a court of competent
jurisdiction to determine the person entitled to receive such distribution. Any
expenses incurred by the Custodian in determining the person entitled to receive
a distribution from the Custodial Account, including without limitation
attorneys fees in any such action, shall be reimbursed from the Custodial
Account.
7. Inalienability of Benefits. The benefits provided hereunder shall not be
--------------------------
subject to alienation, assignment, garnishment, attachment, execution or levy of
any kind of any attempt to cause such benefits to be so subjected shall not be
recognized except to the extent as may be required by law.
8. Rollover Contributions. The Custodian may receive rollover contributions
-----------------------
as described in section 408(d)(3) or any other applicable provisions of the
Code, and regulations promulgated thereunder. If any property is transferred to
the Custodian as a rollover contribution, such property shall be sold by the
Custodian and the proceeds reinvested as provided in section 2 of this Article
VIII. The Custodian reserves the right to refuse to accept any contributions
which are not in the form of cash.
9. Conflict in Provisions. To the extent that any of the provisions of
----------------------
Article VIII shall conflict with the provisions of Articles IV, V, or VII, the
provisions of Article VIII shall prevail.
10. Status of Depositors. Neither the Depositor nor any other person shall
--------------------
have any legal or equitable right against the Custodian or the Investment
Company except as provided herein. The Depositor agrees to indemnify and hold
the Custodian harmless from and against any liability that the Custodian may
incur in the administration of the Account unless arising from the Custodian's
own negligence or misconduct.
11. Loss of Exemption. If the Custodian receives notice that the Depositor's
-----------------
Account has lost its tax-exempt status under section 408 of the Code for any
reason, including by reason of a transaction prohibited by section 4975 of the
Code, the Custodian shall distribute to the Depositor the entire balance in the
Account, in cash or in kind, in the sole discretion of the Custodian no later
than 90 days after the date the Custodian receives such notice.
12. Applicable State Law. This Custodial Account shall be construed,
---------------------
administered and enforced according to the laws of the State of Wisconsin except
to the extent Federal law supersedes Wisconsin law.
13. Distributions to Surviving Spouse. If distributions from the Custodial
---------------------------------
Account are to be made to the Depositor's surviving spouse, or to a trust of
which the Depositor's surviving spouse is the income beneficiary, the amount
which the surviving spouse (or such trust) is entitled to receive in each year
shall not be less than the income of the Custodial Account (or of the portion of
the Custodial Account with respect to which the surviving spouse or such trust
is the beneficiary) for such year, as determined under section 2056(b)(7) of the
Code.
14. Minimum Distributions; Election not to Recalculate Life Expectancies. The
---------------------------------------------------------------------
following provisions supplement the provisions of Article IV with respect to
minimum required distributions, and shall control over the provisions of Article
IV in the event of any inconsistency. All paragraph references in this
paragraph 14 are to paragraphs of Article IV unless otherwise provided.
(a) If the Depositor fails to withdraw the entire balance in the Custodial
Account by the April 1 of the year following the year in which he attains age 70
1/2, he shall be deemed to have elected to receive payments under paragraph 3(d)
or, if he has a designated beneficiary (as determined under Part D of Proposed
Regulations section 1.401(a)(9)-1) under paragraph 3(e). A beneficiary shall be
deemed to have elected the method described in paragraph 4(b)(ii) if either he
withdraws the minimum amount required for the first year under the method
described in paragraph 4(b)(ii) and does not specifically elect the method
described in paragraph 4(b)(i) by the end of such year, or if the date specified
in paragraph 4(b)(i) occurs first and he has not withdrawn the entire balance in
the Custodial Account by that time; otherwise, the beneficiary shall be deemed
to have elected the method described in paragraph 4(b)(i).
(b) If there is more than one beneficiary entitled to receive
distributions on equal priority upon the death of the Depositor or a prior
beneficiary then, to the extent permitted by Proposed Regulations section
1.401(a)(9)-1, Q&A H-2, and subject to such requirements and limitations as the
Custodian may establish, the Custodial Account may be divided into separate
accounts for purposes of Article IV and this paragraph.
(c) Notwithstanding the references to "equal or substantially equal"
payments, if the Depositor or a beneficiary is receiving distributions under
paragraph 3(d), 3(e), or 4(b)(ii), he may withdraw amounts that exceed the
minimum amount required by paragraph 5 in any year, provided that any excess
shall not be credited against the minimum amount required to be withdrawn in
subsequent years. Withdrawals may also be made at irregular intervals, provided
that the minimum amount required for each year shall be withdrawn by the last
day of such year, except that the minimum amount for the year in which the
Depositor attains age 70 1/2, but no subsequent year, may be withdrawn by April
1 of the following year.
(d) In lieu of the methods of recalculating life expectancies annually as
specified in paragraph 2, the Depositor may elect for purposes of paragraph 3(c)
or 3(d), and the Depositor's surviving spouse may elect for purposes of
paragraph 4(b)(ii), to have his life expectancy, or his and his designated
beneficiary's joint and last survivor life expectancy, or the surviving spouse's
life expectancy, initially calculated in the year specified in paragraph 5 and
thereafter reduced by one year in each subsequent year. All elections described
in this paragraph 14(d) shall be made in writing in accordance with procedures
established by the Custodian and the Proposed Regulations or successors thereto.
Such elections must be made and, if made, shall be irrevocable after the date
upon which distributions are required to commence under paragraph 3 or 4(b)(ii).
(e) All references to the Proposed Regulations section 1.401(a)(9)-1 and
1.401(a)(9)-2 contained in Article IV and this paragraph 14 include the
applicable provisions of Proposed Regulations section 1.408-8 applying such
Proposed Regulations to individual retirement accounts, any subsequent
amendments to any such Proposed Regulations, and the applicable provisions of
the permanent Regulations, when issued, all of which are incorporated by
reference and shall control over any contrary provision of this Agreement.
Reference to specific provisions of the Proposed Regulations shall not be
construed to limit reference to other provisions where appropriate in the
interpretation of Article IV and this paragraph 14.
(f) Distributions will be made only upon the request of the Depositor (or
the Depositor's authorized agent, beneficiary, executor, or administrator), in
such form and manner as is acceptable to the Custodian. For such distributions,
life expectancy and joint-life and last-survivor expectancy are calculated based
on information provided by the Depositor (or the Depositor's authorized agent,
beneficiary, executor, or administrator) using the expected return multiples
under Treasury Regulations Section 1.72-9. The Custodian will not be liable for
errors in such calculations resulting Form its reliance on such information. If
any assets held on the Depositor's behalf in a Custodial Account are transferred
directly to a trustee or custodian of another individual retirement account
described in Code Section 408(a) established for the Depositor, it shall be the
Depositor's responsibility to ensure that any requested minimum distribution
required by Article IV is made prior to giving the Custodian such transfer
instructions.
FASCIANO FUND IRA APPLICATION
COMPLETE THIS APPLICATION AND SEND ALONG WITH YOUR CHECK MADE PAYABLE TO
FASCIANO FUND, INC., TO: FIRSTAR TRUST COMPANY, Attn: Fasciano Fund, Inc. P.O.
Box 701, Milwaukee, Wisconsin, 53201-0701.
1. IRA APPLICANT
-------------
Name of Individual: Social Security No.:
---------------------------------------------- ---------------------------
Street Address: Birth Date:
---------------------------------------------- ---------------------------
City: State: Zip Code:
---------------------------------------------- ---------------------------
Home Phone: ( ) Business Phone: ( )
---------------------------------------------- ---------------------------
2. CONTRIBUTION IS FOR CURRENT YEAR UNLESS YOU SPECIFY DIFFERENT YEAR BELOW
------------------------------------------------------------------------
Contribution is for 19----. If no year is indicated, current year will be
assumed.
3. CONTRIBUTION TYPE (Check one. For contributions which are not Regular, see
-----------------
the appropriate section of the IRA Disclosure Statement in the Plan Booklet
for special instructions.) A Rollover consists of a qualifying distribution
which is paid to you from an employer's qualified plan or from another IRA,
to be deposited in your Fasciano Fund IRA within 60 days.
[ ] Regular [ ] Rollover [ ] Transfer
[ ] SEP [ ] SIMPLE [ ] Direct transfer
If a rollover or direct transfer, check one box to indicate the source of the
funds: [ ] an employer's qualified plan or an IRA derived from a rollover
from such a plan; [ ] an IRA to which you contributed [ ] a SEP-IRA or
SIMPLE-IRA or [ ] a tax-sheltered annuity (403(b)) plan or an IRA derived
from a rollover from such a plan
4. INVESTMENT OF CONTRIBUTIONS Your contribution will be invested in whole and
---------------------------
fractional shares of Fasciano Fund, Inc. at the price and in the manner in
which such shares are being offered by Fasciano Fund, Inc.
Investment Minimums: $--------------------------.
There is an Annual Maintenance Fee charged by the Custodian of $12.50. This
fee is paid automatically by redeeming shares from your account.
5. BENEFICIARY DESIGNATION I hereby designate the following as my
-----------------------
Beneficiary(ies) under my Fasciano Fund Individual Retirement Account (IRA):
- ------------------------------------- --------------------------------------
Name Relationship
- ------------------------------------- --------------------------------------
Street Address Social Security No.
- ------------------------ ------------------------ ------------- -----------
City State Zip Code Birth Date
Every payment under my IRA by reason of my death shall be made to my
Beneficiary if he or she is living at the time such payment becomes due; and if
there is no designated Beneficiary living at the time any such payment becomes
due, the payment shall be made to my estate.
A Beneficiary Designation shall be valid only if dated, signed and filed
with the Custodian under the Plan before my death. I understand that I may
change my beneficiary designation by completing a new Beneficiary Designation
and returning it to the Custodian.
SIGNATURE OF APPLICANT:
- ----------------------
I hereby adopt the Fasciano Fund Individual Retirement Plan and Custodial
Agreement. I appoint Firstar Trust Company as Custodian and agree to be bound
by the provisions of the Plan and Custodial Agreement. I certify that the
foregoing information is correct and that I received a copy of the Disclosure
Statement relating to the Plan and custodian fees, as well as a copy of the
current prospectus(es) of the Fund(s) in which my initial investment is to be
made. The terms, provisions and limitations of the IRA plan and Custodial
Agreement, as amended from time to time, are controlling and shall always govern
all rights of myself, my Beneficiaries and all persons claiming under, by or
through them, or any of them.
- ------------------------------- ---------------------------------------------
Date Signature of Applicant
THIS DOCUMENT WILL BE RETAINED BY FIRSTAR TRUST COMPANY
TRANSFER FORM
-------------
FASCIANO FUND
COMPLETE THIS FORM
TO TRANSFER AN EXISTING IRA OR PLAN BALANCE
TO A FASCIANO FUND IRA
PART I
------
(To be completed by investor and mailed to Firstar Trust Company,
Attention: Fasciano Fund, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. If you are opening a new account, enclose a Fasciano
Fund IRA application.)
TO: FIRSTAR TRUST COMPANY:
IF THIS IS A DIRECT TRANSFER FROM AN
EMPLOYER'S QUALIFIED PLAN, SEE THE NOTICE
The assets received are to be ON THE NEXT PAGE.
invested in:
[ ] My existing Fasciano Fund IRA in Fasciano Fund
Account No. -----------------
[ ] My new Fasciano Fund IRA. (A signed IRA Application must be completed
and returned with this Transfer Form.)
- --------------------------------------- -------------------------------------
Investor's Name Daytime Phone
- ------------------------------- ---------------- ------------- --------------
Street City State Zip Code
Investor's Signature --------------------- Date ---------------------------
TO: NAME OF PRESENT CUSTODIAN/TRUSTEE:
------------------------------------------------------------------------
Mutual Fund (if applicable)----------------------- Acct. No.---------------
Address-------------------------------------------- Phone No.---------------
Street
------------------------------------------ ------------- ---------------
City State Zip Code
Present Custodian/Trustee:
I have established an account under the Fasciano Fund Individual Retirement
Account. Please transfer the assets (cash only) indicated below to Firstar
Trust Company as successor custodian.
[ ]All Assets [ ]$----------only [ ] At maturity date of-------------
[ ] Immediately (I am aware of any penalties which may occur)
PART II
- ------- (To be completed by Firstar Trust Company)
TO: THE ABOVE-NAMED CUSTODIAN/TRUSTEE:
Firstar Trust Company accepts its appointment as custodian for the above
account. Please forward a check, as directed above by the investor, payable to:
Firstar Trust Company, FBO ----------------------------------------
Mail check and accompanying documents, if any, to:
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701
FIRSTAR TRUST COMPANY
IMPORTANT NOTICE
TO RECIPIENTS OF DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS:
The law requires that 20% of your distribution from you employer's
qualified retirement plan eligible for rollover be withheld for tax purposes
unless the distribution is made payable directly to the custodian of your
rollover IRA or another qualified plan.
If you are about to receive a distribution from your employer plan which is
eligible for rollover, that distribution may take one of the three forms:
1. Your employer or plan trustee may deliver a check to you. If so, make
sure the check is payable as follows:
Fasciano Fund
Firstar Trust Company, Custodian
A/O ----------------------------------------------- IRA Rollover
(your name)
and deliver it along with a completed application to the following:
FIRSTAR TRUST COMPANY
P.O. BOX 701
MILWAUKEE, WI 53201
2. Your employer or plan trustee may forward your distribution directly
to us. If this occurs, follow the same instructions as above.
3. If your employer requires that an account is opened before sending the
check, make sure that you have sent a completed application to Firstar
Trust Company with the indication that you are about to receive a
rollover.
4. If your employer will be wiring funds to Firstar Trust Company, the
wiring instructions are as follows:
Firstar Bank Milwaukee, N.A. For further credit to:
---------------------
ABA No. 0750-00022 FASCIANO FUND
For credit to:
- -------------- ---------------------------------------
FIRSTAR TRUST COMPANY (Your Name)
Account No. 112-952-137
---------------------------------------
(Account Number)
FASCIANO FUND, INC.
SIMPLE-IRA
INDIVIDUAL
RETIREMENT
ACCOUNT
SUPPLEMENT
FASCIANO FUND, INC.
190 S. LaSalle Street
SUITE 2800
CHICAGO, ILLINOIS 60603
E-MAIL: [email protected]
1-800-848-6050
CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-982-3533
THIS BOOKLET IS AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED
BY A CURRENT FASCIANO FUND PROSPECTUS.
1/1/97
FASCIANO FUND, INC. SIMPLE-IRA SUPPLEMENT
January 1, 1997
190 S. LaSalle Street, Suite 2800 . Chicago, Illinois 60603 . 1-800-848-6050
INTRODUCTION
The documents contained in this packet may used to establish a Salary
Incentive Match Plan IRA, also known as a SIMPLE-IRA. SIMPLE-IRAs are a new
type of individual retirement account that became available for the first time
in 1997. A SIMPLE-IRA plan must be established by an employer (including a
self-employed person), and it enables all eligible employees of the employer to
elect to have up to $6,000 per year deducted from their paychecks on a before-
tax basis and deposited directly into a SIMPLE-IRA maintained for the individual
employee. The employer is also generally required to make contributions, as
described in more detail below.
Because of the differences between a SIMPLE-IRA and other types of IRAs, the
forms contained in the regular Fasciano Fund IRA booklet cannot be used to
establish a SIMPLE-IRA. Instead, you must use the forms contained in this
booklet. However, the Disclosure Statement contained in the regular IRA booklet
includes important information that also applies to a SIMPLE-IRA. You should
carefully review the Disclosure Statement included in the Fasciano Fund IRA
Booklet, before using the forms in this booklet to establish a SIMPLE-IRA.
WHAT IS A SIMPLE-IRA?
A SIMPLE-IRA is a special type of IRA, and is generally subject to the same
rules that apply to all IRAs. However, as an individual you cannot make
contributions directly to a SIMPLE-IRA (except for rollovers as described
below). Instead, your employer must establish a SIMPLE-IRA plan, and make
contributions to your SIMPLE-IRA on your behalf. An employer can establish a
SIMPLE-IRA plan in any year in which it has no more than 100 employees who
earned at least $5,000 in the prior year, and does not maintain any other tax-
qualified pension or profit-sharing plan (other than a frozen plan).
If your employer establishes a SIMPLE-IRA plan and you are an eligible
employee, you can elect to have up to $6,000 of your compensation in any year
withheld and deposited in a SIMPLE-IRA on your behalf. Amounts that you elect
to have deposited in your SIMPLE-IRA are not subject to federal income tax until
you withdraw them (although they are subject to Social Security tax). In
addition to the amount that you elect to have deposited in your SIMPLE-IRA, your
employer must generally make an additional contribution to match the amount that
you have withheld, up to a maximum of 3% of your compensation. The employer may
elect to lower the maximum matching contribution to as low as 1% in some years,
but may not lower the maximum match in more than two years out of every five.
The employer may also elect to make a contribution equal to 2% of compensation
for all eligible employees in any year instead of making matching contributions.
All employees who have been paid at least $5,000 in two prior years and expect
to be paid $5,000 in the current year must be eligible to participate (excluding
nonresident aliens and union workers whose collective bargaining agreement does
not provide for them to participate).
Although SIMPLE-IRAs can only be established under a plan set up by an
employer, each participating employee is the owner of his or her own SIMPLE-IRA
account. All amounts deposited in your SIMPLE-IRA account are fully vested, and
can be withdrawn at any time, as with any other type of IRA. However, amount
withdrawn are subject to tax, and tax penalties may also apply to amounts
withdrawn before you reach the age of 591/2, as described in the Disclosure
Statement.
SIMPLE-IRA plans can generally be set up by any employer with not more than
100 eligible employees that does not maintain any other tax qualified plan,
including self-employed persons, nonprofits, and government agencies. However,
in determining whether an employer has more than 100 employees, the employees of
certain employers under common ownership must be combined. An employer that
establishes a SIMPLE-IRA plan when it has no more than 100 employees can
continue to maintain it for two years after the number of its employees
increases to more than 100.
SETTING UP A SIMPLE-IRA PLAN
It is important to keep in mind the distinction between a SIMPLE-IRA plan and
SIMPLE-IRA accounts. A SIMPLE-IRA plan is a written document established by an
employer that specifies which employees are eligible to make contributions to
SIMPLE-IRAs. SIMPLE-IRA accounts are the separate accounts established by each
participating employee to hold and invest the contributions made on their
behalf. An employer that wishes to establish a SIMPLE-IRA plan can use Form
5304-SIMPLE, which has been issued by the IRS for this purpose. Use of this
forms is not mandatory, and an employer can also use a customized plan document.
(The IRS has also issued Form 5305-SIMPLE, but this form can only be used if all
employees are required to initially deposit their SIMPLE-IRA contributions with
the same designated financial institution.)
This packet includes a Form 5304-SIMPLE that can be used by an employer that
wishes to establish a SIMPLE-IRA plan. The employer will need to complete this
Form to determine which employees will be eligible to participate, and how often
employees will be able to make and change withholding elections. After
completing the Form 5304-SIMPLE, the employer should execute the Form and retain
it in its files. In addition, as discussed below, copies must be furnished to
each eligible employee. Do not file Form 5304-SIMPLE with the IRS.
Once the employer has established a SIMPLE-IRA plan, it must notify all
eligible employees of their right to elect to have a portion of their
compensation deferred under the plan. Each employee must be permitted to make a
deferral election at least during the 60 day period immediately preceding the
first day of the year (i.e., during the period from November 2 through December
31 of the preceding year.) However, if the employer establishes the plan later
in the year, the 60 day period can precede the effective date of the plan. The
employer may permit longer or more frequent election periods if it wishes to do
so, but the 60 day election period prior to the beginning of the year is
required.
The employer must notify each employee of his or her right to make a deferral
election immediately prior to the beginning of the required 60 day election
period, and must also given each eligible employee a summary description of the
plan. A model notice that can be given to each eligible employee is included
with the materials immediately following Form 5304-SIMPLE, and the summary
description requirement can be satisfied by attaching a copy of the completed
Form 5304-SIMPLE to the notice. This notice and summary description must be
given each year, NOT just in the first year in which the plan is established.
In addition, an employer that establishes a SIMPLE-IRA plan must also furnish
all participating employees with information regarding the procedures for
withdrawing funds from their SIMPLE-IRA accounts, and the consequences of such
withdrawals. Fasciano Fund will furnish this information directly to the
participating employees who establish their SIMPLE-IRA accounts with Fasciano
Fund
ESTABLISHING A SIMPLE-IRA ACCOUNT
Although the employer establishes the SIMPLE-IRA plan, each participating
employee must establish his or her own SIMPLE-IRA account to hold the
contributions under the plan. Each employee is the absolute owner of his or her
own account, and has the right to make withdrawals at any time. Enclosed with
these materials are a copy of the Fasciano Fund SIMPLE-IRA Account Agreement,
which is used to establish a Fasciano Fund SIMPLE-IRA. The Fasciano Fund
SIMPLE-IRA Account Agreement is in the form of IRS Form 5305-SA, which is
automatically deemed acceptable by the Internal Revenue Service. The approval
by the IRS relates only to the form of the account and not to the merits of
using the account as a retirement plan.
In order to establish a Fasciano Fund SIMPLE-IRA, a participant must
complete the Fasciano Fund SIMPLE-IRA Application Form, which is included in
this booklet. If the employer has designated Fasciano Fund as the designated
financial institution under the plan, then all SIMPLE-IRAs under the plan will
automatically be established with Fasciano Fund, and participants need only
complete the Application Form. If any participant fails to complete an
Application Form, the employer may complete the form for the employee.
If an employee is establishing a SIMPLE-IRA account under the plan of an
employer that has NOT named Fasciano Fund as the designated financial
institution, the employee will need to complete the application form, and will
also need to notify his or her employer to send all contributions to Fasciano
Fund. The employer establishing the plan should furnish the employee with the
necessary forms to accomplish this notification.
ROLLOVERS AND DIRECT TRANSFERS
Amounts which are held in other SIMPLE-IRAs can also be transferred to a
Fasciano Fund SIMPLE-IRA, either by rollover or direct transfer. Rollovers and
direct transfers to a SIMPLE-IRA can NOT be made from any other kind of IRA, or
from a qualified plan or tax-deferred annuity.
In order to make a rollover or direct transfer to a Fasciano Fund SIMPLE-IRA
from another SIMPLE-IRA, you will need to complete an application form if you do
not already have a Fasciano Fund SIMPLE-IRA. If the funds are being transferred
by direct transfer, you will also need to complete the Transfer Form that
immediately follows the application form in this booklet. If the transfer is a
rollover, you will need to send your check made payable to Fasciano Fund not
later than 60 days after you receive the distribution from the other SIMPLE-IRA.
For more information on direct transfers and rollovers, including the limits
on the frequency of rollovers, see the Disclosure Statement.
WE URGE YOU TO READ THE ENCLOSED MATERIAL, AND THE DISCLOSURE STATEMENT INCLUDED
IN THE FASCIANO FUND IRA BOOKLET, THOROUGHLY.
Form 5305-SA
(December 1996)
Department of the Treasury
Internal Revenue Service
FASCIANO FUND CUSTODIAL ACCOUNT
FOR SIMPLE-IRAS
(Under Sections 408(a) and 408(p) of the Internal Revenue Code)
(January 1, 1997)
ARTICLE I
The Custodian will accept cash contributions on behalf of the Participant
by the Participant's employer under the terms of a SIMPLE plan described in
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 and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
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 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.
(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.
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/. 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 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 section 408(a) and 408(p) and
related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. Definitions.
------------
"Investment Company" shall mean an investment company as defined in
Internal Revenue Code Section 851(a), shares of which Fasciano Fund has agreed
to offer for investment under this Account. "Investment Company Shares" or
"Shares" shall mean shares of beneficial interest or capital stock of the
Investment Company.
2. Investment of Account Assets.
----------------------------
(a) Each contribution forwarded by the Participant to the Custodian shall
identify the Participant's account number and be accompanied by a statement
signed by the Participant identifying the Investment Company Shares in which
that contribution is to be invested. The Custodian may return to the
Participant, without liability for interest thereon, any contributions which are
not accompanied by adequate account identification or an appropriate signed
statement directing investment of those contributions.
(b) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner in which such shares are then
being publicly offered by the Investment Company. All distributions received on
Investment Company Shares held in the Custodial Account shall be reinvested in
like Shares and credited to such Account. If any distribution of Investment
Company Shares may be received at the election of the shareholder in additional
like Shares or in cash or other property, the Custodian shall elect to receive
such distribution in additional like Investment Company Shares.
(c) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its registered nominee. The
Participant shall be the beneficial owner of all Investment Company Shares held
in the Custodial Account and the Custodian shall not vote any of such shares,
except upon written direction of the Participant. The Custodian agrees to
forward to every Participant a then current Prospectus, reports, notices,
proxies and related proxy soliciting materials applicable to Investment Company
Shares received by the Custodian.
(d) The Participant may at any time, by a manually signed direction
delivered to the Custodian, redeem any number of Investment Company Shares held
for his account and reinvest the proceeds in the Shares of any other Investment
Company. Telephone redemptions and reinvestments shall be done at the price and
in the manner in which such Shares are then being redeemed or offered by the
respective Investment Companies.
3. Amendment and Termination.
--------------------------
(a) Fasciano Fund, Inc. may, with the written approval of the Custodian,
amend the Custodial Account in whole or in part (including retroactive
amendments) by delivering to the Participant written notice of such amendment
setting forth the substance and effective date of the amendment. The
Participant shall be deemed to have consented to any such amendments not
objected to in writing by the Participant within thirty (30) days of receipt of
the notice, provided that no amendment shall cause or permit any part of the
assets of the Custodial Account to be diverted to purposes other than for the
exclusive benefit of the Participant or his beneficiaries, nor shall any
amendment be made except in accordance with the applicable law and regulations
affecting this Custodial Account.
(b) The Participant may at any time terminate the Custodial Account by
delivering to the Custodian a written notice of such termination setting forth
the effective date thereof, together with any required withholding information.
(c) The Custodial Account created by this Agreement shall automatically
terminate upon distribution to the Participant or the beneficiary designated
under Paragraph 6 of Article VIII hereof of the entire balance in the Custodial
Account.
(d) The Custodian may be removed by the Participant at any time upon
thirty (30) days written notice to the Custodian. The Custodian may elect to
terminate the Custodial Account upon thirty (30) days written notice to the
Participant.
(e) In the event that the assets of any Investment Company in which the
Custodial Account is invested are transferred to or acquired by any other
investment company or other commingled investment fund which is a permissible
investment for an individual retirement account, by merger or otherwise, the
Custodian may make such amendments to this Agreement, or take such other action,
as it may determined to be necessary or appropriate to accomplish such
transaction and the exchange of Investment Company Shares for shares or other
appropriate units of ownership in such successor fund. The consent of the
Participant shall not be required for any such amendment or action, but the
Participant shall be promptly notified thereof, and shall have the right to
withdraw the funds in the Custodial Account without fee, charge, load or penalty
of any kind.
4. Taxes and Custodial Fees.
-------------------------
(a) Any income taxes or other taxes of any kind whatsoever that may be
levied or assessed upon or in respect of the assets of the Custodial Account, or
the income arising therefrom, any transfer taxes incurred, all other
administrative expenses incurred by the Custodian in the performance of its
duties, including fees for legal services rendered to the Custodian, and the
Custodian's compensation, shall be paid from the Custodial Account. Unusual
administrative responsibilities not contemplated by the fee schedule will result
in such additional charges as will reasonably compensate the Custodian for the
services performed.
(b) The Custodian fee listed in the fee schedule will be deducted by the
Custodian from the initial contribution received from the Participant. The
annual maintenance fee will be deducted on the last business day in September
for each year and enough fund shares will be redeemed to cover this fee. Fees
as listed on the fee schedule will be deducted from the refund or redemption
proceeds at the time of distribution or redemption and the remaining balance
will be remitted to the Participant in the case of distribution, or will be
reinvested in accordance with the Participant's instructions.
5. Reports and Notices.
-------------------
(a) The Custodian shall keep adequate records of transactions it is
required to perform hereunder. No later than sixty (60) days after the close of
each calendar year, or after the Custodian's resignation or removal pursuant to
Article VIII, Paragraph 3, the Custodian shall render to Participant a written
report or reports reflecting the transactions effected by it during such period
and the assets and liabilities of the Custodial Account at the close of the
period.
(b) All communications or notices required or permitted to be given herein
shall be deemed to be given upon receipt by the Custodian at P.O. Box 701,
Milwaukee, Wisconsin 53201-0701, the Investment Company and Fasciano Fund at
P.O. Box 701, Milwaukee, Wisconsin 53201-0701, or the Participant at his most
recent address shown in the Custodian's records. The Participant agrees to
advise the Custodian promptly, in writing, of any change of address.
6. Designation of Beneficiary. The Participant shall have the right, by
--------------------------
written notice to the Custodian, to designate a beneficiary or beneficiaries,
primary and contingent, to receive any benefit to which such Participant may be
entitled in the event of his death prior to the complete distribution of such
benefit. In the event the Participant has not designated any beneficiaries, or
if all beneficiaries shall predecease the Participant, the following persons
shall take in the order named:
(a) Spouse of the Participant;
(b) If the spouse shall predecease the Participant, then in equal shares
to any children surviving the Participant and to the descendants then living of
a deceased child, by the right of representation, or
(c) If the Participant shall leave neither spouse nor descendants
surviving, then to the personal representative of the Participant's estate.
The determination of the Custodian as to the person entitled to receive any
distribution from the Custodial Account following the death of the Participant,
if made in good faith, shall be conclusive and binding on all persons claiming
an interest in the Participant Account; provided that nothing provided herein
shall be construed to preclude the Custodian from filing an action in the nature
of interpleader or other appropriate proceeding in a court of competent
jurisdiction to determine the person entitled to receive such distribution. Any
expenses incurred by the Custodian in determining the person entitled to receive
a distribution from the Custodial Account, including without limitation
attorneys fees in any such action, shall be reimbursed from the Custodial
Account.
7. Inalienability of Benefits. The benefits provided hereunder shall not
--------------------------
be subject to alienation, assignment, garnishment, attachment, execution or levy
of any kind of any attempt to cause such benefits to be so subjected shall not
be recognized except to the extent as may be required by law.
8. Rollover Contributions. The Custodian may receive rollover
----------------------
contributions as described in section 408(d)(3) and regulations promulgated
thereunder, but only from other SIMPLE-IRAs. If any property is transferred to
the Custodian as a rollover contribution, such property shall be sold by the
Custodian and the proceeds reinvested as provided in section 2 of this Article
VIII. The Custodian reserves the right to refuse to accept any contributions
which are not in the form of cash.
9. Conflict in Provisions. To the extent that any of the provisions of
-----------------------
Article VIII shall conflict with the provisions of Articles IV, V, or VII, the
provisions of Article VIII shall prevail.
10. Status of Participants. Neither the Participant nor any other person
----------------------
shall have any legal or equitable right against the Custodian or the Investment
Company except as provided herein. The Participant agrees to indemnify and hold
the Custodian harmless from and against any liability that the Custodian may
incur in the administration of the Account unless arising from the Custodian's
own negligence or misconduct.
11. Loss of Exemption. If the Custodian receives notice that the
-----------------
Participant's Account has lost its tax-exempt status under section 408 of the
Code for any reason, including by reason of a transaction prohibited by section
4975 of the Code, the Custodian shall distribute to the Participant the entire
balance in the Account, in cash or in kind, in the sole discretion of the
Custodian no later than 90 days after the date the Custodian receives such no-
tice.
12. Applicable State Law. This Custodial Account shall be construed,
---------------------
administered and enforced according to the laws of the State of Wisconsin except
to the extent Federal law supersedes Wisconsin law.
13. Distributions to Surviving Spouse. If distributions from the
---------------------------------
Custodial Account are to be made to the Participant's surviving spouse, or to a
trust of which the Participant's surviving spouse is the income beneficiary, the
amount which the surviving spouse (or such trust) is entitled to receive in
each year shall not be less than the income of the Custodial Account (or of the
portion of the Custodial Account with respect to which the surviving spouse or
such trust is the beneficiary) for such year, as determined under section
2056(b)(7) of the Code.
14. Minimum Distributions; Election not to Recalculate Life Expectancies.
--------------------------------------------------------------------
The following provisions supplement the provisions of Article IV with respect to
minimum required distributions, and shall control over the provisions of Article
IV in the event of any inconsistency. All paragraph references in this
paragraph 14 are to paragraphs of Article IV unless otherwise provided.
(a) If the Participant fails to withdraw the entire balance in the
Custodial Account by the April 1 of the year following the year in which he
attains age 70 1/2, he shall be deemed to have elected to receive payments under
paragraph 3(d) or, if he has a designated beneficiary (as determined under Part
D of Proposed Regulations section 1.401(a)(9)-1), under paragraph 3(e). A
beneficiary shall be deemed to have elected the method described in paragraph
4(b)(ii) if either he withdraws the minimum amount required for the first year
under the method described in paragraph 4(b)(ii) and does not specifically elect
the method described in paragraph 4(b)(i) by the end of such year, or if the
date specified in paragraph 4(b)(i) occurs first and he has not withdrawn the
entire balance in the Custodial Account by that time; otherwise, the beneficiary
shall be deemed to have elected the method described in paragraph 4(b)(i).
(b) If there is more than one beneficiary entitled to receive
distributions on equal priority upon the death of the Participant or a prior
beneficiary then, to the extent permitted by Proposed Regulations section
1.401(a)(9)-1, Q&A H-2, and subject to such requirements and limitations as the
Custodian may establish, the Custodial Account may be divided into separate
accounts for purposes of Article IV and this paragraph.
(c) Notwithstanding the references to "equal or substantially
equal" payments, if the Participant or a beneficiary is receiving distributions
under paragraph 3(d), 3(e), or 4(b)(ii), he may withdraw amounts that exceed the
minimum amount required by paragraph 5 in any year, provided that any excess
shall not be credited against the minimum amount required to be withdrawn in
subsequent years. Withdrawals may also be made at irregular intervals, provided
that the minimum amount required for each year shall be withdrawn by the last
day of such year, except that the minimum amount for the year in which the
Participant attains age 70 1/2, but no subsequent year, may be withdrawn by
April 1 of the following year.
(d) In lieu of the methods of recalculating life expectancies annually as
specified in paragraph 2, the Participant may elect for purposes of paragraph
3(c) or 3(d), and the Participant's surviving spouse may elect for purposes of
paragraph 4(b)(ii), to have his life expectancy, or his and his designated
beneficiary's joint and last survivor life expectancy, or the surviving spouse's
life expectancy, initially calculated in the year specified in paragraph 5 and
thereafter reduced by one year in each subsequent year. All elections described
in this paragraph 14(d) shall be made in writing in accordance with procedures
established by the Custodian and the Proposed Regulations or successors thereto.
Such elections must be made and, if made, shall be irrevocable after the date
upon which distributions are required to commence under paragraph 3 or 4(b)(ii).
(e) All references to the Proposed Regulations section 1.401(a)(9)-1 and
1.401(a)(9)-2 contained in Article IV and this paragraph 14 include the
applicable provisions of Proposed Regulations section 1.408-8 applying such
Proposed Regulations to individual retirement accounts, any subsequent
amendments to any such Proposed Regulations, and the applicable provisions of
the permanent Regulations, when issued, all of which are incorporated by
reference and shall control over any contrary provision of this Agreement.
Reference to specific provisions of the Proposed Regulations shall not be
construed to limit reference to other provisions where appropriate in the
interpretation of Article IV and this paragraph 14.
(f) Distributions will be made only upon the request of the Participant
(or the Participant's authorized agent, beneficiary, executor, or
administrator), in such form and manner as is acceptable to the Custodian. For
such distributions, life expectancy and joint-life and last-survivor expectancy
are calculated based on information provided by the Participant (or the
Participant's authorized agent, beneficiary, executor, or administrator) using
the expected return multiples under Treasury Regulations Section 1.72-9. The
Custodian will not be liable for errors in such calculations resulting Form its
reliance on such information. If any assets held on the Participant's behalf in
a Custodial Account are transferred directly to a trustee or Custodian of
another individual retirement account described in Code Section 408(a)
established for the Participant, it shall be the Participant's responsibility
to ensure that any requested minimum distribution required by Article IV is made
prior to giving the Custodian such transfer instructions.
FASCIANO FUND SIMPLE-IRA APPLICATION FORM
COMPLETE THIS APPLICATION AND SEND IT TO: FIRSTAR TRUST COMPANY, Attn:
Fasciano Fund, Inc. P.O. Box 701, Milwaukee, Wisconsin, 53201-0701.
1. SIMPLE-IRA APPLICANT
--------------------
Name of Individual: Social Security No.:
---------------------------------- ---------------------------------------
Street Address: Birth Date:
---------------------------------- ---------------------------------------
City: State: Zip Code:
---------------------------- --------------------- -----------------------
Home Phone: ( ) Business Phone: ( )
---------------------------------- --------------------------------------
2. CONTRIBUTION TYPE. Check the appropriate box below. This Application Form
can only be used to establish a SIMPLE-IRA, which receives contributions
under a Savings Incentive Match Plan (SIMPLE) established by your employer.
You can also make rollover or direct transfer contributions from another
SIMPLE-IRA to this SIMPLE-IRA. If you wish to establish another type of IRA,
you should obtain a regular IRA application form from Fasciano Fund.
[ ] Contributions under a SIMPLE-IRA plan. If your employer has
established a SIMPLE -IRA plan check here and insert the name and address
of your employer: ----------------------------------------------------- --
--------------------------------------------------------------------------
---------------------------------Your employer must also sign below. You
can either include your employer's check payable to Fasciano Fund, Inc.,
or arrange to have your employer send its check directly to Firstar Trust
Company, Attention: Fasciano Fund, P.O. Box 701, Milwaukee, Wisconsin
53201-0701.
[ ] Rollover from another SIMPLE-IRA. If you are rolling over a
distribution that you received within the past 60 days from another
SIMPLE-IRA, check here and include your check payable to Fasciano Fund,
Inc.
[ ] Direct transfer from another SIMPLE-IRA. If this is a direct
transfer from another SIMPLE-IRA, check here and complete the attached
Transfer Form.
3. INVESTMENT OF CONTRIBUTIONS Your contribution will be invested in whole and
fractional shares of Fasciano Fund, Inc. at the price and in the manner in
which such shares are being offered by Fasciano Fund, Inc. There is an
Annual Maintenance Fee charged by the Custodian of $12.50. This fee is paid
automatically by redeeming shares from your account.
4. BENEFICIARY DESIGNATION I hereby designate the following as my
Beneficiary(ies) under my Fasciano Fund SIMPLE Individual Retirement Account
(SIMPLE-IRA):
- ------------------------------------- -------------------------------------
Name Relationship
- ------------------------------------- -------------------------------------
Street Address Social Security No.
- ------------------------- ----------------------- ------------ ----------
City State Zip Code Birth Date
Every payment under my SIMPLE-IRA by reason of my death shall be made to my
Beneficiary if he or she is living at the time such payment becomes due; and if
there is no designated Beneficiary living at the time any such payment becomes
due, the payment shall be made to my estate. A Beneficiary Designation shall be
valid only if dated, signed and filed with the Custodian under the Plan before
my death. I understand that I may change my beneficiary designation by
completing a new Beneficiary Designation and returning it to the Custodian.
SIGNATURE OF APPLICANT:
- -----------------------
I hereby adopt the Fasciano Fund Custodial Account Agreement for SIMPLE-
IRAs. I hereby appoint Firstar Trust Company as Custodian and agree to be bound
by the provisions of the Custodial Account Agreement. I certify that the
foregoing information is correct and that I received a copy of the Disclosure
Statement relating to the Custodial Account and Custodian fees, as well as a
copy of the current prospectus(es) of the Fund(s) in which my initial investment
is to be made. The terms, provisions and limitations of the Custodial Account
Agreement, as amended from time to time, are controlling and shall always govern
all rights of myself, my Beneficiaries and all persons claiming under, by or
through them, or any of them.
- ------------------------------ --------------------------------------------
Date Signature of Applicant
SIGNATURE OF EMPLOYER
- ---------------------
The undersigned, as the employer sponsoring the SIMPLE under which the
foregoing SIMPLE-IRA account is established, represents to Firstar Trust Company
and Fasciano Fund, Inc. that it will furnish the account owner with the
information required by paragraphs (1) through (4) of Q&A H-1 of IRS Notice 97-6
or any successor thereto, and releases Firstar Trust Company and Fasciano Fund,
Inc., from any obligation to provide such information to the undersigned. By
accepting contributions to such account, Firstar Trust Company and Fasciano
Fund, Inc., represent to the undersigned that they will provide the information
required by paragraph (5) thereof directly to the account owner.
- ------------------------------ --------------------------------------------
Date Signature of Employer
THIS DOCUMENT WILL BE RETAINED BY FIRSTAR TRUST COMPANY.
TRANSFER FORM
-------------
FASCIANO FUND
COMPLETE THIS FORM
TO TRANSFER AN EXISTING SIMPLE-IRA BALANCE
TO A FASCIANO FUND SIMPLE-IRA
PART I
------ (To be completed by investor and mailed to Firstar Trust Company,
Attention: Fasciano Fund, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. If you are opening a new account, enclose a Fasciano
Fund SIMPLE-IRA application.)
TO: FIRSTAR TRUST COMPANY:
The assets received are to be invested in:
[ ] My existing Fasciano Funds SIMPLE-IRA in Fasciano Fund Account
No. -------------------------.
[ ] My new Fasciano Fund SIMPLE-IRA. (A signed SIMPLE-IRA Application must
be completed and returned with this Transfer Form.)
- --------------------------------------- --------------------------------------
Investor's Name Daytime Phone
- ------------------------------- ----------------- ------------- ----------------
Street City State Zip Code
Investor's Signature --------------------- Date -----------------------------
TO: NAME OF PRESENT CUSTODIAN/TRUSTEE:
------------------------------------------------------------------------
Mutual Fund (if applicable)-------------------Acct. No.-----------------------
Address---------------------------------------Phone No.-----------------------
Street
------------------------------------------ ------------- --------------
City State Zip Code
Present Custodian/Trustee:
I have established an account under the Fasciano Fund SIMPLE Individual
Retirement Account. Please transfer the assets (cash only) indicated below to
Firstar Trust Company as successor Custodian.
[ ] All Assets [ ] $--------- only [ ]At maturity date of ---------
[ ] Immediately (I am aware of any penalties which may occur)
PART II
- ------- (To be completed by Firstar Trust Company)
TO: THE ABOVE-NAMED CUSTODIAN/TRUSTEE:
Firstar Trust Company accepts its appointment as Custodian for the above
account. Please forward a check, as directed above by the investor, payable to:
Firstar Trust Company, FBO ------------------------------------------
Mail check and accompanying documents, if any, to:
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701
FIRSTAR TRUST COMPANY
FORMS THAT MAY BE USED BY AN EMPLOYER
TO ESTABLISH A SIMPLE-IRA PLAN
In order to establish a SIMPLE-IRA plan, an employer may complete the
blanks in Form 5304-SIMPLE contained in the following pages, and execute the
Form. This form should be kept with the employer's records. Do not file Form
5304-SIMPLE with the Internal Revenue Service. Form 5304-SIMPLE is a form
issued by the Internal Revenue Service, not by Fasciano Fund.
You must also notify each eligible employee of his or her right to elect to
make contributions to a SIMPLE-IRA. This notice must be given to each employee
EACH YEAR prior to the beginning of the period during which he or she may elect
to make such contributions, which must be at least 60 days in length. A copy of
a model notice that can be used for this purpose is enclosed, and immediately
follows Form 5304-SIMPLE. A copy of the completed Form 5304-SIMPLE must be
attached to this notice.
Each employee who wishes to participate must elect to have a portion of his
or her compensation withheld and deposited into a SIMPLE-IRA account. A written
election form that can be used for this purpose is also enclosed. You can also
use any other election form that provides the same information.
Finally, each employee who elects to participate must open a Fasciano Fund
SIMPLE-IRA account. A copy of the SIMPLE-IRA application form should also be
furnished to each eligible employee. If the employer makes contributions to all
eligible employees, rather than just the employees who elect to participate, and
any employee fails to complete a SIMPLE-IRA application, the employer may
complete the application for the employee.
Form 5304-SIMPLE and the attached notification and election forms are
promulgated by the Internal Revenue Service, not by Fasciano Fund. Copies of
these forms are provided solely as a convenience, and Fasciano Fund has no
responsibility for these forms or the manner in which they are prepared or
utilized by the employer. Each employer may also use individually drafted
documents for to establish a SIMPLE-IRA plan, or to notify employees or allow
them to elect deferrals. Consult your own tax and legal advisors before using
these forms.
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<ARTICLE> 6
<CIK> 0000818459
<NAME> FASCIANO FUND, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
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<DIVIDEND-INCOME> 194
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<EXPENSES-NET> 480
<NET-INVESTMENT-INCOME> (121)
<REALIZED-GAINS-CURRENT> 2,418
<APPREC-INCREASE-CURRENT> 2,910
<NET-CHANGE-FROM-OPS> 5,207
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 743
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 396
<NUMBER-OF-SHARES-REDEEMED> 85
<SHARES-REINVESTED> 28
<NET-CHANGE-IN-ASSETS> 13,140
<ACCUMULATED-NII-PRIOR> (251)
<ACCUMULATED-GAINS-PRIOR> 884
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 480
<AVERAGE-NET-ASSETS> 33,514
<PER-SHARE-NAV-BEGIN> 24.33
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 3.82
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.59
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.53
<EXPENSE-RATIO> 1.4
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
