Filed electronically with the Securities and Exchange Commission on
December 30, 1996.
File No. 2-13628
File No. 811-43
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 78
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 30
Scudder Investment Trust
------------------------
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110
-----------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2567
--------------
Thomas F. McDonough
Scudder, Stevens & Clark, Inc.
Two International Place, Boston, MA 02110
-----------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
____ immediately upon filing pursuant to paragraph (b)
____ on _______________ pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
X on March 1, 1997 pursuant to paragraph (a)(i)
----
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on _______________ pursuant to paragraph (a)(ii) of Rule 485.
The Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Registrant filed the notice required by Rule 24f-2 for its most
recent fiscal year on February 29, 1996.
<PAGE>
<TABLE>
<CAPTION>
SCUDDER INVESTMENT TRUST
SCUDDER GROWTH AND INCOME FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
PART A
<S> <C> <C>
Item No. Item Caption Prospectus Caption
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser and Transfer agent
TRUSTEES AND OFFICERS
SHAREHOLDER BENEFITS--A team approach to investing
5A. Management Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION-- Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax Information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the
hearing impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities PURCHASES
Being Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price, Processing
time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 1
<PAGE>
SCUDDER GROWTH AND INCOME FUND
CROSS-REFERENCE SHEET
(continued)
PART B
Caption in Statement of
Item No. Item Caption Additional Information
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Portfolio turnover
14. Management of the Fund INVESTMENT ADVISER
TRUSTEES AND OFFICERS
REMUNERATION
15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts and Other Information
17. Brokerage Allocation and Other PORTFOLIO TRANSACTIONS--Brokerage, Portfolio Turnover
Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 2
<PAGE>
SCUDDER INVESTMENT TRUST
SCUDDER LARGE COMPANY GROWTH FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
PART A
Item No. Item Caption Prospectus Caption
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND FINANCIAL INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser and Transfer agent
TRUSTEES AND OFFICERS
5A. Management Discussion of SHAREHOLDER BENEFITS--A team approach to investing
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION-- Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the
hearing impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities PURCHASES
Being Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price, Processing
time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number and Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 3
<PAGE>
SCUDDER LARGE COMPANY GROWTH FUND
CROSS-REFERENCE SHEET
(continued)
PART B
Caption in Statement of
Item No. Item Caption Additional Information
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Portfolio turnover
14. Management of the Fund INVESTMENT ADVISER
TRUSTEES AND OFFICERS
REMUNERATION
15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts and Other Information
17. Brokerage Allocation and Other PORTFOLIO TRANSACTIONS--Brokerage commissions
Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND-- Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 4
<PAGE>
SCUDDER INVESTMENT TRUST
SCUDDER CLASSIC GROWTH FUND
CROSS-REFERENCE SHEET
Items Required By Form N-1A
PART A
Item No. Item Caption Prospectus Caption
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information
4. General Description of INVESTMENT OBJECTIVES AND POLICIES
Registrant WHY INVEST IN THE FUND?
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser and Transfer agent
TRUSTEES AND OFFICERS
SHAREHOLDER BENEFITS--A team approach to investing
5A. Management Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION-- Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated Information Line,
Dividend reinvestment plan, T.D.D. service for the
hearing impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities PURCHASES
Being Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share price, Processing
time, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 5
<PAGE>
SCUDDER CLASSIC GROWTH FUND
CROSS-REFERENCE SHEET
(continued)
PART B
Caption in Statement of
Item No. Item Caption Additional Information
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History FUND ORGANIZATION
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Portfolio turnover
14. Management of the Fund INVESTMENT ADVISER
TRUSTEES AND OFFICERS
REMUNERATION
15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts and Other Information
17. Brokerage Allocation and Other PORTFOLIO TRANSACTIONS--Brokerage, Portfolio Turnover
Practices
18. Capital Stock and Other FUND ORGANIZATION
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND-- Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 6
</TABLE>
<PAGE>
This prospectus sets forth concisely the information about Scudder Large Company
Growth Fund, a series of Scudder Investment Trust, an open-end management
investment company, that a prospective investor should know before investing.
Please retain it for future reference.
If you require more detailed information, a Statement of Additional Information
dated March 1, 1997, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission.
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.
Contents--see page 4.
Scudder Large Company Growth Fund
Prospectus
March 1, 1997
A pure no-load(TM) (no sales charges) mutual fund which seeks long-term growth
of capital through investment primarily in the equity securities of large U.S.
growth companies.
<PAGE>
Expense information
How to compare a Scudder pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder Large Company Growth Fund (the "Fund"). By
reviewing this table and those in other mutual funds' prospectuses, you can
compare the Fund's fees and expenses with those of other funds. With Scudder's
pure no-load(TM) funds, you pay no commissions to purchase or redeem shares,
or to exchange from one fund to another. As a result, all of your investment
goes to work for you.
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended October 31, 1996.
Investment management fee 0.70%
12b-1 fees NONE
Other expenses 0.37%
Total Fund operating expenses 1.07%
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its
net investment income to shareholders. (As noted above, the Fund has no
redemption fees of any kind.)
1 Year 3 Years 5 Years 10 Years
$11 $34 $59 $131
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.
* You may redeem by writing or calling the Fund. If you wish to receive
redemption proceeds via wire, there is a $5 wire service fee. For additional
information, please refer to "Transaction information--Redeeming shares."
2
<PAGE>
Financial highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited financial
statements.
If you would like more detailed information concerning the Fund's performance, a
complete portfolio listing and audited financial statements are available in the
Fund's Annual Report dated October 31, 1996 and may be obtained without charge
by writing or calling Scudder Investor Services, Inc.
<TABLE>
<CAPTION>
For the Period
May 15 1991
(commencement
of operations) to
Years Ended October 31, October 31,
1996 (a) 1995 1994 1993 1992 1991
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<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.44 $16.17 $16.42 $15.30 $13.65 $12.00
Income from investment operations:
Net investment income .08 .11 .16 .06 .02 .03
Net realized and unrealized gain 3.41 3.40 (.09) 1.09 1.68 1.62
(loss) on investments
Total from investment operations 3.49 3.51 .07 1.15 1.70 1.65
Less distributions from:
Net investment income (.14) (.15) (.08) (.03) (.03) --
Net realized gains on investment (.60) (1.09) (.24) -- (.02) --
transactions
Total distributions (.74) (1.24) (.32) (.03) (.05) --
Net asset value, end of period $21.19 $18.44 $16.17 $16.42 $15.30 $13.65
- ------------------------------------------------------------------------------------------------------------------
Total Return (%) 19.49 23.78 .39 7.49 12.47 13.75**
Ratios and Supplemental Data
Net assets, end of period ($millions) 221 173 113 126 101 30
Ratio of operating expenses net, to 1.07 1.17 1.25 1.20 1.25 1.25*
average daily net assets (%)
Ratio of operating expenses before 1.07 1.17 1.25 1.20 1.40 2.67*
expense reductions, to average
daily net assets (%)
Ratio of net investment income to .41 .71 .96 .39 .24 .83*
average daily net assets (%)
Portfolio turnover rate (%) 68.8 91.6 119.7 111.4 27.4 11.5*
Average commission rate paid (b) $.0551 $ -- $ -- $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years beginning on or after September 1, 1995.
* Annualized
** Not annualized
3
<PAGE>
A message from Scudder's chairman
Scudder, Stevens & Clark, Inc., investment adviser to the Scudder Family of
Funds, was founded in 1919. We offered America's first no-load mutual fund in
1928. Today, we manage in excess of $100 billion for many private accounts and
over 50 mutual fund portfolios. We manage the mutual funds in a special program
for the American Association of Retired Persons, as well as the fund options
available through Scudder Horizon Plan, a tax-advantaged variable annuity. We
also advise The Japan Fund and nine closed-end funds that invest in countries
around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to all shareholders include toll-free access to the
professional service representatives of Scudder Investor Relations, easy
exchange among funds, shareholder reports, informative newsletters and the
walk-in convenience of Scudder Funds Centers.
All Scudder mutual funds are pure no-load(TM). This means you pay no commissions
to purchase or redeem your shares or to exchange from one fund to another. There
are no "12b-1" fees either, which many other funds now charge to support their
marketing efforts. All of your investment goes to work for you. We look forward
to welcoming you as a shareholder.
/s/Daniel Pierce
Scudder Large Company Growth Fund
Investment objective
o long-term growth of capital through investment primarily in the equity
securities of large U.S. growth companies
Investment characteristics
o emphasis on large-sized domestic companies with prospects for maintaining
greater than average growth in earnings, cash flow or assets over time
o focus on companies in strong financial positions
o opportunity to share in the long-term growth of the stock market
o daily liquidity at current net asset value
Contents
Investment objective and policies 5
Why invest in the Fund? 6
Additional information about policies
and investments 6
Distribution and performance
information 9
Fund organization 10
Transaction information 11
Purchases 12
Exchanges and redemptions 13
Shareholder benefits 17
Trustees and Officers 20
Investment products and services 21
How to contact Scudder 22
4
<PAGE>
Investment objective and policies
Scudder Large Company Growth Fund (the "Fund"), a diversified series of Scudder
Investment Trust, seeks to provide long-term growth of capital through
investment primarily in the equity securities of seasoned, financially strong
U.S. growth companies. Although current income is an incidental consideration,
many of the Fund's securities should provide regular dividends which are
expected to grow over time.
The Fund's equity investments consist of common stocks, preferred stocks and
securities convertible into common stocks of companies which are of
above-average financial quality and offer the prospect for above-average growth
in earnings, cash flow or assets relative to the overall market as defined by
the Standard & Poor's 500 Composite Price Index (S&P 500). The prospect for
above-average growth in assets is evaluated in terms of the potential future
earnings such growth in assets can produce.
The Fund allocates its investments among different industries and companies, and
adjusts its portfolio securities based on long-term investment considerations as
opposed to short-term trading. While the Fund emphasizes U.S. investments, it
can commit a portion of assets to the equity securities of foreign growth
companies which meet the criteria applicable to domestic investments.
Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objective will be
met.
Investments
The Fund invests primarily in the equity securities issued by large-sized
domestic companies that offer above-average appreciation potential. In seeking
such investments, the Fund's investment adviser, Scudder, Stevens & Clark, Inc.
(the "Adviser"), invests in companies with the following characteristics:
o companies that have exhibited above-average growth rates over an extended
period with prospects for maintaining greater than average rates of growth
in earnings, cash flow or assets in the future;
o companies that are in a strong financial position with high credit standings
and profitability;
o companies with important business franchises, leading products or dominant
marketing and distribution systems;
o companies guided by experienced, motivated management;
o companies selling at attractive prices relative to potential growth in
earnings, cash flow or assets.
The Adviser utilizes a combination of qualitative and quantitative research
techniques to identify companies that have above-average quality and growth
characteristics and that are deemed to be selling at attractive market
valuations. In-depth fundamental research is used to evaluate various aspects of
corporate performance, with a particular focus on consistency of results,
long-term growth prospects and financial strength. Quantitative valuation models
are designed to help determine which growth companies offer the best values at a
given point in time. From time to time, for temporary defensive or emergency
purposes, the Fund may invest a portion of its assets in cash and cash
equivalents when the Adviser deems such a position advisable in light of
economic or market conditions. The Fund also may invest in convertible
securities, foreign securities, repurchase agreements, and may engage in
strategic transactions. In addition, the Fund may invest, to a limited extent,
in illiquid or restricted securities.
5
<PAGE>
Investment objective and policies (cont'd)
Quality
The Fund invests at least 65% of its total assets in the equity securities of
large U.S. growth companies, i.e., those with total market capitalization of $1
billion or more. The Fund looks for companies with above-average financial
quality.
When assessing financial quality, the Adviser weighs four elements of business
risk. These factors are the Adviser's assessment of the strength of a company's
balance sheet, the accounting practices a company follows, the volatility of a
company's earnings over time and the vulnerability of earnings to changes in
external factors, such as the general economy, the competitive environment,
governmental action and technological change.
More information about investment techniques is provided under "Additional
information about policies and investments."
Why invest in the Fund?
The Fund provides investors with convenient and low-cost access to a diversified
equity portfolio involving seasoned, financially-strong U.S. growth companies.
The Fund's investment strategy is to acquire the equity securities of
well-managed large- and medium-sized companies, primarily located in the U.S.,
which have established records of above-average earnings growth and are judged
to have potential for the future. The Adviser believes that companies with
relatively consistent and above-average rates of growth will be rewarded by the
market with higher stock prices over time and investment returns in excess of
the market as a whole. Also, while the business results of such companies will
be affected by slowdowns in economic growth, they should be less affected by
adverse business conditions than more leveraged or cyclical companies.
The Fund is only appropriate for those investors who understand and can accept
the risks of stock market investing. While the Fund emphasizes the securities of
companies with above-average growth and quality characteristics, movements in
the overall stock market will affect the Fund's price. The Adviser, however,
attempts to lessen the effects of stock market fluctuation through portfolio
diversification and disciplined security selection. The Adviser has been
involved in quality growth investing for over 20 years.
While the Fund is broadly diversified, it does not, in itself, represent a
complete investment program. Nonetheless, because of its emphasis on quality
growth companies, the Fund may be appropriate as a core equity component of an
investment portfolio containing money market, bond and more specialized equity
investments.
In addition, the Fund offers all the benefits of the Scudder Family of Funds.
Scudder, Stevens & Clark, Inc. manages a diverse family of pure no-load(TM)
funds and provides a wide range of services to help investors meet their
investment needs. Please refer to "Investment products and services" for
additional information.
Additional information about policies and investments
Investment restrictions
The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to reduce the Fund's
investment risk.
The Fund may not make loans except through the lending of portfolio securities,
the purchase of debt securities or through repurchase agreements and may not
borrow money except as a temporary measure for extraordinary or emergency
purposes.
A complete description of these and other policies and restrictions is contained
6
<PAGE>
under "The Fund's Investment Objective and Policies" in the Fund's Statement of
Additional Information.
Convertible securities
The Fund may invest in convertible securities (bonds, notes, debentures,
preferred stocks and other securities convertible into common stocks) which may
offer higher income than the common stocks into which they are convertible. The
convertible securities in which the Fund may invest include fixed-income or zero
coupon debt securities which may be converted or exchanged at a stated or
determinable exchange ratio into underlying shares of common stock. Prior to
their conversion, convertible securities may have characteristics similar to
both nonconvertible debt securities and equity securities.
Foreign securities
In addition to investments in companies domiciled in the U.S., the Fund may
invest a portion of its assets in listed and unlisted foreign securities of the
same type as the domestic securities in which it is permitted to invest. The
Fund may invest outside of the U.S. when the anticipated performance of foreign
securities is believed by the Adviser to offer equal or more return potential
than domestic alternatives in keeping with the investment objective of the Fund.
Repurchase agreements
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase them at a specified time and price.
Common stocks
Under normal circumstances, the Fund invests primarily in common stocks. Common
stock is issued by companies to raise cash for business purposes and represents
a proportionate interest in the issuing companies. Therefore, the Fund
participates in the success or failure of any company in which it holds stock.
The market values of common stock can fluctuate significantly, reflecting the
business performance of the issuing company, investor perception and general
economic or financial market movements. Despite the risk of price volatility,
however, common stocks have traditionally offered the greatest potential for
gain on investment, compared to other classes of financial assets such as bonds
or cash equivalents.
Strategic Transactions and derivatives
The Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates, currency exchange rates, and broad or specific equity or fixed-income
market movements), to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio or to enhance potential gain. These
strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and
are regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, enter into various
interest rate transactions such as swaps, caps, floors or collars, and enter
into various currency transactions such as currency forward contracts, currency
futures contracts, currency swaps or options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be
7
<PAGE>
Additional information about policies and investments (cont'd)
purchased for the Fund's portfolio resulting from securities markets or currency
exchange rate fluctuations, to protect the Fund's unrealized gains in the value
of its portfolio securities, to facilitate the sale of such securities for
investment purposes, to manage the effective maturity or duration of
fixed-income securities in the Fund's portfolio, or to establish a position in
the derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. Strategic Transactions involving
financial futures and options thereon will be purchased, sold or entered into
only for bona fide hedging, risk management or portfolio management purposes and
not for speculative purposes. Please refer to "Risk factors--Strategic
Transactions and derivatives" for more information.
Risk factors
The Fund's risks are determined by the nature of the securities held and the
portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques that the
Fund may use from time to time.
Convertible securities. While convertible securities generally offer lower
yields than nonconvertible debt securities of similar quality, their prices may
reflect changes in the value of the underlying common stock. Convertible
securities entail less credit risk than the issuer's common stock. Convertible
securities purchased by the Fund must be rated investment-grade, or if unrated,
judged of equivalent quality by the Adviser. Investment-grade convertible
securities are rated Aaa, Aa, A or Baa by Moody's Investors Service, Inc.
("Moody's"), or AAA, AA, A or BBB by S&P. Moody's considers securities it rates
Baa to have speculative elements as well as investment-grade characteristics.
Illiquid or restricted investments. The absence of a trading market can make it
difficult to ascertain a market value for illiquid or restricted investments.
Disposing of illiquid or restricted investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Fund to sell them promptly at an acceptable price.
Foreign securities. Investing in foreign securities involves considerations not
typically found in investing in U.S. markets. These considerations, which may
favorably or unfavorably affect the Fund's performance, include changes in
exchange rates and exchange rate controls (which may include suspension of the
ability to transfer currency from a given country), costs incurred in
conversions between currencies, non-negotiable brokerage commissions, less
publicly available information, different accounting standards, lower trading
volume and greater market volatility, the difficulty of enforcing obligations in
other countries, less securities regulation, different tax provisions (including
withholding on dividends and interest paid to the Fund), war, expropriation,
political and social instability and diplomatic developments. Further, the
8
<PAGE>
settlement period of securities transactions in foreign markets may be longer
than in domestic markets. These considerations generally are more of a concern
in developing countries. For example, the possibility of revolution and the
dependence on foreign economic assistance may be greater in these countries than
in developed countries. The Adviser seeks to mitigate the risks associated with
these considerations through diversification and active professional management.
Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted. In
the event of the commencement of bankruptcy or insolvency proceedings, with
respect to the seller of the security under a repurchase agreement, the Fund may
encounter delay and incur costs before being able to sell the security. Also, if
a seller defaults, the value of such securities may decline before the Fund is
able to dispose of them.
Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible default
by the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to the Fund,
force the sale or purchase of portfolio securities at inopportune times or for
prices higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation the Fund
can realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and options markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction without incurring substantial losses, if at all. Although the use of
futures contracts and options transactions for hedging should tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time they tend to limit any potential gain which might result from an
increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchases of options, where the exposure is limited to
the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Fund may use and some of their risks are
described more fully in the Fund's Statement of Additional Information.
Distribution and performance information
Dividends and capital gains distributions
The Fund intends to distribute any dividends from its net investment income and
net realized capital gains after utilization of capital loss carryforwards, if
any, annually in December to prevent application of federal excise tax, although
an additional distribution may be made if required, at a later date. Any
dividends or capital gains distributions declared in October, November or
December with a record date in such a month and paid the following January will
be treated by shareholders for federal income tax
9
<PAGE>
Distribution and performance information (cont'd)
purposes as if received on December 31 of the calendar year declared. According
to preference, shareholders may receive distributions in cash or have them
reinvested in additional shares of the Fund. If the investment is in the form of
a retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholder's account.
Generally, dividends from net investment income are taxable to investors as
ordinary income. Long-term capital gains distributions, if any, are taxable as
long-term capital gains regardless of the length of time shareholders have owned
their shares. Short-term capital gains and any other taxable distributions are
taxable as ordinary income. A portion of dividends from ordinary income may
qualify for the dividends-received deduction for corporations.
The Fund sends detailed tax information to shareholders about the amount and
type of its distributions by January 31 of the following year.
Performance information
From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. "Total return" is the change in value
of an investment in the Fund for a specified period. The "average annual total
return" of the Fund is the average annual compound rate of return of an
investment in the Fund assuming the investment has been held for one year, five
years and the life of the Fund. "Cumulative total return" represents the
cumulative change in value of an investment in the Fund for various periods. All
types of total return calculations assume that all dividends and capital gains
distributions during the period were reinvested in shares of the Fund. "Capital
change" measures return from capital, including reinvestment of any capital
gains distributions but does not include the reinvestment of dividends.
Performance will vary based upon, among other things, changes in market
conditions and the level of the Fund's expenses.
Fund organization
The Fund is a diversified series of Scudder Investment Trust (the "Trust"), an
open-end management investment company registered under the Investment Company
Act of 1940 (the "1940 Act"). The Trust, formerly known as Scudder Growth and
Income Fund, was organized as a Massachusetts business trust in September 1984.
The Fund changed its name, from Scudder Quality Growth Fund, on December 10,
1996.
The Fund's activities are supervised by the Trust's Board of Trustees.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Trust is not required to hold and has no current intention
of holding annual shareholder meetings, although special meetings may be called
for purposes such as electing or removing Trustees, changing fundamental
policies or approving an investment management contract. Shareholders will be
assisted in communicating with other shareholders in connection with removing a
Trustee as if Section 16(c) of the 1940 Act were applicable.
Investment adviser
The Fund retains the investment management firm of Scudder, Stevens & Clark,
Inc., a Delaware corporation, to manage its daily investment and business
affairs subject to the policies established by the Board of Trustees. The
Trustees have overall responsibility for the management of the Fund under
Massachusetts law.
The management fee payable to the Adviser under its Investment Management
10
<PAGE>
Agreement is equal to an annual rate of 0.70% of the Fund's average daily net
assets.
The fee is payable monthly, provided that the Fund will make such interim
payments as may be requested by the Adviser not to exceed 75% of the amount of
the fee then accrued on the books of the Fund and unpaid.
All of the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment or administrative services.
Scudder, Stevens & Clark, Inc. is located at Two International Place, Boston,
Massachusetts.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Fund.
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the Fund's
principal underwriter. Scudder Investor Services, Inc. confirms, as agent, all
purchases of shares of the Fund. Scudder Investor Relations is a telephone
information service provided by Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Fund.
Custodian
State Street Bank and Trust Company is the Fund's custodian.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Fund's transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone prior to the expiration of the seven-day period will not
be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).
The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more to your existing
account by wire.
(Continued on page 14)
11
<PAGE>
Purchases
<TABLE>
<S> <C> <C> <C>
Opening Minimum initial investment: $2,500; IRAs $1,000
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:
The Scudder Funds Scudder Shareholder
P.O. Box 2291 Service Center
Boston, MA 42 Longwater Drive
02107-2291 Norwell, MA
02061-1612
o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.
Then call 1-800-225-5163 for instructions.
o In Person Visit one of our Funds Centers to complete your application
with the help of a Scudder representative. Funds Center
locations are listed under Shareholder benefits.
- -----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
shares See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete
Scudder Funds." Fund name, to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.
o In Person Visit one of our Funds Centers to make an additional
investment in your Scudder fund account. Funds Center
locations are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares--
By AutoBuy or By telephone order for more details.
o By Automatic You may arrange to make investments on a regular basis
Investment Plan through automatic deductions from your bank checking
($50 minimum) account. Please call 1-800-225-5163 for more information and an
enrollment form.
</TABLE>
12
<PAGE>
Exchanges and redemptions
<TABLE>
<S> <C> <C>
Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts
o By Telephone To speak with a service representative, call 1-800-225-163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).
o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions
by regular mail to: or by express, registered or by fax to:
or certified mail to:
The Scudder Funds Scudder Shareholder 1-800-821-6234
P.O. Box 2291 Service Center
Boston, MA 02107-2291 42 Longwater Drive
Norwell, MA
02061-1612
- -----------------------------------------------------------------------------------------------------------------------
Redeeming o By Telephone To speak with a service representative, call 1-800-225-5163 from
shares 8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day). You may have redemption
proceeds sent to your predesignated bank account, or redemption proceeds of up
to $100,000 sent to your address of record.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
A signature guarantee is required for redemptions over $50,000.
See Transaction information-Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal 1-800-225-5163 for more information and an enrollment form.
Plan
13
</TABLE>
<PAGE>
Transaction information (cont'd)
(Continued from page 11)
By telephone order. Existing shareholders may purchase shares at a certain day's
price by calling 1-800-225-5163 before the close of regular trading on the New
York Stock Exchange (the "Exchange"), normally 4 p.m. eastern time, on that day.
Orders must be for $10,000 or more and cannot be for an amount greater than four
times the value of your account at the time the order is placed. You must
include with your payment the order number given at the time the order is
placed. A confirmation with complete purchase information is sent shortly after
your order is received. If payment by check or wire is not received within three
business days, the order is subject to cancelation and the shareholder will be
responsible for any loss to the Fund resulting from this cancelation. Telephone
orders are not available for shares held in Scudder IRA accounts and most other
Scudder retirement plan accounts.
By "AutoBuy." If you elected "AutoBuy" for your account, you can call toll-free
to purchase shares. The money will be automatically transferred from your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "AutoBuy," call
1-800-225-5163 for more information.
To purchase additional shares, call 1-800-225-5163. Purchases must be for at
least $250 but not more than $250,000. Proceeds in the amount of your purchase
will be transferred from your bank checking account in two or three business
days following your call. For requests received by the close of regular trading
on the Exchange, shares will be purchased at the net asset value per share
calculated at the close of trading on the day of your call. "AutoBuy" requests
received after the close of regular trading on the Exchange will begin their
processing and be purchased at the net asset value calculated the following
business day.
If you purchase shares by "AutoBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "AutoBuy" transactions are not
available for Scudder IRA accounts and most other retirement plan accounts.
By exchange. Your new account will have the same registration and address as
your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
Redeeming shares
The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
elected telephone redemption to your bank on your application, you can call to
request that federal funds be sent to your authorized bank account. If you did
not elect telephone redemption to your bank on your application, call
1-800-225-5163 for more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.
14
<PAGE>
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. Each Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If a Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. Each Fund will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine.
By "AutoSell." If you elected "AutoSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "AutoSell,"
call 1-800-225-5163 for more information.
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "AutoSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.
"AutoSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $50,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations, or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.
Share price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
the close of regular trading on the Exchange, normally 4 p.m. eastern time, on
each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the current market value of total assets, less all
liabilities, by the total number of shares outstanding.
15
<PAGE>
Transaction information (cont'd)
Processing time
All purchase and redemption requests must be received in good order by the
Fund's transfer agent. Those requests received by the close of regular trading
on the Exchange are executed at the net asset value per share calculated at the
close of regular trading that day.
Purchase and redemption requests received after the close of regular trading on
the Exchange will be executed the following business day.
If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.
The Fund will normally send your redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
Purchases and sales should be made for long-term investment purposes only. The
Fund and Scudder Investor Services, Inc. each reserves the right to reject
purchases of Fund shares (including exchanges) for any reason including when a
pattern of frequent purchases and sales made in response to short-term
fluctuations in the Fund's share price appears evident.
Tax information
A redemption of shares, including an exchange into another Scudder fund, is a
sale of shares and may result in a gain or loss for income tax purposes.
Tax identification number
Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends, capital gains distributions and redemption
and exchange proceeds from accounts (other than those of certain exempt payees)
without a certified Social Security or tax identification number and certain
other certified information or upon notification from the IRS or a broker that
withholding is required. The Fund reserves the right to reject new account
applications without a certified Social Security or tax identification number.
The Fund also reserves the right, following 30 days' notice, to redeem all
shares in accounts without a certified Social Security or tax identification
number.
A shareholder may avoid involuntary redemption by providing the Fund with a tax
identification number during the 30-day notice period.
Minimum balances
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Trustees. Scudder retirement plans have similar
or lower minimum share balance requirements. A shareholder may open an account
with at least $1,000, if an automatic investment plan of $100/month is
established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other information" in the Fund's
16
<PAGE>
Statement of Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.
Redemption-in-kind
The Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by the Fund
and valued as they are for purposes of computing the Fund's net asset value (a
redemption-in-kind). If payment is made in securities, a shareholder may incur
transaction expenses in converting these securities to cash. The Trust has
elected, however, to be governed by Rule 18f-1 under the 1940 Act, as a result
of which the Fund is obligated to redeem shares, with respect to any one
shareholder during any 90-day period, solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of the
period.
Shareholder benefits
Experienced professional management
Scudder, Stevens & Clark, Inc., one of the nation's most experienced investment
management firms, actively manages your Scudder fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.
A team approach to investing
Scudder Large Company Growth Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders and other investment specialists who
work in Scudder's offices across the United States and abroad. Scudder believes
its team approach benefits Fund investors by bringing together many disciplines
and leveraging Scudder's extensive resources.
Lead Portfolio Manager Valerie F. Malter joined Scudder in 1995 and is
responsible for the Fund's investment strategy and daily operation. Ms. Malter
has 11 years of experience as an analyst covering a wide range of industries,
and three years of portfolio management experience focusing on the stocks of
companies with medium- to large-sized market capitalizations. Michael K.
Shields, Portfolio Manager, assists in setting the Fund's investment strategy.
Mr. Shields joined the Fund and Scudder in 1992 and has 15 years of experience
in the financial industry.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. Telephone and
fax redemptions and
17
<PAGE>
Shareholder benefits (cont'd)
exchanges are subject to termination and their terms are subject to change at
any time by the Fund or the transfer agent. In some cases, the transfer agent or
Scudder Investor Services, Inc. may impose additional conditions on telephone
transactions.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You receive a detailed account statement every time you purchase or redeem
shares. All of your statements should be retained to help you keep track of
account activity and the cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
Scudder Funds Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Funds Centers in Boca Raton, Boston, Chicago,
New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of $2,000 per person for anyone with earned income. Many people
can deduct all or part of their contributions from their taxable income, and
all investment earnings accrue on a tax deferred basis. The Scudder No-Fee
IRA charges no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee communications
and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000
18
<PAGE>
for each person covered by the plans. Plans may be adopted individually or
paired to maximize contributions. These are sometimes known as Keogh plans.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500 or
more.
Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA, Profit Sharing
or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
19
<PAGE>
Trustees and Officers
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager,
Educational Foundation
Dudley H. Ladd*
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration,
Northeastern University
Juris Padegs*
Trustee
Jean C. Tempel
Trustee; General Partner, TL Ventures
Bruce F. Beaty*
Vice President
Jerard K. Hartman*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President
Valerie F. Malter*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Assistant Treasurer
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
20
<PAGE>
The Scudder Family of Funds
Money Market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax Free Money Market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money
Fund*
Scudder New York Tax Free
Money Fund*
Tax Free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited
Term Tax Free Fund*
Scudder Massachusetts Tax Free
Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income
Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth
Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Large Company Growth Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund
The Japan Fund
Asset Allocation
Scudder Pathway Series:
Conservative Portfolio
Scudder Pathway Series:
Balanced Portfolio
Scudder Pathway Series:
Growth Portfolio
Scudder Pathway Series:
International Portfolio
Retirement Plans and Tax-Advantaged Investments
IRAs
Keogh Plans
Scudder Horizon Plan*+++
(a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase
Pension Plans
Closed-End Funds#
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income
Fund, Inc.
Montgomery Street Income
Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +A portion of the income from the tax-free funds may
be subject to federal, state, and local taxes. *Not available in all states.
+++A no-load variable annuity contract provided by Charter National Life
Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc., are
traded on various stock exchanges. ++For information on Scudder Treasurers
Trust,(TM) an institutional cash management service that utilizes certain
portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
21
<PAGE>
How to contact Scudder
<TABLE>
<S> <C> <C> <C>
Account Service and Information: Scudder Brokerage Services:
For existing account service Scudder Investor To receive information Scudder Brokerage
and transactions Relations about this discount Services**
1-800-225-5163 brokerage service and
to obtain an application 1-800-700-0820
For personalized Scudder Automated Please address all correspondence to:
information about your Information Line The Scudder Funds
Scudder accounts; (SAIL) P.O. Box 2291
exchanges and 1-800-343-2890 Boston, Massachusetts
redemptions; or 02107-2291
information on
any Scudder fund
Visit the Scudder World Wide Web Site at:
http://funds.scudder.com
Investment Information: Or Stop by a Scudder Funds Center:
To receive information Scudder Investor Many shareholders enjoy the personal, one-on-one
about the Scudder funds, Relations service pf the Scudder Funds Centers. Check for a
for additional applications 1-800-225-2470 Funds Center near you--they can be found in the
and prospectuses, or for following cities:
investment questions
For establishing 401(k) Scudder Defined Boca Raton New York
and 403(b) plans Contribution Services Boston San Francisco
1-800-323-6105 Chicago
For information on Scudder Treasurers Trust(TM), an For information on Scudder Institutional Funds*,
institutional cash management service for corpo- funds designed to meet the broad investment
rations, non-profit organizations and trusts which management and service needs of banks and
utilizes certain portfolios of Scudder Fund, Inc.* other institutions, call: 1-800-854-8525.
($100,000 minimum), call: 1-800-541-7703.
</TABLE>
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
** Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
<PAGE>
SCUDDER LARGE COMPANY GROWTH FUND
A Pure No-Load(TM) (No Sales Charges) Diversified Mutual Fund Seeking Long-Term
Growth of Capital through Investment Primarily in Equity Securities
of Large U.S. Growth Companies.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the prospectus for Scudder Large Company Growth Fund
dated March 1, 1997, as amended from time to time, a copy of which may be
obtained without charge by writing to Scudder Investor Services, Inc., Two
International Place, Boston, Massachusetts 02110-4103.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
THE FUND'S INVESTMENT OBJECTIVE AND POLICIES..........................................................................1
General Investment Objective and Policies....................................................................1
Investment Restrictions.....................................................................................11
PURCHASES............................................................................................................14
Additional Information About Opening an Account.............................................................14
Additional Information About Making Subsequent Investments..................................................14
Additional Information About Making Subsequent Investments by AutoBuy.......................................14
Checks......................................................................................................15
Wire Transfer of Federal Funds..............................................................................15
Share Price.................................................................................................15
Share Certificates..........................................................................................16
Other Information...........................................................................................16
EXCHANGES AND REDEMPTIONS............................................................................................16
Exchanges...................................................................................................16
Redemption by Telephone.....................................................................................17
Redemption By AutoSell......................................................................................18
Redemption by Mail or Fax...................................................................................18
Redemption-In-Kind..........................................................................................18
Other Information...........................................................................................19
FEATURES AND SERVICES OFFERED BY THE FUND............................................................................19
The Pure No-Load(TM) Concept................................................................................19
Dividend and Capital Gain Distribution Options..............................................................20
Diversification.............................................................................................21
Scudder Funds Centers.......................................................................................21
Reports to Shareholders.....................................................................................21
Transaction Summaries.......................................................................................21
THE SCUDDER FAMILY OF FUNDS..........................................................................................21
SPECIAL PLAN ACCOUNTS................................................................................................25
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations and
Self-Employed Individuals..............................................................................26
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and Self-Employed Individuals.........26
Scudder IRA: Individual Retirement Account.................................................................26
Scudder 403(b) Plan.........................................................................................27
Automatic Withdrawal Plan...................................................................................27
Group or Salary Deduction Plan..............................................................................28
Automatic Investment Plan...................................................................................28
Uniform Transfers/Gifts to Minors Act.......................................................................28
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS............................................................................28
PERFORMANCE INFORMATION..............................................................................................29
Average Annual Total Return.................................................................................29
Cumulative Total Return.....................................................................................30
Total Return................................................................................................30
Capital Change..............................................................................................30
Performance Indices.........................................................................................30
Comparison of Fund Performance..............................................................................31
Internet access.............................................................................................32
i
<PAGE>
FUND ORGANIZATION....................................................................................................35
INVESTMENT ADVISER...................................................................................................36
Personal Investments by Employees of the Adviser............................................................38
TRUSTEES AND OFFICERS................................................................................................39
REMUNERATION.........................................................................................................41
DISTRIBUTOR..........................................................................................................41
TAXES................................................................................................................42
PORTFOLIO TRANSACTIONS...............................................................................................45
Brokerage Commissions.......................................................................................45
Portfolio Turnover..........................................................................................46
NET ASSET VALUE......................................................................................................47
ADDITIONAL INFORMATION...............................................................................................48
Experts.....................................................................................................48
Shareholder Indemnification.................................................................................48
Other Information...........................................................................................48
FINANCIAL STATEMENTS.................................................................................................49
APPENDIX
</TABLE>
ii
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
(See "Investment objective and policies" and "Additional
information about policies and investments" in the Fund's
prospectus.)
General Investment Objective and Policies
Scudder Large Company Growth Fund (the "Fund"), a diversified series of
Scudder Investment Trust (the "Trust"), seeks to provide long-term growth of
capital through investment primarily in the equity securities of large U.S.
growth companies. Although current income is an incidental consideration, many
of the Fund's securities should provide regular dividends which are expected to
grow over time.
The Fund's equity investments consist of common stocks, preferred
stocks and securities convertible into common stocks of companies which offer
the prospect for above-average growth in earnings, cash flow or assets relative
to the overall market as defined by the Standard & Poor's 500 Composite Price
Index ("S&P 500"). The prospect for above-average growth in assets is evaluated
in terms of the potential future earnings such growth in assets can produce.
The Fund allocates its investments among different industries and
companies, and adjusts its portfolio securities based on long-term investment
considerations as opposed to short-term trading. While the Fund emphasizes U.S.
investments, it can commit a portion of assets to the equity securities of
foreign growth companies which meet the criteria applicable to domestic
investments.
Except as otherwise indicated, the Fund's investment objective and
policies are not fundamental and may be changed without a vote of shareholders.
If there is a change in investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current financial position and needs. There can be no assurance that the Fund's
objective will be met.
Investments. The Fund invests primarily in the equity securities issued by
large-sized domestic companies that offer above-average appreciation potential.
In seeking such investments, the Fund's investment adviser, Scudder, Stevens &
Clark, Inc. (the "Adviser"), invests in companies with the following
characteristics:
o companies that have exhibited above-average growth rates over an extended
period with prospects for maintaining greater than average rates of growth
in earnings, cash flow or assets in the future;
o companies that are in a strong financial position with high credit
standings and profitability;
o companies with important business franchises, leading products or dominant
marketing and distribution systems;
o companies guided by experienced, motivated management;
o companies selling at attractive prices relative to potential growth in
earnings, cash flow or assets.
The Adviser utilizes a combination of qualitative and quantitative
research techniques to identify companies that have above-average quality and
growth characteristics and that are deemed to be selling at attractive market
valuations. In-depth fundamental research is used to evaluate various aspects of
corporate performance, with a particular focus on consistency of results,
long-term growth prospects and financial strength. Quantitative valuation models
are designed to help determine which growth companies offer the best values at a
given point in time. From time to time, for temporary defensive or emergency
purposes, the Fund may invest a portion of its assets in cash and cash
equivalents when the Adviser deems such a position advisable in light of
economic or market conditions. The Fund also may invest in foreign securities,
repurchase agreements, and may engage in strategic transactions.
<PAGE>
Quality. The Fund invests at least 65% of its total assets in the equity
securities of large U.S. growth companies, i.e., those with total market
capitalization of $1 billion or more. The Fund looks for companies with
above-average financial quality. When assessing financial quality, the Adviser
weighs four elements of business risk. These factors are the Adviser's
assessment of the strength of a company's balance sheet, the accounting
practices a company follows, the volatility of a company's earnings over time
and the vulnerability of earnings to changes in external factors, such as the
general economy, the competitive environment, governmental action and
technological change.
Convertible Securities. The Fund may invest in convertible securities; that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stocks. Investments in convertible securities may
provide income through interest and dividend payments and/or an opportunity for
capital appreciation by virtue of their conversion or exchange features.
The convertible securities in which the Fund may invest include
fixed-income or zero coupon debt securities which may be converted or exchanged
at a stated or determinable exchange ratio into underlying shares of common
stock. The exchange ratio for any particular convertible security may be
adjusted from time to time due to stock splits, dividends, spin-offs, other
corporate distributions or scheduled changes in the exchange ratio. Convertible
debt securities and convertible preferred stocks, until converted, have general
characteristics similar to both debt and equity securities. Although to a lesser
extent than with debt securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion or
exchange feature, the market value of convertible securities typically changes
as the market value of the underlying common stocks changes, and, therefore,
also tends to follow movements in the general market for equity securities. A
unique feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value declines
to the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the prices of the convertible securities tend
to rise as a reflection of the value of the underlying common stock, although
typically not as much as the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
As debt securities, convertible securities are investments which
provide for a stream of income (or in the case of zero coupon securities,
accretion of income) with generally higher yields than common stocks. Of course,
like all debt securities, there can be no assurance of income or principal
payments because the issuers of the convertible securities may default on their
obligations. Convertible securities generally offer lower yields than
nonconvertible securities of similar quality because of their conversion or
exchange features.
Convertible securities are generally subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
nonconvertible securities.
Convertible securities may be issued as fixed income obligations that
pay current income or as zero coupon notes and bonds, including Liquid Yield
Option Notes (LYONs). Zero coupon securities pay no cash income and are sold at
substantial discounts from their value at maturity. When held to maturity, their
entire income, which consists of accretion of discount, comes from the
difference between the issue price and their value at maturity. Zero coupon
convertible securities offer the opportunity for capital appreciation as
increases (or decreases) in market value of such securities closely follows the
movements in the market value of the underlying common stock. Zero coupon
convertible securities are generally expected to be less volatile than the
underlying common stocks as they are usually issued with short to medium length
maturities (15 years or less) and are issued with options and/or redemption
features exercisable by the holder of the obligation entitling the holder to
redeem the obligation and receive a defined cash payment.
2
<PAGE>
Foreign Securities. Investors should recognize that investing in foreign
securities involves certain special considerations, including those set forth
below, which are not typically associated with investing in U.S. securities and
which may favorably or unfavorably affect the Fund's performance. As foreign
companies are not generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies, there may be less publicly available
information about a foreign company than about a domestic company. Many foreign
stock markets, while growing in volume of trading activity, have substantially
less volume than the New York Stock Exchange (the "Exchange"), and securities of
some foreign companies are less liquid and more volatile than securities of
domestic companies. Similarly, volume and liquidity in most foreign bond markets
is less than in the U.S. and at times, volatility of price can be greater than
in the U.S. Further, foreign markets have different clearance and settlement
procedures and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems either could result in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in a possible liability to the purchaser.
Payment for securities without delivery may be required in certain foreign
markets. Fixed commissions on some foreign stock exchanges are generally higher
than negotiated commissions on U.S. exchanges, although the Fund will endeavor
to achieve the most favorable net results on its portfolio transactions.
Further, the Fund may encounter difficulties or be unable to pursue legal
remedies and obtain judgments in foreign courts. There is generally less
government supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the U.S. It may be more
difficult for the Fund's agents to keep currently informed about corporate
actions such as stock dividends or other matters which may affect the prices of
portfolio securities. Communications between the U.S. and foreign countries may
be less reliable than within the U.S., thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect U.S. investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. The management of the Fund seeks to mitigate the
risks associated with the foregoing considerations through diversification and
continuous professional management.
Because investments in foreign securities will usually involve
currencies of foreign countries, and because the Fund may hold foreign
currencies and forward foreign currency exchange contracts ("forward
contracts"), futures contracts and options on futures contracts on foreign
currencies, the value of the assets of the Fund as measured in U.S. dollars may
be affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and the Fund may incur costs in
connection with conversions between various currencies. Although the Fund values
its assets daily in terms of U.S. dollars, it does not intend to convert its
holdings of foreign currencies into U.S. dollars on a daily basis. It will do so
from time to time, and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
(or options thereon) to purchase or sell foreign currencies. (See "Strategic
Transactions and Derivatives" below.)
Repurchase Agreements. The Fund may enter into repurchase agreements with any
member bank of the Federal Reserve System and any broker/dealer recognized as a
reporting government securities dealer if the creditworthiness of the bank or
broker/dealer has been determined by the Adviser to be at least as high as that
of other obligations the Fund may purchase or to be at least equal to that of
issuers of commercial paper rated within the two highest grades assigned by S&P
or Moody's Investors Service, Inc. ("Moody's").
3
<PAGE>
A repurchase agreement provides a means for the Fund to earn income on
funds for periods as short as overnight. It is an arrangement under which the
Fund acquires a security ("Obligation") and the seller agrees, at the time of
sale, to repurchase the Obligation at a specified time and price. Obligations
subject to a repurchase agreement are held in a segregated account and the value
of such obligations kept at least equal to the repurchase price on a daily
basis. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
date of repurchase. In either case, the income to the Fund is unrelated to the
interest rate on the Obligation itself. Obligations will be held by the Fund's
custodian or in the Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"), a repurchase agreement is deemed to be a loan from the Fund to the
seller of the Obligation subject to the repurchase agreement and is therefore
subject to the Fund's investment restriction applicable to loans. It is not
clear whether a court would consider the Obligation purchased by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may cause loss of interest or decline in price of the
Obligation. If the court characterizes the transaction as a loan and the Fund
has not perfected a security interest in the Obligation, the Fund may be
required to return the Obligation to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt instrument purchased for the Fund, the
Adviser seeks to minimize the risk of loss from repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
Obligation. Apart from the risk of bankruptcy or insolvency proceedings, there
is also the risk that the seller may fail to repurchase the Obligation, in which
case the Fund may incur a loss if the proceeds to the Fund of the sale to a
third party are less than the repurchase price. To protect against such
potential loss, if the market value (including interest) of the Obligation
subject to the repurchase agreement becomes less than the repurchase price
(including interest), the Fund will direct the seller of the Obligation to
deliver additional securities so that the market value (including interest) of
all securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that the Fund will be unsuccessful in seeking
to impose on the seller a contractual obligation to deliver additional
securities.
Illiquid and Restricted Investments. The Fund may occasionally purchase
securities other than in the open market. While such purchases may often offer
attractive opportunities for investment not otherwise available on the open
market, the securities so purchased are often "restricted securities" or "not
readily marketable," i.e., securities which cannot be sold to the public without
registration under the Securities Act of 1933 or the availability of an
exemption from registration (such as Rules 144 or 144A) or because they are
subject to other legal or contractual delays in or restrictions on resale.
Generally speaking, illiquid or restricted investments may be sold only
to qualified institutional buyers, or in a privately negotiated transaction to a
limited number of purchasers, or in limited quantities after they have been held
for a specified period of time and other conditions are met pursuant to an
exemption from registration, or in a public offering for which a registration
statement is in effect under the Securities Act of 1933. A Fund may be deemed to
be an "underwriter" for purposes of the Securities Act of 1933 when selling
restricted securities to the public, and in such event a Fund may be liable to
purchasers of such securities if the registration statement prepared by the
issuer, or the prospectus forming a part of it, is materially inaccurate or
misleading.
The Adviser will monitor the liquidity of such restricted securities
subject to the supervision of the Board of Trustees. In reaching liquidity
decisions, the Adviser will consider the following factors: (1) the frequency of
trades and quotes for the security, (2) the number of dealers wishing to
purchase or sell the security and the number of their potential purchasers, (3)
dealer undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades (i.e. the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer).
4
<PAGE>
Strategic Transactions and Derivatives. The Fund may, but is not required to,
utilize various other investment strategies as described below to hedge various
market risks (such as interest rates, currency exchange rates, and broad or
specific equity or fixed-income market movements), to manage the effective
maturity or duration of fixed-income securities in the Fund's portfolio, or to
enhance potential gain. These strategies may be executed through the use of
derivative contracts. Such strategies are generally accepted as a part of modern
portfolio management and are regularly utilized by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.
In the course of pursuing these investment strategies, the Fund may
purchase and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, enter into
various interest rate transactions such as swaps, caps, floors or collars, and
enter into various currency transactions such as currency forward contracts,
currency futures contracts, currency swaps or options on currencies or currency
futures (collectively, all the above are called "Strategic Transactions").
Strategic Transactions may be used without limit to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for the Fund's portfolio resulting from securities markets or currency exchange
rate fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in the Fund's portfolio, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of the Fund to utilize these
Strategic Transactions successfully will depend on the Adviser's ability to
predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when implementing these
strategies, techniques and instruments. Strategic Transactions involving
financial futures and options thereon will be purchased, sold or entered into
only for bona fide hedging, risk management or portfolio management purposes and
not for speculative purposes.
Strategic Transactions, including derivative contracts, have risks
associated with them including possible default by the other party to the
transaction, illiquidity and, to the extent the Adviser's view as to certain
market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options may result in losses to the Fund, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, limit the amount of appreciation the Fund can realize on its
investments or cause the Fund to hold a security it might otherwise sell. The
use of currency transactions can result in the Fund incurring losses as a result
of a number of factors including the imposition of exchange controls, suspension
of settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.
General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
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options require segregation of Fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."
A put option gives the purchaser of the option, upon payment of a
premium, the right to sell, and the writer the obligation to buy, the underlying
security, commodity, index, currency or other instrument at the exercise price.
For instance, the Fund's purchase of a put option on a security might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
by giving the Fund the right to sell such instrument at the option exercise
price. A call option, upon payment of a premium, gives the purchaser of the
option the right to buy, and the seller the obligation to sell, the underlying
instrument at the exercise price. The Fund's purchase of a call option on a
security, financial future, index, currency or other instrument might be
intended to protect the Fund against an increase in the price of the underlying
instrument that it intends to purchase in the future by fixing the price at
which it may purchase such instrument. An American style put or call option may
be exercised at any time during the option period while a European style put or
call option may be exercised only upon expiration or during a fixed period prior
thereto. The Fund is authorized to purchase and sell exchange listed options and
over-the-counter options ("OTC options"). Exchange listed options are issued by
a regulated intermediary such as the Options Clearing Corporation ("OCC"), which
guarantees the performance of the obligations of the parties to such options.
The discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.
With certain exceptions, OCC issued and exchange listed options
generally settle by physical delivery of the underlying security or currency,
although in the future cash settlement may become available. Index options and
Eurodollar instruments are cash settled for the net amount, if any, by which the
option is "in-the-money" (i.e., where the value of the underlying instrument
exceeds, in the case of a call option, or is less than, in the case of a put
option, the exercise price of the option) at the time the option is exercised.
Frequently, rather than taking or making delivery of the underlying instrument
through the process of exercising the option, listed options are closed by
entering into offsetting purchase or sale transactions that do not result in
ownership of the new option.
The Fund's ability to close out its position as a purchaser or seller
of an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.
The hours of trading for listed options may not coincide with the hours
during which the underlying financial instruments are traded. To the extent that
the option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.
OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula price within seven days. The
Fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.
Unless the parties provide for it, there is no central clearing or
guaranty function in an OTC option. As a result, if the Counterparty fails to
make or take delivery of the security, currency or other instrument underlying
an OTC option it has entered into with the Fund or fails to make a cash
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settlement payment due in accordance with the terms of that option, the Fund
will lose any premium it paid for the option as well as any anticipated benefit
of the transaction. Accordingly, the Adviser must assess the creditworthiness of
each such Counterparty or any guarantor or credit enhancement of the
Counterparty's credit to determine the likelihood that the terms of the OTC
option will be satisfied. The Fund will engage in OTC option transactions only
with U.S. government securities dealers recognized by the Federal Reserve Bank
of New York as "primary dealers" or broker/dealers, domestic or foreign banks or
other financial institutions which have received (or the guarantors of the
obligation of which have received) a short-term credit rating of A-1 from S&P or
P-1 from Moody's or an equivalent rating from any nationally recognized
statistical rating organization ("NRSRO") or, in the case of OTC currency
transactions, are determined to be of equivalent credit quality by the Adviser.
The staff of the U.S. Securities and Exchange Commission (the "SEC"), currently
takes the position that OTC options purchased by the Fund, and portfolio
securities "covering" the amount of the Fund's obligation pursuant to an OTC
option sold by it (the cost of the sell-back plus the in-the-money amount, if
any) are illiquid, and are subject to the Fund's limitation on investing no more
than 10% of its assets in illiquid securities.
If the Fund sells a call option, the premium that it receives may serve
as a partial hedge, to the extent of the option premium, against a decrease in
the value of the underlying securities or instruments in its portfolio or will
increase the Fund's income.
The sale of put options can also provide income.
The Fund may purchase and sell call options on securities including
U.S. Treasury and agency securities, mortgage-backed securities, corporate debt
securities, equity securities (including convertible securities) and Eurodollar
instruments that are traded on U.S. and foreign securities exchanges and in the
over-the-counter markets, and on securities indices, currencies and futures
contracts. All calls sold by the Fund must be "covered" (i.e., the Fund must own
the securities or futures contract subject to the call) or must meet the asset
segregation requirements described below as long as the call is outstanding.
Even though the Fund will receive the option premium to help protect it against
loss, a call sold by the Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold.
The Fund may purchase and sell put options on securities including U.S.
Treasury and agency securities, mortgage-backed securities, corporate debt
securities, equity securities (including convertible securities) and Eurodollar
instruments (whether or not it holds the above securities in its portfolio), and
on securities, indices, currencies and futures contracts other than futures on
individual corporate debt and individual equity securities. The Fund will not
sell put options if, as a result, more than 50% of the Fund's assets would be
required to be segregated to cover its potential obligations under such put
options other than those with respect to futures and options thereon. In selling
put options, there is a risk that the Fund may be required to buy the underlying
security at a disadvantageous price above the market price.
General Characteristics of Futures. The Fund may enter into financial futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate, currency or equity market changes, for
duration management and for risk management purposes. Futures are generally
bought and sold on the commodities exchanges where they are listed with payment
of initial and variation margin as described below. The sale of a futures
contract creates a firm obligation by the Fund, as seller, to deliver to the
buyer the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to index futures
and Eurodollar instruments, the net cash amount). Options on futures contracts
are similar to options on securities except that an option on a futures contract
gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such
position.
The Fund's use of financial futures and options thereon will in all
cases be consistent with applicable regulatory requirements and in particular
the rules and regulations of the Commodity Futures Trading Commission and will
be entered into only for bona fide hedging, risk management (including duration
management) or other portfolio management purposes. Typically, maintaining a
futures contract or selling an option thereon requires the Fund to deposit with
a financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
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Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of the Fund.
If the Fund exercises an option on a futures contract it will be obligated to
post initial margin (and potential subsequent variation margin) for the
resulting futures position just as it would for any position. Futures contracts
and options thereon are generally settled by entering into an offsetting
transaction but there can be no assurance that the position can be offset prior
to settlement at an advantageous price, nor that delivery will occur.
The Fund will not enter into a futures contract or related option
(except for closing transactions) if, immediately thereafter, the sum of the
amount of its initial margin and premiums on open futures contracts and options
thereon would exceed 5% of the Fund's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. The segregation requirements with respect to futures contracts and
options thereon are described below.
Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.
Currency Transactions. The Fund may engage in currency transactions with
Counterparties in order to hedge the value of portfolio holdings denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies and operates similarly to an interest rate swap, which is
described below. The Fund may enter into currency transactions with
Counterparties which have received (or the guarantors of the obligations which
have received) a credit rating of A-1 or P-1 by S&P or Moody's, respectively, or
that have an equivalent rating from a NRSRO or are determined to be of
equivalent credit quality by the Adviser.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.
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The Fund may also cross-hedge currencies by entering into transactions
to purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, the Fund may also engage in
proxy hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Adviser considers that
the Austrian schilling is correlated to the German deutschemark (the "D-mark"),
the Fund holds securities denominated in schillings and the Adviser believes
that the value of schillings will decline against the U.S. dollar, the Adviser
may enter into a commitment or option to sell D-marks and buy dollars. Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to the Fund
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that the Fund is engaging in proxy hedging. If the
Fund enters into a currency hedging transaction, the Fund will comply with the
asset segregation requirements described below.
Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.
Combined Transactions. The Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Adviser, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Adviser's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.
Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, currency and index swaps and the purchase or
sale of related caps, floors and collars. The Fund expects to enter into these
transactions primarily to preserve a return or spread on a particular investment
or portion of its portfolio, to protect against currency fluctuations, as a
duration management technique or to protect against any increase in the price of
securities the Fund anticipates purchasing at a later date. The Fund intends to
use these transactions as hedges and not as speculative investments and will not
sell interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Fund may be obligated to pay.
Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
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entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.
The Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the Adviser
and the Fund believe such obligations do not constitute senior securities under
the 1940 Act and, accordingly, will not treat them as being subject to its
borrowing restrictions. The Fund will not enter into any swap, cap, floor or
collar transaction unless, at the time of entering into such transaction, the
unsecured long-term debt of the Counterparty, combined with any credit
enhancements, is rated at least A by S&P or Moody's or has an equivalent rating
from a NRSRO or is determined to be of equivalent credit quality by the Adviser.
If there is a default by the Counterparty, the Fund may have contractual
remedies pursuant to the agreements related to the transaction. The swap market
has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.
Eurodollar Instruments. The Fund may make investments in Eurodollar instruments.
Eurodollar instruments are U.S. dollar-denominated futures contracts or options
thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for borrowings. The Fund
might use Eurodollar futures contracts and options thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked.
Risks of Strategic Transactions Outside the U.S. When conducted outside the
U.S., Strategic Transactions may not be regulated as rigorously as in the U.S.,
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the U.S. of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the U.S., (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the U.S., and (v) lower trading volume and
liquidity.
Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate liquid, high
grade assets with its custodian to the extent Fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid, high grade securities at
least equal to the current amount of the obligation must be segregated with the
custodian. The segregated assets cannot be sold or transferred unless equivalent
assets are substituted in their place or it is no longer necessary to segregate
them. For example, a call option written by the Fund will require the Fund to
hold the securities subject to the call (or securities convertible into the
needed securities without additional consideration) or to segregate liquid, high
grade securities sufficient to purchase and deliver the securities if the call
is exercised. A call option sold by the Fund on an index will require the Fund
to own portfolio securities which correlate with the index or to segregate
liquid, high grade assets equal to the excess of the index value over the
exercise price on a current basis. A put option written by the Fund requires the
Fund to segregate liquid, high grade assets equal to the exercise price.
Except when the Fund enters into a forward contract for the purchase or
sale of a security denominated in a particular currency, which requires no
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segregation, a currency contract which obligates the Fund to buy or sell
currency will generally require the Fund to hold an amount of that currency or
liquid securities denominated in that currency equal to the Fund's obligations
or to segregate liquid, high grade assets equal to the amount of the Fund's
obligation.
OTC options entered into by the Fund, including those on securities,
currency, financial instruments or indices and OCC issued and exchange listed
index options, will generally provide for cash settlement. As a result, when the
Fund sells these instruments it will only segregate an amount of assets equal to
its accrued net obligations, as there is no requirement for payment or delivery
of amounts in excess of the net amount. These amounts will equal 100% of the
exercise price in the case of a non cash-settled put, the same as an OCC
guaranteed listed option sold by the Fund, or the in-the-money amount plus any
sell-back formula amount in the case of a cash-settled put or call. In addition,
when the Fund sells a call option on an index at a time when the in-the-money
amount exceeds the exercise price, the Fund will segregate, until the option
expires or is closed out, cash or cash equivalents equal in value to such
excess. OCC issued and exchange listed options sold by the Fund other than those
above generally settle with physical delivery, or with an election of either
physical delivery or cash settlement and the Fund will segregate an amount of
assets equal to the full value of the option. OTC options settling with physical
delivery, or with an election of either physical delivery or cash settlement
will be treated the same as other options settling with physical delivery.
In the case of a futures contract or an option thereon, the Fund must
deposit initial margin and possible daily variation margin in addition to
segregating assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such assets may consist of cash, cash equivalents,
liquid debt or equity securities or other acceptable assets.
With respect to swaps, the Fund will accrue the net amount of the
excess, if any, of its obligations over its entitlements with respect to each
swap on a daily basis and will segregate an amount of cash or liquid, high grade
securities having a value equal to the accrued excess. Caps, floors and collars
require segregation of assets with a value equal to the Fund's net obligation,
if any.
Strategic Transactions may be covered by other means when consistent
with applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating assets if the Fund held a
futures or forward contract, it could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held. Other Strategic Transactions may also be offset in combinations.
If the offsetting transaction terminates at the time of or after the primary
transaction no segregation is required, but if it terminates prior to such time,
assets equal to any remaining obligation would need to be segregated.
The Fund's activities involving Strategic Transactions may be limited
by the requirements of Subchapter M of the Internal Revenue Code for
qualification as a regulated investment company. (See "TAXES.")
Investment Restrictions
Unless specified to the contrary, the following restrictions are
fundamental policies and may not be changed without the approval of "a majority
of the outstanding voting securities" of the Fund which, under the 1940 Act and
the rules thereunder and as used in this Statement of Additional Information,
means the lesser of (1) 67% or more of the shares of the Fund present at a
meeting if the holders of more than 50% of the outstanding shares of the Fund
are present in person or represented by proxy; or (2) more than 50% of the
outstanding shares of the Fund. Nonfundamental policies of the Fund may be
modified by the Fund's Trustees without a vote of shareholders.
Any investment restrictions herein which involve a maximum percentage
of securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
or encumbrance of securities or assets of, or borrowings by, the Fund. The Fund
is under no restriction as to the amount of portfolio securities which may be
bought or sold.
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As a matter of fundamental policy, the Fund may not:
1. with respect to 75% of its total assets taken at market value
purchase more than 10% of the voting securities of any one
issuer; or invest more than 5% of the value of its total assets
in the securities of any one issuer, except obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment
companies;
2. borrow money except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse
repurchase agreements provided that the Fund maintains asset
coverage of 300% for all borrowings;
3. purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or
mortgages, and (ii) securities secured by real estate or
interests therein, and that the Fund reserves freedom of action
to hold and to sell real estate acquired as a result of the
Fund's ownership of securities); or purchase or sell physical
commodities or contracts relating to physical commodities;
4. act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection
with the disposition of portfolio securities of the Fund;
5. make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase
agreements and the purchase of debt securities in accordance with
its investment objective and investment policies may be deemed to
be loans;
6. issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur and except for shares
of the separate classes or series of the Trust, provided that
collateral arrangements with respect to currency-related
contracts, futures contracts, options or other permitted
investments, including deposits of initial and variation margin,
are not considered to be the issuance of senior securities for
purposes of this restriction; and
7. purchase any securities which would cause more than 25% of the
market value of its total assets at the time of such purchase to
be invested in the securities of one or more issuers having their
principal business activities in the same industry, provided that
there is no limitation in respect to investments in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities (for the purposes of this restriction,
telephone companies are considered to be in a separate industry
from gas and electric public utilities, and wholly-owned finance
companies are considered to be in the industry of their parents
if their activities are primarily related to financing the
activities of their parents).
Other Investment Policies. The Trustees of the Fund voluntarily adopted policies
and restrictions which are observed in the conduct of the Fund's affairs. These
represent intentions of the Trustees based upon current circumstances. They
differ from fundamental investment policies in that they may be changed or
amended by action of the Trustees without prior notice to or approval of
shareholders.
As a matter of nonfundamental policy, the Fund may not:
(a) purchase or retain securities of any open-end investment
company, or securities of closed-end investment companies
except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchases,
or except when such purchase, though not made in the open
market, is part of a plan of merger, consolidation,
reorganization or acquisition of assets; in any event the
Fund may not purchase more than 3% of the outstanding voting
securities of another investment company, may not invest
more than 5% of its assets in another investment company,
and may not invest more than 10% of its assets in other
investment companies;
12
<PAGE>
(b) pledge, mortgage or hypothecate its assets in excess,
together with permitted borrowings, of 1/3 of its total
assets;
(c) purchase or retain securities of an issuer any of whose
officers, directors, trustees or security holders is an
officer, director or trustee of the Fund or a member,
officer, director or trustee of the investment adviser of
the Fund if one or more of such individuals owns
beneficially more than one-half of one percent (1/2%) of the
outstanding shares or securities or both (taken at market
value) of such issuer and such individuals owning more than
one-half of one percent (1/2%) of such shares or securities
together own beneficially more than 5% of such shares or
securities or both;
(d) purchase securities on margin or make short sales unless, by
virtue of its ownership of other securities, it has the
right to obtain securities equivalent in kind and amount to
the securities sold and, if the right is conditional, the
sale is made upon the same conditions, except in connection
with arbitrage transactions and except that the Fund may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities;
(e) invest more than 10% of its total assets in securities which
are not readily marketable, the disposition of which is
restricted under Federal securities laws, or in repurchase
agreements not terminable within seven days, and the Fund
will not invest more than 10% of its total assets in
restricted securities;
(f) purchase securities of any issuer with a record of less than
three years continuous operations, including predecessors,
except U.S. Government securities, securities of such
issuers which are rated by at least one nationally
recognized statistical rating organization, municipal
obligations and obligations issued or guaranteed by any
foreign government or its agencies or instrumentalities, if
such purchase would cause the investments of the Fund in all
such issuers to exceed 5% of the total assets of the Fund
taken at market value;
(g) purchase more than 10% of the voting securities of any one
issuer, except securities issued by the U.S. Government, its
agencies or instrumentalities;
(h) buy options on securities or financial instruments, unless
the aggregate premiums paid on all such options held by the
Fund at any time do not exceed 20% of its net assets; or
sell put options on securities if, as a result, the
aggregate value of the obligations underlying such put
options would exceed 50% of the Fund's net assets;
(i) enter into futures contracts or purchase options thereon
unless immediately after the purchase, the value of the
aggregate initial margin with respect to all futures
contracts entered into on behalf of the Fund and the
premiums paid for options on futures contracts does not
exceed 5% of the fair market value of the Fund's total
assets; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in computing the 5%
limit;
(j) invest in oil, gas or other mineral leases, or exploration
or development programs (although it may invest in issuers
which own or invest in such interests);
(k) borrow money, including reverse repurchase agreements, in
excess of 5% of its total assets (taken at market value)
except for temporary or emergency purposes, or borrow other
than from banks;
(l) purchase warrants if as a result warrants taken at the lower
of cost or market value would represent more than 5% of the
value of the Fund's total net assets or more than 2% of its
net assets in warrants that are not listed on the New York
or American Stock Exchanges or on an exchange with
comparable listing requirements (for this purpose, warrants
attached to securities will be deemed to have no value);
13
<PAGE>
(m) make securities loans if the value of such securities loaned
exceeds 30% of the value of the Fund's total assets at the
time any loan is made; all loans of portfolio securities will
be fully collateralized and marked to market daily. The Fund
has no current intention of making loans of portfolio
securities that would amount to greater than 5% of the Fund's
total assets; and
(n) purchase or sell real estate limited partnership interests.
PURCHASES
(See "Purchases" and "Transaction information" in the Fund's
prospectus.)
Additional Information About Opening an Account
Clients having a regular investment counsel account with the Adviser or
its affiliates and members of their immediate families, officers and employees
of the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $2,500 of Fund
shares through Scudder Investor Services, Inc. (the "Distributor") by letter,
fax, TWX, or telephone.
Shareholders of other Scudder funds who have submitted an account
application and have a certified tax identification number, clients having a
regular investment counsel account with the Adviser or its affiliates and
members of their immediate families, officers and employees of the Adviser or of
any affiliated organization and their immediate families, members of the NASD
and banks may open an account by wire. These investors must call 1-800-225-5163
to get an account number. During the call, the investor will be asked to
indicate the Fund name, amount to be wired ($2,500 minimum), name of bank or
trust company from which the wire will be sent, the exact registration of the
new account, the tax identification or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, State Street Bank and Trust Company, Boston, MA
02110, ABA Number 011000028, DDA Account Number 9903-5552. The investor must
give the Scudder fund name, account name and new account number. Finally, the
investor must send the completed and signed application to the Fund promptly.
The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.
Additional Information About Making Subsequent Investments
Subsequent purchase orders for $10,000 or more, and for an amount not
greater than four times the value of the shareholder's account, may be placed by
telephone, fax, etc. by members of the NASD, by banks and by established
shareholders [except by Scudder Individual Retirement Account (IRA), Scudder
Profit Sharing and Money Purchase Pension Plans, Scudder 401(k) and Scudder
403(b) plan holders]. Orders placed in this manner may be directed to any office
of the Distributor listed in the Fund's prospectus. A two-part invoice of the
purchase will be mailed out promptly following receipt of a request to buy.
Payment should be attached to a copy of the invoice for proper identification.
Federal regulations require that payment be received within seven business days.
If payment is not received within that time, the shares may be canceled. In the
event of such cancellation or cancellation at the purchaser's request, the
purchaser will be responsible for any loss incurred by the Fund or the principal
underwriter by reason of such cancellation. If the purchaser is a shareholder,
the Trust shall have the authority, as agent of the shareholder, to redeem
shares in the account in order to reimburse the Fund or the principal
underwriter for the loss incurred. Net losses on such transactions which are not
recovered from the purchaser will be absorbed by the principal underwriter. Any
net profit on the liquidation of unpaid shares will accrue to the Fund.
Additional Information About Making Subsequent Investments by AutoBuy
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the AutoBuy program, may purchase shares of the Fund by telephone. Through
this service shareholders may purchase up to $250,000 but not less than $250. To
purchase shares by AutoBuy, shareholders should call before 4 p.m. eastern time.
14
<PAGE>
Proceeds in the amount of your purchase will be transferred from your bank
checking account two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
purchased at the net asset value per share calculated at the close of trading on
the day of your call. AutoBuy requests received after the close of regular
trading on the Exchange will begin their processing and be purchased at the net
asset value calculated the following business day. If you purchase shares by
AutoBuy and redeem them within seven days of the purchase, the Fund may hold the
redemption proceeds for a period of up to seven business days. If you purchase
shares and there are insufficient funds in your bank account the purchase will
be canceled and you will be subject to any losses or fees incurred in the
transaction. Auto Buy transactions are not available for Scudder IRA accounts
and most other retirement plan accounts.
In order to request purchases by AutoBuy, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish AutoBuy may so indicate on the application.
Existing shareholders who wish to add AutoBuy to their account may do so by
completing an AutoBuy Enrollment Form. After sending in an enrollment form
shareholders should allow for 15 days for this service to be available.
The Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine. and to discourage fraud. To the extent
that the Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Checks
A certified check is not necessary, but checks are only accepted
subject to collection at full face value in U.S. funds and must be drawn on, or
payable through, a U.S. bank.
If shares of the Fund are purchased by a check which proves to be
uncollectible, the Trust reserves the right to cancel the purchase immediately
and the purchaser will be responsible for any loss incurred by the Fund or the
principal underwriter by reason of such cancellation. If the purchaser is a
shareholder, the Trust will have the authority, as agent of the shareholder, to
redeem shares in the account in order to reimburse the Fund or the principal
underwriter for the loss incurred. Investors whose orders have been canceled may
be prohibited from or restricted in placing future orders in any of the Scudder
funds.
Wire Transfer of Federal Funds
To obtain the net asset value determined as of the close of regular
trading on a selected day, your bank must forward federal funds by wire transfer
and provide the required account information so as to be available to the Fund
prior to the close of regular trading on the Exchange.
The bank sending an investor's federal funds by bank wire may charge
for the service. Presently the Distributor pays a fee for receipt by State
Street Bank and Trust Company (the "Custodian") of "wired funds," but the right
to charge investors for this service is reserved.
Boston banks are closed on certain holidays although the Exchange may
be open. These holidays include Martin Luther King, Jr. Day (the 3rd Monday in
January), Columbus Day (the 2nd Monday in October) and Veterans Day (November
11). Investors are not able to purchase shares by wiring federal funds on such
holidays because the Custodian is not open to receive such federal funds on
behalf of the Fund.
Share Price
Purchases will be filled without sales charge at the net asset value
next computed after receipt of the application in good order. Net asset value
normally will be computed as of the close of regular trading on the Exchange on
15
<PAGE>
each day during which the Exchange is open for trading. Orders received after
the close of regular trading on the Exchange will receive the next day's net
asset value. If the order has been placed by a member of the NASD, other than
the Distributor, it is the responsibility of that member broker, rather than the
Fund, to forward the purchase order to the Fund's transfer agent in Boston by
the close of regular trading on the Exchange.
Share Certificates
Due to the desire of Trust management to afford ease of redemption,
certificates will not be issued to indicate ownership in the Fund.
Other Information
If purchases or redemptions of Fund shares are arranged and settlement
is made at the investor's election through a member of the NASD other than the
Distributor, that member may, at its discretion, charge a fee for that service.
The Board of Trustees and the Distributor, the Trust's principal underwriter,
each has the right to limit the amount of purchases by, and to refuse to sell
to, any person. The Trustees and the Distributor each may suspend or terminate
the offering of shares of the Fund at any time.
The Trust may issue shares of the Fund at net asset value in connection
with any merger or consolidation with, or acquisition of the assets of, any
investment company (or series thereof) or personal holding company, subject to
the requirements of the 1940 Act.
EXCHANGES AND REDEMPTIONS
(See "Exchanges and redemptions" and "Transaction information" in the Fund's
prospectus.)
Exchanges
Exchanges are comprised of a redemption from one Scudder fund and a
purchase into another Scudder fund. The purchase side of the exchange may be
either an additional investment into an existing or may involve opening a new
account in another fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option SAIL ("Scudder Automated
Information Line"), and dividend option as the existing account. Other features
will not carry over automatically to the new account. Exchanges into a new fund
account must be for a minimum of $2,500. When an exchange represents an
additional investment into an existing account, the account receiving the
exchange proceeds must have identical registration, tax identification number,
address, and account options/features as the account of origin. Exchanges into
an existing account must be for $100 or more. If the account receiving the
exchange proceeds is different in any respect, the exchange request must be in
writing and must contain a signature guarantee as described under "Transaction
information--Redeeming shares--Signature guarantees" in the Fund's prospectus.
Exchange orders received before the close of regular trading on the
Exchange on any business day ordinarily will be executed at respective net asset
values determined on that day. Exchange orders received after the close will be
executed on the following business day.
Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Trust and the Transfer Agent each reserves the right to suspend or
terminate the privilege of the Automatic Exchange Program at any time.
No commission is charged to the shareholder for any exchange described
above. An exchange into another Scudder fund is a redemption of shares, and
therefore may result in tax consequences (gain or loss) to the shareholder and
the proceeds of such an exchange may be subject to backup withholding. (See
"TAXES.")
16
<PAGE>
Investors currently receive the exchange privilege, including exchange
by telephone, automatically without having to elect it. The Trust employs
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that the Trust does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Trust will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine. The Trust and the Transfer Agent each reserves the right to suspend or
terminate the privilege of exchanging by telephone or fax at any time.
The Scudder funds into which investors may make an exchange are listed
under "The Scudder Family Of Funds" herein. Before making an exchange,
shareholders should obtain a prospectus of the Scudder fund into which the
exchange is being contemplated from the Distributor. Scudder retirement plans
may have different exchange requirements. Please refer to appropriate plan
literature.
Redemption by Telephone
Shareholders currently receive the right automatically, without having
to elect it, to redeem up to $100,000 to their address of record. Shareholders
may also request to have the proceeds mailed or wired to their pre-designated
bank account. In order to request redemptions by telephone, shareholders must
have completed and returned to the Transfer Agent the application, including the
designation of a bank account to which the redemption proceeds are to be sent.
(a) NEW INVESTORS wishing to establish telephone redemption to a
pre-designated bank account must complete the appropriate section on
the application.
(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA, Scudder
Pension and Profit Sharing, Scudder 401(k) and Scudder 403(b) Plan
holders) who wish to establish telephone redemption to a
pre-designated bank account or who want to change the bank account
previously designated to receive redemption payments should either
return a Telephone Redemption Option Form (available upon request) or
send a letter identifying the account and specifying the exact
information to be changed. The letter must be signed exactly as the
shareholder's name(s) appear on the account. An original signature and
an original signature guarantee are required for each person in whose
name the account is registered.
Telephone redemption is not available with respect to shares held in
retirement accounts.
If a request for redemption to a shareholder's bank account is made by
telephone or fax, payment will be made by Federal Reserve Bank wire to the bank
account designated on the application unless a request is made that the
redemption check be mailed to the designated bank account. There will be a $5.00
charge for all wire redemptions.
Note:Investors designating that a savings bank receive their telephone
redemption proceeds are advised that if the savings bank is not a
participant in the Federal Reserve System, redemption proceeds must be
wired through a commercial bank which is a correspondent of the
savings bank. As this may delay receipt by the shareholder's account,
it is suggested that investors wishing to use a savings bank discuss
wire procedures with their banks and submit any special wire transfer
information with the telephone redemption authorization. If
appropriate wire information is not supplied, redemption proceeds will
be mailed to the designated bank.
The Trust employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Trust does not follow such procedures, it may be liable for losses due
17
<PAGE>
to unauthorized or fraudulent telephone instructions. The Trust will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Redemption By AutoSell
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the AutoSell program may sell shares of the Fund by telephone. To sell shares
by AutoSell, shareholders should call before 4 p.m. eastern time. Redemptions
must be for at least $250. Proceeds in the amount of your redemption will be
transferred to your bank checking account two or three business days following
your call. For requests received by the close of regular trading on the
Exchange, shares will be redeemed at the net asset value per share calculated at
the close of trading on the day of your call. AutoSell requests received after
the close of regular trading on the Exchange will begin their processing and be
redeemed at the net asset value calculated the following business day. AutoSell
transactions are not available for Scudder IRA accounts and most other
retirement plan accounts.
In order to request redemptions by AutoSell, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish AutoSell may so indicate on the application.
Existing shareholders who wish to add AutoSell to their account may do so by
completing an AutoSell Enrollment Form. After sending in an enrollment form,
shareholders should allow for 15 days for this service to be available.
The Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Redemption by Mail or Fax
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax (required in
some states when settling estates).
It is suggested that shareholders holding shares registered in other
than individual names contact the Transfer Agent prior to any redemptions to
ensure that all necessary documents accompany the request. When shares are held
in the name of a corporation, trust, fiduciary agent, attorney or partnership,
the Transfer Agent requires, in addition to the stock power, certified evidence
of authority to sign. These procedures are for the protection of shareholders
and should be followed to ensure prompt payment. Redemption requests must not be
conditional as to date or price of the redemption. Proceeds of a redemption will
be sent within five days after receipt by the Transfer Agent of a request for
redemption that complies with the above requirements. Delays in payment of more
than seven business days of payment for shares tendered for repurchase or
redemption may result, but only until the purchase check has cleared.
The requirements for IRA redemptions are different from those of
regular accounts. For more information call 1-800-225-5163.
Redemption-In-Kind
The Trust reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
the Fund and valued as they are for purposes of computing the Fund's net asset
value (a redemption in kind). If payment is made in securities, a shareholder
may incur transaction expenses in converting these securities into cash. The
Trust, on behalf of the Fund, has elected, however, to be governed by Rule 18f-1
under the 1940 Act as a result of which the Fund is obligated to redeem shares,
with respect to any one shareholder during any 90 day period, solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the Fund at the
beginning of the period.
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<PAGE>
Other Information
If a shareholder redeems all shares in the account after the record
date of a dividend, the shareholder will receive, in addition to the net asset
value thereof, all declared but unpaid dividends thereon. The value of shares
redeemed or repurchased may be more or less than the shareholder's cost
depending on the net asset value at the time of redemption or repurchase. The
Fund does not impose a redemption or repurchase charge although a wire charge
may be applicable for redemption proceeds wired to an investor's bank account.
Redemption of shares, including an exchange into another Scudder fund, may
result in tax consequences (gain or loss) to the shareholder and the proceeds of
such redemptions may be subject to backup withholding. (See "Taxes.")
Shareholders who wish to redeem shares from Special Plan Accounts
should contact the employer, trustee or custodian of the Plan for the
requirements.
The determination of net asset value may be suspended at times and a
shareholder's right to redeem shares and to receive payment may be suspended at
times during which (a) the Exchange is closed, other than customary weekend and
holiday closings, (b) trading on the Exchange is restricted for any reason, (c)
an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or (d) the SEC may
by order permit such a suspension for the protection of the Trust's
shareholders; provided that applicable rules and regulations of the SEC (or any
succeeding governmental authority) shall govern as to whether the conditions
prescribed in (b) or (c) exist.
Shareholders should maintain a share balance worth at least $2,500
($1,000 for IRAs, Uniform Gift to Minors Act, and Uniform Trust to Minors Act
accounts), which amount may be changed by the Board of Trustees. Scudder
retirement plans have similar or lower minimum balance requirements. A
shareholder may open an account with at least $1,000 ($500 for an UGMA, UTMA,
IRA and other retirement accounts), if an automatic investment plan (AIP) of
$100/month ($50/month for an UGMA, UTMA, IRA and other retirement accounts) is
established.
Shareholders who maintain a non-fiduciary account balance of less than
$2,500 in the Fund, without establishing an AIP, will be assessed an annual
$10.00 per fund charge with the fee to be reinvested in the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder at the address
of record. Reductions in value that result solely from market activity will not
trigger an involuntary redemption. UGMA, UTMA, IRA and other retirement accounts
will not be assessed the $10.00 charge or be subject to automatic liquidation.
FEATURES AND SERVICES OFFERED BY THE FUND
(See "Shareholder benefits" in the Fund's prospectus.)
The Pure No-Load(TM) Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.
Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under 12b-1 under the 1940 Act.
19
<PAGE>
A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
12b-1 fee is 0.75% of a fund's average annual net assets, and the maximum charge
for a service fee is 0.25% of a fund's average annual net assets.
A no-load fund does not charge a front-end or back-end load, but can
charge a small 12b-1 fee and/or service fee against fund assets. Under the NASD
Rules of Fair Practice, a mutual fund can call itself a "no-load" fund only if
the 12b-1 fee and/or service fee does not exceed 0.25% of a fund's average
annual net assets.
Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.
The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
<TABLE>
<CAPTION>
====================================================================================================================
Scudder 8.50% Load Fund Load Fund with 0.75% No-Load Fund with
YEARS Pure No-Load(TM)Fund 12b-1 Fee 0.25% 12b-1 Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 $25,937 $23,733 $24,222 $25,354
- --------------------------------------------------------------------------------------------------------------------
15 41,772 38,222 37,698 40,371
- --------------------------------------------------------------------------------------------------------------------
20 67,275 61,557 58,672 64,282
====================================================================================================================
</TABLE>
Investors are encouraged to review the fee tables on page 2 of the
Fund's prospectus for more specific information about the rates at which
management fees and other expenses are assessed.
Dividend and Capital Gain Distribution Options
Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income or distributions from realized capital
gains in additional shares of the Fund. A change of instructions for the method
of payment must be received by the Transfer Agent in writing at least five days
prior to a dividend record date. Shareholders may change their dividend option
either by calling 1-800-225-5163 or by sending written instructions to the
Transfer Agent. Please include your account number with your request. See "How
to contact Scudder" in the Prospectus for the address. Shareholders who have
authorized telephone transactions may change their dividend option by calling
1-800-225-5163.
Reinvestment is usually made at the closing net asset value determined
on the business day following the record date. Investors may leave standing
instructions with the Transfer Agent designating their option for either
reinvestment or cash distribution of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of the Fund.
20
<PAGE>
Investors may also have dividends and distributions automatically
deposited to their predesignated bank account through Scudder's
DistributionsDirect Program. Shareholders who elect to participate in the
DistributionsDirect Program, and whose predesignated checking account of record
is with a member bank of the Automated Clearing House Network (ACH) can have
income and capital gain distributions automatically deposited to their personal
bank account usually within three business days after the Fund pays its
distribution. A DistributionsDirect request form can be obtained by calling
1-800-225-5163. Confirmation statements will be mailed to shareholders as
notification that distributions have been deposited.
Investors choosing to participate in Scudder's Automatic Investment
Withdrawal Plan must reinvest any dividends or capital gains. For most
retirement plan accounts, the reinvestment of dividends and capital gains is
also required.
Diversification
An investment in the Fund represents an interest in a large,
diversified portfolio of carefully selected securities. Diversification may
protect the shareholder against the possible risks associated with concentrating
in fewer securities or in a specific market sector.
Scudder Funds Centers
Investors may visit any of the Fund Centers maintained by the
Distributor and listed in the Fund's prospectus. The Centers are designed to
provide individuals with services during any business day. Investors may pick up
literature or obtain assistance with opening an account, adding monies or
special options to existing accounts, making exchanges within the Scudder Family
of Funds, redeeming shares or opening retirement plans. Checks should not be
mailed to the Centers but to "The Scudder Funds" at the address listed under
"How to contact Scudder" in the prospectus.
Reports to Shareholders
The Fund issues shareholders financial statements examined by
independent accountants on a semiannual basis and audited annually. These
include a list of investments held and statements of assets and liabilities,
operations, changes in net assets and supplementary information for the
Fund.
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the Fund's prospectus.)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
Initial purchases in each Scudder fund must be at least $2,500 or $1,000 in the
case of IRAs. Subsequent purchases must be for $100 or more. Minimum investments
for special plan accounts may be lower.
MONEY MARKET
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital, and consistent therewith, to maintain the liquidity of
capital and to provide current income through investment in a
supervised portfolio of short-term debt securities. SCIT intends to
seek to maintain a constant net asset value of $1.00 per share,
although in certain circumstances this may not be possible.
21
<PAGE>
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and consistent therewith to provide current income
through investment in a supervised portfolio of U.S. Government and
U.S. Government guaranteed obligations with maturities of not more than
762 calendar days. The Fund intends to seek to maintain a constant net
asset value of $1.00 per share, although in certain circumstances this
may not be possible.
INCOME
Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued in
emerging markets.
Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.
Scudder GNMA Fund seeks to provide investors with high current income
from a portfolio of high-quality GNMA securities.
Scudder High Yield Bond Fund seeks to provide a high level of current
income and, secondarily, capital appreciation through investment
primarily in below investment grade domestic debt securities.
Scudder Income Fund seeks to earn a high level of income consistent
with the prudent investment of capital through a flexible investment
program emphasizing high-grade bonds.
Scudder International Bond Fund seeks to provide income from a
portfolio of high-grade bonds denominated in foreign currencies. As a
secondary objective, the Fund seeks protection and possible enhancement
of principal value by actively managing currency, bond market and
maturity exposure and by security selection.
Scudder Short Term Bond Fund seeks to provide a higher and more stable
level of income than is normally provided by money market investments,
and more price stability than investments in intermediate- and
long-term bonds.
Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with the minimization of
reinvestment risks through investments primarily in zero coupon
securities.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") is designed to provide investors
with income exempt from regular federal income tax while seeking
stability of principal. STFMF seeks to maintain a constant net asset
value of $1.00 per share, although in certain circumstances this may
not be possible.
Scudder California Tax Free Money Fund* is designed to provide
California taxpayers income exempt from California state and regular
federal income taxes, and seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, although
in certain circumstances this may not be possible.
Scudder New York Tax Free Money Fund* is designed to provide New York
taxpayers income exempt from New York state, New York City and regular
federal income taxes, and seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, although
in certain circumstances this may not be possible.
- ------------------------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
22
<PAGE>
TAX FREE
Scudder High Yield Tax Free Fund seeks to provide high income which is
exempt from regular federal income tax by investing in municipal
securities.
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.
Scudder Managed Municipal Bonds seeks to provide income which is exempt
from regular federal income tax primarily through investments in
long-term municipal securities with an emphasis on high grade.
Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation by investing in high-grade municipal securities of
intermediate maturities.
Scudder California Tax Free Fund* seeks to provide income exempt from
both California and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
California state, municipal and local government obligations.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide as
high a level of income exempt from Massachusetts personal and regular
federal income tax as is consistent with a high degree of principal
stability.
Scudder Massachusetts Tax Free Fund* seeks to provide income exempt
from both Massachusetts and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
Massachusetts state, municipal and local government obligations.
Scudder New York Tax Free Fund* seeks to provide income exempt from New
York state, New York City and regular federal income taxes through the
professional and efficient management of a portfolio consisting of
investments in New York state, municipal and local government
obligations.
Scudder Ohio Tax Free Fund* seeks to provide income exempt from both
Ohio and regular federal income taxes through the professional and
efficient management of a portfolio consisting of Ohio state, municipal
and local government obligations.
Scudder Pennsylvania Tax Free Fund* seeks to provide income exempt from
both Pennsylvania and regular federal income taxes through a portfolio
consisting of Pennsylvania state, municipal and local government
obligations.
GROWTH AND INCOME
Scudder Balanced Fund seeks to provide a balance of growth and income,
as well as long-term preservation of capital, from a diversified
portfolio of equity and fixed income securities.
Scudder Growth and Income Fund seeks to provide long-term growth of
capital, current income, and growth of income through a portfolio
invested primarily in common stocks and convertible securities by
companies which offer the prospect of growth of earnings while paying
current dividends.
- ------------------------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
23
<PAGE>
GROWTH
Scudder Capital Growth Fund seeks to maximize long-term growth of
capital through a broad and flexible investment program emphasizing
common stocks.
Scudder Classic Growth Fund seeks long-term growth of capital with
reduced share price volatility compared to other growth mutual funds.
Scudder Development Fund seeks to achieve long-term growth of capital
primarily through investments in marketable securities, principally
common stocks, of relatively small or little-known companies which in
the opinion of management have promise of expanding their size and
profitability or of gaining increased market recognition for their
securities, or both.
Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.
Scudder Global Discovery Fund seeks above-average capital appreciation
over the long term by investing primarily in the equity securities of
small companies located throughout the world.
Scudder Global Fund seeks long-term growth of capital primarily
through a diversified portfolio of marketable equity securities
selected on a worldwide basis. It may also invest in debt securities
of U.S. and foreign issuers. Income is an incidental consideration.
Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.
Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.
Scudder International Fund seeks long-term growth of capital through
investment principally in a diversified portfolio of marketable equity
securities selected primarily to permit participation in non-U.S.
companies and economies with prospects for growth. It also invests in
fixed-income securities of foreign governments and companies, with a
view toward total investment return.
Scudder Large Company Growth Fund seeks to provide long-term growth of
capital through investment primarily in the equity securities of large
U.S. growth companies.
Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.
Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-cap stocks.
Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.
Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.
Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in securities of emerging growth companies poised
to be leaders in the 21st century.
Scudder Value Fund seeks long-term growth of capital through investment
in undervalued equity securities.
24
<PAGE>
The Japan Fund, Inc. seeks capital appreciation through investment in
Japanese securities, primarily in common stocks of Japanese companies.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio will, under normal market conditions, invest
substantially in a select mix of Scudder bond mutual funds, but will
have some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks a balance of growth
and income by investing in a select mix of Scudder money market, bond
and equity mutual funds.
Scudder Pathway Series: Growth Portfolio seeks to provide investors
with long-term growth of capital. In pursuing this objective, the
Portfolio will, under normal market conditions, invest predominantly in
a select mix of Scudder equity mutual funds designed to provide
long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total
return. Total return consists of any capital appreciation plus dividend
income and interest. To achieve this objective, the Portfolio invests
in a select mix of international and global Scudder Funds.
The net asset values of most Scudder Funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice the net
asset value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder Funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor Relations; easy telephone exchanges
into other Scudder funds; shares redeemable at net asset value at any time.
SPECIAL PLAN ACCOUNTS
(See "Scudder tax-advantaged retirement plans," "Purchases--By
Automatic Investment Plan" and "Exchanges and redemptions--By
Automatic Withdrawal Plan" in the Fund's prospectus.)
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. It is
advisable for an investor considering the funding of the investment plans
described below to consult with an attorney or other investment or tax adviser
with respect to the suitability requirements and tax aspects thereof.
Shares of the Fund may also be a permitted investment under profit
sharing and pension plans and IRA's other than those offered by the Fund's
distributor depending on the provisions of the relevant plan or IRA.
None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.
25
<PAGE>
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Internal
Revenue Code will be greatly facilitated if it is in such approved form. Under
certain circumstances, the IRS will assume that a plan, adopted in this form,
after special notice to any employees, meets the requirements of Section 401(a)
of the Internal Revenue Code.
Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder 401(k) Plan adopted by a corporation, a
self-employed individual or a group of self-employed individuals (including sole
proprietors and partnerships), or other qualifying organization. This plan has
been approved as a prototype by the IRS.
Scudder IRA: Individual Retirement Account
Shares of the Fund may be purchased as the underlying investment for an
Individual Retirement Account which meets the requirements of Section 408(a) of
the Internal Revenue Code.
A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active participants) are also
eligible to make tax-deductible contributions to an IRA; the annual amount, if
any, of the contribution which such an individual will be eligible to deduct
will be determined by the amount of his, her, or their adjusted gross income for
the year. Whenever the adjusted gross income limitation prohibits an individual
from contributing what would otherwise be the maximum tax-deductible
contribution he or she could make, the individual will be eligible to contribute
the difference to an IRA in the form of nondeductible contributions.
An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (beginning in 1997, up to $2,000 per individual for married couples if only
one spouse has earned income). All income and capital gains derived from IRA
investments are reinvested and compound tax-deferred until distributed. Such
tax-deferred compounding can lead to substantial retirement savings.
The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)
26
<PAGE>
<TABLE>
<CAPTION>
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
- -----------------------------------------------------------------------------------------------------------
Starting
Age of Annual Rate of Return
------------------------------------------------------------------------------
Contributions 5% 10% 15%
- ---------------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
</TABLE>
This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
<TABLE>
<CAPTION>
- ---------------------------- ------------------------- -------------------------- -------------------------
Starting
Age of Annual Rate of Return
------------------------------------------------------------------------------
Contributions 5% 10% 15%
- ---------------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
</TABLE>
Scudder 403(b) Plan
Shares of the Fund may also be purchased as the underlying investment
for tax sheltered annuity plans under the provisions of Section 403(b)(7) of the
Internal Revenue Code. In general, employees of tax-exempt organizations
described in Section 501(c)(3) of the Internal Revenue Code (such as hospitals,
churches, religious, scientific, or literary organizations and educational
institutions) or a public school system are eligible to participate in a 403(b)
plan.
Automatic Withdrawal Plan
Non-retirement plan shareholders may establish an Automatic Withdrawal
Plan to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Payments are mailed at the end
of each month. The check amounts may be based on the redemption of a fixed
dollar amount, fixed share amount, percent of account value or declining
balance. The Plan provides for income dividends and capital gains distributions,
if any, to be reinvested in additional shares. Shares are then liquidated as
necessary to provide for withdrawal payments. Since the withdrawals are in
amounts selected by the investor and have no relationship to yield or income,
payments received cannot be considered as yield or income on the investment and
the resulting liquidations may deplete or possibly extinguish the initial
investment. Requests for increases in withdrawal amounts or to change payee must
be submitted in writing, signed exactly as the account is registered and contain
signature guarantee(s) as described under "Transaction information--Redeeming
shares--Signature guarantees" in the Fund's prospectus. Any such requests must
be received by the Fund's transfer agent by the 15th of the month in which such
change is to take effect. An Automatic Withdrawal Plan may be terminated at any
time by the shareholder, the Trust or its agent on written notice, and will be
terminated when all shares of the Fund under the Plan have been liquidated or
upon receipt by the Trust of notice of death of the shareholder.
An Automatic Withdrawal Plan request form can be obtained by calling
1-800-225-5163.
27
<PAGE>
Group or Salary Deduction Plan
An investor may join a Group or Salary Deduction Plan where
satisfactory arrangements have been made with Scudder Investor Services, Inc.
for forwarding regular investments through a single source. The minimum annual
investment is $240 per investor which may be made in monthly, quarterly,
semiannual or annual payments. The minimum monthly deposit per investor is $20.
Except for trustees or custodian fees for certain retirement plans, at present
there is no separate charge for maintaining group or salary deduction plans;
however, the Trust and its agents reserve the right to establish a maintenance
charge in the future depending on the services required by the investor.
The Trust reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which reduces the account value to less than
$1,000 and the account value is not increased to $1,000 within a reasonable time
after notification. An investor in a plan who has not purchased shares for six
months shall be presumed to have stopped making payments under the plan.
Automatic Investment Plan
Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.
The Automatic Investment Plan involves an investment strategy called
dollar cost averaging. Dollar cost averaging is a method of investing whereby a
specific dollar amount is invested at regular intervals. By investing the same
dollar amount each period, when shares are priced low the investor will purchase
more shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
for various investment goals such as, but not limited to, college planning or
saving for a home.
Uniform Transfers/Gifts to Minors Act
Grandparents, parents or other donors may set up custodian accounts for
minors. The minimum initial investment is $1,000 unless the donor agrees to
continue to make regular share purchases for the account through Scudder's
Automatic Investment Plan (AIP).
In this case, the minimum initial investment is $500.
The Trust reserves the right, after notice has been given to the
shareholder and custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
(See "Distribution and performance information--Dividends and
capital gains distributions" in the Fund's prospectus.)
The Fund intends to follow the practice of distributing substantially
all of its investment company taxable income which includes any excess of net
realized short-term capital gains over net realized long-term capital losses.
The Fund may follow the practice of distributing the entire excess of net
realized long-term capital gains over net realized short-term capital losses.
However, if it appears to be in the best interest of the Fund and its
shareholders, the Fund may retain all or part of such gain for reinvestment,
after paying the related federal taxes for which shareholders may then be able
to claim a credit against their federal tax liability. If the Fund does not
distribute the amount of capital gain and/or net investment income required to
28
<PAGE>
be distributed by an excise tax provision of the Internal Revenue Code, the Fund
may be subject to that excise tax. In certain circumstances, the Fund may
determine that it is in the interest of shareholders to distribute less than the
required amount. (See "TAXES.")
The Fund intends to distribute investment company taxable income in
December each year. The Fund intends to declare in December any net realized
capital gains resulting from its investment activity. The Fund intends to
distribute the December dividends and capital gains either in December or in the
following January. Any dividends or capital gains distributions declared in
October, November or December with a record date in such a month and paid during
the following January will be treated by shareholders for federal income tax
purposes as if received on December 31 of the calendar year declared. Additional
distributions may be made if necessary. Both types of distributions will be made
in shares of the Fund and confirmations will be mailed to each shareholder
unless a shareholder has elected to receive cash, in which case a check will be
sent.
PERFORMANCE INFORMATION
(See "Distribution and performance
information--Performance information" in
the Fund's prospectus.)
From time to time, quotations of the Fund's performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manners:
Average Annual Total Return
Average annual total return is the average annual compound rate of
return for periods of one year, five years, and ten years (or such shorter
periods as may be applicable dating from the commencement of the Fund's
operations), all ended on the last day of a recent calendar quarter. Average
annual total return quotations reflect changes in the price of the Fund's shares
and assume that all dividends and capital gains distributions during the
respective periods were reinvested in Fund shares. Average annual total return
is calculated by computing the average annual compound rates of return of a
hypothetical investment over such periods according to the following formula
(average annual total return is then expressed as a percentage):
T = (ERV/P)^1/n - 1
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Average Annual Total Return for the periods ended October 31, 1996
One Year Five Years Life of the Fund (1)
-------- ---------- --------------------
19.49% 14.59% 13.94%
(1) For the period from May 15, 1991, commencement of operations.
As described above, average annual total return is based on historical
earnings and is not intended to indicate future performance. Average annual
total return for the Fund will vary based on changes in market conditions and
the level of the Fund's expenses.
In connection with communicating its average annual total return to
current or prospective shareholders, the Fund also may compare these figures to
the performance of other mutual funds tracked by mutual fund rating services or
to unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
29
<PAGE>
Cumulative Total Return
Cumulative total return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in Fund shares. Cumulative total return is calculated by computing
the cumulative rates of return of a hypothetical investment over such periods,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P)-1
Where:
C = Cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Cumulative Total Return for the periods ended October 31, 1996
One Year Five Years Life of the Fund (1)
-------- ---------- --------------------
19.49% 97.70% 104.16%
(1) For the period from May 15, 1991, commencement of operations.
Total Return
Total return is the rate of return on an investment for a specified
period of time calculated in the same manner as cumulative total return.
Capital Change
Capital change measures the return from invested capital including
reinvested capital gains distributions. Capital change does not include the
reinvestment of income dividends.
Quotations of the Fund's performance are based on historical earnings
and show the performance of a hypothetical investment and are not intended to
indicate future performance of the Fund. An investor's shares when redeemed may
be worth more or less than their original cost. Performance of the Fund will
vary based on changes in market conditions and the level of the Fund's expenses.
Because some of the Fund's investments are denominated in foreign
currencies, the strength or weakness of the U.S. dollar against these currencies
may account for part of the Fund's investment performance. Information on the
value of the dollar versus foreign currencies may be used from time to time in
advertisements concerning the Fund. Such historical information is not
indicative of future performance.
Performance Indices
The Fund's performance will, from time to time, be compared to the
percentage changes of unmanaged performance indices. Such indices will include
the Dow Jones Industrial Average ("DJIA"), S&P 500 and the Consumer Price Index
("CPI"). The DJIA and S&P 500 are unmanaged indices widely regarded as
representative of the equity market in general. The CPI is a commonly used
measure of inflation.
30
<PAGE>
Comparison of Fund Performance
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of the Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, the Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the NASDAQ OTC Composite Index, the NASDAQ
Industrials Index, the Russell 2000 Index, and statistics published by the Small
Business Administration.
From time to time, in advertising and marketing literature, this Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, the Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically
by independent organizations.
From time to time, in marketing and other Fund literature, Trustees and
officers of the Fund, the Fund's portfolio manager, or members of the portfolio
management team may be depicted and quoted to give prospective and current
shareholders a better sense of the outlook and approach of those who manage the
Fund. In addition, the amount of assets that the Adviser has under management in
various geographical areas may be quoted in advertising and marketing materials.
The Fund may be advertised as an investment choice in Scudder's college
planning program. The description may contain illustrations of projected future
college costs based on assumed rates of inflation and examples of hypothetical
fund performance, calculated as described above.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Fund. The
description may include a "risk/return spectrum" which compares the Fund to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Fund to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
31
<PAGE>
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Internet access
World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.
The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.
Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.
Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.
Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
users can change their current password or disable access to their portfolio
through the World Wide Web.
An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.
A Call MeTM feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call MeTM feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.
32
<PAGE>
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Fund, including reprints of, or selections from, editorials or
articles about this Fund. Sources for Fund performance information and articles
about the Fund include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.
The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
IBC Money Fund Report, a weekly publication of IBC Financial Data, Inc.,
reporting on the performance of the nation's money market funds, summarizing
money market fund activity and including certain averages as performance
benchmarks, specifically "IBC's Money Fund Average," and "IBC's Government Money
Fund Average."
Ibbotson Associates, Inc., a company specializing in investment research and
data.
Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.
Investor's Business Daily, a daily newspaper that features financial, economic,
and business news.
33
<PAGE>
Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.
Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
The New York Times, a nationally distributed newspaper which regularly covers
financial news.
The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.
No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
Smart Money, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.
Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.
USA Today, a leading national daily newspaper.
U.S. News and World Report, a national news weekly that periodically reports
mutual fund performance data.
Value Line Mutual Fund Survey, an independent organization that provides
biweekly performance and other information on mutual funds.
The Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.
Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
34
<PAGE>
Worth, a national publication put out 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.
FUND ORGANIZATION
(See "Fund organization" in the Fund's prospectus.)
The Fund is a series of Scudder Investment Trust, a Massachusetts
business trust established under a Declaration of Trust dated September 20,
1984, as amended. The name of the Trust was changed, effective May 15, 1991,
from Scudder Growth and Income Fund.
The Trust's authorized capital consists of an unlimited number of
shares of beneficial interest, par value $0.01 per share. The Trust's shares are
currently divided into two series, Scudder Large Company Growth Fund and Scudder
Growth and Income Fund. The Trustees of the Trust have the authority to issue
additional series of shares. Each share of each Fund has equal rights with each
other share of that Fund as to voting, dividends and liquidation. All shares
issued and outstanding will be fully paid and nonassessable by the Trust, and
redeemable as described in this Statement of Additional Information and in each
Fund's prospectus.
The assets of the Trust received for the issue or sale of the shares of
each series and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with a proportionate share of the
general liabilities of the Trust. If a series were unable to meet its
obligations, the assets of all other series may in some circumstances be
available to creditors for that purpose, in which case the assets of such other
series could be used to meet liabilities which are not otherwise properly
chargeable to them. Expenses with respect to any two or more series are to be
allocated in proportion to the asset value of the respective series except where
allocations of direct expenses can otherwise be fairly made. The officers of the
Trust, subject to the general supervision of the Trustees, have the power to
determine which liabilities are allocable to a given series, or which are
general or allocable to two or more series. In the event of the dissolution or
liquidation of the Trust or any series, the holders of the shares of any series
are entitled to receive as a class the underlying assets of such shares
available for distribution to shareholders.
Shares of the Trust entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting that
individual series. For example, a change in investment policy for a series would
be voted upon only by shareholders of the series involved. Additionally,
approval of the investment advisory agreement is a matter to be determined
separately by each series.
The Trustees, in their discretion, may authorize the division of shares
of the Fund (or shares of a series) into different classes, permitting shares of
different classes to be distributed by different methods. Although shareholders
of different classes of a series would have an interest in the same portfolio of
assets, shareholders of any subsequently created classes may bear different
expenses in connection with different methods of distribution of their classes.
The Trustees have no present intention of taking the action necessary to effect
the division of shares into separate classes, nor of changing the method of
distribution of shares of the Fund.
The Declaration of Trust provides that obligations of the Fund are not
binding upon the Trustees individually but only upon the property of the Fund,
that the Trustees and officers will not be liable for errors of judgment or
mistakes of fact or law, and that the Fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Fund except if
it is determined in the manner provided in the Declaration of Trust that they
have not acted in good faith in the reasonable belief that their actions were in
the best interests of the Fund. However, nothing in the Declaration of Trust
protects or indemnifies a Trustee or officer against any liability 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.
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<PAGE>
INVESTMENT ADVISER
(See "Fund organization--Investment adviser" in the Fund's
prospectus.)
Scudder, Stevens & Clark, Inc., an investment counsel firm, acts as
investment adviser to the Fund. This organization is one of the most experienced
investment management firms in the U.S. It was established in 1919 and pioneered
the practice of providing investment counsel to individual clients on a fee
basis. In 1928 it introduced the first no-load mutual fund to the public. In
1953 Scudder introduced Scudder International Fund, Inc., the first mutual fund
available in the U.S. investing internationally in securities of issuers in
several foreign countries. The firm reorganized from a partnership to a
corporation on June 28, 1985.
The principal source of the Adviser's income is professional fees
received from providing continuous investment advice, and the firm derives no
income from brokerage or underwriting of securities. Today, it provides
investment counsel for many individuals and institutions, including insurance
companies, colleges, industrial corporations, and financial and banking
organizations. In addition, it manages Montgomery Street Income Securities,
Inc., Scudder California Tax Free Trust, Scudder Cash Investment Trust, Scudder
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Scudder Global Fund,
Inc., Scudder GNMA Fund, Scudder Portfolio Trust, Scudder Institutional Fund,
Inc., Scudder International Fund, Inc., Scudder Investment Trust, Scudder
Municipal Trust, Scudder Mutual Funds, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., Scudder Pathway Series, Scudder Securities Trust,
Scudder State Tax Free Trust, Scudder Tax Free Money Fund, Scudder Tax Free
Trust, Scudder U.S. Treasury Money Fund, Scudder Variable Life Investment Fund,
Scudder World Income Opportunities Fund, Inc., The Argentina Fund, Inc., The
Brazil Fund, Inc., The First Iberian Fund, Inc., The Korea Fund, Inc., The Japan
Fund, Inc. and The Latin America Dollar Income Fund, Inc. Some of the foregoing
companies or trusts have two or more series.
The Adviser also provides investment advisory services to the mutual
funds which comprise the AARP Investment Program from Scudder. The AARP
Investment Program from Scudder has assets over $12 billion and includes the
AARP Growth Trust, AARP Income Trust, AARP Tax Free Income Trust, AARP Managed
Investment Portfolios Trust and AARP Cash Investment Funds.
Institutional assets managed by the Adviser using a large company
growth investment approach exceeded $___ million as of September 31, 1996.
International Investment Experience. The Adviser has been a leader in
international investment management for over forty years. In addition to Scudder
International Fund, Inc., which was incorporated in Canada in 1953 as the first
foreign investment company registered with the SEC, the Adviser's investment
company clients include Scudder Global Fund, and Scudder Global Bond Fund, which
invest worldwide, Scudder Greater Europe Growth Fund, which invests primarily in
the equity securities of European companies, Scudder International Bond Fund,
which invests internationally, Scudder Latin America Fund, which invests in
Latin American issuers, and The Japan Fund, Inc., which invests primarily in
securities of Japanese companies. The Adviser also manages the assets of eight
closed-end investment companies investing in foreign securities: The Argentina
Fund, Inc., The Brazil Fund, Inc., The First Iberian Fund, Inc., The Korea Fund,
Inc., The Latin America Dollar Income Fund, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., and Scudder World Income Opportunities Fund, Inc.
Assets of the Adviser's international investment company clients totaled more
than $__ billion as of December 31, 1996.
The Adviser utilizes its international investment experience when
evaluating foreign accounting practices such as those which may be used by the
issuers of the foreign securities in which the Fund may invest.
The Adviser maintains a large research department, which conducts
continuous studies of the factors that affect the position of various
industries, companies and individual securities. In this work, the Adviser
utilizes certain reports and statistics from a wide variety of sources,
including brokers and dealers who may execute portfolio transactions for the
Fund and other clients of the Adviser, but conclusions are based primarily on
investigations and critical analyses by its own research specialists.
36
<PAGE>
Certain investments may be appropriate for the Fund and also for other
clients advised by the Adviser. Investment decisions for the Fund and other
clients are made with a view toward achieving their respective investment
objectives and after consideration of such factors as their current holdings,
availability of cash for investment and the size of their investments generally.
Frequently, a particular security may be bought or sold for only one client or
in different amounts and at different times for more than one but less than all
clients. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling the security. In addition, purchases
or sales of the same security may be made for two or more clients on the same
date. In such event, such transactions will be allocated among the clients in a
manner believed by the Adviser to be equitable to each. In some cases, this
procedure could have an adverse effect on the price or amount of the securities
purchased or sold by the Fund. Purchase and sale orders for the Fund may be
combined with those of other clients of the Adviser in the interest of achieving
the most favorable net results to the Fund.
The Investment Management Agreement (the "Agreement") between the
Trust, on behalf of Scudder Large Company Growth Fund, and the Adviser was last
approved by the Trustees on August 13, 1996 and by a majority of the Fund's
shareholders on May 12, 1992. The Agreement is dated May 9, 1991 and will
continue in effect until September 30, 1997 and from year to year thereafter
only if its continuance is approved annually by the vote of a majority of those
Trustees who are not parties to such Agreement or interested persons of the
Adviser or the Trust, cast in person at a meeting called for the purpose of
voting on such approval, and by a majority vote either of the Trustees or of the
outstanding voting securities of the Fund. The Agreement may be terminated at
any time without payment of penalty by either party on sixty days' written
notice, and automatically terminates in the event of its assignment.
Under the Agreement, the Adviser provides the Fund with continuing
investment management for the Fund's portfolio consistent with the Fund's
investment objectives, policies and restrictions and determines which securities
shall be purchased for the portfolio of the Fund, which portfolio securities
shall be held or sold by the Fund, and what portion of the Fund's assets will be
held uninvested, subject always to the provisions of the Trust's Declaration of
Trust and By-Laws, the 1940 Act and the Internal Revenue Code of 1986 and to the
Fund's investment objectives, policies and restrictions, and subject, further,
to such policies and instructions as the Trustees may from time to time
establish. The Adviser also advises and assists the officers of the Fund in
taking such steps as are necessary or appropriate to carry out the decisions of
its Trustees and the appropriate committees of the Trustees regarding the
conduct of the business of the Fund.
The Adviser also renders significant administrative services (not
otherwise provided by third parties) necessary for the Fund's operations as an
open-end investment company including, but not limited to, preparing reports and
notices to the Trustees and shareholders; supervising, negotiating contractual
arrangements with, and monitoring various third-party service providers to the
Fund (such as the Fund's transfer agent, pricing agents, custodian, accountants
and others); preparing and making filings with the SEC and other regulatory
agencies; assisting in the preparation and filing of the Fund's federal, state
and local tax returns; preparing and filing the Fund's federal excise tax
returns; assisting with investor and public relations matters; monitoring the
valuation of securities and the calculation of net asset value; monitoring the
registration of shares of the Fund under applicable federal and state securities
laws; maintaining the Fund's books and records to the extent not otherwise
maintained by a third party; assisting in establishing accounting policies of
the Fund; assisting in the resolution of accounting and legal issues;
establishing and monitoring the Fund's operating budget; processing the payment
of the Fund's bills; assisting the Fund in, and otherwise arranging for, the
payment of distributions and dividends and otherwise assisting the Fund in the
conduct of its business, subject to the direction and control of the Trustees.
The Adviser pays the compensation and expenses (except those for
attending Board and Committee meetings outside New York, New York and Boston,
Massachusetts) of all Trustees, officers and executive employees of the Trust
affiliated with the Adviser and makes available, without expense to the Fund,
the services of such Trustees, officers and employees of the Adviser as may duly
be elected officers or Trustees of the Trust, subject to their individual
consent to serve and to any limitations imposed by law, and provides the Fund's
office space and facilities. For these services, the Fund is charged by the
Adviser a fee equal to approximately 0.70 of 1% of the Fund's average daily net
assets. The fee is payable monthly, provided the Fund will make such interim
payments as may be requested by Scudder not to exceed 75% of the amount of the
fee then accrued on the books of the Fund and unpaid. The Agreement provides
that if the Fund's expenses, exclusive of taxes, interest, and extraordinary
expenses, exceed specified limits, such excess, up to the amount of the
37
<PAGE>
management fee, will be paid by the Adviser. The Adviser retains the ability to
be repaid by the Fund if expenses fall below the specified limit prior to the
end of the fiscal year. These expense limitation arrangements can decrease the
Fund's expenses and improve its performance. During the fiscal years ended
October 31, 1994, 1995 and 1996, these agreements resulted in a reduction of
management fees paid by the Fund of $0, $3,897 and $__, respectively. During the
fiscal years ended October 31, 1994, 1995 and 1996, the Adviser imposed a
portion of its management fee amounting to $802,235, $953,916 and $1,447,537,
respectively. The fees not imposed for the fiscal years ended October 31, 1994,
1995 and 1996 were $3,897, $0 and $0, respectively.
Under the Agreement, the Fund is responsible for all of its other
expenses including organizational costs; fees and expenses incurred in
connection with membership in investment company organizations; brokers'
commissions; payment for portfolio pricing services to a pricing agent, if any;
legal, auditing and accounting expenses; the calculation of Net Asset Value,
taxes and governmental fees; the fees and expenses of the transfer agent; the
cost of preparing stock certificates and any other expenses including clerical
expenses of issuance, redemption or repurchase of shares; the expenses of and
the fees for registering or qualifying securities for sale; the fees and
expenses of Trustees, officers and employees of the Trust who are not affiliated
with the Adviser; the cost of printing and distributing reports and notices to
shareholders; and the fees and disbursements of custodians. The Trust may
arrange to have third parties assume all or part of the expenses of sale,
underwriting and distribution of shares of the Fund. The Fund is also
responsible for its expenses incurred in connection with litigation, proceedings
and claims and the legal obligation it may have to indemnify its officers and
Trustees with respect thereto.
The Adviser has agreed in the Agreement to reimburse the Fund for
annual expenses in excess of the lowest applicable expense limitation imposed by
any state in which the Fund is at the time offering its shares for sale,
although no payments are required to be made by the Adviser pursuant to this
reimbursement provision in excess of the annual fee paid by the Fund to the
Adviser. Management has been advised that the lowest such limitation is
presently 2 1/2% of average daily net assets up to $30 million, 2% of the next
$70 million of such net assets and 1 1/2% of such net assets in excess of that
amount. Certain expenses such as brokerage commissions, taxes, extraordinary
expenses and interest are excluded from such limitations, and other expenses may
be excluded from time to time. If reimbursement is required, it will be made as
promptly as practicable after the end of the Fund's fiscal year. However, no fee
payment will be made to the Adviser during any fiscal year which will cause year
to date expenses to exceed the cumulative pro rata expense limitation at the
time of such payment.
The Agreement also provides that the Trust and the Fund may use any
name derived from the name "Scudder, Stevens & Clark" only as long as the
Agreement or any extension, any renewal or amendment thereof remains in effect.
In reviewing the terms of the Agreement and in discussions with the
Adviser concerning such Agreement, Trustees who are not "interested persons" of
the Trust have been represented by independent counsel Ropes & Gray at the
Fund's expense.
The Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which the Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Agreement.
Officers and employees of the Adviser from time to time may engage in
transactions with various banks, including the Fund's custodian bank. It is the
Adviser's opinion that the terms and conditions of those transactions which have
occurred were not influenced by existing or potential custodial or other Fund
relationships.
None of the officers or Trustees of the Trust may have dealings with
the Fund as principals in the purchase or sale of securities, except as
individual subscribers or holders of shares of the Fund.
Personal Investments by Employees of the Adviser
Employees of the Adviser are permitted to make personal securities
transactions, subject to requirements and restrictions set forth in the
Adviser's Code of Ethics. The Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
38
<PAGE>
between personal investment activities and the interests of investment advisory
clients such as the Fund. Among other things, the Code of Ethics, which
generally complies with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing, prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
Position with
Underwriter,
Position Principal Scudder Investor
Name, Age and Address with Trust Occupation** Services, Inc.
- --------------------- ---------- ------------ --------------
<S> <C> <C> <C>
Daniel Pierce+*= (62) President and Chairman of the Board and Director, Vice
Trustee Managing Director of Scudder, President and Assistant
Stevens & Clark, Inc. Treasurer
Henry P. Becton, Jr. (52) Trustee President and General Manager, --
WGBH WGBH Educational Foundation
125 Western Avenue
Allston, MA
Dudley H. Ladd+*= (52) Trustee Managing Director of Scudder, Director and Senior
Stevens & Clark, Inc. Vice President
George M. Lovejoy, Jr.= (66) Trustee President and Director, Fifty --
160 Federal Street Associates
Boston, MA
Wesley W. Marple, Jr.= (64) Trustee Professor of Business --
413 Hayden Hall Administration Northeastern
360 Huntington Ave. University, College of Business
Boston, MA 02115 Administration
Juris Padegs#* (65) Trustee Managing Director of Scudder, Director and Vice
Stevens & Clark, Inc. President
Jean C. Tempel (53) Trustee General Partner, TL Ventures --
Ten Post Office Square
Suite 1325
Boston, MA 02109
Bruce F. Beaty# (38) Vice President Principal of Scudder, Stevens & --
Clark, Inc.
Jerard K. Hartman# (63) Vice President Managing Director of Scudder, --
Stevens & Clark, Inc.
39
<PAGE>
Position with
Underwriter,
Position Principal Scudder Investor
Name, Age and Address with Trust Occupation** Services, Inc.
- --------------------- ---------- ------------ --------------
<S> <C> <C> <C>
Robert T. Hoffman# (38) Vice President Managing Director of Scudder, --
Stevens & Clark, Inc.
Thomas W. Joseph+ (57) Vice President Principal of Scudder, Stevens & Director, Vice
Clark, Inc. President, Treasurer
and Assistant Clerk
David S. Lee+ (62) Vice President Managing Director of Scudder, President, Assistant
Stevens & Clark, Inc. Treasure and Director
Valerie F. Malter# (38) Vice President Principal of Scudder, Stevens & --
Clark, Inc.
Thomas F. McDonough+ (49) Vice President, Principal of Scudder, Stevens & Clerk
Secretary and Clark, Inc.
Assistant Treasurer
Pamela A. McGrath+ (42) Vice President and Managing Director of Scudder, --
Treasurer Stevens & Clark, Inc.
Edward J. O'Connell# (51) Vice President and Principal of Scudder, Stevens & Assistant Treasurer
Assistant Treasurer Clark, Inc.
Coleen Downs Dinneen+ (35) Assistant Secretary Vice President of Scudder, Assistant Clerk
Stevens & Clark, Inc.
</TABLE>
* Messrs. Ladd, Padegs and Pierce are considered by the Trust
and its counsel to be persons who are "interested persons" of
the Adviser or of the Trust (within the meaning of the 1940
Act, as amended).
** Unless otherwise stated, all the officers and Trustees have
been associated with their respective companies for more than
five years, but not necessarily in the same capacity.
= Messrs. Ladd, Lovejoy, Pierce and Marple are members of the
Executive Committee, which has the power to declare dividends
from ordinary income and distributions of realized capital
gains to the same extent as the Board is so empowered.
+ Address: Two International Place, Boston, Massachusetts
# Address: 345 Park Avenue, New York, New York
Certain accounts for which the Adviser acts as investment adviser owned
_________ shares in the aggregate, or _____% of the outstanding shares on
January 31, 1997. The Adviser may be deemed to be the beneficial owner of such
shares but disclaims any beneficial ownership in such shares.
As of January 31, 1997, all Trustees and officers of the Trust as a
group owned beneficially (as the term is defined in Section 13(a) under the
Securities Exchange Act of 1934) _______ shares, or _____% of the shares of the
Fund outstanding on such date.
To the best of the Trust's knowledge, as of January 31, 1997, no person
owned beneficially more than __% of the Fund's shares except as stated above.
The Trustees and officers of the Trust also serve in similar capacities
for other Scudder funds.
40
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REMUNERATION
Several of the officers and Trustees of the Trust may be officers or
employees of the Adviser, or of the Distributor, the Transfer Agent, Scudder
Trust Company, or Scudder Fund Accounting Corporation, from whom they receive
compensation, as a result of which they may be deemed to participate in the fees
paid by the Fund. The Fund pays no direct remuneration to any officer of the
Trust. However, each of the Trustees who is not affiliated with the Adviser will
be compensated for all expenses relating to Trust business (specifically
including travel expenses relating to Trust business). Each of these
unaffiliated Trustees receives an annual Trustee's fee of $4,000 from the Fund
plus $300 for attending each Trustees' meeting, audit committee meeting or
meeting held for the purpose of considering arrangements between the Trust and
the Adviser or any of its affiliates. Each unaffiliated Trustee also receives
$100 per committee meeting attended other than those set forth above. For the
fiscal year ended October 31, 1996, the Trustees' fees and expenses amounted to
$37,344.
The following table shows the aggregate compensation received by each
unaffiliated trustee during 1996 from Scudder Large Company Growth Fund and from
all Scudder funds as a group.
Scudder
Name Investment Trust* All Scudder Funds
---- ----------------- -----------------
Henry P. Becton, Jr. $_____ $_____ (15 funds)
George M. Lovejoy, Jr. $_____ $_____ (12 funds)
Wesley W. Marple, Jr. $_____ $_____ (15 funds)
Jean C. Tempel $_____ $_____ (15 funds)
* Scudder Investment Trust consists of two mutual funds: Scudder Large
Company Growth Fund and Scudder Growth and Income Fund.
DISTRIBUTOR
The Trust has an underwriting agreement with Scudder Investor Services,
Inc. (the "Distributor"), a Massachusetts corporation, which is a subsidiary of
the Adviser. The Trust's underwriting agreement, dated September 10, 1985, will
remain in effect until September 30, 1997 and from year to year thereafter only
if its continuance is approved annually by a majority of the Trustees who are
not parties to such agreement or interested persons of any such party and either
by vote of a majority of the Trustees or a majority of the outstanding voting
securities of the Trust. The underwriting agreement was last approved by the
Trustees on August 13, 1996.
Under the principal underwriting agreement, the Fund is responsible
for: the payment of all fees and expenses in connection with the preparation and
filing with the SEC of its registration statement and prospectus and any
amendments and supplements thereto; the registration and qualification of shares
for sale in the various states, including registering the Trust or the Fund as a
broker/dealer in various states as required; the fees and expenses of preparing,
printing and mailing prospectuses annually to existing shareholders (see below
for expenses relating to prospectuses paid by the Distributor), notices, proxy
statements, reports or other communications to shareholders of the Fund; the
cost of printing and mailing confirmations of purchases of shares and the
prospectuses accompanying such confirmations; any issuance taxes and/or any
initial transfer taxes; a portion of shareholder toll-free telephone charges and
expenses of shareholder service representatives; the cost of wiring funds for
share purchases and redemptions (unless paid by the shareholder who initiates
the transaction); the cost of printing and postage of business reply envelopes;
and a portion of the cost of computer terminals used by both the Fund and the
Distributor.
The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the Fund's
shares to the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of the Fund to the public.
The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state
laws, a portion of the cost of toll-free telephone service and expenses of
shareholder service representatives, a portion of the cost of computer
41
<PAGE>
terminals, and expenses of any activity which is primarily intended to result in
the sale of shares issued by the Fund, unless a Rule 12b-1 Plan is in effect
which provides that the Fund shall bear some or all of such expenses.
Note: Although the Fund currently has no 12b-1 Plan and the Trustees have no
current intention of adopting one, the Fund will also pay those fees and
expenses permitted to be paid or assumed by the Fund pursuant to a 12b-1 Plan,
if any, adopted by the Fund, notwithstanding any other provision to the contrary
in the underwriting agreement.
As agent, the Distributor currently offers the Fund's shares on a
continuous basis to investors in all states in which shares of the Fund may from
time to time be registered or where permitted by applicable law. The
Underwriting Agreement provides that the Distributor accepts orders for shares
at net asset value as no sales commission or load is charged the investor. The
Distributor has made no firm commitment to acquire shares of the Fund.
TAXES
(See "Distribution and performance information--Dividends and capital gains
distributions" and "Transaction information--Tax information and Tax
identification number" in the Fund's
prospectus.)
The Fund has elected to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), or a predecessor statute and has qualified as such since its inception.
It intends to continue to qualify for such treatment. Such qualification does
not involve governmental supervision or management of investment practices or
policy.
As a regulated investment company qualifying under Subchapter M of the
Code, the Fund is required to distribute to its shareholders at least 90 percent
of its investment company taxable income (including net short-term capital
gains) and is not generally subject to federal income tax to the extent that it
annually distributes its investment company taxable income and net realized
capital gains in the manner required under the Code.
The Fund will be subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires payment to shareholders during a calendar year of distributions
representing an amount equal to the sum of at least 98% of the Fund's ordinary
income for the calendar year, at least 98% of the excess of its capital gains
over capital losses (adjusted for certain ordinary losses as prescribed in the
Code) realized during the one-year period ending October 31 during such year,
and all ordinary income and capital gains for prior years that were not
previously distributed.
The Fund's investment company taxable income includes dividends,
interest and net short-term capital gains in excess of net long-term capital
losses, less expenses. Net realized capital gains for a fiscal year are computed
by taking into account any capital loss carryforward of the Fund.
If any net realized long-term capital gains in excess of net realized
short-term capital losses are retained by the Fund for reinvestment, requiring
federal income taxes to be paid thereon by the Fund, the Fund intends to elect
to treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains, will be able to claim a relative share of federal income taxes paid by
the Fund on such gains as a credit against personal federal income tax
liabilities, and will be entitled to increase the adjusted tax basis on Fund
shares by the difference between a pro rata share of such gains and the
individual tax credit. If the Fund makes such an election, it may not be treated
as having met the excise tax distribution requirement.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income.
Dividends from domestic corporations are expected to comprise a
substantial part of the Fund's gross income. To the extent that such dividends
constitute a portion of the Fund's gross income, a portion of the income
distributions of the Fund may be eligible for the deduction for dividends
received by corporations. Shareholders will be informed of the portion of
dividends which so qualify. The dividends-received deduction is reduced to the
extent the shares of the Fund, with respect to which the dividends are received,
42
<PAGE>
are treated as debt-financed under federal income tax law and is eliminated if
the shares are deemed to have been held for less than 46 days.
Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term capital
gains, regardless of the length of time the shares of the Fund have been held by
such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less will be treated as a
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gains during such six-month period.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.
All distributions of investment company taxable income and net realized
capital gains, whether received in shares or in cash, must be reported by each
shareholder on a federal income tax return. Dividends and capital gains
distributions declared in October, November, or December and payable to
shareholders of record in such a month will be deemed to have been received by
shareholders on December 31 if paid during January of the following year.
Redemptions of shares, including exchanges for shares of another Scudder fund,
may result in tax consequences (gain or loss) to the shareholder and are also
subject to these reporting requirements.
An individual may make a deductible IRA contribution of up to $2,000
or, if less, the amount of the individual's earned income for any taxable year
only if (i) neither the individual nor his or her spouse (unless filing separate
returns) is an active participant in an employer's retirement plan, or (ii) the
individual (and his or her spouse, if applicable) has an adjusted gross income
below a certain level ($40,050 for married individuals filing a joint return,
with a phase-out of the deduction for adjusted gross income between $40,050 and
$50,000; $25,050 for a single individual, with a phase-out for adjusted gross
income between $25,050 and $35,000). However, an individual not permitted to
make a deductible contribution to an IRA for any such taxable year may
nonetheless make nondeductible contributions up to $2,000 to an IRA (up to
$2,250 to IRAs for an individual and his or her nonearning spouse) for that
year. There are special rules for determining how withdrawals are to be taxed if
an IRA contains both deductible and nondeductible amounts. In general, a
proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.
Distributions by the Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.
If the Fund invests in stock of certain foreign investment companies,
the Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the Fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.
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<PAGE>
Proposed regulations have been issued which will allow the Fund to make
an election to mark-to-market its shares of these foreign investment companies
in lieu of being taxed in the manner described above. At the end of each taxable
year to which the election applies, the Fund will include in its income the
amount by which the fair market value of the foreign company's stock exceeds the
Fund's adjusted basis in these shares. No mark-to-market losses may be
recognized. Distributions and gain on dispositions of such stock will be treated
as ordinary income distributable to shareholders rather than being subject to a
fund level tax. The Fund intends to make this election if it is determined to be
appropriate and in the best interest of the shareholders.
Dividend and interest income received by the Fund from sources outside
the U.S. may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however, and foreign countries generally do
not impose taxes on capital gains in respect of investments by foreign
investors.
Equity options written by the Fund (covered call options on portfolio
stock) will be subject to tax under Section 1234 of the Code. If the Fund writes
a call option, no gain is recognized upon its receipt of a premium. If the
option lapses or is closed out, any gain or loss is treated as a short-term
capital gain or loss. If a call option is exercised, any resulting gain or loss
is short-term or long-term capital gain or loss depending on the holding period
of the underlying stock.
Many futures and forward contracts entered into by the Fund and all
listed nonequity options written or purchased by the Fund (including covered
call options written on debt securities and options purchased or written on
futures contracts) will be governed by Section 1256 of the Code. Absent a tax
election to the contrary, gain or loss attributable to the lapse, exercise or
closing out of any such position generally will be treated as 60% long-term and
40% short-term capital gain or loss, and on the last trading day of the Fund's
fiscal year, all outstanding Section 1256 positions will be marked to market
(i.e., treated as if such positions were closed out at their closing price on
such day), with any resulting gain or loss recognized as 60% long-term and 40%
short-term capital gain or loss. Under Section 988 of the Code, discussed below,
foreign currency gain or loss from foreign currency-related forward contracts,
certain futures and options, and similar financial instruments entered into or
acquired by the Fund will be treated as ordinary income or loss. Under certain
circumstances, entry into a futures contract to sell a security may constitute a
short sale for federal income tax purposes, causing an adjustment in the holding
period of the underlying security or a substantially identical security in the
Fund's portfolio.
Subchapter M requires that the Fund realize less than 30% of its annual
gross income from the sale or other disposition of stock, securities and certain
options, futures and forward contracts held for less than three months. Options,
futures and forward activities of the Fund may increase the amount of gains
realized by the Fund that are subject to the 30% limitation. Accordingly, the
amount of such activities that the Fund may engage in may be limited.
Positions of the Fund which consist of at least one stock and at least
one stock option or other position with respect to a related security which
substantially diminishes the Fund's risk of loss with respect to such stock
could be treated as a "straddle" which is governed by Section 1092 of the Code,
the operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short-term capital losses into
long-term capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by the Fund.
Positions of the Fund which consist of at least one position not
governed by Section 1256 and at least one futures or forward contract or
nonequity option governed by Section 1256 which substantially diminishes the
Fund's risk of loss with respect to such other position will be treated as a
"mixed straddle." Although mixed straddles are subject to the straddle rules of
Section 1092 of the Code, certain tax elections exist for them which reduce or
eliminate the operation of these rules. The Fund will monitor its transactions
in options and futures and may make certain tax elections in connection with
these investments.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
44
<PAGE>
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain futures contracts, forward contracts and options,
gains or losses attributable to fluctuations in the value of foreign currency
between the date of acquisition of the security or contracts and the date of
disposition are also treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "Section 988" gains or losses, may increase or
decrease the amount of the Fund's investment company taxable income to be
distributed to its shareholders as ordinary income.
A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to the Fund each year, even though the Fund will not receive cash
interest payments from these securities. This original issue discount (imputed
income) will comprise a part of the investment company taxable income of the
Fund which must be distributed to shareholders in order to maintain the
qualification of the Fund as a regulated investment company and to avoid federal
income tax at the level of the Fund. Shareholders will be subject to income tax
on such original issue discount, whether or not they elect to receive their
distributions in cash.
The Fund will be required to report to the IRS all distributions of
taxable income and capital gains as well as gross proceeds from the redemption
or exchange of Fund shares, except in the case of certain exempt shareholders.
Under the backup withholding provisions of Section 3406 of the Code,
distributions of taxable income and capital gains and proceeds from the
redemption or exchange of the shares of a regulated investment company may be
subject to withholding of federal income tax at the rate of 31% in the case of
non-exempt shareholders who fail to furnish the investment company with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. Withholding may also be required if the
Fund is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.
Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year the Fund issues to each
shareholder a statement of the federal income tax status of all distributions.
The Fund is organized as a series of a Massachusetts business trust and
is not liable for any income or franchise tax in the Commonwealth of
Massachusetts, provided that the Fund continues to be treated as a regulated
investment company under Subchapter M of the Code.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of the Fund, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by him or her, where such amounts are treated as income
from U.S. sources under the Code.
Shareholders should consult their tax advisers about the application of
the provisions of tax law in light of their particular tax situations.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
To the maximum extent feasible the Adviser places orders for portfolio
transactions for the Fund through the Distributor, which in turn places orders
on behalf of the Fund with other brokers and dealers. The Distributor receives
45
<PAGE>
no commission, fees or other remuneration from the Fund for this service.
Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase
and sale of securities for the Fund's portfolio is to obtain the most favorable
net results, taking into account such factors as price, commission (negotiable
in the case of U.S. national securities exchange transactions), where
applicable, size of order, difficulty of execution and skill required of the
executing broker/dealer. The Adviser seeks to evaluate the overall
reasonableness of brokerage commissions paid through the familiarity of the
Distributor with commissions charged on comparable transactions, as well as by
comparing commissions paid by the Fund to reported commissions paid by others.
The Adviser reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.
The Fund's purchases and sales of fixed-income securities are generally
placed by the Adviser with primary market makers for these securities on a net
basis, without any brokerage commission being paid by the Fund. Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.
When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
brokers and dealers who supply research, market and statistical information to
the Fund. The term "research, market and statistical information" includes
advice as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities, and analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. The Adviser is authorized when placing
portfolio transactions for the Fund to pay a brokerage commission in excess of
that which another broker might have charged for executing the same transaction
solely on account of the receipt of research, market or statistical information.
The Adviser does not place orders with brokers or dealers on the basis that the
broker or dealer has or has not sold shares of the Fund. In effecting
transactions in over-the-counter securities, orders are placed with the
principal market makers for the security being traded unless, after exercising
care, it appears that more favorable results are available otherwise.
Although certain research, market and statistical information from
brokers and dealers can be useful to the Fund and to the Adviser, it is the
opinion of the Adviser that such information will only supplement the Adviser's
own research effort since the information must still be analyzed, weighed, and
reviewed by the Adviser's staff. Such information may be useful to the Adviser
in providing services to clients other than the Fund, and not all such
information is used by the Adviser in connection with the Fund. Conversely, such
information provided to the Adviser by brokers and dealers through whom other
clients of the Adviser effect securities transactions may be useful to the
Adviser in providing services to the Fund.
In the fiscal years ended October 31, 1996, 1995 and 1994, the Fund
paid brokerage commissions of $_________, $313,826 and $302,266, respectively.
In the fiscal year ended October 31, 1996, the Fund paid brokerage commissions
of $__________ (__% of the total brokerage commissions), resulting from orders
placed, consistent with the policy of seeking to obtain the most favorable net
results, for transactions placed with brokers and dealers who provided
supplementary research, market and statistical information to the Trust or
Adviser. The amount of such transactions aggregated $__________ (__% of all
brokerage transactions). The balance of such brokerage was not allocated to any
particular broker or dealer or with regard to the above-mentioned or any other
special factors.
The Trustees of the Trust intend to review from time to time whether
the recapture for the benefit of the Fund of some portion of the brokerage
commissions or similar fees paid by the Fund on portfolio transactions is
legally permissible and advisable.
Portfolio Turnover
The Fund's average annual portfolio turnover rate, i.e. the ratio of
the lesser of sales or purchases to the monthly average value of the portfolio
(excluding from both the numerator and the denominator all securities with
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<PAGE>
maturities at the time of acquisition of one year or less), for the fiscal years
ended October 31, 1996 and 1995 was 68.8% and 91.6%, respectively. A higher rate
involves greater brokerage and transaction expenses to the Fund and may result
in the realization of net capital gains, which would be taxable to shareholders
when distributed. Purchases and sales are made for the Fund's portfolio whenever
necessary, in management's opinion, to meet the Fund's objective.
NET ASSET VALUE
The net asset value of shares of the Fund is computed as of the close
of regular trading on the Exchange on each day the Exchange is open for trading.
The Exchange is scheduled to be closed on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. Net asset value per share is determined by dividing
the value of the total assets of the Fund, less all liabilities, by the total
number of shares outstanding.
An exchange-traded equity security is valued at its most recent sale
price. Lacking any sales, the security is valued at the calculated mean between
the most recent bid quotation and the most recent asked quotation (the
"Calculated Mean"). Lacking a Calculated Mean, the security is valued at the
most recent bid quotation. An equity security which is traded on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") system is
valued at its most recent sale price. Lacking any sales, the security is valued
at the high or "inside" bid quotation. The value of an equity security not
quoted on the NASDAQ System, but traded in another over-the-counter market, is
its most recent sale price. Lacking any sales, the security is valued at the
Calculated Mean. Lacking a Calculated Mean, the security is valued at the most
recent bid quotation.
Debt securities, other than short-term securities, are valued at prices
supplied by the Fund's pricing agent(s) which reflect broker/dealer supplied
valuations and electronic data processing techniques. Short-term securities with
remaining maturities of sixty days or less are valued by the amortized cost
method, which the Board believes approximates market value. If it is not
possible to value a particular debt security pursuant to these valuation
methods, the value of such security is the most recent bid quotation supplied by
a bona fide marketmaker. If it is not possible to value a particular debt
security pursuant to the above methods, the Adviser may calculate the price of
that debt security, subject to limitations established by the Board.
An exchange traded options contract on securities, currencies, futures
and other financial instruments is valued at its most recent sale price on such
exchange. Lacking any sales, the options contract is valued at the Calculated
Mean. Lacking any Calculated Mean, the options contract is valued at the most
recent bid quotation in the case of a purchased options contract, or the most
recent asked quotation in the case of a written options contract. An options
contract on securities, currencies and other financial instruments traded
over-the-counter is valued at the most recent bid quotation in the case of a
purchased options contract and at the most recent asked quotation in the case of
a written options contract. Futures contracts are valued at the most recent
settlement price. Foreign currency exchange forward contracts are valued at the
value of the underlying currency at the prevailing exchange rate.
If a security is traded on more than one exchange, or upon one or more
exchanges and in the over-the-counter market, quotations are taken from the
market in which the security is traded most extensively.
If, in the opinion of the Fund's Valuation Committee, the value of a
portfolio asset as determined in accordance with these procedures does not
represent the fair market value of the portfolio asset, the value of the
portfolio asset is taken to be an amount which, in the opinion of the Valuation
Committee, represents fair market value on the basis of all available
information. The value of other portfolio holdings owned by the Fund is
determined in a manner which, in the discretion of the Valuation Committee, most
fairly reflects fair market value of the property on the valuation date.
Following the valuations of securities or other portfolio assets in
terms of the currency in which the market quotation used is expressed ("Local
Currency"), the value of these portfolio assets in terms of U.S. dollars is
calculated by converting the Local Currency into U.S. dollars at the prevailing
currency exchange rate on the valuation date.
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ADDITIONAL INFORMATION
Experts
The financial highlights of the Fund included in the prospectus and the
Financial Statements incorporated by reference in this Statement of Additional
Information have been so included or incorporated by reference in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
Shareholder Indemnification
The Trust is an organization of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders of such a
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the Trust. The Declaration of Trust contains an express
disclaimer of shareholder liability in connection with the Trust property or the
acts, obligations or affairs of the Trust. The Declaration of Trust also
provides for indemnification out of the Trust property of any shareholder held
personally liable for the claims and liabilities to which a shareholder may
become subject by reason of being or having been a shareholder. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations.
Other Information
The CUSIP number of the Fund is 811167-20-4.
The Fund has a fiscal year ending October 31.
Many of the investment changes in the Fund will be made at prices
different from those prevailing at the time they may be reflected in a regular
report to shareholders of the Fund. These transactions will reflect investment
decisions made by the Fund's investment adviser in light of the objective and
policies of the Fund and other factors such as its other portfolio holdings and
tax considerations and should not be construed as recommendations for similar
action by other investors.
The name "Scudder Investment Trust" is the designation of the Trustees
for the time being under a Declaration of Trust dated September 20, 1984, as
amended from time to time, and all persons dealing with the Trust must look
solely to the property of the Trust for the enforcement of any claims against
the Trust as neither the Trustees, officers, agents nor shareholders assume any
personal liability for obligations entered into on behalf of the Trust. Upon the
initial purchase of shares, the shareholder agrees to the bound by the Trust's
Declaration of Trust, as amended from time to time. The Declaration of Trust is
on file at the Massachusetts Secretary of State's Office in Boston,
Massachusetts. All persons dealing with the Fund must look only to the assets of
the Fund for the enforcement of any claims against the Fund as no other series
of the Trust assumes any liabilities for obligations entered into on behalf of
the Fund.
Portfolio securities of the Fund are held separately pursuant to a
custodian agreement, by the Trust's custodian, State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110.
The law firm of Dechert Price & Rhoads is counsel to the Fund.
Scudder Fund Accounting Corporation (SFAC), Two International Place,
Boston, Massachusetts, 02110-4103, a subsidiary of the Adviser, computes net
asset value for the Fund. The Fund pays SFAC an annual fee equal to 0.025% of
the first $150 million of average daily net assets, 0.0075% of such assets in
excess of $150 million, 0.0045% of such assets in excess of $1 billion, plus
holding and transaction charges for this service. For the fiscal year ended
October 31, 1996, SFAC's fee amounted to $56,114.
48
<PAGE>
Scudder Service Corporation ("Service Corporation"), P.O. Box 2291,
Boston, Massachusetts 02107-2291, a subsidiary of the Adviser, is the transfer,
dividend-paying and shareholder service agent for the Fund and also provides
subaccounting and recordkeeping services for shareholder accounts in certain
retirement and employee benefit plans. The Fund pays Service Corporation an
annual fee of $26.00 for each account maintained for a participant. For the
fiscal year ended October 31, 1996, Service Corporation's fee amounted to
$275,078. Please call 1-800-225-5163 for specific mailing instructions regarding
your investment.
Scudder Trust Company, Two International Place, Boston, MA 02110-4103,
an affiliate of the Adviser provides services for certain retirement plan
accounts. The Fund pays Scudder Trust Company an annual fee of $29.00 for each
account maintained for a participant. For the fiscal year ended October 31,
1996, Scudder Trust Company's fee amounted to $128,483.
The Fund's prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Trust has
filed with the Commission under the Securities Act of 1933 and reference is
hereby made to the Registration Statement for further information with respect
to the Fund and the securities offered hereby. This Registration Statement is
available for inspection by the public at the SEC in Washington, D.C.
FINANCIAL STATEMENTS
The financial statements, including the investment portfolio, of
Scudder Large Company Growth Fund, together with the Report of Independent
Accountants, and Financial Highlights, are incorporated by reference and
attached hereto on pages 9 through 19, inclusive, in the Annual Report to the
Shareholders of the Fund dated October 31, 1996, and are hereby deemed to be a
part of this Statement of Additional Information.
49
<PAGE>
APPENDIX
Standard & Poor's Earnings and Dividend Rankings for Common Stocks
The investment process involves assessment of various factors--such as
product and industry position, corporate resources and financial policy--with
results that make some common stocks more highly esteemed than others. In this
assessment, Standard & Poor believes that earnings and dividend performance is
the end result of the interplay of these factors and that, over the long run,
the record of this performance has a considerable bearing on relative quality.
The rankings, however, do not pretend to reflect all of the factors, tangible or
intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection
for principal and interest, called creditworthiness, cannot be applied to common
stocks, and therefore rankings are not to be confused with bond quality ratings
which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements
in establishing Standard & Poor's earnings and dividend rankings for common
stocks, which are designed to capsulize the nature of this record in a single
symbol. It should be noted, however, that the process also takes into
consideration certain adjustments and modifications deemed desirable in
establishing such rankings.
The point of departure in arriving at these rankings is a computerized
scoring system based on per-share earnings and dividend records of the most
recent ten years--a period deemed long enough to measure significant time
segments of secular growth, to capture indications of basic change in trend as
they develop, and to encompass the full peak-to-peak range of the business
cycle. Basic scores are computed for earnings and dividends, then adjusted as
indicated by a set of predetermined modifiers for growth, stability within
long-term trend, and cyclicality. Adjusted scores for earnings and dividends are
then combined to yield a final score.
Further, the ranking system makes allowance for the fact that, in
general, corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales volume)
are set for the various rankings, but the system provides for making exceptions
where the score reflects an outstanding earnings-dividend record.
The final score for each stock is measured against a scoring matrix
determined by analysis of the scores of a large and representative sample of
stocks. The range of scores in the array of this sample has been aligned with
the following ladder of rankings:
A+ Highest B+ Average C Lowest
A High B Below Average D In Reorganization
A- Above Average B- Lower
NR signifies no ranking because of insufficient data or because the
stock is not amenable to the ranking process.
The positions as determined above may be modified in some instances by
special considerations, such as natural disasters, massive strikes, and
non-recurring accounting adjustments.
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends, and
relative current standing. These rankings must not be used as market
recommendations; a high-score stock may at times be so overpriced as to justify
its sale, while a low-score stock may be attractively priced for purchase.
Rankings based upon earnings and dividend records are no substitute for complete
analysis. They cannot take into account potential effects of management changes,
internal company policies not yet fully reflected in the earnings and dividend
record, public relations standing, recent competitive shifts, and a host of
other factors that may be relevant to investment status and decision.
<PAGE>
Scudder Quality Growth Fund
Annual Report
October 31, 1996
Pure No-Load(TM) Funds
A fund seeking long-term growth of capital through investment primarily in the
equity securities of seasoned, financially strong U.S. growth companies.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
20 Report of Independent Accountants
21 Tax Information
21 Officers and Trustees
22 Investment Products and Services
23 How to Contact Scudder
In Brief
o Scudder Quality Growth Fund provided a 19.49% total return for the 12
months ended October 31, 1996. The 642 similar funds tracked by Lipper
Analytical Services provided an average total return of 18.47%, while the
Fund's benchmark, the Russell 1000 Growth Index, provided a 22.05% total
return for the period.
o The Fund's sector breakdown remained relatively unchanged during the fiscal
year. We remained committed to keeping the Fund's sector weightings in line
with its benchmark index while making informed stock choices within each
sector.
o We believe growth companies will benefit from the current environment of
slower economic growth and low inflation.
2 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We hope you enjoy our newly redesigned shareholder report. The new format
is designed to enhance the attractiveness and readability of the reports. Let us
know what you think.
This annual report for Scudder Quality Growth Fund covers a period of
continued strength for both the U.S. economy and stock market. A healthy
backdrop helped the Fund provide a 19.49% total return for the 12 months ended
October 31, 1996.
The U.S. economy has been experiencing an expansion of record length, and
while a mild recession would not be a surprise in 1997, there are few reasons to
question the economy's long-term strength. While the financial markets will
always surge and dip in response to short-term indicators, many long-term
structural factors such as deregulation, globalization, and technology are
setting the stage for global economic growth. This, in turn, offers opportunity
for companies domiciled here and abroad in the years ahead as they find global
audiences for products and services. While investors should remain vigilant and
allocate their assets wisely, these global trends should provide a rewarding
investment environment over the long term.
It is with this ever-changing investment landscape in mind that Scudder
recently launched an innovative new product called Scudder Pathway Series.
Pathway Series is a collection of four distinct portfolios -- Conservative,
Growth, Balanced, and International -- that offers flexibility, diversification,
and simplicity. Each portfolio invests in a diverse mix of Scudder Funds. For
more information on Scudder Fund products and services, please turn to page 22.
Should you have any questions about your Scudder Quality Growth Fund account,
please contact a Scudder Investor Relations Representative at 1-800-225-2470.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Quality Growth Fund
3 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
PERFORMANCE UPDATE as of October 31, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER QUALITY GROWTH FUND
- --------------------------------------
1 Year $11,949 19.49% 19.49%
5 Year $17,948 79.48% 12.41%
Life of
Fund* $20,416 104.16% 13.94%
- --------------------------------------
RUSSELL 1000 GROWTH INDEX
- --------------------------------------
1 Year $12,205 22.05% 22.05%
5 Year $19,770 97.70% 14.59%
Life of
Fund* $20,462 104.62% 14.11%
*The Fund commenced operations on May 15, 1991. Index
comparisons begin May 31, 1991.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED OCTOBER 31
SCUDDER QUALITY GROWTH FUND
Year Amount
- ----------------------
5/91 $10,000
10/91 $10,894
10/92 $12,252
10/93 $13,169
10/94 $13,220
10/95 $16,364
10/96 $19,553
YEARLY PERIODS ENDED MONTH OCTOBER 31
RUSSELL 1000 GROWTH FUND
Year Amount
- ----------------------
5/91 $10,000
10/91 $10,350
10/92 $11,470
10/93 $12,308
10/94 $12,973
10/95 $16,766
10/96 $20,462
The Russell 1000 Growth Index is an unmanaged capitalization-weighted price
index of 1000 largest U.S. growth companies traded on the NYSE, AMEX, and
NASDAQ. Index returns assume reinvestment of dividends and, unlike Fund
returns, do not reflect any fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED OCTOBER 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991* 1992 1993 1994 1995 1996
---------------------------------------------------
NET ASSET VALUE... $13.65 $15.30 $16.42 $16.17 $18.44 $21.19
INCOME DIVIDENDS.. $ - $ .03 $ .03 $ .08 $ .15 $ .14
CAPITAL GAINS
DISTRIBUTIONS..... $ - $ .02 $ - $ .24 $ 1.09 $ .60
FUND TOTAL
RETURN (%)........ 13.75 12.47 12.47 .39 23.78 19.49
RETURN (%)........ 8.66 10.82 7.31 5.40 29.23 22.05
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not maintained the Fund's expenses, the total returns for
the five year and the life of Fund would have been lower.
4 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
PORTFOLIO SUMMARY as of OCTOBER 31, 1996
- ---------------------------------------------------------------------------
ASSET ALLOCATION
- ---------------------------------------------------------------------------
Equity Holding 94%
Cash Equivalents 6%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
We remain near-fully invested in stocks of
seasoned, financially-strong U.S. companies.
- --------------------------------------------------------------------------
SECTORS
(Excludes 6% Cash Equivalents)
- --------------------------------------------------------------------------
Consumer Staples 18%
Health 17%
Manufacturing 14%
Technology 14%
Consumer Discretionary 10%
Service Industries 9%
Financial 8%
Media 5%
Durables 4%
Other 1%
- ----------------------------------
100%
- ----------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund's sector breakdown remained relatively
unchanged during the period, although holdings within
sectors changed.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(24% OF PORTFOLIO)
- --------------------------------------------------------------------------
1.GENERAL ELECTRIC CO.
Leading producer of electrical equipment
2.PHILIP MORRIS COMPANIES INC.
Tobacco, food products and brewing
3.PROCTER & GAMBLE CO.
Diversified manufacturer of consumer products
4.MERCK & CO. INC.
Leading ethical drug manufacturer
5.ELECTRONIC DATA SYSTEMS CORP.
Provider of information technology services
6.AMERICAN INTERNATIONAL GROUP, INC.
Major international insurance holding company
7.JOHNSON & JOHNSON
Healthcare products
8.CLEAR CHANNEL COMMUNICATIONS, INC.
Operator of T.V. and radio stations
9. MICROSOFT CORP.
Computer operating systems software
10.PFIZER, INC.
Leading international pharmaceutical company
We established a number of new healthcare positions during the
period, including tenth-largest holding Pfizer.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 9. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Throughout Scudder Quality Growth Fund's fiscal year, investor fears of
strengthening economic growth and accompanying inflation fueled a host of stock
market gyrations. Amidst the surges and dips, your Fund provided a 19.49% total
return for its fiscal year ended October 31. This compared with an average
return of 18.47% for the 642 similar funds tracked by Lipper Analytical
Services, and a 22.05% total return for the same period for the Fund's
benchmark, the unmanaged Russell 1000 Growth Index.
A Look Back
On balance, the stock market continued its upward march through Scudder Quality
Growth Fund's fiscal year. Through February, slow economic growth and low
inflation provided a healthy backdrop for companies capable of delivering
consistently above-average earnings growth rates. In fact, such growth companies
generally prosper when the economy is slow because of their ability to deliver
earnings regardless of the underlying economic environment. Demand for equities
was high, and record levels of cash flowed into mutual funds. While we felt
strongly that economic acceleration was unlikely, signs of stronger growth
caused a stir in the market on more than one occasion. Most notably, much
stronger-than-anticipated February employment numbers caused investors to fear a
surge in inflation, resulting in the Dow Jones Industrial Average tumbling 171
points in March.
The volatile market environment lingered into the second half of the Fund's
fiscal year, as July in particular saw equity returns hurt by surprisingly
strong indicators, and cash flows into equity mutual funds began to taper off.
We continued to believe, however, that economic acceleration and harmful levels
of inflation were unlikely to materialize in the near future. The portfolio was
invested with the expectation that economic growth would remain moderate,
inflation would remain under control, and rapid earnings growth would be
increasingly hard to sustain for the more cyclically sensitive companies and
industries. We held true to our strategy of investing in those companies that we
believed would deliver solid earnings growth, and focused on companies with
solid long-term franchises, strategically oriented and experienced management
teams, and dominant market shares in growing industries.
Focus On Stock Selection
Scudder Quality Growth Fund strives to achieve superior investment returns by
investing in companies with consistent above-average earnings growth. The Fund's
sector exposure is generally kept reasonably close to that of the Russell 1000
Growth Index. Our focus is on choosing quality growth stocks within each sector.
In keeping with this approach, the Fund's sector breakdown for the most part
remained relatively unchanged during the period (see accompanying chart),
although individual holdings within sectors changed. For example, we established
a number of new healthcare positions, including Sandoz, SmithKline, and Pfizer.
We also used market volatility to our advantage to initiate or increase
6 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
positions in quality technology stocks like Computer Associates, Cisco, Atmel,
and Microsoft.
The best performing sectors mid-year were consumer staples and technology, with
strong performances from stocks of companies such as Philip Morris, Coca-Cola,
and Gillette. Although the healthcare sector was a relatively poor performer
during this period, we maintained our exposure as we believed the stocks owned
by the Fund were the best positioned in the sector. This proved a sensible
strategy, as healthcare was one of the Fund's best performing sectors later in
the year.
The Fund had no exposure to communications stocks at the close of the period.
The intense competition between the local access providers, long distance
companies, and regional bells makes for very interesting reading, but not very
rewarding investing, in our opinion. We plan to hold off investing in that
sector until a clearer picture emerges.
The most significant change in sector allocation over the 12 months covered by
this report was in the manufacturing sector, which increased from 8% to 14%. On
more than one occasion during the period, signs of a strengthening economy led
investors toward manufacturing stocks, which generally respond positively to a
stronger economy. We took advantage of some particularly attractive investment
opportunities in this sector, including Honeywell and Monsanto.
======================================================
The Year in Review: Quality Growth Fund's
Sector Weightings
======================================================
Q1 Q2 Q3 Q4
======================================================
Consumer Staples 18% 19% 19% 18%
Health 18% 17% 17% 17%
Technology 14% 12% 11% 14%
Consumer Discretionary 9% 12% 11% 10%
Manufacturing 8% 10% 14% 14%
Service Industries 9% 10% 10% 9%
Financial 9% 7% 7% 8%
Media 7% 5% 5% 5%
Energy -- 2% -- --
Durables 3% -- 3% 4%
Communications -- -- -- --
Other 5% 6% 3% 1%
======================================================
Sector weightings remained relatively unchanged during the fiscal year as the
Fund remained committed to a strategy of making informed stock choices, not
sector bets.
The Road Ahead
We believe growth stocks will benefit from the current environment of slow
economic growth and low inflation. Without more concrete signs of acceleration
in the rate of inflation, we believe the Federal Reserve will not raise
short-term interest rates. This scenario should be viewed positively by the
7 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
markets, and should particularly benefit growth stocks.
We continue to believe the best strategy for the Fund is to focus on stock
selection. In our opinion, the best performing stocks will be those of companies
capable of continued fundamental progress through these uncertain times. We
don't plan significant changes to our current sector weights, as we believe any
attempt to enhance portfolio returns through sector rotation would be extremely
difficult. Any changes made to the Fund will be to ensure that the portfolio is
made up of companies with the best long-term fundamentals -- those with growing
shares in expanding markets, secure franchises, the ability to deliver
consistent earnings quarter after quarter, and skilled management teams.
We believe Scudder Quality Growth Fund should reward investors seeking capital
appreciation over the long term through investment in seasoned, financially
strong U.S. companies. Thank you for your continued investment in Scudder
Quality Growth Fund.
Scudder Quality Growth Fund: A Team Approach to Investing
Scudder Quality Growth Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Valerie F. Malter joined Scudder in 1995 and is
responsible for the Fund's investment strategy and daily operation. Valerie has
10 years of experience as an analyst covering a wide range of industries, and
three years of portfolio management experience focusing on the stocks of
companies with medium- to large-sized market capitalizations. Michael K.
Shields, Portfolio Manager, joined the Fund and Scudder in 1992 and has 14 years
of experience in the financial industry.
Sincerely,
Your Portfolio Management Team
/s/Valerie F. Malter
Valerie F. Malter
/s/Michael K. Shields
Michael K. Shields
8 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
<PAGE>
Investment Portfolio as of October 31, 1996
Principal Market
Amount ($) Value ($)
- --------------------------------------------------------------------------------
Repurchase Agreements 5.9%
- --------------------------------------------------------------------------------
Repurchase Agreement with State Street
Bank & Trust Company dated 10/31/96
at 5.52%, to be repurchased at
$13,031,998 on 11/1/96, collateralized
by a $12,230,000 U.S. Treasury
Bond, 7.25%, 5/15/16 (Cost $13,030,000) .............. 13,030,000 13,030,000
Shares
- --------------------------------------------------------------------------------
Common Stocks 94.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 9.6%
Department & Chain Stores 4.5%
Federated Department Stores, Inc.* ..................... 58,900 1,943,700
Nordstrom, Inc. ........................................ 17,000 613,063
Price/Costco Inc.* ..................................... 161,900 3,217,762
Wal-Mart Stores Inc. ................................... 157,600 4,196,100
----------
9,970,625
----------
Hotels & Casinos 2.0%
Host Marriott Corp. .................................... 163,600 2,515,350
ITT Corp.* ............................................. 43,600 1,831,200
----------
4,346,550
----------
Restaurants 0.9%
McDonald's Corp. ....................................... 46,700 2,072,313
----------
Specialty Retail 2.2%
Corporate Express, Inc.* ............................... 81,200 2,649,150
Intimate Brands, Inc. .................................. 121,400 2,200,375
----------
4,849,525
----------
Consumer Staples 16.5%
Alcohol & Tobacco 5.1%
Anheuser-Busch Companies, Inc. ......................... 112,100 4,315,850
Philip Morris Companies Inc. ........................... 76,000 7,039,500
----------
11,355,350
----------
Consumer Electronic & Photographic Products 1.1%
Duracell International Inc. ............................ 37,300 2,489,775
----------
Food & Beverage 3.4%
Coca-Cola Co., Inc. .................................... 73,500 3,711,750
Dole Food Co. .......................................... 48,900 1,907,100
PepsiCo Inc. ........................................... 65,325 1,935,253
----------
7,554,103
----------
The accompanying notes are an integral part of the financial statements.
================================================================================
9 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Package Goods/Cosmetics 6.9%
Avon Products Inc. ..................................... 40,800 2,213,400
Colgate-Palmolive Co. .................................. 43,300 3,983,600
Gillette Co. ........................................... 37,700 2,818,075
Procter & Gamble Co. ................................... 63,600 6,296,400
----------
15,311,475
----------
Health 16.3%
Biotechnology 1.3%
Amgen Inc.* ............................................ 49,400 3,028,837
----------
Health Industry Services 0.9%
United Healthcare Corp. ................................ 50,800 1,924,050
----------
Medical Supply & Specialty 1.4%
Medtronic Inc. ......................................... 47,500 3,057,812
----------
Pharmaceuticals 12.7%
American Home Products Corp. ........................... 42,500 2,603,125
Baxter International Inc. .............................. 69,000 2,872,125
Eli Lilly & Co. ........................................ 33,349 2,351,105
Johnson & Johnson ...................................... 94,100 4,634,425
Merck & Co. Inc. ....................................... 75,700 5,611,262
Pfizer, Inc. ........................................... 54,100 4,476,775
Sandoz Ltd. AG (ADR) ................................... 41,600 2,407,600
SmithKline Beecham PLC (ADR) ........................... 52,200 3,269,025
----------
28,225,442
----------
Financial 8.0%
Banks 2.5%
NationsBank Corp. ...................................... 23,300 2,196,025
State Street Boston Corp. .............................. 53,800 3,409,575
----------
5,605,600
----------
Insurance 3.6%
American International Group, Inc. ..................... 47,650 5,175,981
MBIA Inc. .............................................. 30,900 2,738,512
----------
7,914,493
----------
Consumer Finance 0.8%
Associates First Capital Corp. ......................... 39,600 1,717,650
----------
Other Financial Companies 1.1%
Federal National Mortgage Association .................. 61,300 2,398,363
----------
The accompanying notes are an integral part of the financial statements.
================================================================================
10 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Media 4.8%
Advertising 0.9%
Interpublic Group of Companies Inc. .................... 42,800 2,075,800
----------
Broadcasting & Entertainment 3.9%
Clear Channel Communications, Inc.* .................... 62,200 4,540,600
Time Warner Inc. ....................................... 54,600 2,033,850
Walt Disney Co. ........................................ 31,000 2,042,125
----------
8,616,575
----------
Service Industries 8.1%
EDP Services 3.9%
Electronic Data Systems Corp. .......................... 115,400 5,193,000
First Data Corp. ....................................... 44,600 3,556,850
----------
8,749,850
----------
Miscellaneous Commercial Services 0.8%
Sensormatic Electronics Corp. .......................... 104,700 1,714,463
----------
Miscellaneous Consumer Services 2.3%
CUC International Inc.* ................................ 93,850 2,299,325
Service Corp. International ............................ 96,700 2,755,950
----------
5,055,275
----------
Printing/Publishing 1.1%
Reuters Holdings PLC "B" (ADR) ......................... 33,700 2,506,438
----------
Durables 3.5%
Telecommunications Equipment
Ascend Communications, Inc.* ........................... 47,100 3,079,162
Cascade Communications Corp.* .......................... 30,300 2,200,538
Nokia AB Oy (ADR) ...................................... 53,100 2,462,513
----------
7,742,213
----------
Manufacturing 13.3%
Chemicals 3.5%
Monsanto Co. ........................................... 100,500 3,982,312
Praxair Inc. ........................................... 51,400 2,274,450
Sigma-Aldrich Corp. .................................... 26,775 1,573,031
----------
7,829,793
----------
Diversified Manufacturing 4.3%
General Electric Co. ................................... 75,600 7,314,300
Honeywell, Inc. ........................................ 35,300 2,193,013
----------
9,507,313
----------
The accompanying notes are an integral part of the financial statements.
================================================================================
11 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Electrical Products 3.1%
Emerson Electric Co. ................................... 49,900 4,441,100
FORE Systems, Inc.* .................................... 61,800 2,456,550
----------
6,897,650
----------
Hand Tools 0.9%
Black & Decker Corp. ................................... 50,000 1,868,750
----------
Office Equipment/Supplies 1.5%
Xerox Corp. ............................................ 73,600 3,413,200
----------
Technology 12.9%
Computer Software 5.4%
Computer Associates International, Inc. ................ 48,900 2,891,212
Informix Corp.* ........................................ 125,700 2,788,969
Microsoft Corp.* ....................................... 32,900 4,515,525
Oracle Systems Corp.* .................................. 42,300 1,789,819
----------
11,985,525
----------
Electronic Components/Distributors 0.2%
Ingram Micro, Inc."A"* ................................. 20,700 372,600
----------
Electronic Data Processing 1.4%
Ceridian Corp.* ........................................ 63,100 3,131,337
----------
Office/Plant Automation 3.8%
3Com Corp.* ............................................ 30,600 2,069,325
Cabletron Systems Inc.* ................................ 48,600 3,031,425
Cisco Systems, Inc.* ................................... 54,300 3,359,812
----------
8,460,562
----------
Semiconductors 2.1%
Atmel Corp.* ........................................... 77,100 1,956,413
Intel Corp. ............................................ 25,300 2,779,838
----------
4,736,251
----------
The accompanying notes are an integral part of the financial statements.
================================================================================
12 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Energy 1.2%
Oil/Gas Transmission
Enron Corp. ............................................ 58,100 2,701,650
Total Common Stocks (Cost $164,308,185) ................ 209,187,208
===========
Total Investment Portfolio - 100.0%
(Cost $177,338,185) (a) .............................. 222,217,208
===========
* Non-income producing security.
(a) The cost for federal income tax purposes was $177,613,834. At October 31,
1996, net unrealized appreciation for all securities based on tax cost was
$44,603,374. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $47,481,396 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$2,878,022.
The accompanying notes are an integral part of the financial statements.
================================================================================
13 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1996
Assets
- --------------------------------------------------------------------------------
Investments, at market (identified cost
$177,338,185) (Note A) ....................... $222,217,208
Cash ........................................... 880
Receivable for investments sold ................ 4,997,577
Receivable for Fund shares sold ................ 457,311
Dividends and interest receivable .............. 76,658
------------
Total assets ................................... 227,749,634
Liabilities
- --------------------------------------------------------------------------------
Payables for investments purchased ............. $ 6,038,563
Payable for Fund shares redeemed ............... 172,311
Accrued management fee (Note C) ................ 136,437
Other accrued expenses (Note C) ................ 148,690
------------
Total liabilities .............................. 6,496,001
Net assets, at market value .................... $221,253,633
============
Net Assets
- --------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ............ $ 459,505
Unrealized appreciation on investments ......... 44,879,023
Accumulated net realized gain .................. 19,088,864
Paid-in capital ................................ 156,826,241
Net assets, at market value .................... $221,253,633
============
Net Asset Value
- --------------------------------------------------------------------------------
Net Asset Value, offering and redemption
price per share ($221,253,633 / 10,441,357
outstanding shares of beneficial interest,
$.01 par value, unlimited number of shares
authorized) .................................. $ 21.19
============
The accompanying notes are an integral part of the financial statements.
================================================================================
14 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Statement of Operations
year ended October 31, 1996
Investment Income
- --------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld
of $19,198) .................................. $ 2,526,785
Interest ....................................... 523,058
------------
3,049,843
Expenses:
Management fee (Note C) ........................ $ 1,447,537
Services to shareholders (Note C) .............. 474,227
Custodian and accounting fees (Note C) ......... 89,652
Trustees' fees and expenses (Note C) ........... 37,344
Reports to shareholders ........................ 62,315
Auditing ....................................... 35,985
Legal .......................................... 14,378
Registration fees .............................. 23,655
Amortization of organization expenses (Note A) . 6,174
Other .......................................... 11,590
------------
2,202,857
Net investment income .......................... 846,986
============
Realized and unrealized gain on investment transactions
- --------------------------------------------------------------------------------
Net realized gain from investments ............. 19,474,609
Net unrealized appreciation on investments
during the period ............................ 15,602,000
------------
Net gain on investments ........................ 35,076,609
Net increase in net assets resulting from
operations ................................... $ 35,923,595
============
The accompanying notes are an integral part of the financial statements.
================================================================================
15 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1996 1995
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ...................................... $ 846,986 $ 966,751
Net realized gain on investments ........................... 19,474,609 5,911,775
Net unrealized appreciation on investments during the period 15,602,000 23,228,314
------------- -------------
Net increase in net assets resulting from operations ....... 35,923,595 30,106,840
------------- -------------
Distributions to shareholders from:
Net investment income ...................................... (1,354,259) (1,069,236)
------------- -------------
Net realized gains from investment transactions ............ (5,803,710) (7,769,783)
------------- -------------
Fund share transactions:
Proceeds from shares sold .................................. 75,627,033 62,792,871
Net asset value of shares issued to shareholders in
reinvestment of distributions............................... 6,992,173 8,642,766
Cost of shares redeemed .................................... (63,602,914) (32,495,742)
------------- -------------
Net increase in net assets from Fund share transactions .... 19,016,292 38,939,895
------------- -------------
Increase (decrease) in net assets .......................... 47,781,918 60,207,716
Net assets at beginning of period .......................... 173,471,715 113,263,999
------------- -------------
Net assets at end of period (including undistributed net
investment income of $459,505 and $966,778, respectively)... $ 221,253,633 $ 173,471,715
============= =============
Other Information
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 9,409,227 7,006,138
------------- -------------
Shares sold ................................................ 3,829,796 3,794,148
Shares issued to shareholders in reinvestment of ........... 380,630 595,642
distributions
Shares redeemed ............................................ (3,178,296) (1,986,701)
------------- -------------
Net increase in Fund shares ................................ 1,032,130 2,403,089
Shares outstanding at end of period ........................ 10,441,357 9,409,227
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
16 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
May 15 1991
(commencement of
operations) to
Years Ended October 31, October 31,
1996 (a) 1995 1994 1993 1992 1991
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................... $18.44 $16.17 $16.42 $15.30 $13.65 $12.00
Income from investment operations:
Net investment income ................... .08 .11 .16 .06 .02 .03
Net realized and unrealized gain
(loss) on investments ................ 3.41 3.40 (.09) 1.09 1.68 1.62
Total from investment operations ........ 3.49 3.51 .07 1.15 1.70 1.65
Less distributions from:
Net investment income ................... (.14) (.15) (.08) (.03) (.03) --
Net realized gains on investment
transactions ......................... (.60) (1.09) (.24) -- (.02) --
Total distributions ..................... (.74) (1.24) (.32) (.03) (.05) --
Net asset value, end of period .......... $21.19 $18.44 $16.17 $16.42 $15.30 $13.65
------------------------------------------------------------------------------------------------------------------------
Total Return (%) ........................ 19.49 23.78 .39 7.49 12.47 13.75**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .. 221 173 113 126 101 30
Ratio of operating expenses net,
to average daily net assets (%) ...... 1.07 1.17 1.25 1.20 1.25 1.25*
Ratio of operating expenses before
expense reductions, to average
daily net assets (%) ................. 1.07 1.17 1.25 1.20 1.40 2.67*
Ratio of net investment income to
average daily net assets (%) ......... .41 .71 .96 .39 .24 .83*
Portfolio turnover rate (%) ............. 68.8 91.6 119.7 111.4 27.4 11.5*
Average commission rate paid (b) ........ $.0551 $ -- $ -- $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years beginning on or after September 1, 1995.
* Annualized
** Not annualized
================================================================================
17 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Quality Growth Fund (the "Fund") is a diversified series of Scudder
Investment Trust (the "Trust"). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system. If
there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used. Short-term investments
having a maturity of sixty days or less are valued at amortized cost.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement and the underlying collateral, is equal to at least 100.5% of the
resale price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. The differences
primarily relate to investments in certain securities sold at a loss. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
================================================================================
18 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Organization Costs. Costs incurred by the Fund in connection with its
organization and initial registration of shares were deferred and amortized on a
straight-line basis over a five-year period.
Other. Investment security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
For the year ended October 31, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $163,465,611 and
$134,364,781, respectively.
C. Related Parties
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund pays the Adviser a fee equal to
an annual rate of 0.70% of the Fund's average daily net assets, computed and
accrued daily and payable monthly. As manager of the assets of the Fund, the
Adviser directs the investments of the Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser determines the securities,
instruments, and other contracts relating to investments to be purchased, sold
or entered into by the Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with the
Agreement. The Agreement provides that if the Fund's expenses, exclusive of
taxes, interest, and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser. In
addition, the Adviser agreed not to impose all or a portion of its management
fee until February 29, 1996 in order to maintain the annualized expenses of the
Fund at not more than 1.25% of average daily net assets. For the year ended
October 31, 1996, the fee pursuant to the Agreement amounted to $1,447,537.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended October 31, 1996, the amount charged to the Fund by SSC aggregated
$275,078, of which $24,462 is unpaid at October 31, 1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended October 31,
1996, the amount charged to the Fund by STC aggregated $128,483, of which
$22,495 is unpaid at October 31, 1996.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
October 31, 1996, the amount charged to the Fund by SFAC aggregated $56,114, of
which $4,665 is unpaid at October 31, 1996.
The Fund pays each of its Trustees not affiliated with the Adviser $4,000
annually plus specified amounts for attended board and committee meetings. For
the year ended October 31, 1996, Trustees fees and expenses aggregated $37,344.
================================================================================
19 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Investment Trust and the Shareholders of Scudder
Quality Growth Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Quality Growth Fund including the investment portfolio, as of October 31, 1996,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended,
and for the period May 15, 1991 (commencement of operations) to October 31,
1991. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Quality Growth Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, and for the period May 15, 1991
(commencement of operations) to October 31, 1991 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 16, 1996
================================================================================
20 - SCUDDER QUALITY GROWTH FUND
<PAGE>
Tax Information
The Fund will mail shareholders IRS Form 1099-Div in late January, summarizing
all taxable distributions paid for 1996.
The Fund paid distributions of $0.32 per share from net long-term capital gains
during its fiscal year ended October 31, 1996. Pursuant to section 852 of the
Internal Revenue Code, the Fund designates $16,387,183 as capital gain dividends
for the year ended October 31, 1996.
Pursuant to section 854 of the Internal Revenue Code, the Fund designates
$2,418,885 as dividends eligible for the dividends received deduction for
corporations for the year ended October 31, 1996.
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dudley H. Ladd*
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University
Juris Padegs*
Trustee
Jean C. Tempel
Trustee; General Partner, TL Ventures
Bruce F. Beaty*
Vice President
Jerard K. Hartman*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President
Valerie F. Malter*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Assistant Treasurer
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
21 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds
- --------------------------------------------------------------------------------
Money Market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax Free Money Market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
- --------------------------------------------------------------------------------
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase
Pension Plans
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
Institutional Cash Management
- --------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +A portion of the income from the tax-free funds may
be subject to federal, state, and local taxes. *Not available in all states.
+++A no-load variable annuity contract provided by Charter National Life
Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc., are
traded on various stock exchanges. ++For information on Scudder Treasurers
Trust,(TM) an institutional cash management service that utilizes certain
portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
22 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
How to Contact Scudder
Account Service and Information
- --------------------------------------------------------------------------------
For existing account service and transactions
Scudder Investor Relations
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
Scudder Automated Information Line (SAIL)
1-800-343-2890
Investment Information
- --------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
Scudder Investor Relations
1-800-225-2470
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services
1-800-323-6105
Please address all correspondence to
- --------------------------------------------------------------------------------
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Visit the Scudder World Wide Web Site at:
- --------------------------------------------------------------------------------
http://funds.scudder.com
Or Stop by a Scudder Funds Center
- --------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they
can be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
For information on Scudder Treasurers Trust(TM), an
institutional cash management service for corporations,
non-profit organizations and trusts which utilizes certain
portfolios of Scudder Fund, Inc.* ($100,000 minimum), call:
1-800-541-7703.
For information on Scudder Institutional Funds*, funds designed
to meet the broad investment management and service needs of
banks and other institutions, call: 1-800-854-8525.
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
23 -- SCUDDER QUALITY GROWTH FUND
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
<PAGE>
SCUDDER INVESTMENT TRUST
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
a. Financial Statements
Included in Part A:
-------------------
For Scudder Growth and Income Fund:
Financial highlights for the ten fiscal years ended December 31, 1995
(Incorporated by reference to Post-Effective Amendment No. 75 to the Registration
Statement.)
For Scudder Large Company Growth Fund:
Financial Highlights for the period May 15, 1991 (commencement of operations) to
October 31, 1991 and for the five fiscal years ended October 31, 1996
For Scudder Classic Growth Fund:
Financial Highlights to be filed by amendment.
Included in the Part B:
-----------------------
For Scudder Growth and Income Fund:
Investment Portfolio as of December 31, 1995
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the year ended December 31, 1995
Statements of Changes in Net Assets for the two fiscal years
ended December 31, 1995
Financial Highlights for the ten fiscal years ended December 31, 1995
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective Amendment No. 75 to the Registration
Statement.)
For Scudder Large Company Growth Fund:
Investment Portfolio as of October 31, 1996
Statement of Assets and Liabilities as of October 31, 1996
Statement of Operations for the fiscal year ended October 31, 1996
Statements of Changes in Net Assets for the three fiscal years
ended October 31, 1996
Financial Highlights for the period May 15, 1991 (commencement of operations) to
October 31, 1991 and for the five fiscal years ended October 31, 1996
Notes to Financial Statements
Report of Independent Accountants
For Scudder Classic Growth Fund:
Statement of Assets and Liabilities as of September 5, 1996 and related notes
(Incorporated by reference to Post-Effective Amendment No. 77 to the Registration
Statement.)
Statements, schedules and historical information other than those listed above have been
omitted since they are either not applicable or are not required.
Part C - Page 1
<PAGE>
b. Exhibits:
All references are to the Registrant's Registration Statement on
Form N-1A filed with the Securities and Exchange Commission. File
Nos. 2-13628 and 811-43. ("Registration Statement").
1. (a)(1) Amended and Restated Declaration of Trust dated November 4, 1987 is
electronically filed herein.
(a)(2) Amendment to Amended and Restated Declaration of Trust dated
November 14, 1990 is electronically filed herein.
(a)(3) Certificate of Amendment of Declaration of Trust dated February 12,
1991 is electronically filed herein.
(b)(1) Establishment and Designation of Series of Shares of Beneficial
Interest, $0.01 par value, with respect to Scudder Growth and Income
Fund and Scudder Quality Growth Fund is electronically filed herein.
(b)(2) Establishment and Designation of Series of Shares of Beneficial
Interest, $0.01 par value, with respect to Scudder Classic Growth
Fund is incorporated by reference to Post-Effective Amendment No. 76
to the Registration Statement ("Post-Effective Amendment No. 76").
2. (a) By-Laws of the Registrant dated September 20, 1984 are
electronically filed herein.
(b) Amendment to By-Laws of the Registrant dated August 13, 1991 is
electronically filed herein.
(c) Amendment to By-Laws of the Registrant dated November 12, 1991 is
electronically filed herein.
3. Inapplicable.
4. Specimen certificate representing shares of beneficial interest with
$0.01 par value of Scudder Growth and Income Fund is incorporated by
reference to Post-Effective Amendment No. 59 to the Registration
Statement ("Post-Effective Amendment No. 59").
5. (a) Investment Management Agreement between the Registrant (on behalf of
Scudder Growth and Income Fund) and Scudder, Stevens & Clark, Inc.
("Scudder") dated November 14, 1990 is electronically filed herein.
(b) Investment Management Agreement between the Registrant (on behalf of
Scudder Quality Growth Fund) and Scudder dated May 9, 1991 is
electronically filed herein.
(c) Investment Management Agreement between the Registrant (on behalf of
Scudder Growth and Income Fund) and Scudder dated August 10, 1993 is
electronically filed herein.
Part C - Page 2
<PAGE>
(d) Investment Management Agreement between the Registrant (on behalf of
Scudder Growth and Income Fund) and Scudder dated August 8, 1995 is
incorporated by reference to Post-Effective Amendment No. 75 to the
Registration Statement ("Post-Effective Amendment No. 75").
(e) Form of Investment Management Agreement between the Registrant, on
behalf of Scudder Classic Growth Fund, and Scudder, Stevens & Clark,
Inc. is incorporated by reference to Post-Effective Amendment No. 77
to the Registration Statement ("Post-Effective Amendment No. 77").
6. (a) Underwriting Agreement between the Registrant and Scudder Investor
Services, Inc., formerly Scudder Fund Distributors, Inc., dated
September 10, 1985 is electronically filed herein.
7. Inapplicable.
8. (a)(1) Custodian Agreement between the Registrant (on behalf of Scudder
Growth and Income Fund) and State Street Bank and Trust Company
("State Street Bank") dated December 31, 1984 is electronically
filed herein.
(a)(2) Amendment dated April 1, 1985 to the Custodian Agreement between the
Registrant and State Street Bank is electronically filed herein.
(a)(3) Amendment dated August 8, 1987 to the Custodian Agreement between
the Registrant and State Street Bank is electronically filed herein.
(a)(4) Amendment dated August 9, 1988 to the Custodian Agreement between
the Registrant and State Street Bank is electronically filed herein.
(a)(5) Amendment dated July 29, 1991 to the Custodian Agreement between the
Registrant and State Street Bank is electronically filed herein.
(a)(6) Custodian fee schedule for Scudder Growth and Income Fund is
electronically filed herein.
(a)(7) Custodian fee schedule for Scudder Quality Growth Fund is
electronically filed herein.
(b) Subcustodian Agreement with fee schedule between State Street Bank
and The Bank of New York, London office, dated December 31, 1978 is
electronically filed herein.
(c)(1) Subcustodian Agreement between State Street Bank and The Chase
Manhattan Bank, N.A. dated September 1, 1986 is electronically filed
herein.
(d) Custodian fee schedule for Scudder Quality Growth Fund and Scudder
Growth and Income Fund is incorporated by reference to
Post-Effective Amendment No. 72 to the Registration Statement
("Post-Effective Amendment No. 72").
Part C - Page 3
<PAGE>
(e) Form of Custodian fee schedule for Scudder Classic Growth Fund is
incorporated by reference to Post-Effective Amendment No. 77 to the
Registration Statement ("Post-Effective Amendment No. 77").
9. (a)(1) Transfer Agency and Service Agreement with fee schedule between the
Registrant and Scudder Service Corporation dated October 2, 1989 is
electronically filed herein.
(a)(2) Revised fee schedule dated October 6, 1995 for Exhibit 9(a)(1) is
incorporated by reference to Post-Effective Amendment No. 76
("Post-Effective Amendment No. 76").
(a)(3) Form of revised fee schedule for Exhibit 9(a)(1) dated October 1,
1996 is filed herein.
(b)(1) COMPASS Service Agreement and fee schedule with Scudder Trust
Company dated January 1, 1990 is electronically filed herein.
(b)(2) COMPASS and TRAK 2000 Service Agreement between Scudder Trust
Company and the Registrant dated October 1, 1995 is incorporated by
reference to Post-Effective Amendment No. 74 ("Post-Effective
Amendment No. 74").
(b)(3) Form of revised fee schedule for Exhibit 9(b)(1) dated October 1,
1996 is filed herein.
(c) Fund Accounting Services Agreement between the Registrant, on behalf
of Scudder Quality Growth Fund and Scudder Fund Accounting
Corporation dated November 1, 1994 is incorporated by
reference to Post-Effective Amendment No. 72.
(d) Fund Accounting Services Agreement between the Registrant, on behalf
of Scudder Growth and Income Fund and Scudder Fund Accounting
Corporation dated October 17, 1994 is incorporated by
reference to Post-Effective Amendment No. 73.
(e) Form of Fund Accounting Services Agreement between the Registrant,
on behalf of Scudder Classic Growth Fund, and Scudder Fund
Accounting Corporation is incorporated by reference to
Post-Effective Amendment No. 77 to the Registration Statement
("Post-Effective Amendment No. 77").
(f)(1) Shareholder Services Agreement between the Registrant and Charles
Schwab & Co., Inc. dated June 1, 1990 is electronically filed herein.
(f)(2) Service Agreement between Copeland Associates, Inc. and Scudder
Service Corporation (on behalf of Scudder Quality Growth Fund and
Scudder Growth and Income Fund) dated June 8, 1995 is incorporated
by reference to Post-Effective Amendment No. 74 ("Post-Effective
Amendment No. 74").
10. Inapplicable.
11. Consent of Independent Accountants is filed herein.
12. Inapplicable.
Part C - Page 4
<PAGE>
13. Inapplicable.
14. (a) Scudder Flexi-Plan for Corporations and Self-Employed Individuals is
electronically filed herein.
(b) Scudder Individual Retirement Plan is electronically filed herein.
(c) SEP-IRA is electronically filed herein.
(d) Scudder Funds 403(b) Plan is electronically filed herein.
(e) Scudder Cash or Deferred Profit Sharing Plan under Section 401(k) is
electronically filed herein.
15. Inapplicable.
16. Schedule for Computation of Performance Quotation is filed herein.
Power of Attorney is electronically filed herein.
17. Inapplicable.
Item 25. Persons Controlled by or under Common Control with Registrant.
- -------- --------------------------------------------------------------
None
Item 26. Number of Holders of Securities (as of November 30, 1996).
- -------- ----------------------------------------------------------
(1) (2)
Title of Class Number of Record Shareholders
Shares of beneficial interest
($0.01 par value):
Scudder Growth and Income Fund 174,834
Scudder Large Company Growth Fund 14,548
Item 27. Indemnification.
- -------- ----------------
A policy of insurance covering Scudder, Stevens & Clark, Inc. its subsidiaries including Scudder
Investor Services, Inc., and all of the registered investment companies advised by Scudder, Stevens
& Clark, Inc. insures the Registrant's Trustees and officers and others against liability arising
by reason of an alleged breach of duty caused by any negligent act, error or accidental omission in
the scope of their duties.
Article IV, Sections 4.1-4.3 of Registrant's Declaration of Trust provide as follows:
Section 4.1. No Personal Liability of Shareholders, Trustees, etc. No Shareholder shall be
subject to any personal liability whatsoever to any Person in connection with Trust
Property or the acts, obligations or affairs of the Trust. No Trustee, officer, employee
or agent of the Trust shall be subject to any personal liability whatsoever to any Person,
other than to the Trust or its Shareholders, in connection with Trust Property or the
affairs of the Trust, save only that arising from bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
Part C - Page 5
<PAGE>
employee, or agent, as such, of the Trust, is made a party to any suit or proceeding to
enforce any such liability of the Trust, he shall not, on account thereof, be held to any
personal liability. The Trust shall indemnify and hold each Shareholder harmless from and
against all claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection with any such claim or
liability. The indemnification and reimbursement required by the preceding sentence shall
be made only out of the assets of the one or more series of which the shareholder who is
entitled to indemnification or reimbursement was a Shareholder at the time the act or event
occurred which gave rise to the claim against or liability of said shareholder. The rights
accruing to a Shareholder under this Section 4.1 shall not impair any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the
right of the Trust to indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, etc. No Trustee, officer, employee or agent of the
Trust shall be liable to the Trust, its Shareholders, or to any Shareholder, Trustee,
officer, employee, or agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 4.3 Mandatory Indemnification. (a) Subject to the exceptions and limitations
contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the Trust shall be
indemnified by the Trust to the fullest extent permitted by law against all
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes involved
as a party or otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, administrative, or other,
including appeals), actual or threatened; and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees, costs, judgments, amounts paid
in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof, or the Shareholders by
reason of a final adjudication by a court or other body before which a proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally adjudicated
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust;
(iii) in the event of a settlement or other disposition not involving a final
adjudication as provided in paragraph (b)(i) or (b)(ii) resulting in a payment by
a Trustee or officer, unless there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
Part C - Page 6
<PAGE>
(A) by the court or other body approving the settlement or other
disposition; or
(B) based upon a review of readily available facts (as opposed to a full
trial-type inquiry) by (x) vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter) or (y) written
opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by policies
maintained by the Trust, shall be severable, shall not affect any other rights to which any
Trustee or officer may now or hereafter be entitled, shall continue as to a person who has
ceased to be such Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person. Nothing contained herein shall
affect any rights to indemnification to which personnel of the Trust other than Trustees
and officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action, suit, or
proceeding of the character described in paragraph (a) of this Section 4.3 may be advanced
by the Trust prior to final disposition thereof upon receipt of an undertaking by or on
behalf of the recipient, to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate
security provided by the recipient, or the Trust shall be insured against losses
arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter (provided that
a majority of the Disinterested Trustees act on the matter) or an independent
legal counsel in a written opinion shall determine, based upon a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason to
believe that the recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is not (i) an
"Interested Person" of the Trust (including anyone who has been exempted from
being an "Interested Person" by any rule, regulation or order of the Commission),
or (ii) involved in the claim, action, suit or proceeding.
Item 28. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
The Adviser has stockholders and employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not considered officers for the purpose of
this Item 28.
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ---------------------------------------
Stephen R. Beckwith Director, Vice President, Assistant Treasurer, Chief Operating Officer & Chief
Financial Officer, Scudder, Stevens & Clark, Inc. (investment adviser)**
Lynn S. Birdsong Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Supervisory Director, The Latin America Income and Appreciation Fund N.V. (investment
company) +
Supervisory Director, The Venezuela High Income Fund N.V. (investment company) xx
Supervisory Director, Scudder Mortgage Fund (investment company)+
Part C - Page 7
<PAGE>
Supervisory Director, Scudder Floating Rate Funds for Fannie Mae Mortgage Securities I
& II (investment company) +
Director, Scudder, Stevens & Clark (Luxembourg) S.A. (investment manager) #
Trustee, Scudder Funds Trust (investment company)*
President & Director, The Latin America Dollar Income Fund, Inc. (investment company)**
President & Director, Scudder World Income Opportunities Fund, Inc. (investment
company)**
Director, Canadian High Income Fund (investment company)#
Director, Hot Growth Companies Fund (investment company)#
President, The Japan Fund, Inc. (investment company)**
Director, Sovereign High Yield Investment Company (investment company)+
Nicholas Bratt Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President & Director, Scudder New Europe Fund, Inc. (investment company)**
President & Director, The Brazil Fund, Inc. (investment company)**
President & Director, The First Iberian Fund, Inc. (investment company)**
President & Director, Scudder International Fund, Inc. (investment company)**
President & Director, Scudder Global Fund, Inc. (President on all series except Scudder
Global Fund) (investment company)**
President & Director, The Korea Fund, Inc. (investment company)**
President & Director, Scudder New Asia Fund, Inc. (investment company)**
President, The Argentina Fund, Inc. (investment company)**
Vice President, Scudder, Stevens & Clark Corporation (Delaware) (investment adviser)**
Vice President, Scudder, Stevens & Clark Japan, Inc. (investment adviser)###
Vice President, Scudder, Stevens & Clark of Canada Ltd. (Canadian investment adviser)
Toronto, Ontario, Canada
Vice President, Scudder, Stevens & Clark Overseas Corporationoo
E. Michael Brown Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Trustee, Scudder GNMA Fund (investment company)*
Trustee, Scudder U.S. Treasury Fund (investment company)*
Trustee, Scudder Tax Free Money Fund (investment company)*
Assistant Treasurer, Scudder Investor Services, Inc. (broker/dealer)*
Director & President, Scudder Realty Holding Corporation (a real estate holding
company)*
Director & President, Scudder Trust Company (a trust company)+++
Director, Scudder Trust (Cayman) Ltd.
Mark S. Casady Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Director & Vice President, Scudder Investor Services, Inc. (broker/dealer)*
Vice President, Scudder Service Corporation (in-house transfer agent)*
Director, SFA, Inc. (advertising agency)*
Linda C. Coughlin Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Director & Senior Vice President, Scudder Investor Services, Inc. (broker/dealer)*
President & Trustee, AARP Cash Investment Funds (investment company)**
President & Trustee, AARP Growth Trust (investment company)**
President & Trustee, AARP Income Trust (investment company)**
President & Trustee, AARP Tax Free Income Trust (investment company)**
President & Trustee, AARP Managed Investment Portfolios Trust (investment company)**
Director, SFA, Inc. (advertising agency)*
Part C - Page 8
<PAGE>
Margaret D. Hadzima Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Assistant Treasurer, Scudder Investor Services, Inc. (broker/dealer)*
Jerard K. Hartman Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder California Tax Free Trust (investment company)*
Vice President, Scudder Equity Trust (investment company)**
Vice President, Scudder Cash Investment Trust (investment company)*
Vice President, Scudder Fund, Inc. (investment company)**
Vice President, Scudder Global Fund, Inc. (investment company)**
Vice President, Scudder GNMA Fund (investment company)*
Vice President, Scudder Portfolio Trust (investment company)*
Vice President, Scudder Institutional Fund, Inc. (investment company)**
Vice President, Scudder International Fund, Inc. (investment company)**
Vice President, Scudder Investment Trust (investment company)*
Vice President, Scudder Municipal Trust (investment company)*
Vice President, Scudder Mutual Funds, Inc. (investment company)**
Vice President, Scudder New Asia Fund, Inc. (investment company)**
Vice President, Scudder New Europe Fund, Inc. (investment company)**
Vice President, Scudder Securities Trust (investment company)*
Vice President, Scudder State Tax Free Trust (investment company)*
Vice President, Scudder Funds Trust (investment company)**
Vice President, Scudder Tax Free Money Fund (investment company)*
Vice President, Scudder Tax Free Trust (investment company)*
Vice President, Scudder U.S. Treasury Money Fund (investment company)*
Vice President, Scudder Pathway Series (investment company)*
Vice President, Scudder Variable Life Investment Fund (investment company)*
Vice President, The Brazil Fund, Inc. (investment company)**
Vice President, The Korea Fund, Inc. (investment company)**
Vice President, The Argentina Fund, Inc. (investment company)**
Vice President & Director, Scudder, Stevens & Clark of Canada, Ltd. (Canadian
investment adviser) Toronto, Ontario, Canada
Vice President, The First Iberian Fund, Inc. (investment company)**
Vice President, The Latin America Dollar Income Fund, Inc. (investment company)**
Vice President, Scudder World Income Opportunities Fund, Inc. (investment company)**
Richard A. Holt Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder Variable Life Investment Fund (investment company)*
Dudley H. Ladd Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Director, Scudder Global Fund, Inc. (investment company)**
Director, Scudder International Fund, Inc. (investment company)**
Director, Scudder Mutual Fund, Inc. (investment company)**
Senior Vice President & Director, Scudder Investor Services, Inc. (broker/dealer)*
President & Director, SFA, Inc. (advertising agency)*
Vice President & Trustee, Scudder Cash Investment Trust (investment company)*
Trustee, Scudder Investment Trust (investment company)*
Trustee, Scudder Portfolio Trust (investment company)*
Trustee, Scudder Municipal Trust (investment company)*
Trustee, Scudder Securities Trust (investment company)*
Trustee, Scudder State Tax Free Trust (investment company)*
Trustee, Scudder Equity Trust (investment company)**
Vice President, Scudder U.S. Treasury Money Fund (investment company)*
Part C - Page 9
<PAGE>
John T. Packard Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President, Montgomery Street Income Securities, Inc. (investment company) o
Director, Scudder Realty Advisors, Inc. (realty investment adviser) x
Daniel Pierce Chairman & Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Chairman & Director, Scudder New Europe Fund, Inc. (investment company)**
Trustee, Scudder California Tax Free Trust (investment company)*
President & Trustee, Scudder Equity Trust (investment company)**
Director, The First Iberian Fund, Inc. (investment company)**
President & Trustee, Scudder GNMA Fund (investment company)*
President & Trustee, Scudder Portfolio Trust (investment company)*
President & Trustee, Scudder Funds Trust (investment company)**
President & Director, Scudder Institutional Fund, Inc. (investment company)**
President & Director, Scudder Fund, Inc. (investment company)**
Chairman & Director, Scudder International Fund, Inc. (investment company)**
President & Trustee, Scudder Investment Trust (investment company)*
Vice President & Trustee, Scudder Municipal Trust (investment company)*
Vice President & Trustee, Scudder Pathway Series (investment company)*
President & Director, Scudder Mutual Funds, Inc. (investment company)**
Director, Scudder New Asia Fund, Inc. (investment company)**
President & Trustee, Scudder Securities Trust (investment company)*
Trustee, Scudder State Tax Free Trust (investment company)*
Vice President & Trustee, Scudder Variable Life Investment Fund (investment company)*
Director, The Brazil Fund, Inc. (until 7/94) (investment company)**
Vice President & Assistant Treasurer, Montgomery Street Income Securities, Inc.
(investment company)o
Chairman, Vice President & Director, Scudder Global Fund, Inc. (investment company)**
Vice President, Director & Assistant Treasurer, Scudder Investor Services, Inc.
(broker/dealer)*
President & Director, Scudder Service Corporation (in-house transfer agent)*
Chairman & President, Scudder, Stevens & Clark of Canada, Ltd. (Canadian investment
adviser), Toronto, Ontario, Canada
President & Director, Scudder Precious Metals, Inc. xxx
Chairman & Director, Scudder Global Opportunities Funds (investment company) Luxembourg
Chairman, Scudder, Stevens & Clark, Ltd. (investment adviser) London, England
Director, Scudder Fund Accounting Corporation (in-house fund accounting agent)*
Director, Vice President & Assistant Secretary, Scudder Realty Holdings Corporation (a
real estate holding company)*
Director, Scudder Latin America Investment Trust PLC (investment company)@
Incorporator, Scudder Trust Company (a trust company)+++
Director, Fiduciary Trust Company (banking & trust company) Boston, MA
Director, Fiduciary Company Incorporated (banking & trust company) Boston, MA
Trustee, New England Aquarium, Boston, MA
Kathryn L. Quirk Director & Secretary, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder Fund, Inc. (investment company)**
Vice President, Scudder Institutional Fund, Inc. (investment company)**
Vice President & Assistant Secretary, Scudder World Income Opportunities Fund, Inc.
(investment company)**
Vice President & Assistant Secretary, The Korea Fund, Inc. (investment company)**
Vice President & Assistant Secretary, The Argentina Fund, Inc. (investment company)**
Part C - Page 10
<PAGE>
Vice President & Assistant Secretary, The Brazil Fund, Inc. (investment company)**
Vice President & Assistant Secretary, Scudder International Fund, Inc. (investment
company)**
Vice President & Assistant Secretary, Scudder Equity Trust (investment company)**
Vice President & Assistant Secretary, Scudder Securities Trust (investment company)*
Vice President & Assistant Secretary, Scudder Funds Trust (investment company)**
Vice President & Assistant Secretary, Scudder Global Fund, Inc. (investment company)**
Vice President & Assistant Secretary, Montgomery Street Income Securities, Inc.
(investment company)o
Vice President & Assistant Secretary, Scudder Mutual Funds, Inc. (investment company)**
Vice President & Assistant Secretary, Scudder Pathway Series (investment company)*
Vice President & Assistant Secretary, Scudder New Europe Fund, Inc. (investment
company)**
Vice President & Assistant Secretary, Scudder Variable Life Investment Fund (investment
company)*
Vice President & Assistant Secretary, The First Iberian Fund, Inc. (investment
company)**
Vice President & Assistant Secretary, The Latin America Dollar Income Fund, Inc.
(investment company)**
Vice President & Secretary, AARP Growth Trust (investment company)**
Vice President & Secretary, AARP Income Trust (investment company)**
Vice President & Secretary, AARP Tax Free Income Trust (investment company)**
Vice President & Secretary, AARP Cash Investment Funds (investment company)**
Vice President & Secretary, AARP Managed Investment Portfolios Trust (investment
company)**
Vice President, Scudder GNMA Fund (investment company)*
Vice President & Secretary, The Japan Fund, Inc. (investment company)**
Director, Vice President & Secretary, Scudder Fund Accounting Corporation (in-house
fund accounting agent)*
Senior Vice President, Scudder Investor Services, Inc. (broker/dealer)*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation (a real
estate holding company)*
Vice President & Assistant Secretary, Scudder Precious Metals, Inc. xxx
Cornelia M. Small Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder Global Fund, Inc. (investment company)**
Vice President, AARP Cash Investment Funds (investment company)**
Vice President, AARP Growth Trust (investment company)**
Vice President, AARP Income Trust (investment company)**
Vice President, AARP Tax Free Income Trust (investment company)**
Edmond D. Villani Director, President & Chief Executive Officer, Scudder, Stevens & Clark, Inc.
(investment adviser)**
Chairman & Director, Scudder New Asia Fund, Inc. (investment company)**
Chairman & Director, The Argentina Fund, Inc. (investment company)**
Director, Scudder Realty Advisors, Inc. (realty investment adviser) x
Supervisory Director, Scudder Mortgage Fund (investment company) +
Chairman & Director, The Latin America Dollar Income Fund, Inc. (investment company)**
Director, Scudder, Stevens & Clark Japan, Inc. (investment adviser)###
Chairman & Director, Scudder World Income Opportunities Fund, Inc. (investment
company)**
Part C - Page 11
<PAGE>
Supervisory Director, Scudder Floating Rate Funds for Fannie Mae Mortgage Securities I
& II (investment company)+
Director, The Brazil Fund, Inc. (investment company)**
Director, Indosuez High Yield Bond Fund (investment company) Luxembourg
President & Director, Scudder, Stevens & Clark Overseas Corporationoo
President & Director, Scudder, Stevens & Clark Corporation (Delaware) (investment
adviser)**
Director, IBJ Global Investment Management S.A., (Luxembourg investment management
company) Luxembourg, Grand-Duchy of Luxembourg
Stephen A. Wohler Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Montgomery Street Income Securities, Inc. (investment company)o
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
++ Two Prudential Plaza, 180 N. Stetson Avenue, Chicago, IL
+++ 5 Industrial Way, Salem, NH
o 101 California Street, San Francisco, CA
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
+ John B. Gorsiraweg 6, Willemstad Curacao, Netherlands Antilles
xx De Ruyterkade 62, P.O. Box 812, Willemstad Curacao, Netherlands Antilles
## 2 Boulevard Royal, Luxembourg
*** B1 2F3F 248 Section 3, Nan King East Road, Taipei, Taiwan
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
@ c/o Sinclair Hendersen Limited, 23 Cathedral Yard, Exeter, Devon
Item 29. Principal Underwriters.
- -------- -----------------------
(a) Scudder California Tax Free Trust
Scudder Cash Investment Trust
Scudder Equity Trust
Scudder Fund, Inc.
Scudder Funds Trust
Scudder Global Fund, Inc.
Scudder GNMA Fund
Scudder Institutional Fund, Inc.
Scudder International Fund, Inc.
Scudder Investment Trust
Scudder Municipal Trust
Scudder Mutual Funds, Inc.
Scudder Pathway Series
Scudder Portfolio Trust
Scudder Securities Trust
Scudder State Tax Free Trust
Scudder Tax Free Money Fund
Scudder Tax Free Trust
Scudder U.S. Treasury Money Fund
Scudder Variable Life Investment Fund
AARP Cash Investment Funds
AARP Growth Trust
AARP Income Trust
AARP Tax Free Income Trust
Part C - Page 12
<PAGE>
AARP Managed Investment Portfolios Trust
The Japan Fund, Inc.
(b)
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
E. Michael Brown Assistant Treasurer None
Two International Place
Boston, MA 02110
Mark S. Casady Director and Vice President None
Two International Place
Boston, MA 02110
Linda Coughlin Director and Senior Vice President None
Two International Place
Boston, MA 02110
Richard W. Desmond Vice President None
345 Park Avenue
New York, NY 10154
Coleen Downs Dinneen Assistant Clerk Assistant Secretary
Two International Place
Boston, MA 02110
Paul J. Elmlinger Senior Vice President None
345 Park Avenue
New York, NY 10154
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Vice President
Two International Place Treasurer and Assistant Clerk
Boston, MA 02110
Dudley H. Ladd Director and Senior Vice President Trustee
Two International Place
Boston, MA 02110
David S. Lee Director, President and Assistant Vice President and Trustee
Two International Place Treasurer
Boston, MA 02110
Thomas F. McDonough Clerk Vice President, Secretary
Two International Place and Assistant Treasurer
Boston, MA 02110
Part C - Page 13
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Thomas H. O'Brien Assistant Treasurer None
345 Park Avenue
New York, NY 10154
Edward J. O'Connell Assistant Treasurer Vice President and
345 Park Avenue Assistant Treasurer
New York, NY 10154
Daniel Pierce Director, Vice President President and Trustee
Two International Place and Assistant Treasurer
Boston, MA 02110
Kathryn L. Quirk Senior Vice President Vice President and
345 Park Avenue Secretary
New York, NY 10154
Edmund J. Thimme Director and Vice President None
345 Park Avenue
New York, NY 10154
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
David B. Watts Assistant Treasurer None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President None
Two International Place
Boston, MA 02110
The Underwriter has employees who are denominated officers of an operational area. Such persons do not have
corporation-wide responsibilities and are not considered officers for the purpose of this Item 29.
(c)
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage
Underwriter Commissions and Repurchases Commissions Other Compensation
----------------- ---------------- --------------- ----------- ------------------
Scudder Investor None None None None
Services, Inc.
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be maintained by Section 31(a) of the 1940
Act and the Rules promulgated thereunder are maintained by Scudder, Stevens & Clark, Two
International Place, Boston, MA 02110. Records relating to the duties of the Registrant's
custodian are maintained by State Street Bank and Trust Company, Heritage Drive, North Quincy,
Part C - Page 14
<PAGE>
Massachusetts. Records relating to the duties of the Registrant's transfer agent are maintained by
Scudder Service Corporation, Two International Place, Boston, Massachusetts.
Item 31. Management Services.
- -------- --------------------
Inapplicable.
Item 32. Undertakings.
- -------- -------------
Inapplicable.
Part C - Page 15
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Boston and the Commonwealth of
Massachusetts on the 19 day of December, 1996.
SCUDDER INVESTMENT TRUST
By /s/Thomas F. McDonough
------------------------------------
Thomas F. McDonough, Vice President,
Secretary and Assistant Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Daniel Pierce
- --------------------------------------
Daniel Pierce* President (Principal Executive December 19, 1996
Officer) and Trustee
/s/Henry P. Becton, Jr.
- --------------------------------------
Henry P. Becton, Jr.* Trustee December 19, 1996
/s/Dudley H. Ladd
- --------------------------------------
Dudley H. Ladd* Trustee December 19, 1996
/s/George M. Lovejoy, Jr.
- --------------------------------------
George M. Lovejoy, Jr.* Trustee December 19, 1996
/s/Wesley W. Marple, Jr.
- --------------------------------------
Wesley W. Marple, Jr.* Trustee December 19, 1996
/s/Juris Padegs
- --------------------------------------
Juris Padegs* Trustee December 19, 1996
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Jean C. Tempel
- --------------------------------------
Jean C. Tempel* Trustee December 19, 1996
/s/Pamela A. McGrath
- --------------------------------------
Pamela A. McGrath Treasurer (Principal Financial and December 19, 1996
Accounting Officer) and Vice President
</TABLE>
*By: /s/Thomas F. McDonough
-----------------------------
Thomas F. McDonough**
** Attorney-in-fact pursuant to a power of attorney
contained in the signature page of Post-Effective
Amendment No. 61 to the Registration Statement
filed February 22, 1991 and pursuant to a power of
attorney contained in the signature page of Post-
Effective Amendment No. 72 to the Registration
Statement filed February 28, 1995.
2
<PAGE>
File No. 2-13628
File No. 811-43
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 78
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 30
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
SCUDDER INVESTMENT TRUST
<PAGE>
SCUDDER INVESTMENT TRUST
EXHIBIT INDEX
Exhibit 1(a)(1)
Exhibit 1(a)(2)
Exhibit 1(a)(3)
Exhibit 1(b)(1)
Exhibit 2(a)
Exhibit 2(b)
Exhibit 2(c)
Exhibit 5(a)
Exhibit 5(b)
Exhibit 5(c)
Exhibit 6(a)
Exhibit 8(a)(1)
Exhibit 8(a)(2)
Exhibit 8(a)(3)
Exhibit 8(a)(4)
Exhibit 8(a)(5)
Exhibit 8(a)(6)
Exhibit 8(a)(7)
Exhibit 8(b)
Exhibit 8(c)(1)
Exhibit 9(a)(1)
Exhibit 9(a)(3)
Exhibit 9(b)(1)
Exhibit 9(b)(3)
<PAGE>
Exhibit 9(f)(1)
Exhibit 11
Exhibit 14(a)
Exhibit 14(b)
Exhibit 14(c)
Exhibit 14(d)
Exhibit 14(e)
Exhibit 16
Exhibit 1
SCUDDER GROWTH AND INCOME FUND FILED
[ILLEGIBLE]
AMENDED AND RESTATED NOV 4 1987
DECLARATION OF TRUST SECRETARY OF STATE
CORPORATION DIVISION
DATED November 3, 1987
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I -- Name and Definitions
Section 1.1 Name
Section 1.2 Definitions
ARTICLE II -- Trustees
Section 2.1 General Powers
Section 2.2 Investments
Section 2.3 Legal Title
Section 2.4 Issuance and Repurchase of
Shares
Section 2.5 Delegation; Committees
Section 2.6 Collection and Payment
Section 2.7 Expenses
Section 2.8 Manner of Acting; By-laws
Section 2.9 Miscellaneous Powers
Section 2 10 Principal Transactions
Section 2.11 Number of Trustees
Section 2.12 Election and Term
Section 2.13 Resignation and Removal
Section 2.14 Vacancies
Section 2.15 Delegation of Power to Other
Trustees
ARTICLE III -- Contracts
Section 3.1 Distribution Contract
Section 3.2 Advisory or Management Contract
Section 3.3 Affiliations of Trustees or
Officers, Etc.
Section 3.4 Compliance with 1940 Act
ARTICLE IV -- Limitations of Liability of Shareholders,
Trustees and Others
Section 4.1 No Personal Liability of Share-
holders, Trustees, Etc.
Section 4.2 Non-Liability of Trustees, Etc.
Section 4.3 Mandatory Indemnification
-ii-
<PAGE>
Page
----
Section 4.4 No Bond Required of Trustees
Section 4.5 No Duty of Investigation; Notice in
Trust Instruments, Etc.
Section 4.6 Reliance on Experts, Etc.
ARTICLE V -- Shares of Beneficial Interest
Section 5.1 Beneficial Interest
Section 5.2 Rights of Shareholders
Section 5,3 Trust Only
Section 5.4 Issuance of Shares
Section 5.5 Register of Shares
Section 5.6 Transfer of Shares
Section 5.7 Notices, Reports
Section 5.8 Treasury Shares
Section 5.9 Voting Powers
Section 5.10 Meetings of Shareholders
Section 5.11 Series Designation
Section 5.12 Assent to Declaration of Trust
ARTICLE VI -- Redemption and Repurchase of Shares
Section 6.1 Redemption of Shares
Section 6.2 Price
Section 6.3 Payment
Section 6.4 Effect of Suspension of
Determination of Net
Asset Value
Section 6.5 Repurchase by Agreement
Section 6.6 Redemption of Shareholder's
Interest
Section 6.7 Redemption of Shares in Order
to Qualify as Regulated
Investment Company;
Disclosure of Holding
Section 6.3 Reductions in Number of Outstanding
Shares Pursuant to Net Asset
Value Formula
Section 6.9 Suspension of Right of Redemption
ARTICLE VII -- Determination of Net Asset Value, Net
Income and Distributions
Section 7.1 Net Asset Value
Section 7.2 Distributions to Shareholders
Section 7.3 Determination of Net Income; Constant
Net Asset Value; Reduction of
Outstanding Shares
-iii-
<PAGE>
Page
----
Section 7.4 Allocation Between Principal and
Income
Section 7.5 Power to Modify Foregoing
Procedures
ARTICLE VIII -- Duration; Termination of Trust;
Amendment; Mergers, Etc.
Section 8.1 Duration
Section 8.2 Termination of Trust
Section 8.3 Amendment Procedure
Section 8.4 Merger, Consolidation and Sale
of Assets
Section 8.5 Incorporation
ARTICLE IX-- Reports to Shareholders
ARTICLE X -- Miscellaneous
Section 10.1 Filing
section 10.2 Governing Law
Section 10.3 Counterparts
Section 10.4 Reliance by Third Parties
Section 10.5 Provisions in Conflict with Law
or Regulations
-iv-
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SCUDDER GROWTH AND INCOME FUND
DATED November 3, 1987
AMENDED AND RESTATED DECLARATION OF TRUST made November 3, 1987, by the
undersigned Trustees;
WHEREAS, pursuant to a Declaration of Trust dated September 20, 1984, the
Trustees, established a Massachusetts business trust for the investment and
reinvestment of funds contributed thereto;
WHEREAS, said Declaration of Trust has been amended from time to time;
WHEREAS, the Trustees desire to restate said Declaration of Trust in its
entirety;
NOW, THEREFORE, the Trustees restate the Declaration of Trust as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "Scudder
Growth and Income Fund".
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-laws" means the By-laws referred to in Section 2.8 hereof, as from
time to time amended.
(b) The term "Commission" has the meaning given it in the 1940 Act. The
term "Interested Person" has the meaning given it in the 1940 Act, as modified
by any applicable order or orders of the Commission. Except as otherwise defined
by the Trustees in conjunction with the establishment of any series of Shares,
the term "vote of a majority of the Shares outstanding and entitled to vote"
shall have the same meaning as the term "vote of a majority of the outstanding
voting securities" given it in the 1940 Act.
(c) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
<PAGE>
include a system for the central handling of securities described in said
Section 17(f).
(d) "Declaration" means this Declaration of Trust as further amended from
time to time. Reference in this Declaration of Trust to "Declaration," "hereof,"
"herein," and "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which such words appear.
(e) "Distributor" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.
(f) "His" shall include the feminine and neuter, as well as the masculine,
genders.
(g) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(h) "Municipal Bonds" means obligations issued by or on behalf of states,
territories of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest from which
is exempt from regular Federal income tax.
(i) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(j) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(k) "Series" individually or collectively means the two or more Series as
may be established and designated from time to time by the Trustees pursuant to
Section 5.11 hereof.
(1) "Shareholder" means a record owner of Outstanding Shares.
(m) "Shares" means the equal proportionate units of interest into which the
beneficial interest in the Trust shall be divided from time to time, including
the Shares of any and all series which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares. "Outstanding Shares" means
those Shares shown from time to time on the books of the Trust or its Transfer
Agent as then issued and outstanding, but shall not include Shares which have
been redeemed or repurchased by the Trust and which are at the time held in the
treasury of the Trust.
(n) "Transfer Agent" means any one or more Persons other than the Trust who
maintains the Shareholder records of the Trust, such as the list of
-2-
<PAGE>
Shareholders, the number of Shares credited to each account, and the like.
(o) The "Trust" means the Scudder Growth and Income Fund.
(p) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(q) The "Trustees" means the person or persons who has or have signed this
Declaration, so long as he or they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to time or be duly
qualified and serving as Trustees in accordance with the provisions of Article
II hereof and reference herein to a Trustee or the Trustees shall refer to such
person or persons in this capacity or their capacities as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
-3-
<PAGE>
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, securities,
including common and preferred stocks; warrants; bonds, debentures, bills, time
notes and all other evidences of indebtedness; negotiable or non-negotiable
instruments; government securities, including securities of any state,
municipality or other political subdivision thereof, or any governmental or
quasi-governmental agency or instrumentality; and money market instruments
including bank certificates of deposit, finance paper, commercial paper, bankers
acceptances and all kinds of repurchase agreements, of any corporation, company,
trust, association, firm or other business organization however established, and
of any country, state, municipality or other political subdivision, or any
governmental or quasi-governmental agency or instrumentality
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend, and to pledge any such securities and to enter
into repurchase agreements and forward foreign currency exchange contracts, to
purchase and sell futures contracts on securities, securities indices and
foreign currencies, to purchase or sell options on such contracts, foreign
currency contracts and foreign currencies and to engage in all types of hedging
and risk management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities, repurchase agreements, futures contracts and options and
other assets included in the Trust Property, including the right to vote thereon
and otherwise act with respect thereto and to do all acts for the preservation,
protection, improvement and enhancement in value of all such assets.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash, and any interest therein.
(f) To borrow money and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of any obligation or engagement of any other Person and to lend
Trust Property.
-4-
<PAGE>
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest, and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To enter into a plan of distribution and any related agreements whereby
the Trust may finance directly or indirectly any activity which is primarily
intended to result in the sale of Shares.
(i) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property, including
the property of any Series of the Trust, shall be vested in the Trustees as
joint tenants except that the Trustees shall have power to cause legal title to
any Trust Property to be held by or in the name of one or more of the Trustees,
or in the name of the Trust, or in the name of any other Person as nominee, on
such terms as the Trustees may determine, provided that the interest of the
Trust therein is deemed appropriately protected. The right, title and interest
of the Trustees in the Trust Property and the property of each Series of the
Trust shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office, resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property or the property of any Series of the
Trust, and the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
-5-
<PAGE>
executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the
provisions set forth in Articles VI and VII and Section 5.11 hereof, to apply to
any such repurchase, redemption, retirement, cancellation or acquisition of
Shares any funds or property of the particular series of the Trust with respect
to which such Shares are issued, whether capital or surplus or otherwise, to the
full extent now or hereafter permitted by the laws of the Commonwealth of
Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur and pay
any expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided herein
or in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of the entire number
of Trustees then in office. The Trustees may adopt By-laws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
-6-
<PAGE>
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.11, hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the
Trust; (b) enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including the Investment
Adviser, Distributor, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
Section 2.10. Principal Transactions. Except in transactions not permitted
by the 1940 Act or rules and regulations adopted by the Commission, the Trustees
may, on behalf of the Trust, buy any securities from or sell any securities to,
or lend any assets of the Trust to, any Trustee or officer of the Trust or any
firm of which any such Trustee or officer is a member acting as principal, or
-7-
<PAGE>
have any such dealings with the Investment Adviser, Distributor or Transfer
Agent or with any Interested Person of such Person; and the Trust may employ any
such Person, or firm or company in which such Person is an Interested Person, as
broker, legal counsel, registrar, Transfer Agent, dividend disbursing agent or
custodian upon customary terms.
Section 2.11. Number of Trustees. The number of Trustees shall initially be
one (1), and thereafter shall be such number as shall be fixed from time to time
by a written instrument signed by a majority of the Trustees, provided, however,
that the number of Trustees shall in no event be more than fifteen (15).
Section 2.12. Election and Term. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.14 hereof, the Trustees shall
be elected by the Shareholders owning of record a plurality of the Shares voting
at a meeting of Shareholders. Such a meeting shall be held on a date fixed by
the Trustees. Except in the event of resignation or removals pursuant to Section
2.13 hereof, each Trustee shall hold office until such time as less than a
majority of the Trustees holding office have been elected by Shareholders. In
such event the Trustees then in office will call a Shareholders' meeting for the
election of Trustees. Except for the foregoing circumstances, the Trustees shall
continue to hold office and may appoint successor Trustees.
Section 2.13. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than one) with cause, by
the action of two-thirds of the remaining Trustees. Any Trustee may be removed
at any meeting of Shareholders by vote of two thirds of the Outstanding Shares.
The Trustee shall promptly call a meeting of the shareholders for the purpose of
voting upon the question of removal of any such Trustee or Trustees when
requested in writing so to do by the holders of not less than ten percent of the
Outstanding Shares, and in that connection, the Trustees will assist shareholder
communications to the extent provided for in Section 16(c) under the 1940 Act.
Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a
Trustee, he shall execute and deliver such documents as the remaining Trustees
shall require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property or property of any series of the Trust held in the
name of the resigning or removed Trustee. Upon the incapacity or death of any
-8-
<PAGE>
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
Section 2.14. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.14, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.
Section 2.15. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of the Shares at a price based on the net
asset value of a Share, whereby the Trustees may either agree to sell the Shares
-9-
<PAGE>
to the other party to the contract or appoint such other party their sales agent
for the Shares, and in either case on such terms and conditions, if any, as may
be prescribed in the By-laws; and such further terms and conditions as the
Trustees may in their discretion determine not inconsistent with the provisions
of this Article III or of the By-laws; and such contract may also provide for
the repurchase of the Shares by such other party as agent of the Trustees.
Section 3.2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into an investment advisory or management
contract or separate advisory contracts with respect to one or more Series
whereby the other party to such contract shall undertake to furnish to the Trust
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions as the Trustees may in their discretion determine, including the
grant of authority to such other party to determine what securities shall be
purchased or sold by the Trust and what portion of its assets shall be
uninvested, which authority shall include the power to make changes in the
investments of the Trust or any Series.
The Trustees may also employ, or authorize the Investment Adviser to
employ, one or more sub-advisers from time to time to perform such of the acts
and services of the Investment Adviser and upon such terms and conditions as may
be agreed upon between the Investment Adviser and such sub-advisers and approved
by the Trustees. Any reference in this Declaration to the Investment Adviser
shall be deemed to include such sub-advisers unless the context otherwise
requires.
Section 3.3. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser or distributor of or for any partnership, corporation, trust,
association or other organization or of or for any parent or affiliate of
any organization, with which a contract of the character described in
Sections 3.1 or 3.2 above or for services as Custodian, Transfer Agent or
disbursing agent or for related services may have been or may hereafter be
made, or that any such organization, or any parent or affiliate thereof, is
a Shareholder of or has an interest in the Trust, or that
(ii) any partnership. corporation, trust, association or other
organization with which a contract of the character described in Sections
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3.1 or 3.2 above or for services as Custodian, Transfer Agent or disbursing
agent or for related services may have been or may hereafter be made also
has any one or more of such contracts with one or more other partnerships,
corporations, trusts, associations or other organizations, or has other
business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.4. Compliance with 1940 Act. Any contract entered into pursuant
to Sections 3.1 or 3.2 shall be consistent with and subject to the requirements
of Section 15 of the 1940 Act (including any amendment thereof or other
applicable act of Congress hereafter enacted), as modified by any applicable
order or orders of the Commission, with respect to its continuance in effect,
its termination and the method of authorization and approval of such contract or
renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such ability of the Trust,
he shall not, on account thereof, be held to any personal liability. The Trust
shall indemnify and hold each Shareholder harmless from and against all claims
and abilities, to which such Shareholder may become subject by reason of his
being or having been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection with any such
claim or liability. The indemnification and reimbursement required by the
preceding sentence shall be made only out of the assets of the one or more
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Series of which the Shareholder who is entitled to indemnification or
reimbursement was a Shareholder at the time the act or event occurred which gave
rise to the claim against or liability of said Shareholder. The rights accruing
to a shareholder under this Section 4.1 shall not impair any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent thereof for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, willful misfeasance, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by law against
all liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, administrative or
other, including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys, fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof, or the
Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
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(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not involving
a final adjudication as provided in paragraph (b)(i) or (b)(ii) resulting
in a payment by a Trustee or officer, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement of other
disposition; or
(B) based upon a review of readily available facts (as opposed to
a full trial-type inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter (provided that a majority
of the Disinterested Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust other than Trustees and officers may be entitled by
contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
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upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is
not (i) an Interested Person of the Trust (including anyone who has been
exempted from being an Interested Person by any rule, regulation or order
of the Commission), or (ii) involved in the claim, action, suit or
proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate, Share, other security of the Trust or undertaking, and every other
act or thing whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees or agents of the Trust. Every written obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking made or issued by the Trustees may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust under any such instrument are not binding upon
any of the Trustees or Shareholders individually, but bind only the trust
estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee and officer or employee
of the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
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Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest, all
of one class, except as provided in Section 5.11 hereof, par value $.01 per
share. The number of Shares of beneficial interest authorized hereunder is
unlimited. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust Property
and the property of each Series of the Trust of every description and the right
to conduct any business hereinbefore described are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have no right to
call for any partition or division of any property, profits, rights or interests
of the Trust nor can they be called upon to share or assume any losses of the
Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any Series of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may, from
time to time without vote of the Shareholders, issue Shares. in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
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party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury. The Trustees may from time to
time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole Shares and/or 1/1,000ths of a Share or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein or in the
By-laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
Section 5.6. Transfer of Shares. Except as otherwise provided by the
Trustees, shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the genuineness of each such execution
and authorization and of other matters as may reasonably be required. Upon such
delivery the transfer shall be recorded on the register of the Trust. Until such
record is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor any transfer
agent or registrar nor any officer, employee or agent of the Trust shall be
affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
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Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices, Reports. Any and all notices to which any Shareholder
may be entitled and any and all communications shall be deemed duly served or
given if mailed, postage prepaid, addressed to any Shareholder of record at his
last known address as recorded on the register of the Trust. A notice of a
meeting, an annual report and any other communication to Shareholders need not
be sent to a Shareholder (i) if an annual report and a proxy statement for two
consecutive shareholder meetings have been mailed to such Shareholder's address
and have been returned as undeliverable, (ii) if all, and at least two, checks
(if sent by first class mail) in payment of dividends on Shares during a
twelve-month period have been mailed to such Shareholder's address and have been
returned as undeliverable or (iii) in any other case in which a proxy statement
concerning a meeting of security holders is not required to be given pursuant to
the Commission's proxy rules as front time to time in effect under the
Securities Exchange Act of 1934. However, delivery of such proxy statements,
annual reports and other communications shall resume if and when such
Shareholder delivers or causes to be delivered to the Trust written notice
setting forth such Shareholder's then current address.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.12; (ii) for the
removal of Trustees as provided in Section 2.13; (iii) with respect to any
investment advisory or management contract entered into pursuant to Section 3.2;
(iv) with respect to termination of the Trust as provided in Section 8.2; (v)
with respect to any amendment of this Declaration to the extent and as provided
in Section 8.3; (vi) with respect to any merger, consolidation or sale of assets
as provided in Section 8.4; (vii) with respect to incorporation of the Trust or
any Series to the extent and as provided in Section 8.5; (viii) to the same
extent as the stockholders of Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
shareholders; (ix) with respect to any plan adopted pursuant to Rule 12b-l (or
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any successor rule) under the 1940 Act; and (x) with respect to such additional
matters relating to the Trust as may be required by this Declaration, the
By-laws or any registration of the Trust as an investment company under the 1940
Act with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote, except that the Trustees may, in
conjunction with the establishment of any Series of Shares, establish or reserve
the right to establish conditions under which the several Series shall have
separate voting rights or, if a Series would not, in the sole judgment of the
Trustees, be materially affected by a proposal, no voting rights. There shall be
no cumulative voting in the election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration or the Bylaws to be taken by Shareholders. The
By-laws may include further provisions for Shareholders' votes and meetings and
related matters.
Section 5.10. Meetings of Shareholders. Meetings of Shareholders may be
called at any time by the President, and shall be called by the President and
Secretary at the request in writing or by resolution, of a majority of Trustees,
or at the written request of the holder or holders of ten percent (10%) or more
of the total number of Shares then issued and outstanding of the Trust entitled
to vote at such meeting. Any such request shall state the purpose of the
proposed meeting.
Section 5.11. Series Designation. The Trustees, in their discretion, may
authorize the division of Shares into two or more Series, and the different
Series shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different Series as
to investment objective, purchase price, allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all series as the context may require.
If the Trustees shall divide the Shares of the Trust into two or more
Series, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust shall apply equally to each
Series of the Trust except, as the context requires otherwise.
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(b) The number of authorized Shares and the number of Shares of each Series
that may be issued shall be unlimited. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any Series
into one or more Series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may determine,
or cancel any Shares of any Series reacquired by the Trust at their discretion
from time to time.
(c) All consideration received by the Trust for the issue or sale of Shares
off a particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors of such Series and except
as may otherwise be required by applicable laws, and shall be so recorded upon
the books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series, the Trustees
shall allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable. Each such allocation by the Trustees
shall be conclusive and binding upon the shareholders of all Series for all
purposes.
(d) The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated and
charged by the Trustees to and among any one or more at the Series established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items are capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders. The assets of
a particular Series of the Trust shall, under no circumstances, be charged with
liabilities attributable to any other Series of the Trust. All persons extending
credit to, or contracting with or having any claim against a particular Series
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of the Trust shall look only to the assets of that particular Series for payment
of such credit, contract or claim. No Shareholder or former Shareholder of any
Series shall have any claim on or right to any assets allocated or belonging to
any other series.
(e) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains made with respect to such Series. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his being or having been a
Shareholder of a Series, such shareholder shall be paid solely out of the funds
and property of such Series of the Trust. Upon liquidation or termination of a
Series of the Trust, Shareholders of such Series shall be entitled to receive a
pro rata share of the net assets of such Series. A Shareholder of a particular
Series of the Trust shall not be entitled to participate in a derivative or
class action on behalf of any other Series or the Shareholders of any other
Series of the Trust.
The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
Series and the establishment and designation thereof. Except as otherwise
provided in this Article V, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each class and
Series of Shares. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration.
Section 5.12. Assent to Declaration of Trust. Every Shareholder, by virtue
of having become a shareholder. shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 8.1. Redemption of Shares. All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust.
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The Trust shall redeem the Shares upon the appropriately verified written
application of the record holder thereof (or upon such other form of request as
the Trustees may determine) at such office or agency as may be designated from
time to time for that purpose in the Trust's then effective registration
statement under the Securities Act of 1933. The Trustees may from time to time
specify additional conditions, not inconsistent with the 1940 Act, regarding the
redemption of Shares in the Trust's then effective registration statement under
the Securities Act of 1933.
Section 6.2. Price. Shares shall be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 7.1 hereof after
receipt of such application.
Section 6.3. Payment. Payment for such Shares shall be made in cash or in
property out of the assets of the relevant series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement under the Securities Act of 1933,
subject to the provisions of Section 6.4 hereof.
Section 6.4. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of the
determination of net asset value, the rights of Shareholders (including those
who shall have applied for redemption pursuant to Section 6.1 hereof but who
shall not yet have received payment) to have Shares redeemed and paid for by the
Trust shall be suspended until the termination of such suspension is declared.
Any record holder who shall have his redemption right so suspended may, during
the period of such suspension, by appropriate written notice of revocation at
the office or agency where application was made, revoke any application for
redemption not honored and withdraw any certificates on deposit. The redemption
price of Shares for which redemption applications have not been revoked shall be
the net asset value of such Shares next determined as set forth in Section 7.1
after the termination of such suspension, and payment shall be made within seven
(7) days after the date upon which the application was made plus the period
after such application during which the determination of net asset value was
suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
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asset value per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trust shall have the
right at any time without prior notice to the shareholder to redeem Shares of
any shareholder for their then current net asset value per Share if at such time
the shareholder owns Shares having an aggregate net asset value of less than
$1,000 subject to such terms and conditions as the Trustees may approve, and
subject to the Trust's giving general notice to all shareholders of its
intention to avail itself of such right, either by publication in the Trust's
registration statement, if any, or by such other means as the Trustees may
determine.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of Shares
or other securities of the Trust has or may become concentrated in any Person to
an extent which would disqualify any Series of the Trust as a regulated
investment company under the Internal Revenue Code, then the Trustees shall have
the power by lot or other means deemed equitable by them (i) to call for
redemption by any such Person a number, or principal amount, of Shares or other
securities of the Trust sufficient to maintain or bring the direct or indirect
ownership of Shares or other securities of the Trust into conformity with the
requirements for such qualification and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose acquisition of the
Shares or other securities of the Trust in question would result in such
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 6.1.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority
Section 6.8. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 7.3.
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Section 6.9. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary week-end and holiday closings,
(ii) during which trading on the New York Stock Exchange is restricted, (iii)
during which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(iv) during any other period when the Commission may for the protection of
Shareholders of the Trust by order permit suspension of the right of redemption
or postponement of the date of payment or redemption; provided that applicable
rules and regulations of the Commission shall govern as to whether the
conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall take
effect at such time as the Trust shall specify but not later than the close of
business on the business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment on redemption until
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange shall
have reopened or the period specified in (ii) or (iii) shall have expired (as to
which in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The value of the assets of the Trust or any
Series of the Trust shall be determined by appraisal of the securities of the
Trust or allocated to such Series, such appraisal to be on the basis of the
amortized cost of such securities in the case of money market securities, market
value in the case of other securities, or by such other method as shall be
deemed to reflect the fair value thereof, determined in good faith by or under
the direction of the Trustees. From the total value of said assets, there shall
be deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits. expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
the Trust or such Series which shall be deemed appropriate. The resulting amount
which shall represent the total net assets of the Trust or the Series shall be
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divided by the number of Shares of the Trust or such Series outstanding at the
time and the quotient so obtained shall be deemed to be the net asset value of
the Shares. The net asset value of the Shares shall be determined at least once
on each business day, as of the close of trading on the New York Stock Exchange
or as of such other time or times as the Trustees shall determine. The power and
duty to make the daily calculations may be delegated by the Trustees to the
Investment Adviser, the custodian, the Transfer Agent or such other Person as
the Trustees may determine by resolution or by approving a contract which
delegates such duty to another Person. The Trustees may suspend the daily
determination of net asset value to the extent permitted by the 1940 Act.
Section 7.2. Distributions to Shareholders. The Trustees shall from time to
time distribute ratably among the Shareholders of the Trust or a Series such
proportion of the net profits, surplus (including paid-in surplus), capital, or
assets of the Trust or such Series held by the Trustees as they may deem proper.
Such distributions may be made in cash or property (including without limitation
any type of obligations of the Trust or such Series or any assets thereof), and
the Trustees may distribute ratably among the Shareholders additional Shares of
the Trust or such Series issuable hereunder in such manner, at such times, and
on such terms as the Trustees may deem proper. Such distributions may be among
the Shareholders of record at the time of declaring a distribution or among the
Shareholders of record at such other date or time or dates or times as the
Trustees shall determine. The Trustees may in their discretion determine that,
solely for the purposes of such distributions, Outstanding Shares shall exclude
Shares for which orders have been placed subsequent to a specified time on the
date the distribution is declared or on the next preceding day if the
distribution is declared as of a day on which Boston banks are not open for
business, all as described in the [effective prospectus] registration statement
under the Securities Act of 1933. The Trustees may always retain from the net
profits such amount as they may deem necessary to pay the debts or expenses of
the Trust or the Series or to meet obligations of the Trust or the Series, or as
they may deem desirable to use in the conduct of its affairs or to retain for
future requirements or extensions of the business. The Trustees may adopt and
offer to Shareholders such dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
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enable the Trust or the Series to avoid or reduce liability for taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. Subject to Section 5.11 hereof, the net income
of the Trust or any Series shall be determined in such manner as the Trustees
shall provide by resolution. Expenses of the Trust or a Series, including the
advisory or management fee, shall be accrued each day. Such net income may be
determined by or under the direction of the Trustees as of the close of trading
on the New York Stock Exchange on each day on which such Exchange is open or as
of such other time or times as the Trustees shall determine, and, except as
provided herein, all the net income of the Trust or any Series, as so
determined, may be declared as a dividend on the Outstanding Shares of the Trust
or such Series. If, for any reason, the net income of the Trust or any Series,
determined at any time is a negative amount, the Trustees shall have the power
with respect to the Trust or such Series (i) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, or (ii) to reduce the number of Outstanding Shares of the Trust or
such Series by reducing the number of Shares in the account of such Shareholder
by that number of full and fractional Shares which represents the amount of such
excess negative net income, or (iii) to cause to be recorded on the books of the
Trust or such Series an asset account in the amount of such negative net income,
which account may be reduced by the amount, provided that the same shall
thereupon become the property of the Trust or such Series with respect to the
Trust or such Series and shall not be paid to any Shareholder, of dividends
declared thereafter upon the Outstanding Shares of the Trust or such Series on
the day such negative net income is experienced, until such asset account is
reduced to zero; or (iv) to combine the methods described in clauses (i) and
(ii) and (iii) of this sentence, in order to cause the net asset value per Share
of the Trust or such Series to remain at a constant amount per Outstanding Share
immediately after each such determination and declaration. The Trustees shall
also have the power to fail to declare a dividend out of net income for the
purpose of causing the net asset value per Share to be increased to a constant
amount. The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend the practice of maintaining the net asset value per Share
of the Trust or a Series at a constant amount.
Section 7.4. Allocation Between Principal and Income. The Trustees shall
have full discretion to determine whether any cash or property received shall be
treated as income or as principal and whether any item of expense shall be
charged to the income or the principal account, and their determination made in
good faith shall be conclusive upon the Shareholders.
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In the case of stock dividends received, the Trustees shall have full discretion
to determine, in the light of the particular circumstances, how much if any of
the value thereof shall be treated as income, the balance, if any, to be treated
as principal.
Section 7.5. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation of time
but subject to the provisions of this Article VIII.
Section 8.2. Termination of Trust. (a) The Trust or any Series of the Trust
may be terminated by an instrument in writing signed by a majority of the
Trustees or by the affirmative vote of the holders a majority of the Shares
outstanding and entitled to vote, at any meeting of Shareholders. Upon the
termination of the Trust or any Series,
(i) the Trust or any Series shall carry on no business except for the
purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the Trust or
Series and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust or Series shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or
Series, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property or
property of the Series to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and do all
other acts appropriate to liquidate its business;
(iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or property of the Series, in cash
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<PAGE>
or in kind or partly each, among the Shareholders of the Trust or Series
according to their respective rights.
(b) After termination of the Trust or any Series and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust (or series] an instrument in writing
setting forth the fact of such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and the rights and
interests of all Shareholders of the Trust or Series shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended by a
vote of the holders of a majority of the Shares outstanding and entitled to
vote. Amendments shall be effective upon the taking of action as provided in
this section or at such later time as shall be specified in the applicable vote
or instrument. The Trustees may also amend this Declaration without the vote or
consent of Shareholders if they deem it necessary to conform this Declaration to
the requirements of applicable federal or state laws or regulations or the
requirements of the regulated investment company provisions of the Internal
Revenue Code (including those provisions of such Code relating to the retention
of the exemption from federal income tax with respect to dividends paid by the
Trust out of interest income received on Municipal Bonds), but the Trustees
shall not be liable for failing so to do. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they deem it
necessary or desirable to change the name of the Trust or to make any other
changes in the Declaration which do not materially adversely affect the rights
of Shareholders hereunder.
(b) No amendment may be made under this Section 8.3 which would change any
rights with respect to any Shares of the Trust or Series by reducing the amount
payable thereon upon liquidation of the Trust or Series or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote or
consent of the holders of two-thirds of the Shares of the Trust or Series
outstanding and entitled to vote. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority off the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
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<PAGE>
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or the property of any Series, including its good
will, upon such terms and conditions and for such consideration when and as
authorized at any meeting of Shareholders of the Trust or Series called for the
purpose by the affirmative vote of the holders of a majority of the Shares of
the Trust or Series.
Section 8.5. Incorporation. With the approval of the holders of a majority
of the Shares of the Trust or any Series outstanding and entitled to vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or the
property of any Series or to carry on any business in which the Trust or the
Series shall directly or indirectly have any interest, and to sell, convey and
transfer the Trust Property or the property of any Series to any such
corporation, trust, association or organization in exchange for the Shares or
securities thereof or otherwise, and to lend money to, subscribe for the Shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization, or any corporation, partnership,
trust, association or organization in which the Trust or the Series holds or is
about to acquire shares or any other interest. The Trustees may also cause a
merger or consolidation between the Trust or any Series or any successor thereto
and any such corporation, trust, partnership, association or other organization
if and to the extent permitted by law, as provided under the law then in effect.
Nothing contained herein sha1l be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to such
organization or entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report, which may be included in the Trust's prospectus or
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statement of additional information, of the transactions of the Trust, including
financial statements which shall at least annually be certified by independent
public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Unless the amendment is embodied in an instrument signed by a majority of the
Trustees, each amendment filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein. A restated Declaration, integrating into a single instrument
all of the provisions of the Declaration which are then in effect and operative,
may be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may hereafter be referred to in
lieu of the original Declaration and the various amendments thereto. The
restated Declaration may include any amendment which the Trustees are empowered
to adopt, whether or not such amendment has been adopted prior to the execution
of the restated Declaration.
Section 10.2. Governing Law. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
internal laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the internal laws of said State without regard to the choice of law
rules thereof.
Section 10.3. Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
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Shareholders,(d) the fact that the number of Trustees or Shareholders present at
any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/Amey A. DeFriez
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named Amey A. DeFriez, who acknowledged
the foregoing instrument to be her free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/George S. Johnston
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named George S. Johnston, who
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/George M. Lovejoy, Jr.
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named George M. Lovejoy, Jr., who
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/Wesley W. Marple, Jr.
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named Wesley W. Marple, Jr., who
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/August R. Meyer
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named August R. Meyer, who acknowledged
the foregoing instrument to be his free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/Juris Padegs
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named Juris Padegs, who acknowledged the
foregoing instrument to be his free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 3rd
day of November, 1987.
/s/Daniel Pierce
-------------------------------
as Trustee and not individua1ly.
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk November 3, 1987
Then personally appeared the above-named Daniel Pierce, who acknowledged
the foregoing instrument to be his free act and deed.
Before me,
/s/[Illegible]
-------------------------------
Notary Public
My commission expires: December 3, 1987
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Exhibit 1(a)(2)
SCUDDER GROWTH AND INCOME FUND
Certificate of Amendment
The undersigned, being at least a majority of the duly elected and
qualified Trustees of Scudder Growth and Income Fund, a business trust organized
under the laws of The Commonwealth of Massachusetts pursuant to a Declaration of
Trust dated November 3, 1987, as amended, do hereby certify that the
Shareholders of said Trust, by the favorable vote on November 13, 1990 of a
majority of the shares outstanding and entitled to vote, adopted amendments to
the Declaration of Trust striking out Section 1.2 subsections (k), (m) and (r),
Sections 5.1, 5.9 and 6.13, Section 6.6 and Section 7.1 and replacing them with
the following:
Article I, Section 1.2:
(k) "Series" Individually or collectively means the two or more Series as may be
established and designated from time to time by the Trustees pursuant to Section
5.11 hereof. Unless the context otherwise requires, the term "Series" shall
include Classes into which shares of the Trust, or of a Series, may be divided
from time to time.
(m) "Shares" means the equal proportionate units of interest into which the
beneficial interest in the Trust shall be divided from time to time, including
the Shares of any and all Series and Classes which may be established by the
Trustees and includes fractions of Shares as well as whole Shares. "Outstanding
Shares" means those shares shown from time to time on the books of the Trust or
its Transfer Agent as then issued and outstanding, but shall not include Shares
which have been redeemed or repurchased by the Trust and which are at the time
held in the Treasury of the Trust.
(r) "Class" means the two or more Classes as may be established and designated
from time to time by the Trustees pursuant to Section 5.13 hereof.
Article V:
Section 5.1. Beneficial Interest. The interest of the beneficiaries hereunder
shall be divided into transferable Shares of beneficial interest, all of one
class, except as provided in Section 5.11 and Section 5.13 hereof, par value
$.01 per share. The number of Shares of beneficial interest authorized hereunder
is unlimited. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and non-assessable.
Section 5.9 Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Section 2.12; (ii) for the removal
of Trustees as provided in Section 2.13; (iii) with respect to any investment
advisory or management contract entered into pursuant to Section 3.2; (iv) with
respect to termination of the Trust as provided in Section 8.2; (v) with respect
to any amendment of this Declaration to the extent and as provided in Section
8.3; (vi) with respect to any merger, consolidation or sale of assets as
provided in Section 8.4; (vii) with respect to incorporation of the Trust, or
any Series to the extent and as provided in Section 8.5; (viii) to the same
extent as the stockholders of Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
shareholders; (ix) with respect to any plan adopted pursuant to Rule 12b-1 (or
any successor rule) under the 1940 Act; and (x) with respect to such additional
matters relating to the Trust as may be required by this Declaration, the
By-laws or any registration of the Trust as an investment company under the 1940
Act with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote, except that the Trustees may, in
conjunction with the establishment of any Series of Shares, establish or reserve
the right to establish conditions under which the several Series shall have
separate voting rights or, if a Series would not, in the sole judgment of the
Trustees, be materially affected by a proposal, no voting rights. There shall be
no cumulative voting in the election of Trustees. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration or the By-laws to be taken by Shareholders.
1
<PAGE>
The By-laws may include further provisions for Shareholders' votes and meetings
and related matters.
Section 5.13. Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall be identical to all other Shares of the Trust or the same
Series, as the case may be, except that there may be variations between
different classes as to allocation of expenses, right of redemption, special and
relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Classes as the context may require.
If the Trustees shall divide the Shares of the Trust or any Series into two or
more Classes, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust, or any Series of the Trust,
shall apply equally to each Class of Shares of the Trust or of any Series of the
Trust, except as the context requires otherwise.
(b) The number of Shares of each Class that may be issued shall be unlimited.
The Trustees may classify or reclassify any unissued Shares of the Trust or any
Series or any Shares previously issued and reacquired of any Class of the Trust
or of any Series into one or more Classes that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of the same or some
other Class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Class reacquired by the Trust at their
discretion from time to time.
(c) Liabilities, expenses. costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular Class may be charged to and borne solely by such
Class and the bearing of expenses solely by a Class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different Classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all purposes.
(d) The establishment and designation of any Class of Shares shall be effective
upon the execution of a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and preferences
of such Class, or as otherwise provided in such instrument. The Trustees may, by
an instrument executed by a majority of their number, abolish any Class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
Article VI:
Section 6.6. Redemption of Shareholder's Interest. The Trust shall have the
right at any time without prior notice to the shareholder to redeem Shares of
any shareholder for their then current net asset value per Share if at such time
the shareholder owns Shares having an aggregate net asset value of less than an
amount set from time to time by the Trustees subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all shareholders of its intention to avail itself of such
right, either by publication in the Trust's registration statement, if any, or
by such other means as the Trustees may determine.
Article VII:
Section 7.1. Net Asset Value. The value of the assets of the Trust or any Series
of the Trust shall be determined by appraisal of the securities of the Trust or
allocated to such Series, such appraisal to be on the basis of the amortized
cost of such securities in the case of money market securities, market value in
the case of other securities, or by such other method as shall be deemed to
reflect the fair value thereof, determined in good faith by or under the
direction of the Trustees. From the total value of said assets, there shall be
deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as
distribution and all other items in the nature of liabilities attributable to
the Trust or such Series or Class thereof which shall be deemed appropriate. The
net asset value of a Share shall be determined by dividing the net asset value
of the Class, or, if no Class has been established, of the Series, or, if no
Series has been established, of the Trust, by the number of Shares of that
Class, or Series, or of the Trust, as applicable, outstanding. The net asset
value of Shares of the Trust or any Class or Series of the Trust shall be
determined pursuant to the procedure and methods prescribed or approved by the
Trustees in their discretion and as set forth in the most recent Registration
2
<PAGE>
Statement of the Trust as filed with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and the Rules thereunder. The net
asset value of the Shares shall be determined at least once on each business
day, as of the close of trading on the New York Stock Exchange or as of such
other time or times as the Trustees shall determine.
The power and duty to make the daily calculations may be delegated by the
Trustees to the Investment Adviser, the Custodian, the Transfer Agent or such
other Person as the Trustees may determine by resolution or by approving a
contract which delegates such duty to another Person. The Trustees may suspend
the daily determination of net asset value to the extent permitted by the 1940
Act.
This Certificate may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
certificate.
IN WITNESS WHEREOF, the undersigned have this day signed this Certificate.
DATE: November 13, 1990
/s/Henry P. Becton Jr.
-----------------------------------
Henry P. Becton, Jr.
/s/Amey A. DeFriez
-----------------------------------
Amey A. DeFriez
/s/Dudley H. Ladd
-----------------------------------
Dudley H. Ladd
/s/George M. Lovejoy, Jr.
-----------------------------------
George M. Lovejoy, Jr.
/s/Wesley W. Marple, Jr.
-----------------------------------
Wesley W. Marple, Jr.
/s/Juris Padegs
-----------------------------------
Juris Padegs
/s/Daniel Pierce
-----------------------------------
Daniel Pierce
3
Exhibit 1(a)(3)
SCUDDER GROWTH AND INCOME FUND
Certificate of Amendment of Declaration of Trust
------------------------------------------------
The undersigned, being at least a majority of the duly elected and
qualified Trustees of Scudder Growth and Income Fund, a Massachusetts business
trust, (the "Trust") acting pursuant to Article VIII, Section 8.3 of the Amended
and Restated Declaration of Trust dated November 3, 1987, as amended, (the
"Declaration of Trust") do hereby certify that the following amendment to the
Declaration of Trust was adopted by the favorable vote on February 12, 1991 of
the majority of Trustees, to wit,
RESOLVED that upon the date the Trust's Post-Effective Amendment to its
Registration Statement under the Securities Act of 1933 offering shares
of a series of the Trust designated "Scudder Quality Growth Fund",
becomes effective, Sections 1.1 and 1.2(o) of the Amended and Restated
Declaration of Trust dated November 3, 1987, as amended, are amended to
change the name of the Trust from "Scudder Growth and Income Fund" to
"Scudder Investment Trust" so that said Sections read in their entirety
as follows:
"Section 1.1. Name. The name of the trust created hereby is the
"Scudder Investment Trust."
"Section 1.2(o). The "Trust" means the Scudder Investment Trust."
IN WITNESS WHEREOF, the undersigned have this day signed this Certificate
of Amendment of Declaration of Trust.
Dated February 12, 1991
/s/ George M. Lovejoy, Jr.
- -------------------------------- ----------------------------------
Henry P. Becton, Jr., as Trustee George M. Lovejoy, Jr., as Trustee
/s/Amey A. DeFriez
- -------------------------------- ----------------------------------
Amey A. DeFriez, as Trustee Wesley W. Marple, Jr., as Trustee
/s/Dudley H. Ladd
- -------------------------------- ----------------------------------
Dudley H. Ladd, as Trustee Juris Padegs, as Trustee
/s/Daniel Pierce
- --------------------------------
Daniel Pierce, as Trustee
0095S
Exhibit 1(b)1
SCUDDER GROWTH AND INCOME FUND
Establishment and Designation of Series
of Beneficial Interest, $.01 Par Value
The undersigned, being a majority of the duly elected and qualified
Trustees of Scudder Growth and Income Fund (to be renamed Scudder Investment
Trust), a Massachusetts business trust (the "Trust") acting pursuant to Section
5.11 of the Declaration of Trust dated November 3, 1987, as amended (the
"Declaration of Trust"), of the Trusts hereby divide the shares of beneficial
interest of the Trust into two separate series (each individually a "Fund" or
collectively the "Funds"), each Fund to have the following special and relative
rights:
1. The Funds shall be designated as follows:
Scudder Growth and Income Fund
Scudder Quality Growth Fund
2. Each Fund shall be authorized to hold cash and invest in securities and
instruments and use investment techniques as described in the Trust's
registration statement under the Securities Act of 1933, as amended from time to
time. Each share of beneficial interest of each Fund ("share") shall be
redeemable as provided in the Declaration of Trust, shall be entitled to one
vote (or fraction thereof in respect of a fractional share) on matters on which
shares of that Fund shall be entitled to vote and shall represent a pro rata
beneficial interest in the assets allocated to that Fund. The proceeds of sales
of shares of a Fund, together with any income and gain thereon, less any
diminution or expenses thereof, shall irrevocably belong to that Fund, unless
otherwise required by law. Each share of a Fund shall be entitled to receive its
pro rata share of net assets of that Fund upon liquidation of that Fund.
3. Shareholders of each Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to that Fund as provided in Rule 18f-2, as
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule.
4. The shares of beneficial interest of the Trust outstanding on the date
hereof shall be deemed to be as shares of the Scudder Growth and Income Fund.
5. The assets and liabilities of the Trust existing on the date hereof
shall, except as provided below, be allocated to the Scudder Growth and Income
Fund and, hereafter, the assets and liabilities of the Trust shall be allocated
among the Funds as set forth in Section 5.11 of the Declaration of Trust, except
as provided below.
(a) Costs incurred in connection with the organization, registration
and public offering of shares of Scudder Quality Growth Fund shall be
amortized by such Fund over the lesser of the life of the Fund or the
five year period beginning with the month the Fund commences
operations.
<PAGE>
(b) The liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Fund
shall be allocated among the Funds on the basis of their relative
average daily net assets.
(c) The Trustees may from time to time in particular cases make
specific allocations of assets or liabilities among the Funds.
6. The Trustees (including any successor Trustees) shall have the right at
any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund provided that such change shall not
adversely affect the rights of shareholders of a Fund.
The foregoing shall be effective upon the date the Trust's Post-Effective
Amendment to its Registration Statement under the Securities Act of 1933
offering shares of the Funds as designated becomes effective.
- ----------------------------------
Henry P. Becton, Jr., as Trustee
/s/ Amey A. DeFriez
- ----------------------------------
Amey A. DeFriez, as Trustee
/s/ Dudley H. Ladd
- ----------------------------------
Dudley H. Ladd, as Trustee
/s/ George M. Lovejoy, Jr.
- ----------------------------------
George M. Lovejoy, Jr., as Trustee
- ---------------------------------
Wesley W. Marple, Jr., as Trustee
- ---------------------------------
Juris Padegs, as Trustee
/s/Daniel Pierce
- ---------------------------------
Daniel Pierce, as Trustee
-2- 0094S
Exhibit 2(a)
BY-LAWS
OF
SCUDDER GROWTH AND INCOME FUND
September 20, 1984
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS 1
ARTICLE II - OFFICES 1
Section 1. Principal Office 1
Section 2. Other Offices 1
ARTICLE III - SHAREHOLDERS 1
Section 1. Meetings 2
Section 2. Notice of Meetings 2
Section 3. Record Date for Meetings and Other Purposes 2
Section 4. Proxies 3
Section 5. Inspection of Records 4
Section 6. Action without Meeting 4
ARTICLE IV. - TRUSTEES 4
Section 1. Meetings of the Trustees 4
Section 2. Meeting, Quorum and Manner of Acting 5
ARTICLE V - COMMITTEES 6
Section 1. Executive and Other Committees 6
Section 2. Meeting Quorum and Manner of Acting 6
ARTICLE VI - OFFICERS 7
Section 1. General Provisions 7
Section 2. Term of Office and Qualifications 7
Section 3. Removal 8
Section 4. Powers and Duties of the President 8
Section 5 Powers and Duties of Vice Presidents 9
Section 6. Powers and Duties of the Treasurer 9
Section 7. Powers and Duties of the Secretary 9
Section 8. Powers and Duties of Assistant Treasurers 10
Section 9. Powers and Duties of Assistant Secretaries 10
Section 10. Compensation of Officers
and Trustees and Members of
Advisory Board 10
-i-
<PAGE>
TABLE OF CONTENTS--CONT.
Page
----
ARTICLE VII - FISCAL YEAR 11
ARTICLE VIII - SEAL 11
ARTICLE IX - WAIVERS OF NOTICE 11
ARTICLE X - CUSTODY OF SECURITIES 12
Section 1. Employment of A Custodian 12
Section 2. Action Upon Termination of Custodian Agreement 12
Section 3. Provisions of Custodian Contract 13
Section 4. Central Certificate System 13
Section 5 Acceptance of Receipts in Lieu of Certificate 14
ARTICLE XI - AMENDMENTS 14
ARTICLE XII - MISCELLANEOUS 15
-ii-
<PAGE>
BY-LAWS
OF
SCUDDER GROWTH AND INCOME FUND
ARTICLE I
DEFINITIONS
The terms "Commission", "Custodian", "Declaration", "Distributor",
"Investment Adviser", "Municipal Bonds", "1940 Act", "Shares", "Transfer Agent",
"Trust", "Trust Property", "Trustees", and "vote of a majority of the Shares
outstanding and entitled to vote", have the respective meanings given them in
the Declaration of Trust of Scudder Growth and Income Fund dated September 20,
1984, as amended from time to time.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the principal
office of the Trust in the Commonwealth of Massachusetts shall be in the City of
Boston, County of Suffolk.
Section 2. Other Offices. The Trust may have offices in such other places
without as well as within the Commonwealth as the Trustees may from time to time
determine.
<PAGE>
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of the Shareholders shall be held as provided
in the Declaration at such place within or without the Commonwealth of
Massachusetts as the Trustees shall designate. The holders of a majority of
outstanding Shares present in person or by proxy shall constitute a quorum at
any meeting of the shareholders
Section 2. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder at his address as recorded on the register
of the Trust mailed at least (10) days and not more than sixty (60) days before
the meeting. Only the business stated in the notice of the meeting shall be
considered at such meeting. Any adjourned meeting may be held as adjourned
without further notice. No notice need be given to any Shareholder who shall
have failed to inform the Trust of his current address or if a written waiver of
notice, executed before or after the meeting by the Shareholder or his attorney
thereunto authorized, is filed with the records of the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose of
determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
-2-
<PAGE>
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than
sixty (60) days prior to the date of any meeting of Shareholders or distribution
or other action as a record date for the determinations of the persons to be
treated as Shareholders of record for such purposes, except for dividend
payments which shall be governed by the Declaration.
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote threat may vote by proxy, provided that no proxy shall be voted
at any meeting unless it shall have been placed on file with the Secretary, or
with such other officer or agent of the Trust as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. Proxies may be
solicited in the name of one or more Trustees or one or more of the officers of
the Trust. Only Shareholders of record shall be entitled to vote. Each whole
share shall be entitled to one vote as to any matter on which it is entitled by
the Declaration to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. When any Share is held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Share. A proxy purporting to be executed by or on behalf of a
-3-
<PAGE>
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such share is a minor or a person of unsound mind, and subject to
guardianship or the the legal control of any other person as regards the charge
or management of such Share, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
Section 5. Inspection of Records. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted shareholders of a
Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
-4-
<PAGE>
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, or by any one
of the Trustees, at the time being in office. Notice of the time and place of
each meeting other than regular or stated meetings shall be given by the
Secretary or an Assistant Secretary or by the officer or Trustee calling the
meeting and shall be mailed to each Trustee at least two days before the
meeting, or shall be telegraphed, cabled, or wirelessed to each Trustee at his
business address, or personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. A notice or waiver of notice need not
specify the purpose of any meeting. The Trustees may meet by means of a
telephone conference circuit or similar communications equipment by means of
which all persons participating in the meeting shall be deemed to have been held
at a place designated by the Trustees at the meeting. Participation in a
telephone conference meeting shall constitute presence in person at such
-5-
<PAGE>
meeting. Any action required or permitted to be taken at any meeting of the
Trustees may be taken by the Trustees without a meeting if all the Trustees
consent to the action in writing and the written consents are filed with the
records of the Trustees' meetings. Such consents shall be treated as a vote for
all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees shall be
present in person at any regular or special meeting of the Trustees in order to
constitute a quorum for the transaction of business at such meeting and (except
as otherwise required by law, the Declaration of these By-Laws) the act of a
majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three (3) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session,
-6-
<PAGE>
including the purchase and sale of securities and the designation of securities
to be delivered upon redemption of Shares of the Trust, and such other powers of
the Trustees as the Trustees may, from time to time, delegate to them except
those powers which by law, the Declaration or these By-Laws they are prohibited
from delegating. The Trustees may also elect from their own number other
Committees from time to time, the number composing such Committees, the powers
conferred upon the same (subject to the same limitations as with respect to the
Executive Committee) and the term of membership on such Committees to be
determined by the Trustees. The Trustees may designate a chairman of any such
Committee. In the absence of such designation the Committee may elect its own
Chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
-7-
<PAGE>
book designated for that purpose and kept in the Office of the Trust.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Secretaries, and one or more Assistant Treasurers. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Declaration or these ByLaws, the President, the Treasurer and the
Secretary shall each hold office until his successor shall have been duly
elected and qualified and all other officers shall hold office at the pleasure
of the Trustees. The Secretary and Treasurer may be the same person. A Vice
President and the Treasurer or a Vice President and the Secretary may be the
same person, but the offices of Vice President, Secretary and Treasurer shall
not be held by the same person. The President shall hold no other office. Except
as above provided, any two offices may be held by the same person. Any officer
may be but none need be a Trustee or Shareholder.
-8-
<PAGE>
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer without cause, by a vote of a majority of the
Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the Trustees and to the control of any Committees of the Trustees, within their
respective spheres as provided by the Trustees, he shall at all times exercise a
general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. He shall also have the power to grant issue,
execute or sign such powers of attorney, proxies or other documents as may be
deemed advisable or necessary in furtherance of the interests of the Trust. The
President shall have such other powers and duties, as from time to time may be
conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform
-9-
<PAGE>
all the duties and may exercise any of the powers of the President, subject to
the control of the Trustees. Each Vice President shall perform such other duties
as may be assigned to him from time to time by the Trustees and the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. He shall deliver all
funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ pursuant to Article X of these By-Laws. He shall render a
statement of condition of the finances of the Trust to the Trustees as often as
they shall require the same and he shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required so to do by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust;
he shall have charge of the Share transfer books, lists and records unless the
same are in the charge of the Transfer Agent. He shall attend to the giving and
serving of all notices by the Trust in accordance with the provisions of these
-10-
<PAGE>
By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all the duties, and may exercise any of the powers of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable provisions of the Declaration, the
compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any Committee or officer upon whom such power may be conferred by the Trustees.
-11-
<PAGE>
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of January in
each year and shall end on the thirty-first day of December in each year,
provided, however, that the Trustees may from time to time change the fiscal
year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law the Declaration
or these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
me deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
-12-
<PAGE>
instructions that it be telegraphed, cabled or wirelessed.
ARTICLE X
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (and any sub-custodian) shall be a bank having not
less than $2,000,000 aggregate capital, surplus and undivided profits and shall
be appointed from time to time by the Trustees, who shall fix its remuneration
Section 2. Action Upon Termination of Custodian Agreement. Upon termination
of a Custodian Agreement or inability of the Custodian to continue to serve, the
trustees shall promptly appoint a successor custodian, but in the event that no
successor custodian can be found who has the required qualifications and is
willing to serve the Trustees shall call as promptly as possible a special
meeting of the Shareholders to determine whether the Trust shall function
without a custodian or shall be liquidated. If so directed by vote of the
holders of a majority of the outstanding voting securities, the Custodian shall
deliver and pay over all Trust Property held by it as specified in such vote.
-13-
<PAGE>
Section 3. Provisions of Custodian Contract. The following provisions shall
apply to the employment of a Custodian and to any contract entered into with the
Custodian so employed:
The Trustees shall cause to be delivered to the Custodian all securities
included in the Trust Property or to which the Trust may become entitled,
and shall order the same to be delivered by the Custodian only in
completion of a sale, exchange, transfer, pledge, loan of portfolio
securities to another person, or other disposition thereof, all as the
Trustees may generally or from time to time require or approve or to a
successor Custodian; and the Trustees shall cause all funds included in the
Trust Property or to which it may become entitled to be paid to the
Custodian, and shall order the same disbursed only for investment against
delivery of the securities acquired, or the return of cash held as
collateral for loans of portfolio securities, or in payment of expenses,
including management compensation, and liabilities of the Trust, including
distributions to shareholders, or to a successor Custodian
Section 4 Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the Custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
-14-
<PAGE>
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust.
Section 5. Acceptance of Receipts in Lieu of Certificates. Subject to such
rules, regulations and orders as the Commission may adopt, the Trustees may
direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or new
By-Laws may be adopted by (a) vote of a majority of the Shares outstanding and
entitled to vote or (b) by the Trustees, provided, however, that no By-Law may
be amended, adopted or repealed by the Trustees if such amendment, adoption or
repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of
the Shareholders.
-15-
Exhibit 2(b)
SCUDDER CASH INVESTMENT TRUST
SCUDDER GNMA FUND
SCUDDER INCOME FUND
SCUDDER INVESTMENT TRUST
SCUDDER U.S. TREASURY MONEY FUND
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER MUNICIPAL TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TARGET FUND
On August 13, 1991, the Trustees of each of the aforementioned Funds
adopted the following resolution amending the By-Laws of each Fund:
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the
Trustees. Notice of regular or stated meetings need not be
given. Meetings of the Trustees other than regular or stated
meetings shall be held whenever called by the President, or by
any one of the Trustees, at the time being in office. Notice
of the time and place of each meeting other than regular or
stated meetings shall be given by the Secretary or an
Assistant Secretary or by the officer or Trustee calling the
meeting and shall be mailed to each Trustee at least two days
before the meeting, or shall be telegraphed, cabled, or
wirelessed to each Trustee at his business address, or
personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee.
Notice of a meeting need not be given to any Trustee if a
written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. A
notice or waiver of notice need not specify the purpose of any
meeting. Meetings can be held in conjunction with investment
companies having the same investment adviser or an affiliated
investment adviser. The Trustees may meet by means of a
telephone conference circuit or similar communications
equipment; participation by such means shall constitute
presence in person at such meeting and shall be deemed to have
occurred at a place designated by the Trustees at the meeting.
Any action required or permitted to be taken at any meeting of
the Trustees may be taken by the Trustees without a meeting if
all the Trustees consent to the action in writing and the
written consents are filed with the records of the Trustees'
meetings. Such consents shall be treated as a vote for all
purposes.
-1-
1596R
Exhibit 2(c)
Approva1 of Amendment to the
Fund's By-Laws with Respect
to Notice of Meetings
----------------------------
RESOLVED, that pursuant to the provisions of Article IV of the Fund's By-Laws,
Section 1.0 of Article IV of the Fund's By-Laws is hereby amended to read in its
entirety as follows (additions have been underlined):
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, or by any one
of the Trustees, at the time being in office. Notice of the time and place of
each meeting other than regular or stated meetings shall be given by the
Secretary or an Assistant Secretary or by the officer or Trustee calling the
meeting and shall be mailed to each Trustee at least two days before the
meeting, or delivered to him personally or transmitted by telegraph, cable or
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other communication leaving a visual record at least one day before the meeting.
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Such notice may, however, be waived by any Trustee, Notice of a meeting need not
be given to any Trustee if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice need not specify the
purpose of any meeting. Meetings can be held in conjunction with investment
companies having the same investment adviser or an affiliated investment
adviser. The Trustees may meet by means of a telephone conference circuit or
similar communications equipment; participation by such means shall constitute
presence in person at such meeting and shall be deemed to have occurred at a
place designated by the Trustees at the meeting. Any action required or
permitted to be taken at any meeting of the Trustees may be taken by the
Trustees without a meeting if all the Trustees consent to the action in writing
and the written consents are filed with the records of the Trustees' meetings.
Such consents shall be treated as a vote for all purposes.
Exhibit 5(a)
Scudder Growth and Income Fund
175 Federal Street
Boston, Massachusetts 02110
November 14, 1990
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
Investment Management Agreement
Dear Sirs:
Scudder Growth and Income Fund (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an investment company.
That Trust has selected you to act as the sole investment manager of the
Trust and to provide certain other services, as more fully set forth below, and
you have indicated that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Trust in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") included in the Trust's Registration Statement on Form N-1 A, as
amended from time to time, (the "Registration Statement") filed by the Trust
under the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in the
preceding sentence have been furnished to you by the Trust. The Trust has also
furnished you with copies properly certified or authenticated of each of the
following additional documents related to the Trust:
(a) Declaration of Trust of the Trust dated November 3, 1987, as
amended to date (the "Declaration").
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees and the shareholders of the Trust
selecting you as investment manager and approving the form of this
Agreement.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Name of Trust. The Trust may use any name derived from the name
"Scudder, Stevens & Clark", if the Trust elects to do so, only for so long as
this Agreement, any other investment management agreement between you and the
Trust or any extension, renewal or amendment hereof or thereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to your business as investment manager. At such time as such an
agreement shall no longer be in effect, the Trust shall (to the extent the Trust
has the legal power to cause it to be done) cease to use such a name or any
other name indicating that it is managed by or otherwise connected with you or
any organization which shall have so succeeded to your business.
3. Portfolio Management Services. As manager of the assets of the Trust,
you shall provide continuing investment management of the assets of the Trust in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies end instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Trust so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Trust shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients in managing the
Trust in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all of the
Trust's investment records and ledgers as are necessary to assist the Trust to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
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requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Trust and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Trust policies
as expressed in the Registration Statement. You shall determine what portion of
the Trust's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Trust and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Trust such office space and facilities in the United States as the
Trust may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
necessary for operating as an open-end investment company and not provided by
persons not parties to this Agreement including, but not limited to, preparing
reports to and meeting materials for the Trust's Board of Trustees and reports
and notices to Trust shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
custodians, depositories, transfer and pricing agents, accountants, attorneys,
printers, underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable to Trust operations; preparing and
making filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Trust's transfer agent; assisting in the preparation and filing of the Trust's
federal, state and local tax returns; preparing and filing the Trust's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities, the calculation of net asset value and the calculation and
payment of distributions to Trust shareholders; monitoring the registration of
the Trust's shares of beneficial interest, par value $.01 per share, ("shares")
under applicable federal and state securities laws; maintaining or causing to be
maintained for the Trust all books, records and reports and any other
information required under the 1940 Act, to the extent that such books, records
and reports and other information are not maintained by the Trust's custodian or
other agents of the Trust; assisting in establishing the accounting policies of
the Trust; assisting in the resolution of accounting issues that may arise with
respect to the Trust's operations and consulting with the Trust's independent
accountants, legal counsel and the Trust's other agents as necessary in
connection therewith; establishing and monitoring the Trust's operating expense
budgets; reviewing the Trust's bills; processing the payment of bills that have
been approved by an authorized person; assisting the Trust in determining the
amount of dividends and distributions available to be paid by the Trust to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent and the
custodian with such information as is required for such parties to effect the
payment of dividends and distributions; and otherwise assisting the Trust as it
may reasonably request in the conduct of the Trust's business, subject to the
direction and control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the obligations of any
agent of the Trust or any other person not a party to this Agreement which is
obligated to provide services to the Trust.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Trust's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Trust, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 3 hereof and the administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Trust other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Trust's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Trust: organization expenses of the
Trust (including out-of-pocket expenses, but not including your overhead or
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employee costs); fees payable to you and to any other Trust advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Trust's custodian
or other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Trust in connection with membership in investment company trade
organizations; fees and expenses of the Trust's custodians, subcustodians,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and,
except as provided below in this section 5, other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Trust; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Trust
for sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Trust's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Trust business) of Trustees, officers and employees
of the Trust who are not affiliated persons of you; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities of the Trust;
expenses of printing and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses and SAIs of the
Trust and supplements thereto; costs of stationery; any litigation expenses;
indemnification of Trustees and officers of the Trust; costs of shareholders'
and other meetings; and travel expenses (or an appropriate portion thereof) of
Trustees and officers of the Trust who are directors, officers or employees of
you to the extent that such expenses relate to attendance at meetings of the
Board of Trustees of the Trust or any committees thereof or advisors thereto
held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Trust if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of the Trust's Shares pursuant to an
underwriting agreement which provides that the underwriter shall assume some or
all of such expenses, or (ii) the Trust shall have adopted a plan in conformity
with Rule 12b-1 under the 1940 Act providing that the Trust (or some other
party) shall assumed some or all of such expenses. You shall be required to pay
such of the foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Trust (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the Trust
shall pay you on the last day of each month the unpaid balance of a fee equal to
the excess of (a) 1/12 of .65 of 1% of the average daily net assets as defined
below of the Trust for such month; provided that, for any calendar month during
which the average of such values exceeds $200,000,000, the fee payable for that
month based on the portion of the average of such values in excess of
$200,000,000 shall be 1/12 of .60 of 1% of such portion; and provided that, for
any calendar month during which the average of such values exceeds $400,000,000,
the fee payable for that month based on the portion of the average of such
values in excess of $400,000,000 shall be 1/12 of .55 of 1% of such portion over
(b) the greater of (i) the amount by which the Trust's expenses exceed the
lowest applicable expense limitation (as more fully described below) or (ii) any
compensation waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim payments of your
fee hereunder as you shall request, provided that no such payment shall exceed
75% of the amount of your fee then accrued on the books of the Trust and unpaid.
The "average daily net assets" of the Trust shall mean the average of the
values placed on the Trust's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Trust is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Trust lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Trust shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. It the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Trust as last determined shall be deemed to be the value of its
net assets as of 4:00 p.m. (New York time), or as of such other time as the
value of the net assets of the Trust's portfolio may be lawfully determined on
that day. If the Trust determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Trust,
shall cause the aggregate expenses of the Trust to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Trust may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Trust the amount
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of any payment received in excess of the limitation pursuant to this section 6
as promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Trust an amount greater than the fee paid to
you in respect of such year pursuant to this Agreement. As used in this section
6, "expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Trust; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for thereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound thereunder by the forms of any publicly
announced waiver of your fee, or any limitation of the Trust's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Trust, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Trust's account with
brokers or dealers selected by you in accordance with Trust policies as
expressed in the Registration Statement. If any occasion should arise in which
you give any advice to clients of yours concerning the Shares of the Trust, you
shall act solely as investment counsel for such clients and not in any way on
behalf of the Trust.
Your services to the Trust pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Trust.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Trust agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Trust or its
shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
Any person, even though also employed by you, who may be or become an employee
of and paid by the Trust shall be deemed, when acting within the scope of his or
her employment by the Trust, to be acting in such employment solely for the
Trust and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1992, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval and (b) by
the Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Trust. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated with respect to the Trust at any
time, without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Trust or by the Trust's Board of Trustees
on 60 days' written notice to you, or by you on 60 days' written notice to the
Trust. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Trust and by the Trust's Board of Trustees, including a
majority of the Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
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11. Limitation of Liability for Claims. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "Scudder Growth and
Income Trust" refers to the Trustees under the Declaration collectively as
trustees and not as individuals or personally, and that no shareholder, Trustee,
officer, employee or agent of the Trust, shall be subject to claims against or
obligations of the Trust to any extent whatsoever, but that the Trust estate
only shall be liable.
You are hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and you agree that the obligations assumed by the
Trust pursuant to this Agreement shall be limited in all cases to the Trust and
its assets, and you shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Trust or any other series of the Trust,
or from any Trustee, officer, employee or agent of the Trust. You understand
that the rights and obligations of each series under the Declaration are
separate and distinct from those of any and all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall not apply to the management of assets allocated to any
series of the Trust's shares hereafter established by the Trust's Board of
Trustees.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Trust to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
SCUDDER GROWTH AND INCOME FUND
By /s/ Daniel Pierce
---------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By /s/ David S. Lee
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Managing Director
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Exhibit 5(b)
Scudder Investment Trust
175 Federal Street
Boston, Massachusetts 02110
May 9, 1991
Scudder, Stevens & Clark, Inc.
175 Federal Street
Boston, MA 02110
Investment Management Agreement
Scudder Quality Growth Fund
Dear Sirs:
Scudder Investment Trust (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an investment company.
Pursuant to the Trust's Declaration of Trust, the Board of Trustees has divided
the Trust's shares of beneficial interest, par value $.01 per share, (the
"Shares") into separate series, or funds, including Scudder Quality Growth Fund
(the "Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
That Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust, on behalf of the Fund,
agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also furnished you with copies properly certified or authenticated
of each of the following additional documents related to the Trust and the Fund:
(a) Declaration of Trust of the Trust dated November 3, 1987, as amended
to date (the "Declaration").
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Fund and the shareholders of the
Fund selecting you as investment manager and approving the form of
this Agreement.
(d) Establishment and Designation of Additional Shares of Beneficial
Interest dated February 12, 1991.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Name of Trust and Fund. The Trust and the Fund may use any name derived
from the name "Scudder, Stevens & Clark", if the Trust elects to do so, only for
so long as this Agreement, any other investment management agreement between you
and the Trust with respect to the Fund or any extension, renewal or amendment
hereof or thereof remains in effect, including any similar agreement with any
organization which shall have succeeded to your business as investment manager.
At such time as such an agreement shall no longer be in effect, the Trust and
the Fund shall each (to the extent the Trust has the legal power to cause it to
be done) cease to use such a name or any other name indicating that it is
managed by or otherwise connected with you or any organization which shall have
so succeeded to your business.
3. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
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the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all the
Fund's investment records and ledgers as are necessary to assist the Trust to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
on behalf of the Fund necessary for operating as an open-end investment company
and not provided by persons not parties to this Agreement including, but not
limited to, preparing reports to and meeting materials for the Trust's Board of
Trustees and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of, custodians, depositories, transfer and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities, the calculation of net asset
value and the calculation and payment of distributions to Fund shareholders;
monitoring the registration of shares of the Fund under applicable federal and
state securities laws; maintaining or causing to be maintained for the Fund all
books, records and reports and any other information required under the 1940
Act, to the extent that such books, records and reports and other information
are not maintained by the Fund's custodian or other agents of the Trust;
assisting in establishing the accounting policies of the Fund; assisting in the
resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Trust's independent accountants, legal
counsel and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets; reviewing the
Fund's bills; processing the payment of bills that have been approved by an
authorized person; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders, preparing
and arranging for the printing of dividend notices to shareholders, and
providing the transfer and dividend paying agent and the custodian with such
information as is required for such parties to effect the payment of dividends
and distributions; and otherwise assisting the Trust and the Fund as it may
reasonably request in the conduct of the Fund's business, subject to the
direction and control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the obligations of any
agent of the Fund or any other person not a party to this Agreement which is
obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
2
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shall provide at your expense the portfolio management services described in
section 3 hereof and the administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Trust in connection with membership in investment company trade
organizations; fees and expenses of the Fund's custodians, subcustodians,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and,
except as provided below in this section 5, other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Trust business) of Trustees, officers and employees
of the Trust who are not affiliated persons of you; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities of the Fund;
expenses of printing and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses and SAIs of the Fund
and supplements thereto; costs of stationery; any litigation expenses;
indemnification of Trustees and officers of the Trust; costs of shareholders'
and other meetings; and travel expenses (or an appropriate portion thereof) of
Trustees and officers of the Trust who are directors, officers or employees of
you to the extent that such expenses relate to attendance at meetings of the
Board of Trustees of the Trust or any committees thereof or advisors thereto
held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have adopted a plan in
conformity with Rule 12b-1 under the 1940 Act providing that the Fund (or some
other party) shall assume some or all of such expenses. You shall be required to
pay such of the foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the Trust
on behalf of the Fund shall pay you on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .70 of 1% of the average
daily net assets as defined below of the Fund for such month over (b) the
greater of (i) the amount by which the Fund's expenses exceed the lowest
applicable expense limitation (as more fully described below) or (ii) any
compensation waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim payments of your
fee hereunder as you shall request, provided that no such payment shall exceed
75% of the amount of your fee then accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 6.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
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<PAGE>
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 6 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 6,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Trust.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Trust agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Trust, the
Fund or its shareholders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Trust and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1992, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval and (b) by
the Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Trust's Board of Trustees on 60 days'
written notice to you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund and by the Trust's Board of Trustees, including a
majority of the Trustees who are not parties to this Agreement or interested
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persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
11. Limitation of Liability for Claims. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "Scudder Investment
Trust" refers to the Trustees under the Declaration collectively as trustees and
not as individuals or personally, and that no shareholder of the Fund, or
Trustee, officer, employee or agent of the Trust, shall be subject to claims
against or obligations of the Trust or of the Fund to any extent whatsoever, but
that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and you agree that the obligations assumed by the
Trust on behalf of the Fund pursuant to this Agreement shall be limited in all
cases to the Fund and its assets, and you shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Fund or any
other series of the Trust, or from any Trustee, officer, employee or agent of
the Trust. You understand that the rights and obligations of the Fund, or
series, under the Declaration are separate and distinct from those of any and
all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
SCUDDER INVESTMENT TRUST
(on behalf of Scudder Quality Growth Fund)
By /s/ Daniel Pierce
---------------------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By /s/ David S. Lee
---------------------------------------
Managing Director
5
Exhibit 5(c)
Scudder Investment Trust
175 Federal Street
Boston, Massachusetts 02110
August 10, 1993
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
Investment Management Agreement
Scudder Growth and Income Fund
Ladies and Gentlemen:
Scudder Investment Trust (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an investment company.
Pursuant to the Trust's Declaration of Trust, the Board of Trustees has divided
the Trust's shares of beneficial interest, par value $.01 per share, (the
"Shares") into separate series, or funds, including Scudder Growth and Income
Fund (the "Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
That Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust on behalf of the Fund
agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also furnished you with copies properly certified or authenticated
of each of the following additional documents related to the Trust and the Fund:
(a) Amended and Restated Declaration of Trust of the Trust dated
November 3, 1987, as amended to date (the "Declaration").
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders of the
Fund selecting you as investment manager and approving the form of
this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest dated February 12, 1991 relating to the Fund.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Name of Trust and Fund. The Trust and the Fund may use any name derived
from the name "Scudder, Stevens & Clark", if the Trust elects to do so, only for
so long as this Agreement, any other investment management agreement between you
and the Trust with respect to the Fund or any extension, renewal or amendment
hereof or thereof remains in effect, including any similar agreement with any
organization which shall have succeeded to your business as investment manager.
At such time as such an agreement shall no longer be in effect, the Trust and
the Fund shall each (to the extent the Trust has the legal power to cause it to
be done) cease to use such a name or any other name indicating that it is
managed by or otherwise connected with you or any organization which shall have
so succeeded to your business.
3. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
1
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policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the Trust to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
on behalf of the Fund necessary for operating as an open-end investment company
and not provided by persons not parties to this Agreement including, but not
limited to, preparing reports to and meeting materials for the Trust's Board of
Trustees and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of, custodians, depositories, transfer and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities, the calculation of net asset
value and the calculation and payment of distributions to Fund shareholders;
monitoring the registration of Shares of the Fund under applicable federal and
state securities laws; maintaining or causing to be maintained for the Fund all
books, records and reports and any other information required under the 1940
Act, to the extent that such books, records and reports and other information
are not maintained by the Fund's custodian or other agents of the Fund;
assisting in establishing the accounting policies of the Fund; assisting in the
resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith; establishing
and monitoring the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by an authorized person;
assisting the Fund in determining the amount of dividends and distributions
available to be paid by the Fund to its shareholders, preparing and arranging
for the printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent and the custodian with such information as is required
for such parties to effect the payment of dividends and distributions; and
otherwise assisting the Trust as it may reasonably request in the conduct of the
Fund's business, subject to the direction and control of the Trust's Board of
Trustees. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 3 hereof and the administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's custodians, subcustodians,
2
<PAGE>
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates and,
except as provided below in this section 5, other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Trust business) of Trustees, officers and employees
of the Trust who are not affiliated persons of you; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities of the Fund;
expenses of printing and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses and SAIs of the Fund
and supplements thereto; costs of stationery; any litigation expenses;
indemnification of Trustees and officers of the Trust; costs of shareholders'
and other meetings; and travel expenses (or an appropriate portion thereof) of
Trustees and officers of the Trust who are directors, officers or employees of
you to the extent that such expenses relate to attendance at meetings of the
Board of Trustees of the Trust or any committees thereof or advisors thereto
held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have adopted a plan in
conformity with Rule 12b-1 under the 1940 Act providing that the Fund (or some
other party) shall assume some or all of such expenses. You shall be required to
pay such of the foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the Trust
on behalf of the Fund shall pay you on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of 0.65 of 1% of the average
daily net assets as defined below of the Fund for such month; provided that, for
any calendar month during which the average of such values exceeds $200 million,
the fee payable for that month based on the portion of the average of such
values in excess of $200 million shall be 1/12 of 0.60 of 1% of such portion;
provided that, for any calendar month during which the average of such values
exceeds $400 million, the fee payable for that month based on the portion of the
average of such values in excess of $400 million shall be 1/12 of 0.55 of 1% of
such portion; and provided that, for any calendar month during which the average
of such values exceeds $900 million, the fee payable for that month based on the
portion of the average of such values in excess of $900 million shall be 1/12 of
0.50 of 1% of such portion over (b) the greater of (i) the amount by which the
Fund's expenses exceed the lowest applicable expense limitation (as more fully
described below) or (ii) any compensation waived by you from time to time (as
more fully described below). You shall be entitled to receive during any month
such interim payments of your fee hereunder as you shall request, provided that
no such payment shall exceed 75% of the amount of your fee then accrued on the
books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 6.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 6 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 6,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
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<PAGE>
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Trust.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Trust agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Trust, the
Fund or its shareholders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Fund and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1994, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval and (b) by
the Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Trust's Board of Trustees on 60 days'
written notice to you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund and by the Trust's Board of Trustees, including a
majority of the Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
11. Limitation of Liability for Claims. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "Scudder Investment
Trust" refers to the Trustees under the Declaration collectively as trustees and
not as individuals or personally, and that no shareholder of the Fund, or
Trustee, officer, employee or agent of the Trust, shall be subject to claims
against or obligations of the Trust or of the Fund to any extent whatsoever, but
that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and you agree that the obligations assumed by the
Trust on behalf of the Fund pursuant to this Agreement shall be limited in all
cases to the Fund and its assets, and you shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Fund or any
other series of the Trust, or from any Trustee, officer, employee or agent of
the Trust. You understand that the rights and obligations of each Fund, or
series, under the Declaration are separate and distinct from those of any and
all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
4
<PAGE>
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
SCUDDER INVESTMENT TRUST,
on behalf of Scudder Growth and Income Fund
By: /s/ Daniel Pierce
-----------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By: /s/ David S. Lee
------------------------------
Managing Director
5
Exhibit (6)(a)
SCUDDER GROWTH AND INCOME FUND
175 Federal Street
Boston, Massachusetts 02110
September 10, 1985
Scudder Fund Distributors, Inc.
115 Federal Street
Boston, Massachusetts 02110
Underwriting Agreement
Dear Sirs:
Scudder Growth and Income Fund (hereinafter called the "Fund") is a
business trust organized under the laws of Massachusetts and is engaged in the
business of an investment company. The authorized capital of the Fund consists
of shares of beneficial interest, without par value ("Shares"), of one series.
The Fund has selected you to act as principal underwriter (as such term is
defined in Section 2(a)(29) of the Investment Company Act of 1940, as amended
(the "1940 Act")) of the Shares and you are willing to act as such principal
underwriter and to perform the duties and functions of underwriter in the manner
and on the terms and conditions hereinafter set forth. Accordingly, the Fund
hereby agrees with you as follows:
1. Delivery of Documents. The Fund has furnished you with copies properly
certified or authenticated of each of the following:
(a) Declaration of Trust of the Fund, dated September 20, 1984, as amended
to date.
<PAGE>
(b) By-Laws of the Fund as in effect on the date hereof.
(c) Resolutions of the Board of Trustees of the Fund selecting you as
principal underwriter and approving this form of Agreement.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
The Fund will furnish you promptly with properly certified or authenticated
copies of any registration statement filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, (the "1933
Act") or the 1940 Act, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to
time use its best efforts to register under the 1933 Act such number of Shares
not already so registered as you may reasonably be expected to sell on behalf of
the Fund. You and the Fund will cooperate in taking such action as may be
necessary from time to time to qualify Shares so registered for sale by you or
the Fund in any states mutually agreeable to you and the Fund, and to maintain
such qualification. This Agreement relates to the issue and sale of Shares that
are duly authorized and registered and available for sale by the Fund, including
redeemed or repurchased Shares if and to the extent that they may be legally
sold and if, but only if, the Fund sees fit to sell them.
-2-
<PAGE>
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7 hereof
and to such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus or statement of additional information, you
are authorized to sell as agent on behalf of the Fund Shares authorized for
issue and registered under the 1933 Act. You may also purchase as principal
Shares for resale to the public. Such sales will be made by you on behalf of the
Fund by accepting unconditional orders to purchase Shares placed with you by
investors and such purchases will be made by you only after acceptance by you of
such orders. The sales price to the public of Shares shall be the public
offering price as defined in paragraph 6 hereof.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by the Fund and registered under the
1933 Act, provided that you may in your discretion refuse to accept orders for
Shares from any particular applicant.
5. Sale of Shares by the Fund. Unless you are otherwise notified by the
Fund, any right granted to you to accept orders for Shares or to make sales on
behalf of the Fund or to purchase shares for resale will not apply to (i) Shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all of the assets of any investment company or substantially all
-3-
<PAGE>
the outstanding shares of any such company, and (ii) to Shares that may be
offered by the Fund to shareholders of the Fund by virtue of their being such
shareholders.
6. Public Offering Price. All shares sold to investors by you will be sold
at the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per Share, determined, in the manner
provided in the Fund's registration statements as from time to time in effect
under the 1933 Act and the 1940 Act, next after the order is accepted by you.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Fund reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Fund if, in the judgment of a majority of the Board of Trustees or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Fund to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Fund while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by you before
you had knowledge of the suspension.
-4-
<PAGE>
8. Portfolio Securities. Portfolio securities of the Fund may be bought or
sold by or through you and you may participate directly or indirectly in
brokerage commissions or "spread" in respect of transactions in portfolio
securities of the Fund; provided, however, that all sums of money received by
you as a result of such purchases and sales or as a result of such participation
must, after reimbursement of your actual expenses in connection with such
activity, be paid over by you to or for the benefit of the Fund.
9. Expenses. (a) The Fund will pay (or will enter into arrangements
providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of
any registration statement (including a prospectus and statement
of additional information) under the 1933 Act or the 1940 Act, or
both, and any amendments or supplements thereto that may be made
from time to time;
(2) in connection with the registration and qualification of Shares
for sale in the various jurisdictions in which the Fund shall
determine it advisable to qualify such shares for sale (including
registering the Fund as a broker or dealer or any officer of the
Fund or other person as agent or salesman of the Fund in any such
jurisdictions);
-5-
<PAGE>
(3) of preparing, setting in type, printing and mailing any notice,
proxy statement, report, prospectus or other communication to
shareholders of the Fund in their capacity as such;
(4) of preparing, setting in type, printing and mailing prospectuses
annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares resulting
from the acceptance by you of orders to purchase Shares placed
with you by investors, including the expenses of printing and
mailing confirmations of such purchase orders and the expenses of
printing and mailing a prospectus included with the confirmation
of such orders;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this paragraph 9;
(8) of wiring funds in payment of Share purchases or in satisfaction
of redemption or repurchase requests, unless such expenses are
paid for by the investor or shareholder who initiates the
transaction;
-6-
<PAGE>
(9) of the cost of printing and postage of business reply envelopes
sent to Fund shareholders;
(10) of one or more CRT terminals connected with the computer
facilities of the transfer agent other than the portion allocated
to you in this paragraph 9;
(11) permitted to be paid or assumed by the Fund pursuant to a plan
("12b-1 Plan"), if any, adopted by the Fund in conformity with
the requirements of Rule 12b-1 under the 1940 Act ("Rule 12b-1")
or any successor rule, notwithstanding any other provision to the
contrary herein;
(12) of the expense of setting in type, printing and postage of the
periodic newsletter to shareholders other than the portion
allocated to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you as
shareholder representatives other than the portion allocated to
you in this paragraph.
(b) You shall pay or arrange for the payment of all fees and expenses:
-7-
<PAGE>
(1) of printing and distributing any prospectuses or reports prepared
for your use in connection with the offering of Shares to the
public;
(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of Shares
to the public;
(3) of advertising in connection with the offering of Shares to the
public;
(4) incurred in connection with your registration as a broker or
dealer or the registration or qualification of your officers,
directors, agents or representatives under Federal and state
laws;
(5) of that portion of WATS (or equivalent) telephone lines,
allocated to you on the basis of use by investors (but not
shareholders) who request information or prospectuses;
(6) of that portion of the expense of setting in type, printing and
postage of the periodic newsletter to shareholders attributable
to promotional material included in such newsletter at your
request concerning investment companies other than the Fund or
concerning the Fund to the extent you are requited to assume the
-8-
<PAGE>
expense thereof pursuant to paragraph 9(b)(8), except such
material which is limited to information, such as listings of
other investment companies and their investment objectives, given
in connection with the exchange privilege as from time to time
described in the Fund's prospectus;
(7) of that portion of the salaries and overhead of persons employed
by you as shareholder representatives attributable to the time
spent by such persons in responding to requests from investors,
but not share holders, for information about the Fund; and
(8) of any activity which is primarily intended to result in the sale
of Shares, unless a 12b-l Plan shall be in effect which provides
that the Fund shall bear some or all of such expenses, in which
case the Fund shall bear such expenses in accordance with such
Plan;
(9) of that portion of one or more CRT terminals connected with the
computer facilities of the transfer agent attributable to your
use of such terminal(s) to gain access to such of the transfer
agent's records as also serve as your records.
-9-
<PAGE>
Expenses which are to be allocated between you and the Fund shall be
allocated pursuant to reasonable procedures or formulae mutually agreed upon
from time to time, which procedures or formulae shall to the extent practicable
reflect studies of relevant empirical data.
10. Conformity with Law. You agree that in selling shares you will duly
conform in all respects with the laws of the United States and any state in
which shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Fund in the performance of your duties hereunder. You shall be responsible
for your own conduct and the employment, control and conduct of your agents and
employees and for injury to such agents or employees or to others through your
agents or employees. You assume full responsibility for your agents and
employees under applicable statutes and agree to pay all employee taxes
thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act, against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which the Fund or such Trustees, officers, or controlling person may become
-10-
<PAGE>
subject under such Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any shares by any person which (i) may be
based upon any wrongful act by you or any of your employees or representatives,
or (ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement (including a prospectus or
statement of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading if such statement or omission was made in reliance upon
information furnished to the Fund by you, or (iii) may be incurred or arise by
reason of your acting as the Fund's agent instead of purchasing and reselling
Shares as principal in distributing the Shares to the public, provided, however,
that in no case (i) is your indemnity in favor of a Trustee or officer or any
other person deemed to protect such Trustee or officer or other person against
any liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) are you to be liable under your indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Fund or such person, as the case may be, shall
have notified you in writing within a reasonable time after the summons or other
-11-
<PAGE>
first legal process giving information of the nature of the claims shall have
been served upon the Fund or upon such person (or after the Fund or such person
shall have received notice of such service on any designated agent), but
failure to notify you of any such claim shall not relieve you from any liability
which you may have to the Fund or any person against whom such action is brought
otherwise than on account of your indemnity agreement contained in this
paragraph. You shall be entitled to participate, at your own expense, in the
defense, or, if you so elect, to assume the defense of any suit brought to
enforce any such liability, but if you elect to assume the defense, such defense
shall be conducted by counsel chosen by you and satisfactory to the Fund, to its
officers and trustees, or to any controlling person or persons, defendant or
defendants in, the suit. In the event that you elect to assume the defense of
any such suit and retain such counsel, the Fund, such officers and Trustees or
controlling person or persons, defendant or defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them, but, in case
you do not elect to assume the defense of any such suit, you will reimburse the
Fund, such officers and Trustees or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of any counsel
retained by them. You agree promptly to notify the Fund of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of Shares.
-12-
<PAGE>
The Fund agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
you or such directors, officers or controlling person may become subject under
such Act, under any other statute, at common law or otherwise, arising out of
the acquisition of any Shares by any person which (1) may be based upon any
wrongful act by the Fund or any of its employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (including a prospectus or statement
of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to you by the Fund; provided, however, that in no case (i)
is the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is the Fund to be liable under its indemnity agreement
-13-
<PAGE>
contained in this paragraph with respect to any claims made against you or any
such director, officer or controlling person unless you or such director,
officer or controlling person as the case may be, shall have notified the Fund
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon you or upon such director, officer or controlling person (or after you or
such director, officer or controlling person shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Fund elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to you, your directors, officers or controlling persons or persons.
defendant or defendants in the suit. In the event that the Fund elects to assume
the defense of any such suit and retain such counsel you, your directors,
officers or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Fund does not elect to assume the defense of any such suit, it
will reimburse You or such directors, officers or controlling person or persons,
-14-
<PAGE>
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with, the issuance or sale of any Shares.
13. Authorized Representations. The Fund is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained in a registration statement (including
a prospectus or statement of additional information) covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of shares
other than the information and representations contained in a registration
statement (including a prospectus or statement of additional information)
covering Shares, as such registration statement may be amended or supplemented
from time to time. No person other than you is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Fund.
14. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date first written above and will remain in effect for a
period of two years from the date hereof and from year to year thereafter, but
-15-
<PAGE>
only so long as such continuance is specifically approved at least annually by
the vote of a majority of the Trustees who are not interested persons of you or
of the Fund, cast in person at a meeting called for the purpose of voting on
such approval, and by vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund this Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty, by
the Board of Trustees of the Fund, by a vote of a majority of the outstanding
voting securities of the Fund, or by you. This Agreement will automatically
terminate in the event of its assignment. In interpreting the provisions of this
paragraph 14, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person", "assignment" and "majority
of the outstanding voting securities"), as modified by any applicable order of
the Securities and Exchange Commission, shall, be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
-16-
<PAGE>
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Fund may terminate this
Agreement forthwith. If you should at any time request that a change be made in
the Fund's Declaration of Trust or By-laws or in its methods of doing business;
in order to comply with any requirements of federal law or regulations of the
Securities and Exchange Commission or of a national securities association of
which you are or may be a member relating to the sale of shares of the Fund, and
the Fund should not make such necessary change within a reasonable time, you may
terminate this Agreement forthwith.
16. Termination of Prior Agreements. This Agreement upon its effectiveness
terminates and supersedes all prior underwriting contracts between the parties.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
The name "Scudder Growth and Income Fund" is the designation of the
Trustees for the time being under a Declaration of Trust dated September 20,
1984, as amended from time to time, and all persons dealing with the Fund must
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<PAGE>
look solely to the property of the Fund for the enforcement of any claims
against the Fund as neither the Trustees, officers, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Fund.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Very truly yours,
SCUDDER GROWTH AND INCOME FUND
BY: /s/ [Illegible]
--------------------------------------
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER FUND DISTRIBUTORS, INC.
BY: /s/ [Illegible]
--------------------------------------
-18-
Exhibit 8 (a)(1)
CUSTODIAN CONTRACT
This Contract between Scudder Growth and Income Fund (the "Fund"), a
Massachusetts business trust created under a Declaration of Trust dated
September 20, 1984, as the same may be amended from time to time, (the
"Declaration of Trust") and State Street Bank and Trust Company (the
"Custodian"),
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
I. Employment of Custodian and Property to be Held by It; Application of
Contract
The Fund hereby employs the Custodian as the Custodian of its assets
pursuant to the provisions of the Declaration of Trust and the By-Laws of the
Fund. The Fund agrees to deliver to the Custodian all securities and cash owned
by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of beneficial interest, without par value, ("Shares") of all
series whenever created (each a "Portfolio") of the Fund as may be issued or
sold from time to time. The Custodian shall not be responsible for any property
of the Fund held or received by the Fund and not delivered to the Custodian.
The Custodian may from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the Trustees of the Fund, and
<PAGE>
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian.
The Fund may from time to time employ a special custodian in connection
with certain repurchase agreements entered into by the Fund, with the terms of
such employment to be governed by a special custodian agreement between the Fund
and the special custodian. However, the Fund agrees not to employ any such
special custodian until the Fund and the Custodian have entered into a master
repurchase agreement or other agreement which sets forth the terms governing the
relationship, including the method of transfer of securities and cash, between
the Custodian and such special custodian.
State Street acknowledges that additional Portfolios may be established and
that Portfolios may be terminated, from time to time by action of the trustees
of the Fund. If the context requires and unless otherwise specifically provided
herein, the term "Fund" as used in this Contract shall mean in addition each
subsequently created separate Portfolio.
II. Duties of the Custodian with Respect to Property of the Fund Held by the
Custodian
A. Holding Securities. The Custodian shall hold and physically segregate in a
separate account for the Fund all non-cash property of the Fund, including
all securities owned by the Fund, except that securities which are
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<PAGE>
maintained pursuant to Section L of Article II hereof in a clearing agency
which acts as a securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury, collectively referred to herein as
"Securities Systems", shall be identified as belonging to the Fund.
B. Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities Systems account
of the Custodian only upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, and only in
the following cases:
1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section L hereof;
4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
5) To the Issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
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<PAGE>
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the Issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section K of Article II hereof or into the name or nominee name of any
sub-custodian appointed pursuant to Article I hereof; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) To the broker selling the same for examination in accordance with the
"street delivery" custom; provided that the Custodian shall adopt such
procedures, as the Fund from time to time shall approve, to ensure
their prompt return to the Custodian by the broker in the event the
broker elects not to accept them;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the Issuer of such securities, or pursuant to provisions
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<PAGE>
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the custodian;
9) In the case of warrants, rights or similar securities, for the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the
custodian;
10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) Upon receipt of instructions from the transfer agent for the Fund (the
"Transfer Agent"), for delivery to the Transfer Agent or to holders of
-5-
<PAGE>
shares in connection with distributions in kind, as may be described
from time to time in the Fund's currently effective prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
13) For any other proper corporate purposes, but only upon receipt of, in
addition to proper instructions, a certified copy of a resolution of
the Trustees or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purposes to be
proper corporate purposes, and naming the person or persons to whom
delivery of such securities shall be made.
C. Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
-6-
<PAGE>
pursuant to Section K of Article II hereof or in the name or nominee name
of any sub-custodian or special custodian appointed pursuant to Article I
hereof. All securities accepted by the Custodian on behalf of the Fund
under the terms of this Contract shall be in "street" or other good
delivery form.
D. Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or order
by the Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940, as amended. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other banks
or trust companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be qualified
to act as a custodian under the Investment Company Act of 1940, as amended,
and that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by vote of a majority of
the Trustees of the Fund. Such funds shall be deposited by the Custodian in
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<PAGE>
its capacity as Custodian and shall be withdrawable by the Custodian only
in that capacity.
E. Payments for Shares. The Custodian shall receive from the distributor of
the Fund's Shares or from the Transfer Agent and deposit into the Fund's
account such payments as are received for Shares of the Fund issued or sold
from time to time by the Fund. The Custodian will provide timely
notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares of the Fund.
F. Investment and Availability of Federal Funds. Upon mutual agreement between
the Fund and the Custodian, the Custodian shall, upon the receipt of proper
instructions, which may be continuing instructions when deemed appropriate
by the parties,
1) invest in such instruments as may be set forth in such instructions on
the same day as received all federal funds received after a time
agreed upon between the Custodian and the Fund; and
2) make federal funds available to the Fund as of specified times agreed
upon from time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares of the Fund which are deposited
into the Fund's account.
G. Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant to
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<PAGE>
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date
of payment by the Issuer, such securities are held by the Custodian or
agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder.
H. Payment of Fund Moneys. Upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
1) Upon the purchase of securities for the account of the Fund but only
(a) against the delivery of such securities to the Custodian (or any
bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment Company Act
of 1940, as amended, or is permitted by a rule under such Act, to act
as a custodian and has been designated by the Custodian as its agent
for this purpose) or sub-custodian or special custodian registered in
the name of the Fund or in the name of a nominee of the Custodian
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<PAGE>
referred to in Section C of Article II hereof or in proper form for
transfer; (b) in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in Section L of
Article II hereof or (c) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, (i) against
delivery of the securities either in certificate form or through an
entry crediting the Custodian's, sub-custodian's or special
custodian's account at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing purchase by the
Fund of securities owned by the Custodian or other bank along with
written evidence of the agreement by the Custodian or other bank to
repurchase such securities from the Fund;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section B of Article II hereof;
3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section J of Article II hereof,
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
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<PAGE>
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
6) For any other proper purposes, but only upon receipt of, in addition
to proper instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.
I. Liability for Payment in Advance of Receipt of Securities Purchased. In any
and every case where payment for purchase of securities for the account of
the Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund to
so pay in advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received
-11-
<PAGE>
by the Custodian, except that in the case of repurchase agreements entered
into by the Fund with a bank which is a member of the Federal Reserve
System, the Custodian may transfer funds to the account of such bank prior
to the receipt of written evidence that the securities subject to such
repurchase agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal
Reserve Bank of Boston or of the safe-keeping receipt, provided that such
securities have in fact been so transferred by book-entry.
J. Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations of
the Declaration of Trust and any applicable votes of the Trustees of the
Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of
Shares who have delivered to the Transfer Agent a request for redemption or
repurchase of their Shares. In connection with the redemption or repurchase
of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares, which
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<PAGE>
checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
K. Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article II as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of any of its responsibilities or liabilities
hereunder.
L. Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities Systems" in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
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<PAGE>
1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian, or otherwise for customers.
2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund.
3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon (1) receipt
of advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advices from the Securities
System of transfers of securities for the account of the Fund shall
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<PAGE>
identify the Fund, be maintained for the Fund by the Custodian and be
provided to the Fund at its request. The Custodian shall furnish the
Fund confirmation of each transfer to or from the account of the Fund
in the form of a written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund on
the next business day.
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System.
5) The Custodian shall have received the initial or annual certificate,
as the case may be, required by Article IX hereof.
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from any failure of the
-15-
<PAGE>
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
M. Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
N. Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
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<PAGE>
O. Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of securities and expirations
of rights in connection therewith) received by the Custodian from issuers
of the securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
P. Proper Instructions. "Proper instructions" as used throughout this Article
ii means a writing signed or initialled by one or more person or persons as
the Trustees shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered proper instructions if the
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
-17-
<PAGE>
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Trustees of the Fund accompanied
by a detailed description of procedures approved by the Trustees, "proper
instructions" may include communications effected directly between
electro-mechanical or electronic devices provided that the Trustees and the
Custodian are satisfied that such procedures afford adequate safeguards for
the Fund's assets.
O. Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and' property of the Fund except as
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otherwise directed by the Trustees of the Fund.
R. Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or
on behalf of the Fund. The Custodian may receive and accept a certified
copy of a vote of the Trustees of the Fund as conclusive evidence (a) of
the authority of any person to act in accordance with such vote or (b) of
any determination or of any action by the Trustees pursuant to the
Declaration of Trust as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
III. Duties of Custodian with Respect to Books of Account and Calculation of Net
Asset value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Trustees of the Fund to keep the books of
account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. The Custodian shall also upon request calculate the net income of the
Fund and, if instructed in writing by an officer of the Fund to do so, shall
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<PAGE>
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the income of the Fund shall be made at the time or times described from time to
time in the Fund's currently effective prospectus.
IV. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, as amended,
with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
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<PAGE>
V. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1, and Form N-lR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
VI. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, which shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Fund, to provide reasonable assurance that any
material inadequacies would be disclosed, shall state in detail material
inadequacies disclosed by such examination, and, if there are no such
inadequacies, shall so state.
VII. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
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<PAGE>
VIII. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties. The Custodian shall
be held to the exercise of reasonable care in carrying out the provisions of
this Contract, but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Fund) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the Custodian with respect
to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
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<PAGE>
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
IX. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section L of Article II hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Trustees of the Fund have approved the initial use of a particular
Securities System and the receipt of an annual certificate of the Secretary or
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<PAGE>
an Assistant Secretary that the Trustees have reviewed the use by the Fund of
such Securities system, as required in each case by Rule l7f-4 under the
Investment Company Act of 1940, as amended; provided further, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust or the Fund's By-Laws, and further provided, that the Fund may at any time
by action of its Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Federal Deposit Insurance
Corporation or Commissioner of Banks for the Commonwealth of Massachusetts or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
X. Successor Custodian
If a successor custodian shall be appointed by the Trustees of the Fund,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer. all
securities then held by it hereunder.
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If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Trustees of the
Fund, deliver at the office of the Custodian such securities, funds and other
properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Trustees shall have been delivered to the
Custodian on or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the Investment Company Act of 1940, as amended,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Trustees to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
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this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
XI. Special Provisions Concerning Repurchase Agreements.
Notwithstanding anything to the contrary in this Agreement, upon receipt of
proper instructions, which may be standing instructions, in connection with
repurchase agreements, the Custodian shall transmit, prior to receipt on behalf
of the Fund of any securities or other property, funds from the Fund's custodian
account to a special custodian approved by the Trustees of the Fund, which funds
shall be used to pay for securities to be purchased by the Fund subject to the
Fund's obligation to sell and the seller's obligation to repurchase such
securities shall be held in the custody of the special custodian.
XII. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust or the By-Laws of the Fund. No interpretive or
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additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
XIII. Trustees
All references to actions of or by Trustees herein shall require action by
such Trustees acting as a board or formally constituted group and not
individually.
XIV. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
The name "Scudder Growth and Income Fund" is the designation of the
Trustees for the time being under a Declaration of Trust dated September 20,
1984 and all persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 31st day of December, 1984.
SEAL SCUDDER GROWTH AND INCOME FUND
By /s/ [Illegible}
-------------------------------------
EXECUTIVE VICE PRESIDENT
SEAL STATE STREET BANK AND TRUST COMPANY
By /s/ [Illegible}
-------------------------------------
[Title]
-27-
Exhibit 8(a)(2)
SCUDDER GROWTH AND INCOME FUND
Custodian Contract
Amendment No. 1
The Scudder Growth and Income Fund (the "Fund") and State Street Bank and
Trust Company (the "Custodian") hereby agree to amend the Custodian Contract
entered into on December 31, 1984 pursuant to Article IX therein, as follows:
1. Page 5, Article II, Section B. By inserting the following new Paragraphs
12 and 13 as follows and by renumbering the existing Paragraphs 12 and 13 as
Paragraphs 14 and 15, respectively:
"12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;"
2. Page 9, Article II, Section H, Paragraph 1, line 1. By inserting after
"securities" the following: ", futures contracts or options on futures
contracts".
3. Page 9, Article II, Section H, Paragraph 1, line 3. By inserting after
"securities" the following: ", or evidence of title to futures contracts or
options on futures contracts,".
4. Page 9, Article II, Section H, Paragraph 1, line 19. By inserting after
"another bank" the following: "or a broker-dealer which is a member of the
NASD,".
5. Page 11, Article II, Section H. By adding a new Paragraph 6 as follows
and by renumbering the current Paragraph 6 as Paragraph 7:
<PAGE>
"6) For payment of the amount of dividends received in respect of
securities sold short;"
6. Page 16, Article II. By adding the following new Section M. as follows
and by renumbering the current Sections M., N., O., P., andd Q., as Sections N.,
O., P., Q. and R., respectively:
"M. Segregated Account. The Custodian shall upon receipt of proper
instructions, which may be standing instructions, establish and
maintain a segregated account or accounts for and on behalf of
the Fund, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account
by the Custodian pursuant to Section L hereof, (i) in accordance
with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund,
(ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv)
for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to proper instructions,
a certified copy of a resolution of the Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes."
7. Page 17, Article II, Section O, line 5. By inserting after "connection
therewith" the following: "and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or sold by
the Fund)".
<PAGE>
8. Page 21, Article VI, line 5. By inserting after "safeguarding
securities," the following: "futures contracts and options on futures
contracts,".
This Amendment shall become effective as of its date of execution.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 14 day of April, 1985.
SCUDDER GROWTH AND INCOME FUND
(SEAL)
By /s/Daniel S. Lee
---------------------------------
Title: EXECUTIVE VICE PRESIDENT
STATE STREET BANK AND TRUST COMPANY
(SEAL)
By /s/E.D. Hankes, Jr.
---------------------------------
Title:
Exhibit 8(a)(3)
AMENDMENT
---------
The Custodian Contract dated December 31, 1984 between Scudder Growth and
Income Fund (the "Fund") and State Street Bank and Trust Company (the
"Custodian") is hereby amended as follows:
I. Section II.A is amended to read as follows:
"Holding Securities. The Custodian shall hold and physically segregate in a
separate account for each series ("Portfolio") of the Fund all non-cash property
allocated to each portfolio, including all securities owned by the Fund and
allocated to each Portfolio except that (a) securities which are maintained
pursuant to Section II.L. in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department of
Treasury, collectively referred to herein as "Securities System", shall be
identified as belonging to a specified Portfolio and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section II.L.1., shall be identified as
belonging to a specified Portfolio".
II. Sections II.B is amended to read, in relevant part as follows:
"Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry system account ("Direct
Paper System Account") only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and only in the
following cases:
1) . . . .
.
.
.
13) . . . . "
III. Section II.B. 4) through 13) are renumbered 5) through 14) and the
following is added as subparagraph 4):
"4) In the case of a sale effected through the Direct Paper System, in
accordance with the provisions of Section L.1 hereof."
IV. Section II.H(1) is amended to read in relevant part as follows:
"Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options, futures contracts or options
on futures contracts for the account of the Fund but only (a) against
the delivery of such securities or evidence of title to such options,
<PAGE>
futures contracts or options on futures contracts, to the Custodian
(or any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the Investment Act of
1940, as amended, to as as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name of the
Fund or in the name of a nominee of the Custodian referred to in
Section II.C hereof or in proper form for transfer; (b) in the case of
a purchase effected through a Securities System, in accordance with
the conditions set forth in Section II.L. hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section II.L.1.; or (d) in
the case of repurchase agreements entered into between the Fund and
the Custodian, or another bank, or a broker-dealer which is a member
of NASD, (i) against delivery of the securities either in certificate
form or thorugh an entry crediting the Custodian's account in which is
holds securities as a fiduciary, custodian or otherwise for customers
at the Federal Reserve Bank with such securities or (ii) in the case
of purchase by the Fund of securities owned by State Street Bank and
Trust Company ("State Street") for its own account, against (A)
delivery of the receipt evidencing purchase by the Fund, (B)
earmarking certificates for such securities to show ownership by the
Fund or transfer of such securities from State Street's proprietary
account at the Federal Reserve Bank to its account described in (i)
above, unless the securities are already held in the latter account,
(C) the entry on the records of State Street showing that such
securities are held by the Fund, and (D) delivery of written evidence
of the agreement of State Street to repurchase such securities from
the Fund; provided that, upon receipt of Proper Instructions, the
Custodian shall transfer to another bank or trust company qualified to
act as a custodian under the Investment Company Act of 1940, as
amended, securities held in a Securities System and purchased from
State Street subject to State Street's agreement to repurchase such
securities;"
V. Following Section II.L., there is inserted a new Section II.L.1 to read
as follows:
L.1 "Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by the Fund for which the Custodian
acts as issuing and paying agent for the direct issue of commercial paper by and
for issuers through the Custodian's book-entry system, referred to herein as the
"Direct Paper System", subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
-2-
<PAGE>
3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
Portfolio by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account of
the Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities sold for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Direct Paper System
for the account of the Fund; and
6) The Custodian shall provide the Fund with any report on its system of
internal accounting control regarding the Direct Paper System as the
Fund may reasonably request from time to time."
VI. Section IX is hereby amended to read as follows:
Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement to the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section II.L. hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Trustees of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has reviewed the use by the Fund of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not act under
Section II.L.1 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has approved the
initial use of the Direct Paper System and the receipt of an annual certificate
of the Secretary or an Assistant Secretary that the Board of Trustees has
reviewed the use by the Fund of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any time
by action of its Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency,
-3-
<PAGE>
the Federal Deposit Insurance Corporation or the Commissioner of Banks for the
Commonwealth of Massachusetts or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements."
Except as otherwise expressly amended and modified herein, the provisions
of the Custodian Contract shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed in its name on its behalf by its duly authorized representatives and
its Seal to be hereto affixed as of the 8th day of August, 1987.
ATTEST: SCUDDER GROWTH AND INCOME FUND
/s/ Marilyn J. Hayes By: /s/David S. Lee
- --------------------------- ------------------------------------
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/ P.H. Larsen By: /s/ E.D. Hankes, Jr.
- --------------------------- ------------------------------------
Assistant Secretary Vice President
-4-
OO90Z
Exhibit 8(a)(4)
AMENDMENT TO THE
CUSTODIAN CONTRACT
AGREEMENT made this 9th day of August 1988 by and between STATE STREET BANK
AND TRUST COMPANY ("Custodian") and SCUDDER GROWTH AND INCOME FUND (the "Fund").
WITNESSETH THAT:
WHEREAS, the Custodian and the Fund are parties to a Custodian Contract
dated December 31, 1984 (as amended to date, the "Contract") which governs the
terms and conditions under which the Custodian maintained custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Contract and mutually agree to the following:
Replace subsection 7) of Section II.B Delivery of Securities with the
following new subsection 7):
7) Upon the sale of such securities for the account of the
Fund, to the broker or its clearing agent, against a receipt,
for examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST SCUDDER GROWTH AND INCOME FUND
/s/Marilyn G. Hayes /s/David S. Lee
- ------------------- ----------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/Maureen O'Brien /s/
- ------------------- --------------------------
Assistant Secretary Vice President
FC0825C/10
Exhibit 8(a)(5)
AMENDMENT TO THE CUSTODIAN CONTRACT
-----------------------------------
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and Scudder Investment Trust (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated December 31, 1984 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the custodian Contract
to provide for the maintenance of the Fund's foreign securities, and cash
incidental to transactions in such securities, in the custody of certain foreign
banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and conditions;
1. Appointment of Foreign Sub-Custodians
-------------------------------------
The Fund hereby authorizes and instructs the Custodian to
employ as sub-custodians for the Fund's securities and other assets maintained
outside the United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in Article
II Section P of the Custodian Contract, together with a certified resolution of
the Fund's Board of Trustees, the Custodian and the Fund may agree to amend
Schedule A hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as sub-custodian. Upon
receipt of Proper Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more of such sub-custodians for maintaining custody of
the Fund's assets.
2. Assets to be Held
-----------------
The Custodian shall limit the securities and other assets
maintained in the custody of the foreign sub-custodians to: (a) "foreign
securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment
Company Act of 1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to effect the
Fund's foreign securities transactions.
<PAGE>
3. Foreign Securities Depositories
-------------------------------
Except as may otherwise be agreed upon in writing by the
Custodian and the Fund, assets of the Fund shall be maintained in foreign
securities depositories only through arrangements implemented by the foreign
banking institutions serving as sub-custodians pursuant to the terms hereof.
Where possible, such arrangements shall include entry into agreements containing
the provisions set forth in Section 5 hereof.
4. Segregation of Securities
-------------------------
The Custodian shall identify on its books as belonging to the
Fund, the foreign securities of the Fund held by each foreign sub-custodian.
Each agreement pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a custody account for
the Custodian on behalf of the Fund and physically segregate in that account,
securities and other assets of the Fund, and, in the event that such institution
deposits the Fund's securities in a foreign securities depository, that it shall
identify on its books as belonging to the Custodian, as agent for the Fund, the
securities so deposited.
5. Agreements with Foreign Banking Institutions
--------------------------------------------
Each agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit 1 hereto and shall provide that:
(a) the Fund's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking institution
or its creditors or agents, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the assets
as belonging to the Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be given
access to the books and records of the foreign banking institution relating to
its actions under its agreement with the Custodian; and (e) assets of the Fund
held by the foreign sub-custodian will be subject only to the instructions of
the Custodian or its agents.
6. Access of Independent Accountants of the Fund
---------------------------------------------
Upon request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of the Fund to be afforded
access to the books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement with the
Custodian.
-2-
<PAGE>
7. Reports by Custodian
--------------------
The Custodian will supply to the Fund from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of the Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and other
assets and advices or notifications of any transfers of securities to or from
each custodial account maintained by a foreign banking institution for the
Custodian on behalf of the Fund indicating, as to securities acquired for the
Fund, the identity of the entity having physical possession of such securities.
8. Transactions in Foreign Custody Account
---------------------------------------
(a) Except as otherwise provided in paragraph (b) of this
Section 8, the provisions of Article II Section B and Article II Section H of
the Custodian Contract shall apply, mutatis mutandis to the foreign securities
of the Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of the Custodian Contract to
the contrary, settlement and payment for securities received for the account of
the Fund and delivery of securities maintained for the account of the Fund may
be effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the same
extent as set forth in Article II Section C of the Custodian Contract, and the
Fund agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.
9. Liability of Foreign Sub-Custodians
-----------------------------------
Each agreement pursuant to which the Custodian employs a
foreign banking institution as a foreign sub-custodian shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Custodian and the Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or in connection
with the institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the Custodian with
respect to
-3-
<PAGE>
any claims against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage, cost, expense, liability
or claim.
10. Liability of Custodian
----------------------
The Custodian shall be liable for the acts or omissions of a
foreign banking institution to the same extent set forth with respect to
sub-custodians generally in the Custodian Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by paragraph 13
hereof, the Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism or any loss where the sub-custodian
has otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 10, in delegating custody duties to State Street
London Ltd., the Custodian shall not be relieved of any responsibility to the
Fund for any loss due to such delegation, except such loss as may result from
(a) political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due to Acts
of God, nuclear incident or other losses under circumstances where the Custodian
and State Street London Ltd. have exercised reasonable care.
11. Reimbursement for Advances
--------------------------
If the Fund requires the Custodian to advance cash or
securities for any purpose, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the account of the
Fund shall be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of the Fund assets to the extent necessary to obtain reimbursement;
provided, however, that (a) such reimbursement shall only occur after written
demand has been made upon the Fund, and (b) the amount of each reimburse-ment
shall not exceed any applicable investment restriction of the Fund in effect at
the time of the reimbursement, including the Fund's ability to pledge its assets
(such pledges currently being limited to 10% of gross assets).
-4-
<PAGE>
12. Monitoring Responsibilities
---------------------------
The custodian shall furnish annually to the Fund, during the
month of June, information concerning the foreign sub-custodians employed by
the Custodian. Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of this amendment
to the Custodian Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the subject
of an exemptive order from the Securities and Exchange Commission is notified by
such foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity has declined below S200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
13. Branches of U.S. Banks
----------------------
(a) Except as otherwise set forth in this amendment to the
Custodian Contract, the provisions hereof shall not apply where the custody of
the Fund assets is maintained in a foreign branch of a banking institution which
is a "bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by Article I
of the Custodian Contract.
(b) Cash held for the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London Branch, which account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.
14. Applicability of Custodian Contract
-----------------------------------
Except as specifically superseded or modified herein, the
terms and provisions of the Custodian Contract shall continue to apply with full
force and effect.
-5-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 29th day of July, 1991.
ATTEST: SCUDDER INVESTMENT TRUST
Vice President By: /s/Daniel Pierce
(Title) (Title)
ATTEST: STATE STREET BANK AND TRUST COMPANY
/s/Mary E. Fox By: /s/
Assistant Secretary Vice President
-6-
<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Scudder Investment
Trust for use as sub-custodians for the Fund's securities and other assets.
(insert banks and securities depositories)
Certified
- --------------------------
Fund's Authorized Officer
Dated:
--------------------
-7-
Exhibit 8(a)(6)
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
SCUDDER, STEVENS & CLARK FUNDS
(See Attachment "A")
Effective October 1, 1986
- --------------------------------------------------------------------------------
I. Administration
Custody, Portfolio and Fund Accounting Service - Maintain custody of fund
assets. Settle portfolio purchases and sales. Report buy and sell fails.
Determine and collect portfolio income. Make cash disbursements and report
cash transactions. Maintain investment ledgers, provide selected portfolio
transactions, position and income reports. Maintain general ledger and
capital stock accounts. Prepare daily trial balance. Calculate net asset
value daily. Provide selected general ledger reports. Securities yield or
market value quotations will be provided to State Street by the fund.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
-------------------------
Custody, Portfolio
Fund Net Assets and Fund Accounting
--------------- -------------------
First $20 Million 1/ 10 of 1%
Next $80 Million 1/ 25 of 1%
Excess 1/100 of 1%
Minimum Monthly Charges As stated in attachment "A"
and $2,000 for all new funds
II. Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $12.00
New York Physical Settlements $25.00
All other trades $16.00
<PAGE>
III. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
IV. Interest Pate Futures
Transactions -- no security movement $ 8.00
V. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VI. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
VII. Principal Reduction Payments
Per paydown $ 3.00
VIII. Dividend Charges (For items held at the Request
of Traders over record date in street form) $50.00
IX. Earnings Credit
A balance credit equal to 75% of the 90 day CD rate in effect the last
business day of each month will be applied to the Custodian Demand Deposit
Account balance of each fund, net of check redemption service overdrafts,
on a pro-rated basis against the fund's custodian fee, excluding
out-of-pocket expenses. The balance credit will be cumulative and carried
forward each month. Any excess credit remaining at year-end (December 31)
will not be carried forward.
<PAGE>
X. Automated Pricing
Monthly Base Fee $175.00*
Monthly Quote Charge -
- Municipal Bonds via Muller Data $ 21.00
- Municipal Ponds via Kenny Information
Systems $ 16.00
- Government, Corporate and Convertible
Bonds via Merrill Lynch $ 11.00
- Corporate and Government Bonds via
Muller Data $ 11.00
- Options, Futures and Private Placements $ 6.00
- Foreign Equities and Bonds via Extel Ltd. $ 6.00
- Listed Equities, OTC Equities, and Bonds $ 6.00
- Corporate, Municipal, Convertible and
Government Bonds, Adjustable Rate Preferred
Stocks via IDSI $ 6.00
For billing purposes, the monthly quote charge will be based on the
average number of positions in the portfolio.
XI. Special Services
Fees for activities of a non-recurring nature such as fund consolidations
or reorganizations, extraordinary security shipments and the preparation
of special reports will be subject to negotiation. Fees for tax
accounting/recordkeeping for options, financial futures, and other special
items will be negotiated separately.
* Does not apply to Variable Life Series
<PAGE>
XII. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15 each
XIII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
SCUDDER, STEVENS & CLARK FUNDS STATE STREET BANK & TRUST Co.
By /s/ [Illegible] By /s/ [Illegible]
----------------------------- --------------------------------
Title President Title Vice President
Date October 7,1986 Date October 7, 1986
<PAGE>
ATTACHMENT "A"
Fund No. Fund Name Monthly Minimum
- -------- --------- ---------------
7201 Scudder Income $1,000
7202 Scudder Growth & Income 1,000
7203 Scudder Capital Growth 1,000
7217 Scudder Government Mortgage Securities 2,000
7208 Scudder Cash Investment Trust 1,500
7209 Scudder Managed Mini Bond 1,500
7211 Scudder Government Money 1,500
7290 Scudder California Tax Free 1,500
7291 Scudder New York Tax Free 1,500
7241 Scudder Global 2,500
7232 Scudder Target General 1986 1,000
7233 Scudder Target General 1987 1,000
7234 Scudder Target General 1990 1,000
7240 Scudder Target General 1994 1,000
7237 Scudder Target Government 1986 1,000
7238 Scudder Target Government 1987 1,000
7239 Scudder Target Government 1990 1,000
7260 Scudder Tax Free Target 1987 1,000
7261 Scudder Tax Free Target 1990 1,000
7262 Scudder Tax Free Target 1993 1,000
7251 Scudder Tax Free Target 1996 1,000
7264 Scudder U.S. Government Zero Coupon 1990 1,000
7265 Scudder U.S. Government Zero Coupon 1995 1,000
7266 Scudder U.S. Government Zero Coupon 2000 1,000
7267 Scudder U.S. Government Zero Coupon 2005 1,000
7268 Scudder U.S. Government Zero Coupon 2010 1,000
7213 Scudder Variable Life Money Market 1,000
7214 Scudder Variable Life Equity 1,000
7215 Scudder Variable Life Diversified 1,000
7216 Scudder Variable Life Bond 1,000
7210 Scudder Variable Money Fund 1,500
7253 Scudder Variable Life Zero Coupon 1990 1,000
7254 Scudder Variable Life Zero Coupon 1995 1,000
7255 Scudder Variable Life Zero Coupon 2000 1,000
7256 Scudder Variable Life Zero Coupon 2005 1,000
7257 Scudder Variable Life Zero Coupon 2010 1,000
<PAGE>
ATTACHMENT "B"
to Custodian Fee Schedule
Dated October 1, 1986
Fund No. Fund Name Monthly Minimum
- -------- --------- ---------------
7295 Scudder Equity Income $1,000
7292 Scudder High Yield Tax Free 1,500
7225 Scudder California Tax Free Money 1,500
7224 Scudder New York Tax Free Money 1,500
7206 Scudder Variable Life International 1,500
7223 Scudder Mass Tax Free 1,500
7226 Scudder Ohio Tax Free 1,500
7227 Scudder Penn Tax Free 1,500
SCUDDER, STEVENS & CLARK FUNDS STATE STREET BANK & TRUST Co.
By /s/ [Illegible] By /s/ [Illegible]
----------------------------- --------------------------------
Title President Title Vice President
Date June 26, 1987 Date 4/8/88
[Logo] State Street
STATE STREET BANK AND TRUST COMPANY Exhibit 8(a)(7)
Custodian Fee Schedule
SCUDDER QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
I. Administration
Custody, Portfolio and Fund Accounting Service - Maintain custody of
fund assets. Settle portfolio purchases and sales. Report buy and sell
fails. Determine and collect portfolio income. Make cash disbursements
and report cash transactions. Maintain investment ledgers, provide
selected portfolio transactions, position and income reports. Maintain
general ledger and capital stock accounts. Prepare daily trial
balance. Calculate net asset value daily. Provide selected general
ledger reports. Securities yield or market value quotations will be
provided to State Street by the fund.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
Custody, Portfolio
*Fund Net Assets and Fund Accounting
--------------- -------------------
First $20 Million 1/10 of 1%
Next $80 Million 1/25 of 1%
Excess 1/100 of 1%
Minimum Monthly Charges 1,000
II. Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $12.00
New York Physical Settlements $25.00
All Other Trades $16.00
*Administration charge waived for months one - twelve
Minimum Phased in as follows:
Months thirteen - eighteen $ 500.00
Months nineteen and thereafter $1,000.00
<PAGE>
III. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per
broker $15.00
Option exercised charge, per issue, per
broker $15.00
IV. Interest Rate Futures
Transactions -- no security movement $ 8.00
V. Coupon Bonds
Monitoring for calls and processing coupons --
for each coupon issue held -- monthly charge $ 5.00
VI. Holdings Charge
For each issue maintained -- monthly charge $ 5.00
VII. Principal Reduction Payments
Per paydown $ 3.00
VIII. Dividend Charges (For items held at the
Request of Traders over record date in street
form) $50.00
IX. Earnings Credit
A balance credit equal to 75% of the 90 day CD rate in effect the last
business day of each month will be applied to the Custodian Demand
Deposit Account balance of each fund, net of check redemption service
overdrafts, on a pro-rated basis against the fund's custodian fee,
excluding out-of-pocket expenses. The balance credit will be
cumulative and carried forward each month. Any excess credit remaining
at year-end (December 31) will not be carried forward.
<PAGE>
X. Automated Pricing
Monthly Base Fee $175.00
Monthly Quote Charge -
- Municipal Bonds via Muller Data $ 21.00
- Municipal Bonds via Kenny Information $ 16.00
Systems
- Government, Corporate and Convertible Bonds
via Merrill Lynch $ 11.00
- Corporate and Government Bonds via Muller
Data $ 11.00
- Options, Futures and Private Placement $ 6.00
- Foreign Equities and Bonds via Extel Ltd. $ 6.00
- Listed Equities, OTC Equities, and Bonds $ 6.00
- Corporate, Municipal, Convertible and
Government Bonds, Adjustable Rate Preferred
Stocks via IDSI $ 6.00
For billing purposes, the monthly quote charge will be based on the
average number of positions in the portfolio.
XI. Special Services
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments
and the preparation of special reports will be subject to negotiation.
<PAGE>
XII. Out-of-Pocket Expenses
A billing for the recover of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer - $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over
$2,500 - $4.25
GNMA Transfer - $15 each
XIII. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's
offices.
SGUDDER, STEVENS & CLARK FUNDS STATE STREET BARK & TRUST CO.
By /s/ [Illegible] By /s/ [Illegible]
---------------------------- ----------------------------
Title [Illegible] Title Vice President
------------------------- ------------------------
Date [Illegible] Date 4/1/91
------------------------- -------------------------
EXHIBIT 8(b)(1)
SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of December 31, 1978, between State Street Bank and
Trust Company organized under the laws of the Commonwealth of Massachusetts (the
"Custodian"), and The Bank of New York, London office (the "Subcustodian").
WITNESSETH:
WHEREAS, the Custodian, under its former name, State Street Trust Company,
has entered into a custodian agreement with Third Investment Counsel Corporation
("Fund") dated September 30, 1949; as subsequently amended by an amendment dated
November 29, 1978;
WHEREAS, Third Investment Counsel Corporation most recently changed its
name to Scudder, Stevens & Clark Common Stock Fund, Inc. on March 21, 1950;
WHEREAS, the Custodian desires to utilize Subcustodian for the purpose of
holding cash and securities outside the United States;
WHEREAS, the Subcustodian is a bank within the meaning of Section 2(a)(5)
of the Investment Company Act of 1940 having an aggregate capital, surplus and
undivided profits of not less than Two Million Dollars ($2,000,000);
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as follows:
I. The Custodian may from time to time deposit securities or cash with the
Subcustodian. The Subcustodian shall not be responsible for any property of the
Fund not delivered to the Subcustodian.
<PAGE>
II. The Subcustodian shall hold and dispose of the securities hereafter held by
or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or corporations,
pursuant to the provisions hereof, all securities received by it for the account
of the Custodian as custodian for the Fund. If any securities are registered in
nominee name, such nominee name shall be used solely for the Fund. All such
securities are to be held or disposed of by the Subcustodian for, and subject at
all times to, the instructions of the Custodian pursuant to the terms of this
Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian shall
release or deliver securities owned by the Fund only for the following purposes:
(1) upon sale of securities for the account of the Fund against
receipt of payment therefor by cash, certified or cashier's check, or bank
credit;
(2) to the issuer thereof or its agent when securities are called,
redeemed, retired or otherwise become payable, provided that the cash is to
be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or certificates
representing the same aggregate face amount or number of units, for
exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement;
-2-
<PAGE>
provided that, in any such case, the new securities and cash, if any, are
to be delivered to the Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities; provided that the surrender of interim receipts or temporary
securities for definitive securities may be made at any time; provided
that, in any such case, the new securities are to be delivered to the
Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receipt agent. The Subcustodian shall have full
responsibility for transmitting to the Custodian any such offers received
by it. Thereafter, the Custodian, if it desires to respond to such offer,
shall have full responsibility for providing the subcustodian with all
necessary instructions in timely enough fashion for the subcustodian to act
thereon prior to any expiration time for such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes other than
the manners and purposes enumerated in the foregoing five items; provided,
however, that disposition pursuant to this item (6) shall be made by the
Subcustodian only upon receipt of instructions from the Custodian
specifying the amount of such securities to be delivered, the purpose for
-3-
<PAGE>
which the delivery is to be made, and the name of the person or persons to
whom such delivery is to be made.
III. The Subcustodian shall hold and dispose of cash hereafter held by or
deposited with the Subcustodian as follows:
A. The subcustodian shall open and maintain a separate account or accounts
in the name of the Custodian as custodian for the Fund, subject only to draft or
order by the Subcustodian acting pursuant to the terms of this Agreement. The
Subcustodian shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it for the account of the Custodian as custodian
for the Fund.
B. Upon receipt of instructions from the Custodian, the Subcustodian shall
make payments of cash for the account of the Fund from such cash only for the
following purposes:
(1) upon the purchase of securities for the account of the Fund but
only against the delivery of such securities to the Subcustodian;
(2) in connection with the subscription, conversion, exchange, tender
or surrender of securities owned by the Fund as set forth in Paragraph IIB
hereof; and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Fund.
IV. All instructions shall be in writing executed by the Custodian, and the
Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the subcustodian may in its discretion act
-4-
<PAGE>
on the basis of instructions received via telecommunications facilities if the
Subcustodian reasonably believes such instructions to have been dispatched by
the Custodian. The Subcustodian may require that instructions received via
telecommunications facilities be authenticated. The Subcustodian shall be
protected in acting upon any instructions, notice, request, consent, certificate
or other instrument or paper reasonably believed by it to be genuine and to have
been properly executed. The Subcustodian may receive and accept a certificate
signed by the secretary of the Custodian as conclusive evidence of the authority
of any person to act on behalf of the Custodian, and such certificate may be
considered as in full force and effect until receipt by the Subcustodian of
written notice to the contrary.
V. Unless and until the Subcustodian receives instructions from the Custodian to
the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it for
the account of the Custodian as custodian for the Fund which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Custodian as custodian for the Fund;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Fund;
C. Hold for the account of the Custodian as custodian for the Fund
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder.
-5-
<PAGE>
VI. The Subcustodian shall execute on behalf of the Custodian, in the Fund's
name, any declarations, affidavits, or certificates of ownership which may be
necessary or useful from time to time for the Subcustodian to perform any or
several of its obligations arising under the provisions of this Agreement.
VII. If the Subcustodian shall receive any notices or reports in respect of
securities held by it hereunder, it shall promptly upon receipt thereof transmit
to the Custodian by airmail, telecommunications facilities, or comparable means
any such notices or reports.
VIII. The Subcustodian may, from time to time, appoint (and may at any time
remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
IX. On each day on which there is a cash or securities transaction over the
account of the Custodian as custodian for the Fund, the Subcustodian shall
dispatch to the Custodian (and to the Fund if requested) separate cash and
securities advices. The Subcustodian shall furnish to the Custodian at the end
of every month a statement of the cash and securities held by the Subcustodian
and any agent for the Custodian as custodian for the Fund. Such statements shall
be sent by air mail, telecommunications facilities or comparable means to the
Custodian within 15 days after the end of each month. The Subcustodian shall
-6-
<PAGE>
furnish the Custodian with such additional statements as the Custodian may
reasonably request.
X. As compensation for the services rendered pursuant to this Agreement, the
Custodian shall pay the Subcustodian a fee computed in accordance with the
schedule attached hereto as Exhibit A, as such schedule may be amended from time
to time by written agreement between the Custodian and the Subcustodian. The
Custodian shall reimburse the Subcustodian for any reasonable out-of-pocket
expenses incurred by the Subcustodian in connection with its obligations
hereunder.
XI. Upon request, the Custodian shall deliver, or shall request the Fund to
deliver, to the Subcustodian, such proxies, powers-of-attorney or other
instruments as may be necessary or desirable in connection with the performance
by the Subcustodian of its obligations under this Agreement.
XII. So long as and to the extent that it is in the exercise of reasonable care,
the Subcustodian shall not be responsible for the title, validity or genuineness
of any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement. The Subcustodian shall not be liable for any action
taken or omitted in good faith upon any notice, request, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties. The Subcustodian shall be obligated to exercise
reasonable care and diligence in carrying out the provisions of this Agreement
and shall be without liability for any action taken or thing done by it in good
faith and without negligence, the standard for which shall be that applicable to
-7-
<PAGE>
a bailee for hire under Massachusetts law. Notwithstanding the foregoing, the
Subcustodian shall not be liable for (a) any violation by the Fund of any
limitation applicable to its powers to make expenditures, to invest in or pledge
securities or to borrow which does not involve action by the Subcustodian, and
(b) any violation by the Fund of any limitation applicable to its powers to make
investments, to invest in or pledge securities or to borrow which involves
action by the Subcustodian, provided that such action was authorized in
accordance with Paragraphs II, III or IV hereof. The Subcustodian shall be
entitled to and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice.
XIII. This Agreement may be terminated at any time by the Custodian or the
Subcustodian by giving written notice to the other party at least thirty (30)
days prior to the date on which such termination is to become effective. In the
event of termination, the Subcustodian will deliver any securities held by it or
any agent to the Custodian or to such successor subcustodian as the Custodian
shall instruct in a manner to be mutually agreed upon by the parties hereto or,
in the absence of such agreement, in a reasonable manner. Further in the event
of termination, the Subcustodian shall be entitled to receive prior to the
delivery of the securities held by it or any agent all accrued fees and
unreimbursed expenses the payment of which is contemplated by Paragraph X hereof
-8-
<PAGE>
upon receipt by the Custodian of a final statement setting forth such fees and
expenses.
XIV. Except as the parties shall from time to time otherwise agree, all
instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian: State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Attention:
Telex No.:
If to the Subcustodian: The Bank of New York
Attention:
Telex No.:
XV. This Agreement constitutes the entire understanding and agreement of the
parties hereto, and neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated except by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
XVI. This Agreement shall be binding upon and shall inure to the benefit of the
Custodian and the Subcustodian and their successors and assignees provided that
neither the Custodian nor the Subcustodian may assign this Agreement or any of
the rights or obligations hereunder without the prior written consent of the
other party.
XVII. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts. The parties hereto agree that
notwithstanding any provision or provisions of this Agreement of apparent
contrary effect, the Subcustodian shall have no obligation to take any action
which is contrary to any one or several provisions of the laws, orders or
-9-
<PAGE>
regulations of England. The Subcustodian shall not be liable for any expense or
damage to the Custodian or the Fund that may result from violation of any or
several of the foregoing laws, orders and regulations, except as such expense or
damage is caused by the wilful misconduct or negligence of the Subcustodian.
XVIII. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument. This Agreement shall become effective when one or more counterparts
have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
STATE STREET SANK AND TRUST COMPANY
(the "Custodian")
By /s/ [Illegible]
---------------------------------------
VICE PRESIDENT
THE BANK OF NEW YORK
(the "Subcustodian")
By /s/ [Illegible]
---------------------------------------
10-
Exhibit 8(c)(1)
SUBCUSTODIAN AGREEMENT
AGREEMENT dated September 1, 1996 between THE CHASE MANHATTAN BANK, N.A.
("Bank") and STATE STREET BANK AND TRUST COMPANY ("Company").
1. Custody Account. The Bank agrees to establish and maintain (a) a custody
account in the name of the Company, acting as custodian for SCUDDER GROWTH AND
INCOME FUND, a Massachusetts business trust ("Fund") ("Custody Account") for any
and all stocks, shares, bonds, debentures, notes, mortgages or other obligations
for the payment of money and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the same
or evidencing or representing any other rights or interests therein and other
similar property (hereinafter called "Securities") from time to time received by
the flank or its subcustodian (as defined in the last sentence of Section 3) for
the account of the Company, and (b) a deposit account in the name of the Company
acting as custodian for the Fund ("Deposit Account") for any and all cash in any
currency received by the Bank or its subcustodian for the account of the
Company, which cash shall not be subject to withdrawal by draft or check.
2. Maintenance of Securities Abroad. Securities in the Custody Account
shall be held in the country or other jurisdiction as shall be specified from
time to time in Instructions, provided that such country or other jurisdiction
shall be one in which the principal trading market for such
<PAGE>
Securities is located or the country or other jurisdiction in which such
Securities are to be presented for payment or are acquired for the custody
Account and cash in the Deposit Account shall be credited to an account in such
amounts and in the country or other jurisdiction as shall be specified from time
to time in Instructions, provided that such country or other jurisdiction shall
be one in which such cash is the legal currency for the payment of public or
private debts.
3. Eligible Foreign Custodians and Securities Depositories. The Company
authorizes the flank to hold the Securities in the Custody Account and the cash
in the Deposit Account in custody and deposit accounts, respectively, which have
been established by the Bank with one of its branches, a branch of a qualified
U.S. bank, an eligible foreign custodian or an eligible foreign securities
depository; provided, however, that the Board of Trustees of the Fund has
approved the use of, and the Bank's contract with, such eligible foreign
custodian or eligible foreign securities depository by resolution, and
Instructions to such effect have been provided to the Bank. Furthermore, if one
of the Bank's branches, a branch of a qualified U.S. bank or an eligible foreign
custodian is selected to act as the Bank's subcustodian to hold any of the
Securities or cash, such entity is authorized to hold such Securities or cash in
its account with any eligible foreign securities depository in which it
participates. For purposes of this Agreement (a) "qualified U.S. bank" shall
mean a qualified U.S. bank as defined in Rule 17f-5 under the Investment Company
Act of 1940; (b) "eligible foreign custodian" shall mean (i) a banking
-2-
<PAGE>
institution or trust company incorporated or organized under the laws of a
country other than the United States that is regulated as such by that country's
government or an agency thereof and that has shareholders' equity in excess of
$200 million in U.S. currency (or a foreign currency equivalent thereof), (ii) a
majority owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent thereof) or (iii) a
banking institution or trust company incorporated or organized under the laws of
a country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is incorporated
or organized under the laws of a country other than the United States which has
such other qualifications as shall be specified in Instructions and approved by
the Bank; and (c) "eligible foreign securities depository" shall mean a
securities depository or clearing agency, incorporated or organized under the
laws of a country other than the United States, which operates (i) the central
system for handling of securities or equivalent book-entries in that country or
(ii) a transnational system for the central handling of securities or equivalent
book-entries.
Hereinafter the term "subcustodian" will refer to any branch of a qualified
U.S. bank, any eligible foreign custodian or any eligible foreign securities
-3-
<PAGE>
depository with which the Bank has entered an agreement of the type contemplated
hereunder regarding Securities and/or cash held in or to be acquired for the
Custody Account or the Deposit Account.
4. Use of Subcustodian. With respect to Securities and other assets which
are maintained by the Bank in the physical custody of a subcustodian pursuant to
Section 3 (as used in this Section 4, the term "Securities" means such
Securities and other assets).
(a) The Bank will identify on its books as belonging to the Fund any
Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities placed
in its care to be held in an eligible foreign securities depository,
such subcustodian will be required by its agreement with the Bank to
identify on its book such Securities as being held for the account of
the Bank as a custodian for its customers.
(c) Any Securities in the Custody Account held by a subcustodian of the
Bank will be subject only to the instructions of the Bank or its
agents; and any Securities held in an eligible foreign securities
depository for the account of a subcustodian will be subject only to
the instructions of such subcustodian.
(d) The Bank will only deposit Securities in an account with a
subcustodian which includes exclusively the assets held by the Bank
for its customers, and the Bank will cause such account to be
-4-
<PAGE>
designated by such subcustodian as a special custody account for the
exclusive benefit of customers of the Bank.
(e) Any agreement the Bank shall enter into with a subcustodian with
respect to the holding of Securities shall require that (i) the
Securities are not subject to any right, charge, security interest,
lien or claim of any kind in favor of such subcustodian except for
their safe custody or administration and (ii) beneficial ownership of
such Securities is freely transferable without the payment of money or
value other than for safe custody or administration; provided,
however, that the foregoing shall not apply to the extent that any of
the above-mentioned rights, charges, etc. result from any compensation
or other expenses arising with respect to the safekeeping of
Securities pursuant to such agreement or from any arrangements made by
the Company with any such subcustodian.
(f) The Bank shall allow independent public accountants of the Fund such
reasonable access to the records of the Bank relating to the
Securities held in the Custody Account as is required by such
accountants in connection with their examination of the books and
records pertaining to the affairs of the Fund. The Bank shall, subject
to restrictions under applicable law, also obtain from any
subcustodian with which the Bank maintains the physical custody of any
-5-
<PAGE>
Securities in the custody Account an undertaking to permit independent
public accountants of the Fund such reasonable access to the records
of such subcustodian as may be required in connection with their
examination of the books and records pertaining to the affairs of the
Fund. Upon a reasonable request from the Company, the Bank shall
furnish to the Fund and the Company such reports (or portions thereof)
of the Bank's external auditors as relate directly to the Bank's
system of internal accounting controls applicable to the Bank's duties
under this Agreement. The Bank shall use its best efforts to obtain
and furnish the Fund and the Company with such similar reports as the
Fund or the Company may reasonably request with respect to each
eligible foreign custodian and eligible foreign securities depository
holding Securities of the Company.
(g) The Bank will supply to the Fund and the Company from time to time as
mutually agreed upon a statement in respect to any Securities in the
Custody Account held by a subcustodian, including an identification of
the entity having possession of the Securities, and the Bank will send
to the Fund and the Company an advice or notification of any transfers
of Securities to or from the Custody Account, indicating, as to
Securities acquired for the Company, the identity of the entity having
-6-
<PAGE>
physical possession of such Securities. In the absence of the filing
in writing with the Bank by the Company of exceptions or objections to
any such statement within ninety (90) days, the Company shall be
deemed to have approved such statement; and in such case or upon
written approval of the Company of any such statement the Bank shall,
to the extent permitted by law, be released, relieved and discharged
with respect to all matters and things readily apparent on the face of
such statement as though such statement has been settled by the decree
of a court of competent jurisdiction in an action in which the Company
and all persons having any equity interest in the Company were
parties.
(h) The Bank hereby warrants to the Fund and the Company that in its
opinion, after due inquiry, the established procedures to be followed
by each of its branches, each branch of a qualified U.S. bank, each
eligible foreign custodian and each eligible foreign securities
depository holding Securities of the Fund in the account of the
Company pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established
procedures with respect to similar securities held by the Bank (and
its securities depositories) in New York.
5. Deposit Account Payments. Subject to the provisions of Section 7, the
Bank shall make, or cause its subcustodians to make, payments of cash credited
-7-
<PAGE>
to the Deposit Account only
(a) in connection with the purchase of Securities for the Fund and the
delivery of such securities to, or the crediting of such Securities to
the account of, the Bank or its subcustodian, each such payment to be
made at prices as confirmed by Instructions (as defined in Section 9
hereof) from Authorized Persons (as defined in Section 10 hereof);
(b) for the payment for the account of the Fund of dividends, interest,
taxes, management or supervisory fees, capital distributions or
operating expenses;
(c) for the payments to be made in connection with the conversion,
exchange or surrender of Securities held in the Custody Account;
(d) for other proper corporate purposes of the Fund; or
(e) upon the termination of this Custody Agreement as hereinafter set
forth.
All payments of cash for a purpose permitted by subsection (a), (b) or (c)
of this Section 5 will be made only upon receipt by the Bank of Instructions
from Authorized Persons which shall specify the purpose for which the payment is
to be made and the applicable subsection of this Section 5. In the case of any
payment to be made for the purpose permitted by subsection (d) of this Section
5, the Bank must first receive a certified copy of a resolution of the Board of
Trustees of the Fund adequately describing such payment, declaring such purpose
to be a proper corporate purpose, and naming the person or persons to whom such
-8-
<PAGE>
payment is to be made. Any payment pursuant to subsection (e) of this Section.5
will be made in accordance with Section 17.
In the event that any payment made under this Section 5 exceeds the funds
available in the Deposit Account, the Bank may, in its discretion, advance the
Company an amount equal to such excess and such advance shall be deemed a loan
from the Bank to the Company, payable on demand, bearing interest at the rate of
interest customarily charged by the Bank on similar loans.
If the Bank causes the Deposit Account to be credited on the payable date
for interest, dividends or redemptions, the Company will promptly return to the
Bank any such amount or property so credited upon oral or written notification
that neither the Hank nor its subcustodian can collect such amount or property
in the ordinary course of business. The Bank or its subcustodian, as the case
may be, shall have no duty or obligation to institute legal proceedings, file a
claim or proof of claim in any insolvency proceeding or take any other action
with respect to the collection of such amount or property beyond its ordinary
collection procedures.
6. Custody Account Transaction. Subject to the provisions of Section 7,
Securities in be transferred, exchanged or delivered subcustodians only
(a) upon sale of such Securities for the Fund and receipt by the Bank or
its subcustodian only of payment therefor, each such payment to be in
the amount confirmed by Instructions from Authorized Persons;
-9-
<PAGE>
(b) when such securities are called, redeemed or retired, or otherwise
become payable;
(c) in exchange for or upon conversion into other Securities alone or
other Securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their terms into other
securities;
(e) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary Securities
for definitive Securities;
(g) for other proper corporate purposes of the Fund;
(h) upon the termination of this Custody Agreement as hereinafter set
forth.
All transfers, exchanges or deliveries of Securities in the Custody Account
for a purpose permitted by either subsection (a), (b), (c), (d), (e) or (f) of
this Section 6 will be made, except as provided in Section 8, only upon receipt
by the Bank of Instructions from Authorized Persons which shall specify the
purpose of the transfer, exchange or delivery to be made and the applicable
subsection of this Section 6. In the case of any transfer, exchange or delivery
to be made for the purpose permitted by subsection (g) of this Section 6, the
Bank must first receive a certified copy of a resolution of the Board of
Trustees of the Fund adequately describing such transfer,
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<PAGE>
exchange or delivery, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such Securities shall be
made. Any transfer or delivery pursuant to subsection (h) of this Section 6 will
be made in accordance with Section 17.
7. Custody Account Procedures. With respect to any transaction involving
Securities held in or to be acquired for the Custody Account, the Bank in its
discretion may cause the Deposit Account to be credited on the contractual
settlement date with the proceeds of any sale or exchange of Securities from the
Custody Account and to be debited on the contractual settlement date for the
cost of Securities purchased or acquired for the Custody Account. The Bank may
reverse any such credit or debit if the transaction with respect to which such
credit or debit were made fails to settle within a reasonable period, determined
by the Bank in its discretion, after the contractual settlement date, except
that if any Securities delivered pursuant to this Section 7 are returned by the
recipient thereof, the Bank may cause any such credits and debits to be reversed
at any time. With respect to any transactions as to which the Bank does not
determine so to credit or debit the Deposit Account, the proceeds from the sale
or exchange of Securities will be credited and the cost of such Securities
purchased or acquired will be debited to the Deposit Account on the date such
proceeds or Securities are received by the Bank.
Notwithstanding the preceding paragraph, settlement and payment for
Securities received for, and delivery of Securities out of, the custody Account
-11-
<PAGE>
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the expectation of
receiving later payment for such Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives Instructions from
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian, to
(a) present for payment any Securities in the Custody Account which are
called, redeemed or retired or otherwise become payable and all
coupons and other income items which call for payment upon
presentation to the extent that the Bank or subcustodian is aware of
such opportunities for payment, and hold cash received upon
presentation of such Securities in accordance with the provisions of
Sections 2, 3 and 4 of this Agreement;
(b) in respect of Securities in the Custody Account, execute in the name
of the Company such ownership and other certificates as may be
required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in the Custody
Account for definitive Securities;
-12-
<PAGE>
(d) convert moneys received with respect to Securities of foreign issue
into United States dollars or any other currency necessary to effect
any transaction involving the Securities whenever it is practicable to
do so through customary banking channels, using any method or agency
available, including but not limited to, the facilities of the Bank,
its subsidiaries., affiliates or subcustodians; and
(e) appoint brokers and agents for any transaction involving the
Securities in the Custody Account, including, without limitation,
affiliates of the Bank or any subcustodian, but except as otherwise
specifically provided herein the Bank or its subcustodian, as the case
may be, will not be responsible for any act, omission or default of,
or for the solvency of, any such broker or agent.
9. Instructions. As used in this Agreement, the term "Instructions" means
instructions of the Company received by the Bank, via telephone, telex, TWX,
facsimile transmission, bank wire or other teleprocess or electronic instruction
system acceptable to the Bank which the Bank reasonably believes in good faith
to have been given by Authorized Persons or which are transmitted with proper
testing or authentication pursuant to terms and conditions which the Bank may
specify.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Company will hold the
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<PAGE>
Bank harmless for its failure to send such confirmation in writing or the
failure of such confirmation to conform to the telephone instructions received.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until cancelled or superseded. If the Bank requires test
arrangements, authentication methods or other security devices to be used with
respect to Instructions, any Instructions given by the Company thereafter shall
be given and processed in accordance with such terms and conditions for the use
of such arrangements, methods or devices as the Bank may put into effect and
modify from time to time. The Company shall safeguard any testkeys9
identification codes or other security devices which the Bank shall make
available to it. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions, with respect to the Custody
Account.
10. Authorized Persons. As used in this Agreement, the term "Authorized
Persons" means such officers or such agents of the Fund or the Company as have
been designated by a resolution of the Board of Trustees of the Fund or the
Company, as the case may be, a certified copy of which has been provided to the
Bank, to act on behalf of the Fund or the Company in the performance of any acts
which Authorized Persons may do under this Agreement. Such persons shall
continue to be Authorized Persons until such time as the Bank receives
Instructions from Authorized Persons that any such officer or agent is no longer
an Authorized Person.
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<PAGE>
11. Nominees. Securities in the Custody Account which are ordinarily held
in registered form may be registered in the name of the Bank's nominee or, as to
any Securities in the possession of any entity other than the Bank, in the name
of such entity's nominee. The Company agrees to hold any such nominee harmless
from any liability as a holder of record of such Securities. The Bank may
without notice to the Company cause any such Securities to cease to be
registered in the name of any such nominee and to be registered in the name of
the Company. In the event that any Securities registered in the name of the
Bank's nominee or held by one of its subcustodians and registered in the name of
such subcustodian's nominee are called for partial redemption by the issuer of
such Security, the Bank may allot, or cause to be alloted, the called portion to
the respective beneficial holders of such class of security in any manner the
Bank deems to be fair and equitable.
12. Standard of Care. The Bank shall be responsible for the performance of
only such duties as are set forth herein or contained in Instructions given to
the Bank by Authorized Persons which are not contrary to the provisions of this
Agreement. The Bank will use reasonable care with respect to the safekeeping of
Securities in the Custody Account. The Bank shall be liable to the Fund and the
Company for any loss which shall occur as the result of the failure of a
subcustodian or an eligible foreign securities depository engaged by such
subcustodian to exercise reasonable care with respect to the safekeeping of such
securities and other assets to the same extent that the Bank would be liable to
-15-
<PAGE>
the Fund and the Company if the Bank were holding such Securities and other
assets in New York. In the event of any loss to the Fund or the Company by
reason of the failure of the Bank or its subcustodian or an eligible foreign
securities depository engaged by such subcustodian to utilize reasonable care,
the Bank shall be liable to the Fund or the Company to the extent of the Fund's
or the Company's damages, to be determined based on the market value of the
property which is the subject of the loss at the date of discovery of such loss
and without reference to any special conditions or circumstances. The Bank shall
be held to the exercise of reasonable care in carrying out this Agreement but
shall be indemnified by, and shall be without liability to, the Fund or the
Company for any action taken or omitted by the Bank in good faith without
negligence. The Bank shall be entitled to rely, and may act, on advice of
counsel (who may be counsel for the Fund or the Company) on all matters and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. The Bank need not maintain any insurance for the benefit of the
Fund or the Company.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Company.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its subcustodian of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take action as provided in Section 8 hereof. The
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<PAGE>
Bank shall not be liable for any action taken in good faith upon Instructions or
upon any certified copy of any resolution and may rely on the genuineness of any
such documents which it may in good faith believe to be validly executed. The
Bank shall not be liable for any loss resulting from, or caused by
nationalization, expropriation, currency restrictions, acts of war or terrorism,
insurrection, revolutions nuclear fusion, fission or radiation, acts of God or
other similar events or acts not due to the failure of the Bank, subcustodians
or eligible foreign securities depositories to exercise reasonable care in the
performance of their duties.
13. Compliance with Securities and Exchange Commission Rules and Orders.
Except to the extent the Bank has specifically agreed pursuant to this Agreement
to comply with a condition of a rule, regulation, interpretation or exemptive
order promulgated by or under the authority of the Securities and Exchange
Commission, the Fund and the Company shall be solely responsible to assure that
the maintenance of Securities and cash under this Agreement complies with any
such rule, regulation, interpretation or exemptive order.
14. Corporate Action. The Bank or its subcustodian is to forward to the
Company only such communications relative to the Securities in the Custody
Account as call for voting or the exercise of rights or other specific action
(including material relative to legal proceedings intended to be transmitted to
security holders) to the extent sufficient copies are received or may be
-17-
<PAGE>
reproduced by the Bank or its subcustodian in time for forwarding to each
customer. The Bank or its subcustodian will cause its nominee to execute and
deliver to the Company proxies relating to Securities in the Custody Account
registered in the name of such nominee but without indicating the manner in
which such proxies are to be voted. Proxies relating to bearer Securities will
be delivered in accordance with written instructions from Authorized Persons.
15. Fees and Expenses. The Company agrees to pay to the Bank from time to
time such compensation for its services pursuant to this Agreement as may be
mutually agreed upon in writing from time to time and the Bank's out-of-pocket
or incidental expenses, including (but without limitation) legal fees. The
Company hereby agrees to hold the Bank harmless from any liability or loss
resulting from any taxes or other governmental charges, and any expenses related
thereto, which may be imposed, or assessed with respect to the Custody Account
or any Securities in the Custody Account and also agrees to hold the Bank, its
subcustodians, and their respective nominees harmless from any liability as a
record holder of Securities in the Custody Account. The Bank is authorized to
charge any account of the Company for such items and the Bank shall have a lien
on Securities in the Custody Account and on cash in the Deposit Account for any
amount owing to the Bank from time to time under this Agreement, as long as such
lien would not contravene the provisions of the Order of the Securities and
Exchange Commission contained in Release No. 12053, dated November 20, 1981, as
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<PAGE>
the same may be amended from time to time.
16. Effectiveness. This Agreement shall be effective on the date first
noted above.
17. Termination. This Agreement may be terminated by the Company or the
Bank by 60 days written notice to the other, sent by registered mail, provided
that any termination by the Company shall be authorized by a resolution of its
Board of Trustees, a certified copy of which shall accompany such notice of
termination, and provided further, that such resolution shall specify the names
of the persons to whom the Bank shall deliver the Securities in the Custody
Account and to whom the cash in the Deposit Account shall be paid. If notice of
termination is given by the Bank, the Company shall, within 60 days following
the giving of such notice, deliver to the Bank a certified copy of a resolution
of its Board of Trustees specifying the names of the persons to whom the Bank
shall deliver the Securities in the Custody Account and to whom the cash in the
Deposit Account shall be paid. In either case the Bank will deliver such
Securities and cash to the persons so specified, after deducting therefrom any
amounts which the Bank determines to be owed to it under Section 15. If within
60 days following the giving of a notice of termination by the Bank, the Bank
does not receive from the Company a certified copy of a resolution of the Board
of Trustees specifying the names of the persons to whom the Bank shall deliver
the Securities in the Custody Account and to whom the cash in the Cash Account
shall be paid, the Bank, at its election, may deliver such Securities and pay
such cash to a bank or trust company doing business in the State of New York to
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<PAGE>
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold such Securities and cash until a
certified copy of one or more resolutions as aforesaid is delivered to the Bank.
The obligations of the parties hereto regarding the use of reasonable care,
indemnities and payment of fees and expenses shall survive the termination of
this Agreement.
18. Notices. Any notice or other communication from the Company to the Bank
is to be sent to the office of the Bank at 1211 Avenue of the Americas (33rd
floor), New York, New York, 10036, Attention Global Custody Division, or such
other address as may hereafter be given to the Company in accordance with the
notice provisions hereunder, and any notice from the Bank to the Fund or the
Company is to be mailed postage prepaid, addressed to the Fund at 173 Federal
Street, Boston, Massachusetts 02110, and to the Company at the address appearing
below, or as it may hereafter be changed on the Bank's records in accordance
with notice hereunder from the Fund or the Company.
19. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors and assigns of the Company and the
Bank.
20. Readings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
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<PAGE>
STATE STREET BANK AND TRUST COMPANY
By /s/ [Illegible]
---------------------------------
Vice President
Address for record c/o SCUDDER GROWTH AND INCOME FUND
P.O. BOX 1713
Boston, MA 02105
------------------------------------
THE CHASE MANHATTAN BANK, N.A.
By /s/ [Illegible]
---------------------------------
Vice President
-21-
Exhibit 9(a)(1)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
SCUDDER GROWTH AND INCOME FUND
and
SCUDDER SERVICE CORPORATION
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of October 2, 1989, by and between SCUDDER GROWTH AND
INCOME FUND, a Massachusetts business trust, having its principal office and
place of business at 175 Federal Street, Boston, Massachusetts 02110 (the
"Company") and SCUDDER SERVICE CORPORATION, a Massachusetts corporation, having
its principal office and place of business at 160 Federal Street, Boston,
Massachusetts 02110 (the "Agent").
WHEREAS, the Company desires to appoint the Agent as a transfer agent,
dividend disbursing agent in connection with certain other activities and the
Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. Terms of Appointment: Duties of the Agent.
1.01. Subject to the terms and conditions set forth in this Agreement, the
Company hereby employs and appoints the Agent to act as, and the Agent agrees to
act as, transfer agent for the Company's authorized and issued shares of
beneficial interest ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the Company ("Shareholders") and set out in a currently
effective prospectus ("Prospectus") or currently effective statement of
additional information ("Statement of Additional Information") of the Company,
including without limitation any periodic investment plan or periodic withdrawal
program. If the Company offers two or more series of Shares as of the date
hereof, the term "Company" shall be deemed to apply to each series of Shares,
unless the context otherwise requires.
1.02. The Agent agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Company and the Agent, the Agent shall:
(i) Receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation
thereof to the duly authorized custodian of the Company (the
"Custodian").
(ii) Pursuant to orders for the purchase of Shares, record the
purchase of the appropriate number of Shares in the
Shareholder's account and, if requested by the Shareholder,
and if the Trustees of the Company have authorized the
issuance of stock certificates, issue a certificates for the
appropriate number of Shares;
<PAGE>
(iii) Pursuant to instructions provided by Shareholders, reinvest
income dividends and capital gain distributions;
(iv) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(v) Provide an appropriate response to Shareholders with respect
to all correspondence and rejected trades;
(vi) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vii) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(viii) Prepare and transmit payments for dividends and
distributions declared by the Company;
(ix) Report abandoned property to the various states as
authorized by the Company in accordance with policies and
principles agreed upon by the Company and Agent;
(x) Maintain records of account for and advise the Company and
its Shareholders as to the foregoing;
(xi) Record the issuance of Shares of the Company and maintain an
accurate control book with respect to Shares pursuant to SEC
Rule 17A-10(e) under the Securities Exchange Act of 1934.
The Agent shall also provide the Company on a regular basis
with the total number of Shares which are issued and
outstanding and shall have no obligation, when recording the
issuance of Shares, to monitor the issuance of such Shares
or to take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Company;
(xii) Respond to all telephone inquiries from shareholder or
their authorized representatives regarding the status of
Shareholder accounts;
(xiii) Respond to correspondence from Shareholders or their
authorized representatives regarding the status of
Shareholder accounts or information related to Shareholder
accounts; and
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<PAGE>
(xiv) Perform all Shareholder account maintenance updates.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Agent shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program). The detailed definition, frequency, limitations and
associated costs (if any) set out in the attached fee schedule, include but are
not limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxy statement and proxies, receiving and tabulating
proxies, mailing shareholder reports and prospectuses to current Shareholders,
and withholding all applicable taxes (including but not limited to all
withholding taxes imposed under the U.S. Internal Revenue Code and Treasury
regulations promulgated thereunder, and applicable state and local laws to the
extent consistent with good industry practice), preparing and filing U.S.
Treasury Department Forms 1099, Form 941 when applicable and other appropriate
forms required with respect to dividends, distributions and taxes withheld on
Shareholder accounts by federal authorities for all registered Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information, (ii) provide
daily and monthly a written report and access to information which will enable
the Company to monitor the total number of Shares sold and the aggregate public
offering price thereof in each State by the Company, added by sales in each
State of the registered Shareholder or dealer branch office, as defined by the
Company, and (iii) if directed by the Company, (A) each confirmation of the
purchase which establishes a new account will be accompanied by a Prospectus and
any amendment or supplement thereto, and (B) a Prospectus, and any amendment or
supplement thereto, will be mailed to each Shareholder at the time a
confirmation of the first purchase by such Shareholder, subsequent to the
effective date of a Prospectus or any amendment or supplement thereto, is mailed
to such Shareholders.
(c) In addition, the Company shall (i) identify to the Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting to the Company for each state and (ii) approve those transactions to
be included for each state on the blue sky system prior to activation and
thereafter monitor the daily activity for each state. The responsibility of the
Agent for the Company's blue sky State registration status is solely limited to
the initial establishment of transactions subject to blue sky compliance by the
Company and the reporting of such transactions as provided above.
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<PAGE>
(d) The Agent shall utilize a system to identify all share
transactions which involve purchase and redemption orders that are processed at
a time other than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect upon the
Company of such transactions so identified on a daily and cumulative basis.
(e) The Agent shall supply to the Company from time to time, as
mutually agreed upon, reports summarizing the transactions identified pursuant
to paragraph (d) above, and the daily and cumulative net effects of such
transactions, and shall advise the Company at the end of each month of the net
cumulative effect at such time. The Agent shall promptly advise the Company if
at any time the cumulative net effect exceeds a dollar amount equivalent to 1/2
of 1 cent per outstanding Share.
(f) The Agent shall make appropriate arrangements with banking
institutions in connection with effecting timely redemptions of shares by the
Write-a-Check redemption feature described in the Company's Prospectus and
Statement of Additional Information.
1.03. The Agent's offices, personnel and computer and other equipment shall
be adequate to perform the services contemplated by this Agreement for the
Company and for other investment companies advised by Scudder, Stevens & Clark,
Inc. and its affiliates. The Agent shall notify the Company in the event that is
proposes to provide such services for any investment companies or other entities
other than those managed by Scudder, Stevens & Clark, Inc. and its affiliates.
Article 2. Fees and Expenses.
2.01 For the performance by the Agent pursuant to this Agreement, the
Company agrees to pay the Agent an annual maintenance fee for each Shareholder
account as set out in a fee schedule agreed to by both parties in writing. Such
fees and out-of-pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Company and the Agent, as approved by a majority of the Trustees who are not
"interested person" (as defined in the Investment Company Act of 1940) of the
Company.
2.02. In addition to the fee paid under Section 2.01 above, the Company
agrees to reimburse the Agent for out-of-pocket expenses or advances incurred by
the Agent for the items set out in the fee schedule agreed to by both parties in
writing. In addition, any other expenses incurred by the Agent at the request or
with the consent of the Company will be reimbursed by the Company.
2.03. The Company agrees to pay all fees and reimbursable expenses
promptly, the terms, method and procedures for which are detailed on the fee
schedule agreed to by both parties in writing. Postage for mailing of dividends,
proxy statement, Company reports and other mailings to all Shareholders accounts
shall be advanced to
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<PAGE>
the Agent by the Company at least two (2) days prior to the mailing date of such
materials.
2.04. The Company may engage accounting firms or other consultants to
evaluate the fees paid by the Company and quality of services rendered by the
Servicing Company hereunder, and such firms or other consultants shall be
provided access by the Servicing Company to such information as may be
reasonably required in connection with such engagement. The Servicing Company
will give due consideration and regard to the recommendations to the Company in
connection with such engagement, but shall bot be bound thereby.
Article 3. Representations and Warranties of the Agent.
The Agent represents and warrants to the Company that:
3.01. It is a corporation duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.02. It has the legal power and authority to carry on its business in The
Commonwealth of Massachusetts.
3.03. It is empowered under applicable laws and by this charter an by-laws
to enter into and perform this Agreement.
3.04. All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement.
3.05. It is duly registered as a transfer agent under Section 17A of the
Securities Exchange Act of 1934, as amended.
3.06. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Company.
4.01. It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.02. It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
4.03. All proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
4.04. It is an investment company registered under the Investment Company
Act of 1940, as amended.
-5-
<PAGE>
4.05. A registration statement under the Securities Act of 1933 is
currently effective (or will be effective prior to commencement by the Agent of
performance of services hereunder) and will remain effective, and appropriate
state securities law filings have been made and/or will continue to be made,
with respect to all Shares of the Company being offered for sale.
Article 5. Indemnification.
5.01. To the extent that the Agent acts in good faith and without
negligence or willful misconduct, the Agent shall not be responsible for, and
the Company shall indemnify and hold the Agent harmless from and against, any
and all losses, damages, costs, charges, counsel fees, payment, expenses and
liabilities arising out of or attributable to:
(a) All actions of the Agent or its agents or subcontractors required
to be taken and correctly executed pursuant to this Agreement.
(b) The Company's lack of good faith, negligence or willful misconduct
or which arise out of the breach of any representation or warranty of the
Company hereunder.
(c) The reasonable reliance on or use by the Agent or its agents of
subcontractors of information, records and documents or services which are
received or relied upon by the Agent or its agents or subcontractors and
furnished to it or performed by or on behalf of the Company.
(d) The reasonable reliance on, or the carrying out by the Agent or
its agents or subcontractors of, any written instructions or requests of the
Company.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations, or the securities laws or
regulations of any state that such Shares be registered in such state, or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state, unless such violation is the result of the Agent's negligent or willful
failure to company with the provisions of Section 2.01(b) of this Agreement.
5.02. The Agent shall indemnify and hold the Company harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to the Agent's refusal
or failure to comply with the terms of this Agreement (whether as a result of
the acts or omissions of the Agent or of its agents or subcontractors) or
arising out of the lack of good faith, negligence or willful misconduct of the
Agent, or its agents or subcontractors, or arising out of the breach of any
representation or warranty of the Agent hereunder.
-6-
<PAGE>
5.03. At any time the Agent may apply to any officer of the Company for
instructions, and may consult with outside legal counsel with respect to any
matter arising in connection with the services to be performed by the Agent
under this Agreement, and the Agent and its agents or subcontractors shall not
be liable and shall be indemnified by the Company for any action reasonably
taken or omitted by it in reliance upon such instructions or upon the opinion of
such counsel. The Agent, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Company, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
document provided to the Agent or its agents or subcontractors by
machine-readable input, telex, CRT date entry or other similar means authorized
by the Company, and shall not be held to have notice of any change of authority
of any person, until receipt by the Agent of written notice thereof from the
Company. The Agent, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Company,
and the proper countersignatures of any former transfer agent or registrar, or
of a co-transfer agent or co-registrar.
5.04. In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
5.05. Neither party to this Agreement shall be liable to the other party
for consequential damages under any provisions of this Agreement, but each shall
be liable for general damages resulting from breach of this Agreement. For the
purposes of this Agreement, the term "general damages" shall include but shall
not be limited to:
(a) All costs of correcting errors made by the Agent or its agents or
subcontractors in Company shareholder accounts, including the
expense of computer time, computer programming and personnel;
(b) Amounts which the Company is liable to pay to a person (or his
representative) who has purchased or redeemed, or caused to
repurchased, Shares at a price which is higher, in the case of a
purchase or lower, in the case of a redemption or repurchase,
than correct net asset value per Share, but only to the extent
that the price at which such Shares were purchased, redeemed or
repurchased was incorrect as a result of either (i) one or more
errors caused by the Agent or its agents or subcontractors in
processing shareholder accounts of the Company or (ii) the
posting by the Agent of the purchase, redemption or repurchase of
Shares subsequent to the time such purchase, redemption or
repurchase
-7-
<PAGE>
should have been posted pursuant to laws and regulations
applicable to open-end investment companies, if the delay is
caused by the Agent, its agents or subcontractors;
(c) the value of dividends and distributions which are not credited
on Shares because of the failure of the Agent or its agents or
subcontractors to timely post the purchase of such Shares;
(d) The value of dividends and distributions which were incorrectly
credited on Shares because of the failure of the Agent or its
agents or subcontractors to timely post the redemption or
repurchase of such Shares;
(e) The value of dividends and distributions, some portion of which
was incorrectly credited, or was not credited, on Shares because
of the application by the Agent or its agents or subcontractor of
an incorrect dividend or distribution factor or otherwise;
(f) Penalties and interest which the Company is required to pay
because of the failure of the Agent or its agents or
subcontractors to comply with the information reporting and
withholding (including backup withholding) requirements of the
Internal Revenue Code of 1986, as amended, and applicable
Treasury regulations thereunder, applicable to Company
Shareholder accounts; and
(g) Interest in accordance with the laws of The Commonwealth of
Massachusetts on any damages from the date of the breach of this
Agreement.
5.06. In order that the indemnification provisions contained in this
Article 5 shall apply, upon assertion of a claim or loss for either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion or loss, and shall keep the
other party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate at
its expense with the party seeking indemnification in the defense of such claim.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's other written consent.
5.07. Losses incurred by the Company arising from the Agent effecting a
share transaction at a trade (pricing) date prior to the processing date shall
be governed by a separate agreement between the Agent and the Company.
The obligations of the parties hereto under this Article 5 shall survive
the termination of this Agreement.
-8-
<PAGE>
Article 6. Covenants of the Company and the Agent.
6.01. The Company shall promptly furnish to the Agent the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Company authorizing the appointment of the Agent and the execution and delivery
of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Company and
all amendments thereto.
6.02. The Agent hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account, of such certificates,
forms and devices.
6.03. The Agent shall at all times maintain insurance coverage which is
reasonable and customary in light of its duties hereunder and its other
obligations and activities.
6.04. The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, (the
"Act") and the Rules thereunder, the Agent agrees that all such records prepared
or maintained by the Agent relating to the services to be performed by the Agent
hereunder and those records that the Company and the Agent agree from time to
time to be the records of the Company are the property of the Company and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Company on and in accordance with
its request. Records surrendered hereunder shall be in machine readable form,
except to the extent that the Agent has maintained such a record only in paper
form.
6.05. The Agent and the Company agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.06. In case of any requests or demands for the inspection of the
Shareholders records of the Company, the Agent will endeavor to notify the
Company and to secure instructions from an authorized officer of the Company as
to such inspection. The Agent reserves the right, however, to exhibit the
Shareholders records to any person whenever it is reasonably advised by its
counsel that it may be held liable for the failure to exhibit the Shareholders
records to such person.
-9-
<PAGE>
6.07. The Agent agrees to maintain or provide for redundant facilities or a
compatible configuration and to maintain or provide for backup of the Company's
master and input files and to store such files in a secure off-premises location
so that in the event of a power failure or other interruption of whatever cause
at the location of such files the Company's records are maintained intact and
transactions can be processed at another location.
6.08. The Agent acknowledges that the Company, as a registered investment
company under the Act, is subject to the provisions of the Act and the rules and
regulations thereunder, and that the offer and sale of the Company's Shares are
subject to the provisions of federal and state laws and regulations applicable
to the offer and sale of securities. The Company acknowledges that the Agent is
not responsible for the Company's compliance with such laws and regulations. If
the Company advises the Agent that a procedure of the Agent related to the
discharge of its obligations hereunder has or may have the effect of causing the
Company to violate any of such laws or regulations, the Agent shall use its best
efforts to develop a mutually agreeable alternative procedure which does not
have such effect.
Article 7. Termination of Agreement.
7.01. This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02. Should the Company exercise its right to terminate, all reasonable
out-of-pocket expenses of the Agent associated with the movement of records and
materials required by this Agreement will be borne by the Company. Additionally,
the Agent reserves the right to charge for any other reasonable expenses
associated with such termination.
Article 8. Additional Series.
8.01. In the event that the Company establishes one or more series of
Shares with respect to which it desires to have the Agent render services as
transfer agent under the terms hereof, it shall no notify the Agent in writing,
and unless the Agent objects in writing to providing such services, the term
"Company" hereunder, unless the context otherwise requires, shall be deemed to
include each such series of Shares. All record keeping and reporting shall be
done separately for each series. Unless the Company and the Agent agree to an
amended fee schedule, the fee schedule attached hereto shall apply to each
series separately.
Article 9. Assignment.
9.01. Except as provided in Section 9.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
-10-
<PAGE>
9.02. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9.03. The Agent may, with notice to and consent on the part of the Company,
which consent shall not be unreasonably withheld, subcontract for the
performance of certain services under this Agreement to qualified service
providers, which shall be registered as transfer agents under Section 17A of the
Securities Exchange Act of 1934 if such registration is required; provided,
however, that the Agent shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
Article 10. Amendment.
10.01. This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors or Trustees of each party.
Article 11. Massachusetts Law to Apply.
11.01. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 12. Form N-SAR.
12.01. The Agent shall maintain such records as shall enable the Company to
fulfill the requirements of Form N-SAR or any successor report which must be
filed with the Securities and Exchange Commission.
Article 13. Merger of Agreement.
13.01. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 14. Counterparts.
14.01. This Agreement may be executed by the parties hereto in any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
-11-
<PAGE>
Article 15. Limitation of Liability of the Trustees and the Shareholders.
It is understood and expressly stipulated that none of the Trustees,
officers, agents, or shareholders of the Company shall be personally liable
hereunder. The name of the Company is the designation of the Trustees for the
time being under the Company's Declaration of Trust, as the same is now stated
or may hereafter be amended, and all persons dealing with the trust must look
solely to the property of the trust for the enforcement of any claims against
the trust as neither the Trustee, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the trust. No
series of the Company, if any, shall be liable for the obligations of any other
series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: SCUDDER GROWTH AND INCOME FUND
/s/ Marilyn J. Hayes By: /s/ David S. Lee
- ------------------------ -------------------------------
Title: Vice President
ATTEST: SCUDDER SERVICE CORPORATION
/s/ Marilyn J. Hayes By: /s/ Daniel Pierce
- ------------------------ -------------------------------
Title: Vice President
-12-
Exhibit 9(a)(3)
SCUDDER SERVICE CORPORATION
FEE INFORMATION FOR SERVICES PROVIDED UNDER
TRANSFER AGENCY AND SERVICE AGREEMENT
Scudder Family of Funds
(Except Scudder Cash Investment Trust)
Annual service charge for each account
- --------------------------------------
1/12th of the annual service charge shall be charged and payable each month. It
will be charged for any account which at any time during the month had a share
balance in the fund. The minimum monthly charge to any portfolio is $1,500.00
per relationship for an omnibus account, or $10.00 per subaccount, whichever is
greater.
<TABLE>
<S> <C> <C>
Regular Accounts Retirement Accounts
---------------- -------------------
Money Market Funds $31.50 $34.50
Non-Money Market Funds 26.00 29.00
Additional Charge per Account for Funds with
Redemption Fee 2.00 2.00
Other fees
Closed Account 4.00 5.00
New Account Setup Charge 7.50 7.50**
Maintenance Charge 5.00 5.00**
National Securities Clearing Corporation
(NSCC) Charge per Transaction 1.00 1.00
Information Access:
o VRU Access Charge per Call 0.20 0.20
o Internet To be determined To be determined
** = Applies to retail retirement accounts
</TABLE>
Out of pocket expenses shall be reimbursed by the fund to Scudder Service
Corporation or paid directly by the fund. Such expenses include but are not
limited to the following:
Telephone (portion allocable to servicing accounts)
Postage, overnight service or similar services
Stationery and envelopes
Shareholder Statements - printing and postage
Checks - stock supply, printing and postage
Data circuits
Forms
Microfilm and microfiche
Expenses incurred at the specific direction of the fund
Bank check clearing and processing charges
This schedule covers representative assisted services offered from Monday
through Friday, 8:00 a.m. to 8:00 p.m. EST.
<PAGE>
Payment
- -------
The above will be billed within the first five (5) business days of each month
and will be paid by wire within five (5) business days of receipt.
On behalf of the Funds listed on
Attachment A: Scudder Service Company
By:_________________________ By:_____________________
David S. Lee Daniel Pierce
President or Vice President President
Date: October 1, 1996 Date: October 1, 1996
2
<PAGE>
ATTACHMENT A
TRANSFER AGENCY AND SERVICE AGREEMENT
MONEY MARKET FUND SERVICE ACCOUNT
Money Market Accounts
Scudder California Tax Free Money Fund
Scudder New York Tax Free Money Fund
Scudder Tax Free Money Fund
Scudder U.S. Treasury Money Fund
NON-MONEY MARKET FUND SERVICE ACCOUNT
Monthly Income Funds
Scudder California Tax Free Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder High Yield Tax Free Fund
Scudder International Bond Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term Tax Free Fund
Scudder Massachusetts Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund
Scudder Ohio Tax Free Fund
Scudder Pennsylvania Tax Free Fund
Scudder Short Term Bond Fund
Quarterly Distribution Funds
Scudder Balanced Fund
Scudder Emerging Markets Income Fund
Scudder Growth and Income Fund
Scudder Income Fund
Annual Distribution Funds
Scudder Capital Growth Fund Scudder Latin America Fund
Scudder Classic Growth Fund Scudder Micro Cap Fund
Scudder Development Fund Scudder Pacific Opportunities Fund
Scudder Global Discovery Fund Scudder Quality Growth Fund
Scudder Global Fund Scudder Small Company Value Fund
Scudder Gold Fund Scudder 21st Century Growth Fund
Scudder Emerging Markets Growth Fund Scudder Value Fund
Scudder Greater Europe Growth Fund Scudder Zero Coupon 2000 Fund
Scudder International Fund
dated as of October 1, 1996
3
Exhibit 9(b)(1)
COMPASS SERVICE AGREEMENT
THIS AGREEMENT made as of this 1st day of January, 1990, by and between
SCUDDER TRUST COMPANY, a New Hampshire banking corporation ("Trust Company") and
SCUDDER INCOME FUND, a Massachusetts business trust ("the Fund").
WITNESSETH:
WHEREAS, Trust Company is engaged in the business of providing certain
recordkeeping and other services; and
WHEREAS, the Fund is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940, as amended; and
WHEREAS, Trust Company is willing to provide to the Fund certain
recordkeeping and other services in connection with certain omnibus accounts
maintained with the Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Terms of Appointment: Duties of the Service.
1.01. Subject to the terms and conditions set forth in this Agreement, the
fund hereby employs and appoints Trust Company to act as, and Trust Company
agrees to act as, recordkeeping agent with respect to the authorized and issued
shares of beneficial interest of the Fund ("Shares") or units representing such
Shares ("Units") which are held in plan-level omnibus accounts (individually an
"Account" or collectively the "Accounts") in connection with certain retirement
and employee benefit plans established under the Internal Revenue Code of 1986
including but not limited to defined contribution plans, Section 403(b) plans,
individual retirement accounts and deferred compensation plans (each a "Plan" or
collectively the "Plans"), utilizing the Comprehensive Participant Accounting
Services ("COMPASS"), and established by plan administrators, employers,
trustees, custodians and other persons (each individually an "Administrator" or
collectively the "Administrators") on behalf of employers (each individually and
"Employer" or collectively the "Employers") and individuals for certain
participants in such Plans (each individually a "Participant" or collectively
the "Participants").
1.02. Trust Company agrees that it will perform the following services in
accordance with procedures established form time to time by agreement between
the Fund and Trust Company. Subject to instructions from the Administrators,
Trust Company shall:
(i) receive from Administrators instructions for the purchase of
Shares of the Fund, confirm compliance with such instructions and, as agent of
the respective Administrators, deliver
<PAGE>
within a reasonable time such instructions and any appropriate documentation
therefor to the Transfer Agent of the Fund duly appointed by the trustees of the
Fund (the "Transfer Agent");
(ii) record the purchase by Plans of the appropriate number of Shares
or Units and within a reasonable time allocate such Shares or Units among the
Participant's Accounts;
(iii) record dividends and capital gains distributions on behalf of
Participants;
(iv) receive from Administrators instructions for redemption and
repurchase requests and directions, confirm compliance with such instructions
and as agent of the respective Administrators deliver within a reasonable time
such instructions and any appropriate documentation therefor to the Transfer
Agent;
(v) record the redemption or repurchase by Plans of the appropriate
number of Shares or Units and within a reasonable time make the appropriate
adjustments among the Participants' accounts;
(vi) certify to the Fund no less frequently than annually the number
of Participants accounts for which records are maintained hereunder;
(vii) maintain records of accounts for and advise the Fund and
Administrators and Participants, when appropriate, as to the foregoing;
(viii) maintain all Plan and Participant accounts other than accounts
maintained by the Transfer Agent; and
(ix) maintain and mail administrative reports and Participant
statements.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and Trust Company.
Article 2. Fees and Expenses.
2.01. For performance by Trust Company of services pursuant to this
Agreement, the Fund agrees to pay Trust Company an annual maintenance fee for
each Participant account as set out in the fee schedule, as amended from time to
time. Such fee schedule and out-of-pocket expenses and advances identified under
Section 2.02 below may be changed from time to time by mutual agreement between
the Fund and Trust Company.
-2-
<PAGE>
2.02. In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse Trust Company for out-of-pocket expenses or advances incurred by
Trust Company for the items set out in the fee schedule. In addition, any other
expenses incurred by Trust Company, at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03. The Fund agrees to pay all fees and reimbursable expenses promptly.
Postage and the cost of materials for mailing of administrative reports,
Participant statements and other mailings to all Employer accounts or
Participants shall be advanced to Trust Company by the Fund at least two (2)
days prior to the mailing date of such materials or paid within two (2) days of
the receipt by the Fund of a bill therefor.
Article 3. Representations and Warranties of Trust Company.
Trust Company represents and warrants to the Fund that:
3.01. It is a banking corporation duly organized and existing and in good
standing under the laws of The State of New Hampshire.
3.02. It has the legal power and authority to carry on its business in any
jurisdiction where it does business.
3.03. It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Fund.
The Fund represents and warrants to Trust Company that:
4.01. It is a business trust duly organized and existing and in good
standing under the laws of The Commonwealth of Massachusetts.
4.02. It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
-3-
<PAGE>
4.03. All proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
4.04. It is an investment company registered under the Investment Company
Act of 1940, as amended (the "Act").
4.05. It makes available its Shares in connection with certain Plans.
4.06. A majority of the Trustees of the Fund who are not interested persons
have made findings to the effect that:
(a) the Agreement is in the best interest of the Fund and its
shareholders;
(b) the services to be performed pursuant to the Agreement are
services required for the operation of the Fund;
(c) Trust Company can provide services the nature and quality of which
are at least equal to those provided by others offering the same or similar
services; and
(d) the fees charged by Trust Company for such services are fair and
reasonable in the light of the usual and customary charges made by others for
services of the same nature and quality.
4.07. A registration statement under the Securities Act of 1933, as
amended, has been filed and has become effective, and appropriate state
securities law filings have been made with respect to all Shares of the Fund
being offered for sale. The Fund shall notify Trust Company (i) if such
registration statement or any state securities registration or qualification has
been terminated or a stop order has been entered with respect to the Shares or
(ii) if such registration statement shall have been amended to cover Shares of
any additional Series (as hereinafter defined in Section 8.01).
Article 5. Indemnification.
5.01. Trust Company shall bot be responsible for, and the Fund shall
indemnify and hold Trust Company harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liabilities
arising out of or attributable to:
(a) All actions of Trust Company or its agents required to be taken
pursuant to this Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
-4-
<PAGE>
(c) The reliance on or use by Trust Company or its agents of
information, records and documents which (i) are received by Trust Company or
its agents and furnished to it by or on behalf of the Fund, and (ii) have been
prepared and/or maintained by the Fund or any other person or firm (except Trust
Company) on behalf of the Fund.
(d) The reliance on or the carrying out by Trust Company or its agents
of any written instructions or requests of the Fund or any person acting on
behalf of the Fund.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations, or the securities laws or
regulations of any state that such Shares be registered in such state, or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02. Trust Company shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to Trust Company's
refusal or failure to comply with the terms of this Agreement, or which arise
out of Trust Company's lack of good faith, negligence or willful misconduct or
which arise out of the breach of any representation or warranty of Trust Company
hereunder.
5.03. At any time Trust Company may apply to any officer of the Fund for
instructions, and may consult with legal counsel (which may also be legal
counsel for the Fund) with respect to any matter arising in connection with the
services to be performed by Trust Company under this Agreement, and Trust
Company shall not be liable and shall be indemnified by the Fund for any action
taken or omitted by it in reliance upon such instructions or upon the opinion of
such counsel. Trust Company and its agents shall be protected and indemnified in
acting upon any paper of document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instruction, information, data, records or documents
provided Trust Company or its agents by telephone, in person, machine-readable
input, telex, CRT data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund.
5.04. Trust Company may at any time or times in its discretion appoint (any
may at any time remove) another individual, corporation, partnership, trust or
company as its agent to carry out such of the provisions of this Agreement as
Trust Company shall from time to time direct.
5.05. In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, or other causes reasonably beyond its control,
-5-
<PAGE>
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes.
5.06. In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6. Covenants of the Fund and Trust Company.
6.01. Trust Company hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of records and for
the preparation or use, and for keeping account of, such records.
6.02. Trust Company shall at all times maintain insurance coverage which is
reasonable and customary in light of its duties hereunder and its other
obligations and activities, and shall notify the Fund of any changes in its
insurance coverage unless the Fund is covered by the same policy and such change
is also applicable to the Fund.
6.03. Trust Company shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
6.04. Trust Company and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05. In case of any requests or demands for the inspection of the records
relating to Plan Accounts and participant accounts with the Fund, Trust Company
will endeavor to notify the Fund and to secure instructions from an authorized
officer of the Fund as to such inspection. Trust Company reserves the right,
however, to exhibit such records to any person whenever it is reasonably advised
by counsel to the Fund that it may be held liable for the failure to exhibit
such records to such person.
6.06. Trust Company acknowledges that the Fund, as a registered investment
company under the Act, is subject to the provisions of the Act and the rules and
regulations thereunder, and that the offer and sale of the Fund's
-6-
<PAGE>
Shares are subject to the provisions of federal and state laws and regulations
applicable to the offer and sale of securities. The Fund acknowledges that Trust
Company is not responsible for the Fund's compliance with such laws, rules and
regulations. If the Fund advised Trust Company that a procedure of Trust Company
related to the discharge of its obligations hereunder has or may have the effect
of causing the Fund to violate any of such laws or regulations, Trust Company
shall use its best efforts to develop an alternative procedure which does not
have such effect.
6.07. Trust Company acknowledges to the Fund that, as the offeror of
COMPASS, Trust Company does not act as a plan administrator or as a fiduciary
under the Employee Retirement Income Security Act of 1974, as amended from time
to time, with respect to any Plan. Trust Company shall not be responsible for
determining whether the terms of a particular Plan or the Shares of the Fund are
appropriate for the Plan or Participant and does not guarantee the performance
of the Fund.
Article 7. Termination of Agreement.
7.01. This Agreement may be terminated by either party on the last day of
the month next commencing after thirty (30) days written notice to the other
party.
7.02. Upon termination of this Agreement, the Fund shall pay to Trust
Company such fees and expenses as may be due as of the date of such termination.
7.03. Should the Fund exercise its right to terminate this Agreement, Trust
Company reserves the right to charge for any other reasonable expenses
associated with such termination.
Article 8. Additional Series of the Fund.
8.01. Shares of the Fund are of a single class; however, Shares may be
divided into additional series ("Series") that may be established from time to
time by action of the Trustees of the Fund. if the context requires and unless
otherwise specifically provided herein, the term "Fund" as used in this
Agreement shall mean in addition each separate Series currently existing or
subsequently created, and the term "Shares" shall mean all shares of beneficial
interest of the Fund, whether of a single class or divided into separate Series
of the Fund currently existing or hereinafter created.
8.02. In the event that the Fund establishes one or more or additional
Series of Shares in addition to the original Series with respect to which it
desires to have Trust Company render services as record keeping agent under the
terms hereof, it shall so notify Trust Company in writing,
-7-
<PAGE>
and upon the effectiveness of a registration statement under the Securities Act
of 19433, as amended, relating to such Series of Shares and unless Trust Company
objects in writing to providing such services, such Series shall be subject to
this Agreement.
8.03. In the event that the Fund suspends the offering of Shares of any one
or more Series, it shall so notify Trust Company in writing to such effect.
Article 9. Assignment.
9.01. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
9.02. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
Article 10. Amendment.
10.01. This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 11. Massachusetts Law to Apply.
11.01. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 12. Entire Agreement.
12.01. This Agreement constitutes the entire agreement between the parties
hereto.
Article 13. Correspondence.
13.01. Trust Company will answer correspondence from Administrators
relating to Accounts and such other correspondence as may from time to time be
mutually agreed upon and notify the Fund of any correspondence which may require
an answer from the Fund.
Article 14. Further Actions.
14.01. Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
-8-
<PAGE>
Article 15. Interpretive Provisions.
15.01. In connection with the operation of this Agreement, Trust Company
and the Fund may agree from time to time on such provisions interpretive of or
in addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions are to be signed by the parties and annexed hereto, but no
such provisions shall contravene any applicable federal or state law or
regulation and no such interpretive or additional provision shall be deemed to
be an amendment of this Agreement.
Article 16. Miscellaneous.
16.01. The name Scudder Income Fund is the designation of the Trustees for
the time being under a Declaration of Trust dated November 3, 1987, as amended,
and all persons dealing with the Fund must look solely to the Fund property for
the enforcement of any claims against the Fund as neither the Trustees,
officers, agents nor shareholders assume any personal liability for obligations
entered into on behalf of the Fund. No Series of the Fund shall be liable for
any claims against any other Series of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
SCUDDER TRUST COMPANY
BY:/S/ Dennis [Illegible]}
-------------------------
Title: Vice President/Treasurer
SCUDDER INCOME FUND
BY:/S/ David S. Lee
-------------------------
Title: Vice President
-9-
Exhibit 9(b)(3)
SCUDDER TRUST COMPANY
FEE INFORMATION FOR SERVICES PROVIDED UNDER
COMPASS AND TRAK 2000 SERVICE AGREEMENT
Annual service charge for each participant's account in a retirement and
employee benefit plan:
Each Account or
---------------
Sub Account
-----------
Money Market Funds $ 34.50
Non-Money Market Funds 29.00
Closed Account 5.00
Information Access:
o VRU Access Charge per Call 0.20
o Internet To be determined
1/12th of the annual service charge shall be charged and payable each month. It
will be charged for any account or subaccount which at any time during the month
had a share or unit account balance in the fund.
Out of pocket expenses shall be paid by the Fund directly to the Vendor. Such
expenses include but are not limited to the following:
Supplies:
Stationery and envelopes in connection with participant statements and
administrative Reports
Telephone (portion allocable to servicing accounts)
Postage, overnight service or similar services
Microfilm and Microfiche
Checks
On behalf of the Funds listed on
Attachment A: Scudder Trust Company
By:_________________________ By:_____________________
David S. Lee Dennis M. Cronin, Jr.
President or Vice President Senior Vice President and Treasurer
Date: October 1, 1996 Date: October 1, 1996
<PAGE>
ATTACHMENT A
COMPASS and TRAK 2000 SERVICE AGREEMENT
MONEY MARKET FUND SERVICE ACCOUNTS
Money Market Accounts
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
NON-MONEY MARKET FUND SERVICE ACCOUNTS
Monthly Income Funds
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Quarterly Distribution Funds
Scudder Balanced Fund
Scudder Emerging Markets Income Fund
Scudder Growth and Income Fund
Scudder Income Fund
Annual Distribution Funds
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Emerging Markets Growth Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund
Scudder Zero Coupon 2000 Fund
October 1, 1996
2
Exhibit 9(f)(1)
SHAREHOLDER
SERVICES AGREEMENT
This Agreement, made as of the 1st day of June, 1990, between SCUDDER
GROWTH AND INCOME FUND (the "Fund") an open-end investment company which is
registered under the Investment Company Act of 1940, as amended, ("1940 Act"),
and CHARLES SCHWAB & CO., INC. ("Schwab"), a corporation organized under the
laws of California which is a Securities and Exchange Commission licensed
transfer agent which has its principal place of business at 101 Montgomery
Street, San Francisco, California 94104.
WHEREAS, Schwab has established the Charles Schwab & Co., Inc. Defined
Contribution Prototype Plan (the "Prototype Plan") pursuant to which employers
may establish or amend employee benefit plans and their related Trusts
("Trusts"), and Schwab will offer to provide record keeping and trustee services
with respect to participants in Prototype Plans; and
WHEREAS, participants in Prototype Plans may direct that all or a portion
of their accounts may be invested in shares of the Fund; and
WHEREAS, the Fund desires that Schwab perform certain services for it; and
WHEREAS, the performance of such services by Schwab will benefit the Fund
and those participants in Prototype Plans who have directed that all or a
portion of their accounts be invested in shares of the Fund; and
WHEREAS, Schwab is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of mutual promises set forth below, the
parties agree as follows:
1. Omnibus Account. The Fund will cause to be maintained on its shareholder
records a single account in the name of Schwab, which account shall include
all shares of the Fund held by "Trust Client Shareholders", as defined
below, for the benefit of participants in the Prototype Plans.
1
<PAGE>
2. Trust Client Shareholders. Trusts which are related to Prototype Plans and
which acquire an interest in the Fund shall herein be referred to as
Schwab's "Trust Client Shareholders."
3. Services. Schwab will perform for the Fund the shareholder services set
forth in Exhibit A hereto. Schwab also agrees to perform for the Fund such
special services incidental to the performance of the services set forth
herein as agreed to by the parties from time to time. Schwab will perform
such additional services as are provided on an amendment to Exhibit A
hereof, in consideration of the fees set forth in Section 7 below.
4. Agents of Schwab. Upon 60 days prior written notice to the Fund, unless
waived by the Fund, Schwab may, in its discretion, appoint in writing other
parties qualified to perform shareholder services to carry out some or all
of its responsibilities under this Agreement.
5. Compliance With Law. The Fund assumes full responsibility for the
preparation and contents of each prospectus, annual report or proxy
statement of the Fund and for compliance thereof with all applicable
requirements of the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and any other laws, rules and regulations
of governmental authorities having jurisdiction. Schwab will comply with
all regulatory requirements applicable to it with respect to transmitting
orders to purchase or redeem Fund shares.
6. Mailing of Materials and Tabulation of Proxies. Subject to Section 5
hereof, the Fund specifically agrees that Schwab may designate a party for
the purpose of mailing the materials described in Section 5 hereof on
behalf of the Fund to Schwab's Trust Client Shareholders and for tabulation
of returned proxy ballots, with the Fund bearing the reasonable costs of
postage and mail house handling. Within a reasonable period prior to the
record date, the Fund shall contact such designated party to establish the
procedures for such mailing and tabulation of all returned proxy ballots.
7. Fee. For the services provided under this Agreement, the Fund will compute
and pay Schwab a monthly fee as follows:
$1.50 per month per participant account in each Trust Client Shareholder.
The fee shall be charged only for participant accounts which held shares in
the Fund during the month.
2
<PAGE>
Schwab, through the recordkeeper for adopters of the Prototype Plans, will
provide the Fund with a monthly accounting of the assets and the number of
participants accounts on whose behalf Schwab's Trust Client Shareholders
have invested in Fund Shares. Such accounting shall be for the purpose of
computing the fee to be paid Schwab. Each month's fee shall be paid to
Schwab monthly.
8. Nonexclusivity. The services furnished to the Fund by Schwab under this
agreement are not to be deemed exclusive and Schwab shall be free to
furnish similar services to other investment companies registered under the
1940 Act so long as its services under this Agreement are not impaired
thereby. Nothing under this Agreement shall limit or restrict the right of
any employee, officer or director of Schwab to engage in any other business
or to devote his or her time and attention in part of the management or
other aspects of any other business, whether of similar or dissimilar
nature.
9. Proprietary Information. The Fund agrees that neither it nor its
representatives or agents will use or distribute the names of Schwab's
Trust Client Shareholders that it may obtain by reason of the relationship
with Schwab under this Agreement.
10. Schwab's Reliance on Records and Instructions. Schwab may rely on any
written records or instructions provided to it by the Fund.
11. Uncontrollable Events. Schwab assumes no responsibility hereunder, and will
not e liable, for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
12. Standard of Care. Schwab will use its best efforts to ensure the accuracy
of all services performed under this Agreement, but will not be liable to
the Fund for any action taken or omitted by Schwab in the absence of bad
faith, willful misconduct or negligence. Schwab shall not be liable for any
losses to the Fund caused by the Fund but shall use reasonable efforts to
recover losses to the Fund.
3
<PAGE>
13. Reports. Schwab will furnish to the Fund and to the Fund's properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the
Fund in writing, such reports at such times as are reasonably agreed upon
by the Fund and Schwab.
14. Rights of Ownership. All computer programs and procedures developed by
Schwab to perform services required to be provided by Schwab under this
Agreement are the property of Schwab, except such programs and procedures
developed by the Fund or Scudder, Stevens & Clark, Inc. and its affiliates.
15. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section shall not limit or in any way
affect Schwab's right to appoint an agent pursuant to Section 4 hereof.
16. Terms. This Agreement may be terminated by either party upon sixty (60)
days written notice mailed to the Fund at: c/o D.M. Cronin, Scudder Fund
Distributors Inc., 175 Federal Street, Boston, MA 02110 and to Schwab at
101 Montgomery Street, San Francisco, California 94101, Attention: General
Counsel.
17. If the Fund is a Massachusetts Business trust the obligations of the Fund
under this agreement are not binding upon any Trustees, officers, agents or
shareholders of the Fund individually, but bind only the trust estate of
the Fund, and all persons dealing with the Fund must look solely to the
Fund property for the enforcement of any claims against the Fund.
Furthermore, the parties hereto acknowledge that the Fund may be an
investment company whose assets may allocated to two or more series. In
such a case, Schwab agrees to seek satisfaction of all obligations
hereunder solely out of the assets of the series on whose behalf the
transaction giving rise to the obligation was entered into.
18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
as of the date and year first above written.
CHARLES SCHWAB & CO., INC.
Dated: June 4, 1990 By:/s/ David Krim
----------------------------
David Krim
Vice President
-------------------------------
(Typed Name)
SCUDDER GROWTH AND INCOME FUND
Dated: June 1, 1990 By:/s/ David S. Lee
----------------------------
David S. Lee
-------------------------------
(Typed Name)
5
<PAGE>
EXHIBIT A
SHAREHOLDER SERVICES
I. Record Maintenance.
Schwab will provide full maintenance of all shareholder records will
include:
A. Share balance;
B. Account transaction history, including dividends and other
distributions paid and the date and price for all transactions;
C. Name and address of the record shareholder, including zip codes and
tax identification numbers but will not include responsibility for
obtaining certified tax identification numbers or impending back-up
withholding;
D. Records of distributions and dividend payments;
E. Transfer records; and
F. Overall control records.
II. Controls
A. Schwab shall maintain all balance controls daily and produce monthly
summaries of the Trust Client Shareholder accounts expressed in:
1. shares; and
2. dollar amounts.
III. Special Services Included
A. Prepare envelopes/labels and mail proxy statements; tabulate votes
from returned ballots.
B. Mail Fund reports and prospectuses and Statements of Additional
Information.
6
Exhibit 11
Coopers Coopers & Lybrand L.L.P.
& Lybrand a professional services firm
Consent of Independent Accountants
To the Board of Directors and Trustees of Scudder Investment Trust:
We consent to the incorporation by reference in the Post-Effective Amendment No.
78 to the Registration Statement of Scudder Large Company Growth Fund (formerly
Scudder Quality Growth Fund) on Form N-1A of our report dated December 16, 1996
on our audit of the financial statements and financial highlights of Scudder
Quality Growth Fund which report is included in the Annual Report to
Shareholders for the fiscal year ended October 31, 1996 which is incorporated by
reference in the Post Effective Amendment to the Registration Statement.
We also consent to the reference to our Firm under the caption, "Experts."
/s/Coopers & Lybrand L.L.P.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 20, 1996
Exhibit 14(a)
A GUIDE TO
SCUDDER FLEXI-PLAN
================================================================================
o General Information
o Questions and Answers
o Plan Agreement
- -------------------------=======================================================
Scudder Flexi-Plan is a tax-qualified
retirement plan consisting of a profit
sharing plan and a money purchase
pension plan.
Flexi-Plan is for self-employed
individuals (sole proprietors or
partnerships) and corporations.
It is a significant improvement on
Keoghs.
SCUDDER
SERVING INVESTORS SINCE 1919
- -------------------------=======================================================
<PAGE>
- ------------
INTRODUCTION
============
Scudder Flexi-Plan is a tax-qualified retirement program designed to meet the
needs of self-employed individuals, sole proprietors, partnerships and
corporations. If you're self-employed, it's an important advancement in Keogh
plans, allowing you to reduce your current tax bill while providing for the
future of everyone who participates in your plan.
Here are some of the important advantages offered by Scudder-Flexi-Plan:
o Significantly enhanced benefits for the self-employed. Flexi-Plan is part of a
new generation of Keogh plans offering self-employed individuals the same
benefits previously available only through corporations, including higher
tax-deductible contribution limits.
o Two plans to choose from. Our Flexi-Plan encompasses a profit sharing plan and
a money purchase pension plan: These plans can be used together to maximize your
flexibility and your tax-deductible contributions.
o The Scudder funds. Flexi-Plan investments are made in the Scudder family of
mutual funds. With the Scudder funds you can design an investment strategy to
suit your objectives, now and in the future. Invest for growth, income,
stability, or any combination. You get a full range of investment choices, with
the flexibility to exchange among the funds with a simple, toll-free call. And
because all Scudder funds are no load, 100% of your investment can go to work
for your retirement.
o The Scudder distinction. Scudder is one of the nation's largest and most
experienced investment counsel firms. We manage billions of dollars for astute
investors around the world. We pioneered the first no-load mutual fund in 1928,
and we have over 30 years of experience and commitment to retirement planning.
- --------------------------------------------------------------------------------
A Scudder Retirement Plan Specialist can answer any questions you have about
Flexi-Plan and help you complete our enrollment forms. Just call 1-800-323-6105.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------------
HOW YOU BENEFIT FROM A
SCUDDER FLEXI-PLAN
======================
- --------------------------------------------------------------------------------
An immediate
tax break
Your contributions are tax-deductible. This can significantly reduce your tax
bill. If you're in the 28% tax bracket, a $12,000 contribution to a Flexi-Plan
will save you $3,360 that you would otherwise pay in current taxes.
- --------------------------------------------------------------------------------
Tax-deferred
compounding
Your contributions can grow free from state and federal taxes until
withdrawn--usually at retirement. This means all of your earnings are reinvested
tax-deferred, so they in turn earn more for you. Tax-deferred compounding is one
of the keys to real growth.
- --------------------------------------------------------------------------------
Favorable tax
treatment for
distributions
A lump sum distribution from your Flexi-Plan may be eligible for special tax
treatment called "5-year forward averaging." By taxing your distribution as if
it were your only income, and as if you received 1/5 of it each year for 5
years, 5-year forward averaging can significantly reduce your tax bill. For
Flexi-Plan investors it's an important advantage which is not available with
IRAs and SEPs.
THE PRINTED DOCUMENT CONTAINS A MOUNTAIN CHART HERE
MOUNTAIN CHART TITLE:
The Advantages of Tax Deferred Investing
MOUNTAIN CHART DATA:
This chart illustrates the advantage of deferring taxes while saving for your
retirement. If you invest $12,000 in your plan each year for 25 years, and earn
an 8% return on your investment each year, then at the end of this period you'll
have $947,453 in your account. If you invest the same amount each year in a
taxable account, and you're in the 28% tax bracket, paying taxes on your
investment income directly from this account, you'll have only $484,712 at the
end of the same 25 years. Of course, your actual return and tax bracket will
vary, and retirement plan balances become taxable at distribution. Your results
will differ from those in this example.
<PAGE>
- -------------------------
IMPORTANT FEATURES OF THE
SCUDDER FLEXI-PLAN
=========================
- --------------------------------------------------------------------------------
A wide range
of no load
investments
Scudder offers a family of commission-free mutual funds including money market
funds, income funds and growth funds. You can tailor your Flexi-Plan investments
to meet your needs by selecting one or more funds with an objective similar to
your own. The blue booklet, "How to select the right Scudder funds for you,"
will help you make the right choice.
- --------------------------------------------------------------------------------
Complete
flexibility
With Scudder, you always have the freedom to exchange among our funds as your
needs or market conditions change. All it takes is a simple toll-free call.
- --------------------------------------------------------------------------------
No fees or
charges
There's no set-up fee for Scudder Flexi-Plan, no annual maintenance fee, and no
fee if you should close your account. And all of the Scudder funds are no-load
so every dollar you invest goes to work for your future. Complete this to any
other retirement programs you might consider.
- --------------------------------------------------------------------------------
Friendly,
professional
service
As a Flexi-Plan investor, you'll receive regular fund reports and a quarterly
newsletter covering topics of interest and concern to investors. And you'll have
toll-free access to experienced Service Representatives who are ready to assist
you with instant updates on your account and speedy answers to your questions.
- --------------------------------------------------------------------------------
Convenient
recordkeeping
We will send you and your employees detailed account statements, and State
Street Bank, as the trustee for your Flexi-Plan, will send you the information
you or your accountant will need to file 5500 forms.
If yours is a larger plan, ask about alternative arrangements, including more
complete plan administration. You also have the option of naming trustees other
than State Street. Call our Retirement Plan Specialists for details.
- --------------------------------------------------------------------------------
Retirement Plan
Specialists
If you have any questions about Scudder Flexi-Plan, you can call our Retirement
Plan Specialists toll-free at 1-800-323-6105. They can explain how to calculate
the right contribution and assist you in completing our enrollment forms. And
our Service Representatives are always available to help you match a fund to
your objectives. Just call 1-800-225-2470.
<PAGE>
- ---------------------
QUESTIONS AND ANSWERS
=====================
- --------------------------------------------------------------------------------
Flexi-Plan
Q. What is Scudder
Flexi-Plan?
A. Flexi-Plan is a complete retirement program consisting of a profit sharing
plan and a money purchase pension plan. They can be used separately or together.
- --------------------------------------------------------------------------------
Q. Who is eligible for the
Scudder Flexi-Plan?
A. Self-employed individuals (including sole proprietors and partnerships) and
corporations (including Subchapter corporations) are eligible, so you're
eligible if you are any of the following:
o a member of a corporate Board of Directors;
o an owner of a small business;
o a freelancer providing services for a fee;
o a person with self-employment income from a part-time job--even if you
are also employed by a company with a qualified retirement plan.
Q. Can I start a Flexi-Plan
if I already have a Keogh or other
qualified retirement plan?
A. You can, so long as your total contributions to all of your retirement
plans do not exceed the maximum allowed by law. (IRA contributions are not
counted towards this limit.)
Q. Can I have a Flexi-Plan
and an IRA?
A. Yes, anyone covered by a Flexi-Plan is also entitled to make a
tax-deductible IRA contribution of up to $2,000 for the 1986 tax year.
For 1987, you'll still be able to invest as much as $2,000 in an IRA, but if
you're covered by a Flexi-Pan and your adjusted gross income exceeds $40,000
(for joint filers) or $25,000 (for single filers) part or all of your IRA
contribution will be nondeductible.
- --------------------------------------------------------------------------------
Q. What fees are involved?
A. There are no fees at all for either you or your employees. You pay no sales
charge when you buy or sell fund shares. There are no separate charges for
opening, maintaining or closing an account.
Q. What is the minimum
contribution necessary to start a
Flexi-Plan?
A. If you are the only person participating in your plan, then your minimum
contribution to open either the profit sharing or pension plan alone is just
$500. You can invest in more than one fund as long as you place at least $500 in
each fund. If you adopt the second plan, your minimum contribution for the
second plan is $300 per fund.
If your Flexi-Plan covers more than one person, then the minimum initial
contribution to either the profit sharing or pension plan alone equals $300
multiplied by your number of participants. Your contribution can be allocated
among your participants in any amounts.
For example, if your plan covers three people your initial contribution should
be at least $1500 (3 x $500). You might contribute $700 for participant A, $500
for participant B, and $300 for participant C. If you adopt the second plan,
your minimum initial investment in the second plan equals $300 multiplied by
your number of participants.
Once you establish a plan, your contributions to existing accounts may be
[ILLEGIBLE]
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
- --------------------------------------------------------------------------------
Q. When should I start my
Flexi-Plan?
A. You must establish your plan by the end of your fiscal year to obtain a tax
deduction for that year. If you are a calendar year taxpayer (a self-employed
professional, for instance, whose taxes are due on April 15th) then you have
until December 31st to start a plan the current year.
Q. What is the deadline for
making contributions?
A. You have until the day your tax return is due (inducting any extensions) to
make your full contributions. Of course, the sooner you make your contributions
the sooner your retirement dollars begin compounding tax-deferred, so it pays to
start as early as possible in each new year.
Q. How much can I contrib-
ute to the Flexi-pension and
profit sharing plans together?
A. If you are incorporated, you can contribute as much as 25% of earned
income--up to $30,000 for each person covered by your plan.
If you are self-employed, the same limits apply, but earned income is defined
differently for you. Your earned income equals your net profits less retirement
plan contributions made on your behalf. The result is that 25% of your earned
income will equal 20% of your net profits. If you are a sole proprietor, your
net profits will appear on your Schedule C.
Your employees are still eligible to receive a contribution of up to 25% of
their wages.
Example: Assume you are self-employed, have net profits of $100,000 and no
employees. You'd like to contribute the maximum allowable.
You can contribute $20,000. This would be 20% of your net profits (20% x
$100,000) which is the same as 25% of your earned income [25% x
($100,000-$20,000)]. The difference between earned income and net profits is the
retirement plan contribution.
The specific contribution limits for each plan are explained later.
Q. What are the advantages
of using Flexi-Plan's profit shar-
ing plan?
A. The profit sharing plan provides you with the greatest flexibility. You can
change the percentage of compensation you contribute each year. You can also
skip a year and make no contribution, if you like.
You can contribute as much as 15% of earned income (again, up to $30,000 per
participant) to a profit sharing plan. If you don't intend to contribute any
more than 15%, then the profit sharing plan is your best option. If you'd like
to contribute more than 15%, then you should consider the money purchase pension
plan in conjunction with the profit sharing plan, or the pension plan alone.
Q. What are the advantages
of using Flexi-Plan's money
purchase pension plan?
A. The pension plan allows you to contribute the maximum amount. You can
contribute as much as 25% of compensation, up to $30,000 for each participant,
to a pension account. The pension plan, however, limits your flexibility. You
must contribute a fixed percentage of each participant's compensation to the
pension plan each year--even if you have no earnings or profits. You cannot
change the percentage you contribute for any year unless you amend your plan.
Q. If I'm self-employed, am I
required to contribute to the
money purchase pension plan for
the year if I have no earnings?
A. No, you are not required to make any contributions for yourself, since
contributions are calculated as a fixed percentage of earnings. However, if you
have employees you may need to contribute for them.
<PAGE>
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Q. Should I adopt both the
profit sharing plan and the
pension plan?
A. If you're interested in contributing more than 15% you can adopt the profit
sharing plan and the pension plan together. This will provide you with the
maximum tax-break plus the flexibility to change the percentage of compensation
you contribute each year--by as much as 15% by altering your contributions to
the profit sharing plan.
Here's how you would divide your contributions if you want to contribute the
full 25%:
o To insure maximum flexibility, you would contribute 15% to the profit
sharing plan.
o To bring your contributions to 25%, you would contribute an additional
10% to the pension plan.
Remember, with the pension plan you would be committed to contributing a fixed
10% each year, but you could vary the level of your contributions to the profit
sharing plan from 0% to 15%.
Q. How much can I contrib-
ute to each plan if I'm self-
employed?
A. You'll recall that self-employed people can make contributions of up to 25%
of earned income, which equals 20% of net profits.
If you're contributing 15% to the profit sharing plan alone you would multiply
your net profits by 13.043%. The result will equal 15% of your earned income.
If you're adopting both plans and contributing the maximum, 13.043% for the
profit sharing plan does not apply, because you must consider both plans
together. As a self-employed individual you would contribute 12% to the profit
sharing plan and 8% to the pension plan. These contributions are based on net
profits.
Contributions for any employees are based on each individual's compensation as
shown on their W-2 forms.
Calculating Your Contribution Limits
(multiply this percentage by net profits if you are self-employed)
total
maximum profit pension contribution
deduction for sharing plan plan limit
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Adopting only Self-employed 13.043% -- 13.043%
profit sharing Employees 15 -- 15
plan
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Adopting only Self-employed -- 20 20
pension plan Employees -- 25 25
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Adopting Self-employed 12 8 20
both plans Employees 15 10 25
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<PAGE>
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Q. Can I make voluntary
contributions to Flexi-Plan?
A. Yes, if you choose to, you and your plan's participants can each make
nondeductible voluntary contributions totaling 10% of your cumulative wages
during the time you or they are covered by the plan. This is above and beyond
the regular contributions you make as the employer.
If you're self-employed, your nondeductible voluntary contributions can
be up to 10% of net profits after your deductible retirement plan contributions.
In a year when you make the maximum tax-deductible contribution, full voluntary
contributions may not be made.
Q. What are the benefits of
making voluntary contributions?
A. All the earnings on these contributions are tax-deferred until withdrawn.
They allow you to accumulate even greater retirement savings.
Q. Is there a deadline for
making voluntary contributions?
A. No, voluntary contributions can be made at any time.
Q. Can I place a distribution
from another qualified retirement
plan in my Flexi-Plan account?
A. Yes, you can roll over lump sum distributions from other qualified
retirement plans. This allows you to continue deferring taxes and retain any
right you have to use special forward averaging on subsequent lump sum
distributions.
(Note: Generally, if you owned more than 5% of a business, a distribution from a
plan sponsored by that business may not be rolled over to another qualified
plan.)
Q. Can I transfer an existing
corporate retirement plan or
Keogh to Scudder?
A. Yes, and we'll do all the paperwork. Simply use the Transfer Form included
in this kit. There are no tax penalties involved.
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Q. When can distributions
begin?
A. Generally, a participant in Flexi-Plan can start distributions either at
retirement or at normal retirement age, whichever is later. Your plan
administrator can, in many cases, approve earlier distributions. However,
stating in 1987, distributions before age 59-1/2 may be subject to a 10% penalty
tax unless rolled over or distributed in a certain manner. In addition,
owners of more than 5% of the business:
o must begin distributions by April 1st of the year following the year
they turn age 70-1/2, even if they continue to work and to make contributions.
other plan participants:
o may receive distributions when they terminate employment, or when the
plan terminates.
o prior to 1989, need not begin distributions until retirement, even if
over age 70-1/2.
Voluntary contributions may be withdrawn at any time.
Q. How can I take out my
money?
A. There are three ways to withdraw your money, depending on your plan(s) and
your particular situation:
<PAGE>
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1. A lump sum payment allows you to withdraw your entire investment at once.
2. Periodic installments allow you to receive your money over a period of time.
3. Annuity payments ensure that you receive payments as long as you or your
spouse live.
Please review the Plan Document carefully to decide which options are available
for your situation.
Q. How are Flexi-Plan distri-
butions taxed?
A. If you take periodic distributions from your account, they will be taxed as
ordinary income.
If you ask to receive a lump sum, then your distribution may be eligible for
special forward averaging, a tax treatment which can significantly reduce your
tax bill. Lump sum distributions can also be placed in an IRA rollover, where
they can continue to tax-deferred.
Q. How does the Tax Reform
Act of 1986 change the rules for
Flexi-Plan investors?
A. This law makes several changes to the rules governing Keoughs, pensions,
and profit sharing plans. You should note that the major benefits of investing
in a Flexi-Plan--a large annual tax-deduction and tax-deferred compounding of
investment returns--remain intact, and more important than ever.
New rules for the 1987 tax year
o Nondeductible voluntary contributions will count toward the 25% or
$30,000 ceiling on annual contributions starting with the 1987 tax year.
o Withdrawals made before age 59-1/2 will generally be subject to a 10%
IRS penalty, unless rolled over to another plan or distributed in a certain
manner.
o Plan participants whose adjusted gross income exceeds $50,000 (for
joint filers) or $35,000 (for single filers) will be able to make only
nondeductible IRA contributions.
o Lump sum distributions will be eligible for five-year forward averaging
(formerly 10-year) under restricted conditions. 10-year averaging may apply
for individuals who reached age 50 before 1/1/86.
New rules effective with the 1989 tax year
o Contributions can be based on only the first $200,000 of compensation
for any one person, even if the retirement plan is not top heavy. (A
self-employed person can base contributions on as much as $230,000 if making a
$30,000 contribution.)
o Employees cannot be required to complete more than two years of service
before becoming eligible to participate in a retirement plan.
o Vesting schedule will be tightened resulting in more rapid vesting for
plan participants.
o All participants will be required to begin distributions by April 1 of
the year following the year they turn 70-1/2, even if they continue to work
and receive contributions at the same time.
o There will be a 50% IRS penalty on distributions which were required
but not received by plan participants over age 70-1/2.
A more detailed explanation of the tax reform changes, titled "Scudder
Flexi-Plan
[ILLEGIBLE]
<PAGE>
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For Those Plans Covering Employees
Q. If I have employees,
should they be covered by this
Plan?
A. Yes. You must include full-time employees and certain part-time employees,
if they meet specific conditions. You can require your employees to complete a
waiting period before becoming eligible to participate, or you can offer them
immediate participation. Prior to 1989 the most stringent eligibility
requirements allowed are 3 years of service and 21 years of age.
Q. How much should I con-
tribute for each of my employees?
A. Contributions for any employees are based on each individual's compensation
as shown on their W-2 forms. You contribute the same percentage of compensation
for each employee that you contribute for yourself. For example, you might
contribute 5% of compensation for each eligible participant. Maximum
contribution limits for employees are shown in the chart on page 7.
Q. Does Flexi-Plan allow for
Social Security integration?
A. Yes. As an employer you already contribute toward retirement for each of
your employees by making payments to Social Security. Your Social Security
contributions are based on each employee's wages; however, wages in excess of
the Social Security wage base are not taken into account.
Integration allows you to allocate a portion of your total retirement plan
contribution to employees whose wages exceed the Social Security wage base (or a
lower amount which you can select). In effect, integration allows you to
consider your Social Security contributions together with your retirement plan
contributions for the purpose of allocation. (A top heavy plan will still have
to make minimum contributions.)
Q. How are contributions
vested?
A. You can select full and immediate vesting, 6-year graduated vesting, or
something in between. (If you choose a waiting period of more than one year for
eligibility, vesting must be full and immediate.)
Q. Can participants make
their own investment decisions?
A. Each participant's account will be self-directed within the Scudder family
of funds, unless you decide to have your plan administrator make the investment
decisions. Generally, the employer is the plan administrator.
Q. Does Flexi-Plan permit
loans?
A. You have the option of allowing participants to borrow from your plan.
Loans must be available to all plan participants on an equal basis.
Plan loans can be an important source of funds for participants in times of
hardship. A reasonable rate of interest is required on plan loans.
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Q. What is a "top heavy"
plan?
A. A top heavy plan is one in which more than 60% of the benefits go to key
employees. This is frequently the case in small businesses where there are few
employees.
<PAGE>
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Q. Who are key employees?
A. A key employee is an employee who at any time during the plan years or any
of the preceding four plan years, is one of the following:
o an individual owning more than 5% of a business;
o an individual owning more than 1% of a business and earning more
than $150,000;
o an officer of a business earning more than $45,000;
o one of the 10 employees earning more than $30,000 and owning the
largest interests in the employer.
Q. Are there special require-
ments for top heavy plans?
A. Top heavy plans must allocate a contribution of at least 3% to non-key
employees (or the percentage equal to the highest contribution rate used for key
employees). Top heavy plans must also provide that vesting for eligible
participants reach 100% after 6 years. This rule is incorporated in the
Flexi-Plan.
Q. Does the Flexi-Plan
satisfy TEFRA's top heavy rules?
A. Yes, the Flexi-Plan automatically includes provisions that satisfy these
rules regarding top heavy plans.
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Q. What kind of reports will I
need to file?
A. You should file a Summary Plan Description with the U.S. Department of
Labor within 120 days of starting your Flexi-Plan. We'll send one to you with
instructions as soon as you sign up.
You may also have to file the IRS Form 5500 Series Report for your plan each
year. It's due by the final day of the seventh month following the end of your
plan year. This will be July 31 for those plans on a calendar year. State Street
Bank and Trust Co., if trustee, will send you the information you need to
complete the form.
Q. What kind of notification
should I give to my employees?
A. You must post a Notice to Interested Parties. You should also make a copy
of the Summary Plan Description available to each of your participants. The
Notice to Interested Parties is included in the enrollment book.
Q. Will I need to apply to the
IRS for a determination letter?
A. If you use the Adoption Agreements enclosed in this kit (which appoint
State Street Bank as Trustee), you can rely on Scudder's IRS opinion letter,
unless you maintain or have maintained at any time another qualified plan (other
than a plan amended into a Flexi-Plan appointing State Street Bank as trustee or
another Flexi-Plan appointing State Street Bank as trustee). If you have
maintained another plan, you'll have to file for a determination letter from the
IRS for assurance that both your plans will be qualified.
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How to Start Your Flexi-Plan
Q. What should I do to start
a Flexi-Plan?
A. Everything you need is right in this package. After reading all of the
enclosed material, including the prospectus for the fund or funds you've
selected, turn to the booklet of enrollment forms and follow the instructions
there. (If you need a new prospectus, please give us a call.)
<PAGE>
SCUDDER
PROTOTYPE PLAN
Basic Plan Document 01
SECTION 1.
INTRODUCTION
The Employer has established this Plan (the "Plan") consisting of the
Adoption Agreement and the following provisions (the "Prototype Plan") for the
exclusive benefit of its Employees and their Beneficiaries.
SECTION 2.
DEFINITIONS
Where the following words and phrases appear in this Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.01 "Account" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's Employer
Contribution Account, Nondeductible Voluntary Contribution Account, Deductible
Voluntary Contribution Account, Rollover Account, and any transfer account
established pursuant to Section 4.04 hereof with respect to funds transferred on
the Participant's behalf.
2.02 "Act" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
2.03 "Administrator" shall mean the person or persons specified in Section
12.01 hereof.
2.04 "Adoption Agreement" shall mean the agreement by which the Employer
has most recently adopted or amended the Plan.
2.05 "Beneficiary" shall mean any person or legal representative
effectively designated by the Participant as a person entitled to receive
benefits on or after the death of a Participant within the meaning of Code
Section 401(a)(9)(E) and any regulations promulgated thereunder by the Secretary
of the Treasury.
2.06 "Code" shall mean the Internal Revenue Code of 1954, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.07 "Compensation" shall mean the amount paid during the Plan Year by the
Employer to the Employee for services rendered while a Participant, as
reportable to the Federal Government for the purpose of withholding Federal
income taxes, but not including, so long as the Plan is not integrated with
Social Security, amounts attributable to any category specified in the Adoption
Agreement. If so specified in the Adoption Agreement, Compensation shall also
mean amounts paid to the Employee for services rendered for the entire Plan Year
in which an Employee became a Participant whether or not such an Employee was a
Participant for the entire Plan Year. In the case of a Self-Employed Individual,
the above determination of Compensation shall be made on the basis of the Self-
Employed Individual's Earned Income. Notwithstanding the previous sentence, for
the purposes of the limitations imposed by Section 401(a)(i)(C)(II) below,
Compensation of a Self-Employed Individual shall be determined in accordance
with the rules provided in Code Section 404(a)(8)(D).
2.08 "Current Accumulated Earnings and Profits" of an Employer other than a
sole-proprietorship or partnership shall mean the Employer's current or
accumulated earnings and profits, as determined on the basis of the Employer's
books of account in accordance with generally accepted accounting practices,
without any deductions for Employer Contributions under the Plan (or any other
qualified plan) for the current Year or for income taxes for the current Year,
and without regard to the Employer's election to be taxed as a small business
corporation, if it has so elected. If the Employer is a sole-proprietorship or
partnership, "Current or Accumulated Earnings and Profits" shall mean the net
income of such Employer before deduction for income taxes and contributions made
hereunder.
2.09 "Deductible Voluntary Contribution Account" shall mean the separate
account maintained pursuant to Section 6.03(c) hereof for the Deductible
Voluntary Contributions made by the Participant and the income, expenses, gains
and losses attributable thereto.
2.10 "Deductible Voluntary Contributions" shall mean the contributions made
by Participants in accordance with Section 4.02 hereof, which respective
contributing Participants designate as "Deductible Voluntary Contributions" at
the time of contribution, and which comply with the requirements of Code Section
219.
2.11 "Designated Investment Company" shall mean a regulated investment
company for which Scudder, Stevens & Clark, its successor or any of its
affiliates, acts as investment adviser and which is designed by Scudder Fund
Distributors, Inc. or its successors, as eligible for investment under the Plan.
2.12 "Designation of Beneficiary" or "Designation" shall mean the document
executed by a Participant under Section 15.
2.13 "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expect to result in death or last for a continuous period
of 12 months or more, as certified by a licensed physician selected by the
Participant and approved by the Employer.
2.14 "Distributee" shall mean the Beneficiary or other person entitled to
receive the undistributed portion of the Participant's Account under Section 8
because of death or under Section 14 because of incompetency or inability to
ascertain or locate such individual.
2.15 "Distributor" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.16 "Earned Income" shall mean the net earnings from self employment in
the trade or business with respect to which the Plan is established, for which
personal services of the Owner-Employee or Self-Employed Individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
plan, including this Plan, to the extent deductible under Code Section 404.
2.17 "Effective Date" shall mean the date specified by the Employer in the
Adoption Agreement.
2.18 "Election Period" shall mean the period which begins of the first day
of the Plan Year in which the Participant attains age 35 and which ends on the
date of the Participant's death. If a Participant separates from service prior
to the first day of the Plan Year in which he or she attains age 35 the Election
Period with respect to his or her vested Account balance (as of his or her date
of separation) shall begin on his or her date of separation.
2.19 "Employee" shall mean an individual who performs services in the
business of the Employer in any capacity (including any individual deemed to be
an employee of the Employer under Code Section 414(n)).
2.20 "Employer" shall mean the organization or other entity named as such
in the Adoption Agreement and any successor organization or entity which adopts
the Plan.
Any two or more organizations or entities which are members of (a) a
controlled group of corporations (as defined under Code Section 414(b)), (b) a
group of trades or businesses (whether or not incorporated) which are under
common control (as defined under Code Section 414(c)), or (c) an affiliated
service group (as defined under Code Section 414(m)), will be considered to be
the Employer for the purposes of the Plan, unless the Plan is adopted as a
nonstandardized plan, the adopting Employer makes a written election to the
contrary and such written election is attached to the Adoption Agreement. Any
such attached, written election shall become part of the Adoption Agreement.
2.21 "Employer Contribution Account" shall mean the separate account
maintained pursuant to Section 6.03(a) hereof for the Employer Contributions
allocated to a Participant and the income, expenses, gains and losses
attributable thereto.
2.22 "Employer Contributions" shall mean the contributions made by the
Employer in accordance with Section 4.01 hereof.
2.23 "Hour of Service" shall mean:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited to
the Employee for the computation period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including Disability), layoff,
jury duty, military duty or leave of absence. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous period (whether
or not such period occurs in a single computation period). Hours under this
subsection shall be calculated and credited pursuant to section 2530.200b-2 of
the Department of Labor Relations which are incorporated herein by reference;
(c) Solely for the purpose of determining whether a One-Year Break in
Service has occurred, each hour which normally would have been credited to an
Employee (or in any case in which such house cannot be determined, eight hours
per day of such absence) but for an absence from work during a Plan Year
beginning after December 31, 1984 because of such individual's pregnancy, birth
of a child of the individual, placement of an adopted child with the individual,
or caring for an adopted or a natural child following placement or birth. Hours
of Service under this paragraph shall be credited in the Plan Year in which the
absence begins if the individual would otherwise have suffered a One-Year Break
in Service, and in all other cases, in the immediately following Plan Year. No
more than 501 Hours of Service shall be credited under this paragraph by reason
of any one placement or pregnancy. Notwithstanding any implication of this
subsection (c) to the contrary, no credit shall be give under this subsection
(c), unless the Employee makes a timely, written filing with the Administrator
which establishes valid reasons for the absence and enumerates the days for
which there was such an absence;
(d) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under subsection (a), (b) or (c), as the case
may be, and under this subsection (d). These hours shall be credited to the
Employee for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award, agreement or
payment is made.
Where the Employer maintains the plan of a predecessor employer, service
for such predecessor employer shall be treated as Service of the Employer. Where
the Employer does not maintain the plan of a predecessor employer, employment by
a predecessor employer, upon the written election of the Employer made in a
uniform and non-discriminatory manner, shall be treated as Service for the
Employer, provided that the Employer may only make such an election if he has
adopted this Plan as a nonstandardized plan.
If the Employer is a member of (a) a controlled group of corporations (as
defined under Code Section 414(b)), (b) a group of trades or businesses (whether
or not incorporated) which are under common control (as defined under Code
Section 414(c)), or (c) an affiliated service group (as defined under Code
Section 414(m)), all service of an Employee for any member of such a group shall
be treated as if it were Service for the Employer for purposes of this Section
2.23.
In addition, all service for any individual who is considered a leased
employee of the Employer under Code Section 414(n) shall be treated as if it
were Service for the Employer for purposes of this Section 2.23. However,
qualified plan contributions or benefits provided by the leasing organization
which are attributable to Services performed for the Employer shall be treated
as provided by the Employer. The provisions of this paragraph shall not apply to
any leased employee if such employee is covered by a money purchase pension plan
maintained by the leasing organization providing: (a) a nonintegrated employer
contribution rate of at least 7-12% of compensation, (b) immediate
participation, and (c) full and immediate vesting. For purposes of this Section
2.23, the term "leased employee" means any person who is not an Employee and
who, pursuant to an agreement
<PAGE>
between the recipient and any other person, has performed services for the
Employer (or for the Employer and related persons determined in accordance
with Code Section 414(n)(6)) on a substantially full-time basis for a
period of at least one year and such services are of a type historically
performed by employees in the business field of the Employer.
2.24 "Integration Level" for a Plan Year shall mean the lesser of the
Social Security Wage Base or the dollar amount specified in the Adoption
Agreement.
2.25 "Integration Rate" for a Plan Year shall mean the lesser of the OASDI
Rate (as in effect on the first day of the Plan Year) or the rate specified in
the Adoption Agreement.
2.26 "Loan Trustee" shall mean the Trustee or, if the Employer has
specified otherwise in the Adoption Agreement, the individual or individuals so
appointed to act as trustees solely for the purpose of administering the
provisions of Section 10 and holding the Trust assets to the extent that they
are invested in loans pursuant to such Section.
2.27 "Nondeductible Voluntary Contributions Account" shall mean the
separate account maintained pursuant to the Section 6.03(b) hereof for
Nondeductible Voluntary Contributions made by the Participant and the income,
expenses, gains and losses attributable thereto.
2.28 "Nondeductible Voluntary Contributions" shall mean all contributions
by Participants which are not Deductible Voluntary Contributions, Rollover
Contributions, or contributions of accumulated deductible employee contributions
made pursuant to Section 4.02(b)(vi) hereof.
2.29 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
earlier of (a) the date selected by the Employer in the Adoption Agreement or,
(b) if the Employer enforces a mandatory retirement age, the first day of the
month in which the Participant reaches that age.
2.30 "OASDI Rate" for a Plan Year shall mean the tax rate applicable, on
the first day of the Plan Year, to employer contributions for old age,
survivors, and disability insurance under the Social Security Act.
2.31 "One-Year Break in Service" shall mean a 12-consecutive-month period
in which an Employee does not complete more than 500 Hours of Service unless the
number of Hours of Service specified in the Adoption Agreement for purposes of
determining a Year of Service is less than 501, in which case a
12-consecutive-month period in which an Employee has fewer than that number of
Hours of Service shall be a One-Year Break in Service. The computation period
over which One-Year Breaks in Service shall be measured shall be the same
computation period over which Years of Service are measured.
2.32 "Owner-Employee" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than 10% of
either the capital or profits interest of a partnership adopting this Plan as
the Employer. Solely for the purposes of Section 10 hereof, Owner-Employee shall
also mean an Employee or officer who owns (or is considered as owning within the
meaning of Code Section 318(a)(1)) on any day during the Year, more than 5% of
the Employer if the Employer is an electing small business corporation.
2.33 "Participant" shall mean an Employee who is eligible to participate in
the Plan under Section 3 (other than, if this Plan is adopted as a
non-standardized plan, a Self-Employed Individual who elects not to be a
Participant in the Plan) and who has not, since becoming a Participant, died,
retired, otherwise terminated employment with the Employer or transferred from
an eligible class to a class of Employees ineligible to participate in the Plan.
2.34 "Plan" shall mean the Prototype Plan and Adoption Agreement.
2.35 "Plan Year" shall mean the fiscal year of the Employer or a different
12-consecutive-month period as specified in the Adoption Agreement.
2.36 "Prototype Plan" shall mean these Sections 1.24.
2.37 "Qualified Election" shall mean a valid waiver of a Qualified Joint
and Survivor Annuity or Qualified Preretirement Survivor Annuity, as the case
may be. To be valid, the waiver must be in writing and Participant's Spouse must
consent to it in writing. The Spouse's consent to the waiver must be witnessed
by a Plan representative or notary public and must be a limited consent to the
provision of a benefit or benefits to a specific alternate person or persons.
Notwithstanding the foregoing consent requirement, if the Participant
establishes to the satisfaction of a Plan representative that such written
consent may not be obtained because there is no Spouse or the Spouse cannot be
located, a waiver will nonetheless be deemed a Qualified Election. Any consent
necessary for a Qualified Election will be valid only with respect to the Spouse
who signs the consent, or in the event of a deemed Qualified Election, the
Spouse whose consent could not be obtained or who could not be located.
Additionally, a revocation of a prior waiver may be made by a Participant
without the consent of the Spouse at any time before the commencement of
distributions or benefits. The number of revocations shall be unlimited, but
each such revocation shall once again make the Qualified Joint and Survivor
Annuity or Qualified Preretirement Survivor Annuity applicable, as the case may
be, and the spouse must consent to any subsequent waiver in accordance with the
requirements of this Section 2.37.
2.38 "Qualified Joint and Survivor Annuity" shall mean, in the case of a
married Participant, an annuity which can be purchased with the Participant's
vested Account balance for the life of the Participant with a survivor annuity
for the life of the Spouse equal to 50% of the amount of the annuity which is
payable during the joint lives of the participant and the Spouse. In the case of
an unmarried Participant, Qualified Joint and Survivor Annuity shall mean an
annuity which can be purchased with a Participant's vested Account balance for
the life of the Participant.
2.39 "Rollover Account" shall mean the separate account maintained pursuant
to Section 6.03(d) hereof for any Rollover Contributions (as described in
Section 4.03 hereof) made by the Participant and the income, expenses, gains and
losses attributable thereto.
2.40 "Rollover Contributions" shall mean contributions made to the Trust by
Participants in accordance with Section 4.03 hereof.
2.41 "Self-Employed Individual" shall mean an Employee who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no Current or Accumulated Earnings and Profits
for the taxable year.
2.42 "Service" shall mean employment by the Employer and, if the Employer
is maintaining the plan of a predecessor employer, or if the Employer is not
maintaining the plan of a predecessor employer but has so elected in the manner
described in Section 2.23 above, employment by such predecessor employer.
2.43 "Social Security Wage Base" for a Plan Year means the maximum amount
of annual earnings which may be considered wages under Code Section 3121(a)(1)
as in effect on the first day of such Plan Year.
2.44 "Sponsor" shall mean any of the organizations (a) which have requested
a favorable opinion letter from the National Office of the Internal Revenue
Service for this Plan or (b) to which a favorable opinion letter for this Plan
has been issued by the National Office of the Internal Revenue Service.
2.45 "Spouse" shall mean the spouse or surviving spouse of the Participant,
provided that a former spouse will be treated as the spouse or surviving spouse
to the extent provided under a Qualified Domestic Relations Order (as described
in Section 16.02 hereinafter).
2.46 "Trust" shall mean the trust established under Section 11 of this Plan
for investment of Trust assets.
2.47 "Trust Fund" shall mean the contributions to the Trust and any assets
into which such contributions shall be invested or reinvested in accordance with
Sections 11.01 and 11.03 of this Plan.
2.48 "Trustee" shall mean the person or persons including any successor or
successors thereto, named in the Adoption Agreement to act as trustee of the
Trust and hold the Trust assets in accordance with Section 11 hereof.
2.49 "Valuation Date" shall mean the last day of each Plan Year.
2.50 "Vesting Years" shall be measured on the 12-consecutive-month period
specified in the Adoption Agreement. A Participant will have a Vesting Year
during such computation period only if the Participant completes the number of
Hours of Service selected in the Adoption Agreement for purposes of computing a
Year of Service. However, notwithstanding the preceding sentence, if the
Employer has so specified in the Adoption Agreement, a Participant who does not
receive credit for a Vesting Year under the preceding sentence will still have a
Vesting Year for each Plan Year for which the Participant shares in the
allocation of Employer contributions for the Plan Year. However, when
determining Vesting Years, unless the Employer has otherwise specified in the
Adoption Agreement, there shall be excluded: (a) if this Plan is a continuation
of an earlier plan which would have disregarded such service, Service before the
first Plan Year to which the Act is applicable; (b) Service after five
consecutive One-Year Breaks in Service (but this exclusion shall apply only for
the purpose of computing the vested percentage of Employer Contributions made
before such five-year period); (c) Service before a period of five One-Year
Breaks in Service, if the Participant has no vested interest in his Employer
Contribution Account at the time of such break and the number of consecutive
One-Year Breaks in Service equals or exceeds the number of Vesting Years
excluded by such break without counting Vesting Years excluded by an earlier
application of this provision; (d) Service before the first Plan Year in which
the Participant attained age 18; (e) Service before the Employer maintained this
Plan or a predecessor plan; and (f) Service before January 1, 1971, unless the
Participant has completed at least three Vesting Years after December 31, 1970.
For the purposes of subsection (a), service disregarded under a prior plan
includes service credits lost because of separation or failure to complete a
required period of service within a specified period of time; such lost service
credits may have resulted in the loss of prior vesting or benefit accruals, or
the denial of eligibility to participate.
2.51 "Year" shall mean the fiscal year of the Employer.
2.52 "Year of Service" shall mean a 12-consecutive-month period, beginning
on an Employee's initial date of employment or an anniversary thereof during
which the Employee completes the number of Hours of Service specified in the
Adoption Agreement. The initial date of employment is the first day on which the
Employee performs an Hour of Service.
SECTION 3.
ELIGIBILITY
3.01 Entry. Each Employee of the Employer, who on the Effective Date of
this Plan meets the conditions specified in the Adoption Agreement, shall become
eligible to participate in the Plan commending with Effective Date. Each other
Employee of the Employer, including future Employees, shall become eligible to
participate in the Plan when the eligibility requirements specified in the
Adoption Agreement are met. For the purposes of this Plan's eligibility
requirements, the exclusion concerning Employees who are covered by collective
bargaining agreements applies to individuals who are covered by a collective
bargaining contract between the Employer and Employee Representatives if
contract negotiations considered retirement benefits in good faith and unless
such contract specifically provides for participation in the Plan. For the
purposes of this Section 3.01, "Employee Representatives" shall mean the
representatives of an employee organization which engages in collective
bargaining negotiations with the Employer, provided that owners, officers and
executives of the Employer do not comprise more than 50% of the employee
organization's membership.
3.02 Interrupted Service. All Years of Service with the Employer are
counted towards eligibility except the following:
(a) If the Employer has specified in the Adoption Agreement that more
than one Year of Service is required before becoming a Participant, and if the
individual has a One-Year Break in Service before satisfying the Plan's
eligibility requirements. Service before such break will not be taken into
account.
(b) For Plan Years beginning before January 1, 1985, in the case of a
Participant who does not
<PAGE>
have any nonforfeitable right to his or her Employer Contributions, Years
of Service before a One-Year Break in Service will not be taken into
account in computing Years of Service for purposes of eligibility if the
number of consecutive One-Year Breaks in Service equals or exceeds the
aggregate number of such Years of Service before such break. Such
aggregate number of Years of Service before such break will not include any
Years of Service disregarded under this subsection (b) by reason of a prior
break in service.
(c) For Plan Years beginning after December 31, 1984, in the case of a
Participant who does not have any nonforfeitable right to his or her Employer
Contributions, Years of Service before a period of consecutive One-Year Breaks
in Service will not be taken into account in computing Years of Service for
purposes of eligibility, if the number of consecutive One-Year Breaks in Service
in such period equals or exceeds the greater of five or the Employee's aggregate
number of such Years of Service before such break. Such aggregate number of
Years of Service before such period will not include any Years of Service
disregarded under this subsection (c) by reason of a prior period of consecutive
One-Year Breaks in Service.
3.03 Reentry. If a former Participant either (a) had a nonforfeitable right
to all or a portion of his or her Employer Contribution Account at the time of
termination from Service or (b) did not have any nonforfeitable right to his or
her Employer Contribution Account but does not have Service prior to the break
in Service disregarded by operation of Section 3.02(b) or (e) hereof, such
former Participant shall become a Participant immediately upon return to the
employ of the Employer as a member of an eligible class of Employees.
3.04 Transfer to Eligible Class. In the event an Employee is not a member
of an eligible class of Employees becomes a member of an eligible class, such
Employee shall participate immediately if such Employee has satisfied the
minimum age and Service requirements and would have previously become a
Participant had he or she been a member of an eligible class through the period
of employ with the Employer.
3.05 Determination by Administrator. Eligibility shall be determined by the
Administrator and the Administrator shall notify each Employee upon his or her
admission as a Participant in the Plan.
SECTION 4.
CONTRIBUTIONS
4.01 Employer Contributions and Allocation
(a) Profit Sharing Plan. If the Employer has adopted this Plan as a
profit sharing plan, the following provisions shall apply:
(i) Contribution.
(A) Subject to Requirements of subparagraphs (B) and (C)
below, beginning in the Plan Year in which the Plan is adopted, and for each
Plan Year thereafter, the Employer will contribute the amount determined by it,
in its discretion, for the Plan Year in question.
(B) Subject to the requirements of subparagraph (C) below,
during any Plan Year in which the Employer has elected to provide Employer
thrift matching contributions in the Adoption Agreement, the Employer shall
contribute at least the aggregate amount specified in the Adoption Agreement.
(C) During a Plan Year, the aggregate Employer Contributions
made pursuant to this Section 4.01(a)(i) may not exceed the lesser of (I) the
Employer's Current or Accumulated Earnings and Profits for the Plan Year or (II)
15% (or such larger percentage as may be permitted by the Code as a current
deduction to the Employer with respect to any Plan Year) of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid to, or accrued by the Employer for,
Participants for that Plan Year plus any unused credit carryovers from previous
Plan Years. For this purpose, a "credit carryover" is the amount by which
Employer Contributions for a previous Plan Year were less than 15% of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid or accrued by the Employer to
Participants for such Plan Year, but such unused credit carryover shall in no
event permit the Employer Contributions for a Plan Year to exceed 25% (or such
larger percentage as may be permitted by the Code as a deduction to the
Employer) of the total Compensation (disregarding any exclusions from
Compensation specified by the Employer in the Adoption Agreement) paid to, or
accrued for, Participants by the Employer for the Plan Year in question.
(ii) Allocation Under Non-Integrated, Profit Sharing Plan. If the
Employer has adopted this Plan as a profit sharing plan under which allocations
shall be made on a non-integrated basis, Employer Contributions, plus any
forfeitures under Section 7.02, for a Plan Year shall be allocated according to
the provisions of this subsection (ii) as of the Valuation Date for such Plan
Year.
(A) Subject to the terms of subparagraph (B) below, unless
the Employer has specified otherwise in the Adoption Agreement, such amount
shall be allocated among the Employer Contribution Accounts of all Participants
and former Participants who were employed by the Employer during the Plan Year.
If the Employer has specified in the Adoption Agreement that a minimum number of
Hours of Service are necessary to share in the allocation of Employer
Contributions and forfeitures for a Plan Year in which the Plan is not Top
Heavy. Participants and former Participants, as the case may be, who fail to
complete the required number of Hours of Service during such a Plan Year shall
not share in the allocation. If the Employer has so specified in the Adoption
Agreement, Employer Contributions and forfeitures shall be allocated only among
otherwise entitled Participants who are employed by the Employer on such
Valuation Date. Employer Contributions and forfeitures shall be allocated to
Participants entitled to share in the allocation of Employer Contributions and
forfeitures for that Plan Year in proportion to their Compensation for such Plan
Year.
(B) Notwithstanding the provisions of subparagraph (A) above
but nonetheless subject to the provisions of Section 21.03 below, during any
Plan Year in which the Employer has elected to provide Employer thrift matching
contributions in the Adoption Agreement and the Plan is not a Top-Heavy Plan.
Employer Contributions and forfeitures shall be allocated in proportion to the
percentage of Participants' Nondeductible Voluntary Contributions as specified
in the Adoption Agreement.
(iii) Allocation Under Integrated, Profit Sharing Plan. If the
Employer has adopted this Plan as a profit sharing plan under which allocations
shall be made on an integrated basis. Employer Contributions, plus any
forfeitures under Section 7.02, for a Plan Year shall be allocated according to
the provisions of this subsection (iii) as of the Valuation Date for such Plan
Year. Unless the Employer has specified otherwise in the Adoption Agreement,
such amount shall be allocated among all Participants and former Participants
who were employed by the Employer during the Plan Year. If the Employer has
specified in the Adoption Agreement that a minimum number of Hours of Service
are necessary to share in the allocation of Employer Contributions and
forfeitures for a Plan Year in which the Plan is not Top Heavy, Participants and
former Participants, as the case may be, who fail to complete the required
number of Hours of Service during such a Plan Year shall not share in the
allocation. If the Employer has so specified in the Adoption Agreement, Employer
Contributions and forfeitures shall be allocated only among otherwise entitled
Participants who are employed by the Employer on such Valuation Date. Employer
Contributions and forfeitures shall be allocated to Participants entitled to
share in the allocation of Employer Contributions and forfeitures for that Plan
Year as follows:
(A) First, Employer Contributions and forfeitures will be
allocated to the Employer Contribution Account of each Participant entitled to
share in the allocation of such amounts in the ratio that each such
Participant's Compensation for the Plan Year in excess of the Integration Level
bears to the Compensation in excess of the Integration Level for all such
Participants, provided that the amount so credited to any such Participant's
Employer Contribution Account for the Plan Year shall not exceed the product of
the Integration Rate times the Participant's Compensation in excess of the
Integration Level.
(B) Next, any remaining Employer Contributions or
forfeitures will be allocated to the Employer Contribution Accounts of all
Participants entitled to share in the allocation of the Employer Contributions
for the Plan Year in the ratio that each such Participant's Compensation for the
Plan Year bears to all such Participants' Compensation for that Plan Year.
(b) Money Purchase Pension Plan. If the Employer has adopted this Plan
as a money purchase pension plan, the Employer will, beginning for the Plan Year
in which the Plan is adopted, and for each Plan Year thereafter, contribute, for
allocation to the Employer Contribution Account of each Participant entitled to
share in the allocation of Employer Contributions, the amount specified in the
Adoption Agreement reduced by any forfeitures arising during the preceding Plan
Year pursuant to Section 7.02 hereafter.
(i) Unless the Employer has specified otherwise in the Adoption
Agreement, the amount of the Employer Contribution shall be calculated on the
basis of the Compensation of all Participants and former Participants who were
employed by the Employer during the Plan Year. If the Employer has specified in
the Adoption Agreement that a minimum number of Hours of Service are necessary
to receive an Employer Contribution in a Plan Year in which the Plan is not Top
Heavy, Participants and former Participants, as the case may be, who fail to
complete the required number of Hours of Service during such a Plan Year shall
not be considered when calculating the amount of the Employer Contribution. If
the Employer has so specified in the Adoption Agreement, only Participants who
are employed by the Employer on such Valuation Date and who are otherwise
entitled to receive an allocation shall be considered when calculating the
amount of the Employer Contribution. Employer Contributions shall be allocated
to the Employer Contribution Accounts of only those Participants who were
included in the calculation of the amount of the Employer Contribution.
(ii) To the extent that the Employer Contribution for a Plan Year
is reduced by forfeitures, such forfeitures shall be added to such Employer
Contribution and allocated as a part thereof.
(iii) Any excess forfeitures not allocated pursuant to this
Section 4.01(b) shall be carried over to future Plan Years.
4.02 Participant Contributions. If, in the Adoption Agreement, the Employer
has specified that Participants may make either Deductible Voluntary
Contributions or Nondeductible Voluntary Contributions, or both, a Participant
may make such permitted contributions to his or her Account; provided, however,
that a Participant's right to make such contribution(s) shall be subject to the
conditions and limitations specified below.
(a) The following conditions and limitations shall apply if the
Employer has specified that Participants may make Nondeductible Voluntary
Contributions:
(i) The aggregate amount of a Participant's Nondeductible
Voluntary Contributions, plus any nondeductible voluntary contributions he or
she makes under any other qualified retirement plan maintained by the Employer,
shall not exceed 10% of his or her Compensation (disregarding any exclusions
from Compensation specified by the Employer in the Adoption Agreement) for the
period in which he or she has been a Participant in the Plan.
(ii) The aggregate amount of a Participant's Nondeductible
Voluntary Contributions shall not cause the Annual Addition (as defined in
Section 5.05(a) hereof) to his or her Account to exceed the limitations set
forth in Section 5.
(iii) A Participant's Nondeductible Voluntary Contributions shall
be allocated to his or her Nondeductible Voluntary Contribution Account under
Section 6.03 hereof.
(iv) A Participant's Nondeductible Voluntary Contribution Account
shall be nonforfeitable and the Participant may withdraw all or a portion of his
or her Nondeductible Voluntary Contribution Account upon 30 days' written notice
to the Administrator.
(b) The following conditions and limitations shall apply if the
Employer has specified that the Participants may made Deductible Voluntary
Contributions:
(i) The aggregate amount of a Participant's Deductible Voluntary
Contributions in any calendar year may not exceed the lesser of (1) $2,000 or
(2) the Participant's compensation for calendar year for which the contribution
is made. Compensation for this purpose means all wages, salaries, earned income
and other amounts received or derived from
<PAGE>
personal services actually rendered and includible in gross income, but does not
include amounts derived from or received as earnings or profits from property or
amounts received as a pension or annuity or as deferred compensation. This
limitation applies to all the Participant's Deductible Voluntary Contributions
made for the calendar year to all qualified retirement plans maintained by the
Employer. The Administrator shall not accept any contributions in excess of this
limitation.
(ii) A Participant may not make Deductible Voluntary
Contributions for the calendar year in which he or she attains age 70-1/2 or any
calendar year thereafter.
(iii) A Deductible Voluntary Contribution will be considered
contributed for the calendar year in which it is actually made. However, if a
Participant makes a Deductible Voluntary Contribution on or before April 15, he
or she may notify the Administrator at the time the Deductible Voluntary
Contribution is made that it is made for the preceding calendar year. A
Deductible Voluntary Contribution may only be made for a calendar year in which
the Employee was a Participant, and in no event may a Deductible Voluntary
Contribution be made by an Employee after he or she has ceased to be a
Participant.
(iv) All Participant Contributions will be considered to be
Deductible Voluntary Contributions, unless the Employer has elected in the
Adoption Agreement to allow Nondeductible Voluntary Contributions and the
Participant designates before April 15 of the calendar year following the
calendar year in which the contribution was made that the contribution was a
Nondeductible Voluntary Contribution. In such a case, the contribution will be
considered to have been a Nondeductible Voluntary Contribution made during the
calendar year in which it was contributed.
(v) A Participant's Deductible Voluntary Contributions must be in
cash and shall be allocated to his or her Deductible Voluntary Contribution
Account under Section 6.03 hereof.
(vi) A Participant's right to his or her Deductible Voluntary
Contribution Account shall be nonforfeitable and the Participant may withdraw
all or a portion of his or her Deductible Voluntary Contribution Account upon
written application to the Administrator. However, if at the time the
Participant receives the withdrawal, he or she has not attained age 59-1/2 and
is not disabled, the Participant will be subject to a federal income tax penalty
unless, within 60 days of the date he or she receives it, he or she rolls over
the amount withdrawn to an individual retirement plan or, if the Participant can
satisfy the requirement contained in section 4.03(b) below, a qualified
retirement plan.
(vii) The Administrator may, in its discretion, accept
accumulated deductible employee contributions (as defined in Code Section
72(o)(5)) that were distributed from a qualified retirement plan and rolled over
pursuant to Code Sections 402(a)(5), 402(a)(7), 403(a)(4), or 408(d)(3). The
rolled over amount will be added to the Participant's Deductible Voluntary
Contribution Account, but will not be taken into account in applying the
restrictions specified in Section 4.02(b)(i) and (ii) above. In no case may the
Administrator authorize the Plan to accept rollovers of accumulated deductible
employee contributions from a qualified plan to which a contribution was made
for the Participant while the plan was a Top-Heavy Plan (as defined in Section
21.02(b) hereof and applied to such other plan) and the Participant was a Key
Employee (as defined in Section 21.02(a) hereof and applied to such other
employer).
4.03 Rollover Contributions. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express request of
the Participant wishing to make such Rollover Contribution, the same to be held,
administered and distributed by the Trustee in accordance with the terms of this
Plan, provided that the Trustee consents if the contribution includes property
other than cash. A Rollover Contribution shall only be a contribution, comprised
of money and/or property, which is a "rollover amount" within the meaning of
Code Section 402(a)(5) or a "rollover contribution" within the meaning of Code
Section 408(d)(3)(A)(ii) (as modified by Code Section 408(d)(3)(C)) with respect
to which both of the following conditions are met:
(a) The transfer of such amount is being made within 60 days of its
receipt by the Participant and
(b) No part of such amount is attributable to contributions made on
behalf of the Participant while he or she was a Key Employee (as defined in
Section 21.02(a) and applied to such other employer) in a Top-Heavy Plan (as
defined in Section 21.02(b) and applied to such other plan).
All Rollover Contributions made under this Section 4.03 must be accepted by
the Trustee within the 60-day period referred to in paragraph (a) above. A
Participant's Rollover Contribution shall at no time be included in the
computation of the maximum allocation to a Participant's Account as set forth in
Section 5 hereof. Each Rollover Contribution made by a Participant shall be
allocated to his or her Rollover Account pursuant to Section 6.03(d) hereof.
Such Rollover Account shall be invested by the Trustee as part of the Trust
Fund, pursuant to Section 11 hereafter, except as it may be held in kind as
permitted above. A Participant may withdraw all or a portion of his or her
Rollover Account upon 30 days' written notice to the Administrator. However, if
the Participant is, or has been, a 5-percent owner (as defined in Code Section
416(i)(1)(B)(i)) and at the time of the withdrawal, he or she has not attained
age 59-1/2 and is not disabled, the Participant will be subject to a federal
income tax penalty unless, within 60 days of the date he or she receives it, he
or she rolls the amount withdrawn to an individual retirement plan or, if the
Participant can satisfy the requirement contained in subsection (b) above, a
qualified retirement plan.
4.04 Transfers from other Qualified Plans. The Administrator may, in its
discretion, direct the Trustee to accept the transfer of any assets held for the
Participant's benefit under a qualified retirement plan of a former employer of
such Participant. Such a transfer shall be made directly between the trustee or
custodian of the former employer's plan and the Trustee in the form of cash or
its equivalent, and shall be accompanied by written instruction showing
separately the portion of the transfer attributable to contributions by the
former employer and by the Participant respectively. Separate written
instructions delivered to the Administrator shall identify the portion of the
transferred funds, if any, attributable to any period during which the
Participant participated in a defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus plan or profit sharing plan which
would otherwise have provided a life annuity form of payment to the Participant.
The Administrator shall be entitled to rely on all inclusions and commissions in
such written instructions with respect to character of the transferred funds. To
the extent that the amount transferred is attributable to contributions by the
former employer, it shall be maintained in a separate transfer account. To the
extent that the amount transferred is attributable to contributions by the
Participant, it shall be maintained in the Participant's Nondeductible Voluntary
Contribution Account or Deductible Voluntary Contribution Account as is
appropriate.
SECTION 5.
CODE SECTION 415
LIMITATIONS ON ALLOCATIONS
5.01 Employers Maintaining No Other Plan.
(a) If a Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit fund (as defined in
Code Section 419(e)) maintaned by the Employer, the amount of the Annual
Addition which may be credited to the Participant's Account for any Limitation
Year shall not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in the Plan.
(b) If the Employer Contribution that would otherwide be allocated to
a Participant's Account would cause the Annual Addition for the Limitation Year
to exceed the Maximum Permissible Amount, the amount allocated will be reduced
so that any Excess Amount shall be eliminated and, consequently, the Annual
Addition for the Limitation Year will equal the Maximum Permissible Amount.
(i) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly determined for all
Participants similarly situated.
(ii) As soon as is administratively feasible after the end of
each Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of Participants' actual Compensation for the
Limitation Year.
(c) Any Excess Amount shall be eliminated pursuant to the following
procedure:
(i) The portion of the Excess Amount consisting of Nondeductible
Voluntary Contributions which are a part of the Annual Addition (as defined in
Section 5.05(a)) shall be returned to the Participant as soon as
administratively feasible;
(ii) If after the application of subparagraph (i) an Excess
Amount still exists and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's Account will be used to
reduce Employer Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary.
(iii) If after the application of subparagraph (i) an Excess
Amount still exists and the Participant is not covered by the Plan at the end of
the Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce proportionally future
Employer Contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary. If a suspense account is in existence at any time
during the Limitation Year pursuant to this subparagraph, it will not
participate in the allocation of the Trust's investment gains and losses. In the
event of termination of the Plan, the suspense account shall revert to the
Employer to the extent it may not then be allocated to any Participant's
Account.
(d) Notwithstanding any other provision in subsections (a) through
(c), the Employer shall not contribute any amount that would cause an allocation
to the suspense account as of the date the contribution is allocated.
5.02 Employers Maintaining Other Master or Prototype Defined Contribution
Plans
(a) This Section 5.02 applies if, in addition to this Plan, a
Participant is covered under another qualified Master or Prototype defined
contribution plan or a welfare benefit fund (as defined in Code Section 419(e))
maintained by the Employer during any Limitation Year. The Annual Addition which
may be allocated to any Participant's Account for any such Limitation Year shall
not exceed the Maximum Permissible Amount, reduced by the sum of any portion of
the Annual Addition credited to the Participant's account under such other plans
and welfare benefit funds for the same Limitation Year.
(b) If the Annual Addition with respect to a Participant under other
defined contribution plans and welfare benefit funds maintained by the Employer
of what would be portions of the Annual Addition (if the allocations were made
under the Plan) are less than the Maximum Permissible Amount and the Employer
Contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Addition for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Addition under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount.
(c) If the Annual Addition with respect to the Participant under such
other defined contribution plans and welfare benefit funds in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for the
Limitation Year.
(d) If an Excess Amount was allocated to a Participant under this Plan
on a date which coincides with the date an allocation was made under another
plan, the Excess Amount attributed to this Plan will be the product of,
(i) The total Excess Amount allocated as of such date, multiplied
by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
(B) the total Annual Addition allocations to the Participant
for the Limitation Year as of such date under this and all other qualified
Master or Prototype defined contribution plans maintained by the Employer.
(e) Any Excess Amount attributed to the Plan will be disposed in the
manner described in Section 5.01.
<PAGE>
5.03 Employers Maintaining Other Defined Contribution Plans. If a
Participant is covered under another qualified defined contribution plan which
is not a Master or Prototype plan, the Annual Addition credited to the
Participant's Account under this Plan for any Limitation Year will be limited in
accordance with the provisions of Section 5.02 as though the plan were a Master
or Prototype Plan, unless the Employer provides other limitations pursuant to
the Adoption Agreement.
5.04 Employers Maintaining Defined Benefit Plans. If the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering
any Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. The Annual Addition which may be credited to the Participant's
Account under this Plan for any Limitation Year will be limited in accordance
with the provisions of Section 5.02, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.05 Definitions. For purposes of this Section 5, the following terms shall
be defined as follows:
(a) Annual Addition. With respect to any Participant, the "Annual
Addition" shall be the sum of the following amounts credited to a Participant's
Account for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) the lesser of
(A) one-half (1/2) the allocated Nondeductible Voluntary
Contributions or
(B) the amount of allocated Nondeductible Voluntary
Contributions in excess of 6% of the Participant's Compensation for the
Limitation Year.
Any Excess Amount applied under Section 5.01(c)(ii) or (iii) or Section
5.02(e) in a Limitation Year to reduce Employer Contributions will be considered
part of the Annual Addition for such Limitation Year. Amounts allocated, after
March 31, 1984, to an individual medical account (as defined in Code Section
415(l)(1)) which is part of a defined benefit plan maintained by the Employer,
are treated as part of the Annual Addition. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a Key Employee (as defined in Section
21.02(a) hereof) under a welfare benefit fund (as defined in Code Section
419(e)) maintained by the Employer, are treated as part of the Annual Addition.
(b) Compensation. For the purposes of this Section 5, a Participant's
"Compensation" shall include any earned income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred compensation
which are not includible in the Participant's gross income for the taxable year
in which contributed, or Employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the Participant,
or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock
option, or when restricted property held by the Participant either becomes
freely transferable or is no longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(iv) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary-reduction
agreement) towards the purchase of an annuity described in Code Section 403(b)
(whether or not the amounts are actually excludable from the gross income of the
Participant).
For purposes of applying the limitations of this Section 5, Compensation
for a Limitation Year is the Compensation actually paid or includible in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
profit sharing plan who is permanently and totally disabled (as defined in Code
Section 22(e)(3)) is the Compensation such Participant would have received for
the Limitation Year if the Participant was paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; such imputed
compensation for the disabled Participant may be taken into account only if the
Participant is not an officer, an owner, or highly compensated, and
contributions made on behalf of such a Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit Fraction" shall be
a fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125%
of the dollar limitation in effect for the Limitation Year under Code Section
415(b)(1)(A) or 140% of the Participant's Highest Average Compensation.
Notwithstanding the above, if the Participant was a participant in one or
more defined benefit plans maintained by the Employer which were in existence on
July 11, 1982, the denominator of this fraction will not be less than 125% of
the sum of the annual benefits under such plans which the Participant had
accrued as of the later of the end of the last Limitation Year beginning before
January 1, 1983. The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the requirements of Code
Section 415 as in effect at the end of the 1982 Limitation Year. For purposes of
this paragraph, a Master or Prototype plan with an opinion letter issued before
January 1, 1983, which was adopted by the Employer on or before June 30, 1983,
is treated as a plan in existence on July 1, 1982.
(d) Defined Contribution Fraction. The "Defined Contribution Fraction"
shall be a fraction, the numerator of which is the sum of the Annual Additions
to the Participant's account under all the defined contribution plans (whether
or not terminated) maintained by the Employer for the current and all prior
Limitation Years, (including the Annual Additions attributable to the
Participant's nondeductible employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer, and the Annual Additions
attributable to all welfare benefit funds (as defined in Code Section 419(e))),
and the denominator of which is the sum of the Maximum Aggregate Amounts for the
current and all prior Limitation Years of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
Maximum Aggregate Amount in any Limitation Year is the lesser of 125% of the
dollar limitation in effect under Code Section 415(c)(1)(A) or 35% of the
Participant's Compensation for such year.
If a Participant was a participant in one or more defined contribution
plans maintained by the Employer which were in existence on July 1, 1982, the
numerator of this fraction will be adjusted if the sum of this Defined
Contribution Fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to the
product of
(i) The excess of the sum of the fractions over 1.0, multiplied
by
(ii) the denominator of this Defined Contribution Fraction.
will be permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as
of the later of the end of the last Limitation Year beginning before
January 1, 1983 or September 30, 1983. This adjustment also will be made
if at the end of the last Limitation Year beginning before January 1, 1984,
the sum of the fractions exceeds 1.0 because of the accruals or additions
that were made before the limitations of this Section 5 became effective to
any plans of the Employer in existence on July 1, 1982. For purposes of
this paragraph, a Master or Prototype plan with an opinion letter issued
before January 1, 1983, which is adopted by the Employer on or before
September 30, 1983, is treated as a plan in existence on July 1, 1982.
(e) Employer. "Employer" means the Employer that adopts this Plan and
all members of (i) a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)), (ii) commonly controlled
trades or businesses (whether or not incorporated) (as defined in Code Section
414(c) as modified by Code Section 415(h)), or (iii) affiliated service groups
(as defined in Code Section 414(m)) or which the Employer is a part.
(f) Excess Amount. The "Excess Amount" is the excess of what would
otherwise by a Participant's Annual Addition for the Limitation Year over the
Maximum Permissible Amount. If at the end of a Limitation Year when the Maximum
Permissible Amount is determined on the basis of the Participant's actual
Compensation for the year, an Excess Amount results, the Excess Amount will be
deemed to consist of the portion of the Annual Addition last allocated, except
that the portion of the Annual Addition attributable to a welfare benefit fund
will be deemed to have been allocated first regardless of the actual allocation
date.
(g) Highest Average Compensation. A Participant's "Highest Average
Compensation" is his or her average Compensation for the three consecutive Years
of Service with the Employer that produces the highest average. A Year of
Service with the Employer is the 12-consecutive-month period defined in Section
2.52 of the Plan.
(h) Limitation Year. A "Limitation Year" is the Plan Year or any other
12-consecutive-month period specified by the Employer in the Adoption Agreement.
All qualified plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different 12-consecutive-month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(i) Master or Prototype Plan. A "Master or Prototype" plan is a plan
the form of which is the subject of a favorable opinion letter from the Internal
Revenue Service.
(j) Maximum Permissible Amount. For a Limitation Year, the "Maximum
Permissible Amount" with respect to any Participant shall be the lesser of
(i) $30,000 (or beginning January 1, 1988, such larger amount
determined by the Commissioner of Internal Revenue for the Limitation Year) or
(ii) 25% of the Participant's Compensation for the Limitation
Year.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive-month period, the Maximum
Permissible Amount will not exceed the quotient determined by first multiplying
$30,000 by the number of months in the short Limitation Year and then dividing
the product by 12.
(k) Projected Annual Benefit. The "Project Annual Benefit" is the
annual retirement benefit (adjusted to an actuarilly equivalent straight life
annuity if such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the Participant would
be entitled under the terms of the plan assuming:
(i) the Participant will continue employment until normal
retirement date under the plan (or current age, if later), and
(ii) the Participant's compensation for the current Limitation
Year and all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
SECTION 6.
TIME AND MANNER OF MAKING
CONTRIBUTIONS
6.01 Manner. Unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one or
more installments.
6.02 Time. Employer Contributions and Participant Contributions with
respect to a Plan Year shall be made before the time limit, including extensions
thereof, for filing the Employer's federal income tax returns for the Year with
or within which the particular Plan Year ends (or such later time as is
permitted by regulations authorized by the Secretary of the Treasury or
delegate). Rollover Contributions may be made at any time acceptable to the
Administrator in accordance with Section 4.0 hereof. All contributions shall be
paid to the Administrator for transfer to the Trustee, as soon as possible, or,
if acceptable to the Administrator and the Trustee, such contributions may be
paid directly to the Trustee. The Administrator shall transfer such
contributions to the Trustee as soon as possible. The
<PAGE>
Administrator may establish a payroll deduction system or other procedure to
assist the making of Participant Contributions to the Trust, and the
Administrator may from time to time adopt rules or policies governing the manner
in which such contributions may be made so that the Plan may be conveniently
administered.
6.03. Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a) Employer Contributions;
(b) Nondeductible Voluntary Contributions, if selected in the Adoption
Agreement;
(c) Deductible Voluntary Contributions, if selected in the Adoption
Agreement;
(d) Rollover Contributions, if, pursuant to Section 4.03 hereof, the
Administrator directs the Trustee to accept such contributions; and
(e) funds directly or indirectly transferred from another qualified
retirement plan pursuant to Section 4.04 hereof, if the Administrator directs
the Trustee to accept such transfers.
In addition, pursuant to Section 7.02(d) and (f) hereof, separate accounts
will be maintained for the pre-break and postbreak Employer Contributions made
on behalf of a Participant who has Service excluded from the calculations of
Vesting Years pursuant to Section 2.50(b) or (c). Notwithstanding the above, if
a Participant's rights to Employer Contributions are immediately and fully
nonforfeitable, Employer Contributions allocated on behalf of such Participant
and his or her Nondeductible Voluntary Contributions may be maintained in a
single account.
SECTION 7.
VESTING
7.01 When Vested. A Participant shall always have a fully vested and
nonforfeitable interest in his or her Nondeductible Voluntary Contribution
Account, Deductible Voluntary Contribution Account and Rollover Account, and any
transfer account established pursuant to Section 4.04 hereof on his or her
behalf. A Participant's interest in his or her Employer Contribution Account
shall be vested and nonforfeitable at Normal Retirement Date, death, Disability,
upon termination (including a complete discontinuance of Employer Contributions)
or partial termination of the Plan and otherwise only to the extent specified in
the Adoption Agreement.
7.02 Forfeitures. If a Participant's employment with the Employer is
terminated before his or her Employer Contribution Account is fully vested in
accordance with Section 7.01 hereof, this Section 7.02 shall apply.
(a) If the Participant completes a period of five consecutive One-Year
Breaks in Service before returning to employment with the Employer, dying or
becoming disabled, the portion of the Participant's Employer Contribution
Account which was not vested at the time of his or her termination shall be
forfeited and
(i) if this Plan is adopted as a profit sharing plan, allocated
exclusively as of the next Valuation Date in the same manner, and to the same
Participants' Employer Contribution Accounts as the Employer Contribution for
that Plan Year is allocated pursuant to Section 4.01 hereof, or
(ii) if this Plan is adopted as a money purchase pension plan,
applied exclusively to reduce the Employer Contributions for the next Plan Year.
(b) No forfeitures shall occur solely as a result of withdrawal of
Deductible Voluntary Contributions, Nondeductible Voluntary Contributions,
Rollover Contributions or amounts held in a transfer account.
(c) Following a forfeiture, the Participant shall be fully vested in
all funds which remain in his or her Employer Contribution Account immediately
after the forfeiture and in all Trust earnings subsequently attributed to such
funds.
(d) If the Participant is reemployed by the Employer after he or she
completes five consecutive One-Year Breaks in Service, an additional Employer
Contribution Account shall be maintained on the Participant's behalf; provided
that, at a subsequent time, the Trustee shall have the discretionary authority
to combine any number of Employer Contribution Accounts maintained for a
Participant, so long as the Participant is 100% vested in each combined account.
All subsequent Employer Contributions made on the Participant's behalf shall be
credited to the Employer Contribution Account which was established at the time
of his or her return to employment with the Employer. The extent to which the
Participant is vested in any additional Employer Contribution Accounts
established on his or her behalf shall be determined independently of any
determination of the extent to which the Participant is vested in any previously
established Employer Contribution Account(s); all such determinations shall be
made in accordance with the provisions in Section 2.50 above.
(e) If the Participant has received a distribution from his or her
Employer Contribution Account pursuant to Section 9 hereof and if the
Participant is reemployed by the Employer before he or she completes five
consecutive One-Year Breaks in Service, the portion of the Employer Contribution
Account which is then vested shall be determined by adding to the then value of
the Employer Contribution Account, the amount, if any, previously distributed
and not repaid to the Trust, applying the vesting percentage then applicable,
and then subtracting the amount previously distributed and not repaid to the
Trust.
(f) Each Employer Contribution Account established pursuant to
subsection (d) hereof (or such Employer Contribution Account into which the
Trustee has combined the accounts pursuant to all powers granted to it in
subsection (d) hereof) shall be credited with its proportionate share of Trust
earnings and losses. For the purposes of the remaining Sections of this Plan,
all Employer Contribution Accounts established in the name of a Participant
shall be treated as a single account.
SECTION 8.
DISTRIBUTION UPON DEATH
8.01 Qualified Preretirement Survivor Annuity. If this Plan is adopted as a
money purchase pension plan, unless an optional form of distribution has been
selected within the Election Period pursuant to a Qualified Election, if a
Participant's Service terminates because of death before distributions have
commenced, then the Trustee shall, upon the direction of the Administrator,
apply 50% of the Participant's vested Account balance toward the purchase of an
annuity contract for the life of the Spouse.
8.02 Other Distributions at Death. If the Participant dies after he or she
has begun to receive distributions pursuant to Section 9.01 or 9.03(b), this
Section 8.02 shall apply with respect to the Participant's entire Account. With
respect to any Account, or portion thereof, to which Section 8.01 did not apply,
if the Participant dies before he or she has begun to receive distributions
pursuant to Sections 9.01 and 9.03(b), this Section 8.02 shall apply with
respect to such Account, or portion thereof. With respect to a portion of the
Participant's Account to which Section 8.01 did apply, if the Participant made a
Qualified Election within the Election Period not to receive a Qualified
Preretirement Survivor Annuity at his or her death and the Participant's Service
terminates because of death before distributions have commenced, this Section
8.02 shall apply with respect to such portion of the Participant's Account.
(a) With respect to any Account of portion thereof to which this
Section 8.02 applies the Trustee shall, at the direction of the Administrator,
distribute the Participant's Account in accordance with the provisions of this
Section 8.02. The Administrator's direction shall include notification of the
Participant's or Beneficiary's death and the existence or non-existence of a
surviving spouse.
(b) If the Participant has validly named a Beneficiary or
Beneficiaries in the most recent Designation of Beneficiary form filed with
Trustee before the Participant's death in compliance with Section 15, his or her
Account shall be distributed to the Beneficiary or Beneficiaries so named. To
the extent that any portion of an Account of a deceased Participant is not
governed by an effective Designation of Beneficiary form which names at least
one living Beneficiary, that portion of the Account shall be distributed to the
deceased Participant's Spouse or if that is not possible, to the estate of the
deceased Participant.
(c) If the Participant has validly elected a manner of distribution
with respect to his or her Account, his or her Account shall be distributed in
accordance with such election. With respect to any portion of a deceased
Participant's Account for which the Participant has not validly elected a manner
of distribution, distribution shall be made in such manner as the Participant's
Beneficiary (or Beneficiaries) may elect, or in the absence of such an election,
in a lump sum.
(d) Distribution to the Participant's Beneficiary shall be made
according to the following provisions:
(i) If the Participant dies before benefits commence and during a
Plan Year which began after December 31, 1984, and if the Spouse is not the
Beneficiary, the Participant's entire Account balance must be distributed to the
Participant's Beneficiary either (A) within five years after the Participant's
death, or (B) in substantially equal annual or more frequent installments over a
period not exceeding the life expectancy of the Beneficiary (as determined as of
the date of the Participant's death by using the return multiples contained in
section 1.72-9 of the Treasury Regulations) provided that such distributions
commence within one year after the Participant's death.
(ii) If the Participant dies before benefits commence and during
a Plan Year which begins after December 31, 1984, and if the Spouse is the
Beneficiary, the Participant's entire Account balance must be distributed to the
Participant's Spouse either (A) within five years after the Participant's death,
or (B) in substantially annual or more frequent installments over a period not
longer than the Spouse's life expectancy (as determined as of the time
distribution is commenced and recalculated annually, by using the return
multiples contained in section 1.72-9 of the Treasury Regulations) provided that
such distribution is commenced on or before the later of the date on which the
Participant would have attained age 70-1/2 or one year after the Participant's
death.
(iii) If distributions have commenced to the Participant before
the Participant's death, distributions to the Participant's Spouse, Beneficiary
or estate shall continue over a period at least as rapid as the period selected
by the Participant.
(e) If a Participant's Beneficiary dies after the Participant and
before he or she receives full payment of the portion of the Participant's
Account balance to which he or she is entitled, the Trustee shall, upon
direction of the Administrator, distribute the funds to which the deceased
Beneficiary is entitled to the beneficiary or beneficiaries validly named on the
most recent designation of beneficiary form filed by the Beneficiary with the
Trustee before the Beneficiary's death. To the extent that any portion of the
funds to which the deceased Beneficiary was entitled are not governed by an
effective designation of beneficiary, the funds shall be distributed to the
deceased Beneficiary's surviving spouse, or if that is not possible, to the
estate of the deceased Beneficiary. The Administrator's direction shall include
notification of the Beneficiary's death and the existence or non-existence of a
surviving spouse.
(i) If distributions had commenced before the Participant's
death, distribution to the beneficiary of a deceased Beneficiary shall continue
over a period at least as rapid as the period selected by the Participant.
(ii) If the deceased Beneficiary was the surviving Spouse of the
Participant and the deceased Beneficiary had not begun to receive distributions
from the Participant's Account at the time of his or her death, the
Participant's Account shall be distributed to the deceased Beneficiary's
beneficiary according to the provisions of this Section 8.02 applied as if the
Beneficiary were the Participant. In addition, the surviving spouse's
beneficiaries shall be treated as Beneficiaries during any future application
of this Section 8.02.
(iii) If neither subparagraph (i) nor (ii) above apply, the
Participant's Account shall be distributed to the deceased Beneficiary's
beneficiary either (A) within five years after the Participant's death, or (B)
in substantially equal annual or more frequent installments over the remainder
of the life expectancy of the Beneficiary as that life expectancy was determined
at the Participant's death (by using the return multiples contained in section
1.72-9 of the Treasury Regulations) provided that distributions commence (or
commenced) within one year of the Participant's death.
(f) If a beneficiary of a Beneficiary (or a beneficiary) dies before
he or she has received full payment of the portion of the Participant's Account
balance to which he or she is entitled, the Trustee shall, after notification by
the Administrator of the beneficiary's death, distribute the funds to which the
deceased beneficiary is entitled to the beneficiary or beneficiaries validly
<PAGE>
named on the most recent designation of beneficiary form filed by the deceased
beneficiary with the Trustee before the beneficiary's death. To the extent that
any portion of the funds to which the deceased beneficiary was entitled are not
governed by an effective designation of beneficiary, the funds shall be
distributed to the deceased beneficiary's surviving spouse, or if that is not
possible, to the estate of the deceased beneficiary.
(i) If distributions had commenced before the Participant's
Death, distribution to the beneficiary of a deceased Beneficiary shall continue
over a period at least as rapid as that selected by the Participant.
(ii) In all other cases, the Participant's Account shall be
distributed to the deceased beneficiary's beneficiary either (A) within five
years after the Participant's death, or (B) in substantially equal annual or
more frequent installments over the remainder of the life expectancy of the
Beneficiary as that life expectancy was determined at the Participant's death
(by using the return multiples contained in section 1.72-9 of the Treasury
Regulations) provided that distributions commence (or commenced) within one year
of the Participant's death.
8.03 Children as Beneficiaries. For the purposes of Section 8.02, any
distribution paid to a Participant's child shall be treated as paid to the
Participant's surviving Spouse if such amount becomes payable to the surviving
Spouse when the child reaches the age of maturity.
SECTION 9
OTHER DISTRIBUTIONS
9.01 Distribution in Plan Years Beginning Before January 1, 1985. During
any Plan Year which begins before January 1, 1985, the Account of any
Participant to which Section 8 does not apply, to the extent it is vested
pursuant to Section 7.01 hereof, will be distributed in accordance with the
terms of this Section 9.01.
(a) A Participant's Account will normally be distributed in monthly
installments which must commence at or within 60 days after the end of the Plan
Year in which occurs his or her Normal Retirement Date or in which his or her
Service ceases, whichever is later, to continue over a period of 120 months;
provided, however, that in the case of a Participant who is an Owner-Employee,
monthly installments to such a Participant must commence no later than the last
day of the Participant's taxable year in which such Participant attains age 70-
1/2. The monthly amount shall normally be the vested balance of the
Participant's Account divided by the remaining number of months in such 120
months, all rounded to the nearest cent. However, the amount of each monthly
installment may be recomputed and adjusted from time to time no more frequently
than monthly as the Trustee may reasonably determine.
(b) All Participants may request and the Administrator shall have the
discretionary power to approve, subject to the requirements stated in this Plan,
any of the following variations from the normal pattern of distribution:
(i) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's attainment of age 59-1/2,
Disability, or separation from Service, if this Plan is adopted as a profit
sharing plan.
(ii) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's Disability or separation
from Service, if this Plan is adopted as a money purchase pension plan.
(iii) Distributions made or commencing after the normal time of
distribution described in Section 9.01(a); provided, however, that any such
deferred distribution must commence no later than the last day of the
Participant's taxable year in which the Participant attains age 70-1/2.
(iv) Distribution of the Participant's entire Account at one
time.
(v) Installment payments of a fixed amount, such payments to be
made until exhaustion of the Participant's Account.
(vi) Distribution in kind.
(vii) Any reasonable combination of the foregoing or any
reasonable time or manner of distribution within the above-stated limitations.
9.02 Timing of Annuity Payments and Normal Distributions in Plan Years
Beginning After December 31, 1984. Payment of benefits under the Qualified
Joint and Survivor Annuity or distributions pursuant to the normal form of
distribution discussed in Section 9.03(b), shall commence after the Participant
attains his or her Normal Retirement Date and on or before the earlier of 60
days after the close of the Plan Year, or the first April 1 after the calendar
year, in which occurs the Participant's Normal Retirement Date or in which his
or her employment ceases, whichever is later; provided, however, that in the
case of a Participant who is a 5-percent owner of the Employer (as defined in
Code Section 416(i)(1)(B)(i)), payment of benefits or monthly installments to
such a Participant must commence on or before the first April 1 after the
calendar year in which such Participant attains age 70-1/2. In the case of a
Participant who becomes a 5-percent owner of the Employer (as defined in Code
Section 416(i)(1)(B)(i)) after attaining age 70-1/2 but before termination of
employment, and during a Plan Year which began after December 31, 1984, payment
of benefits or monthly installments to such Participant must begin on or before
the first April 1 after the calendar year in which Participant becomes a 5-
percent owner.
9.03 Form of Distribution in Plan Years Beginning after December 31, 1984.
During any Plan Year which begins after December 31, 1984, the Account of a
Participant to which Section 8 does not apply, shall be distributed in a form
according to this Section 9.03.
(a) If this Plan is adopted as a money purchase pension plan, unless
the Participant elects an optional form of distribution pursuant to a Qualified
Election within 90 days before the date on which distributions under this
Section 9 would commence, a Participant's Account shall be paid in the form of a
Qualified Joint and Survivor Annuity.
(b) If the Participant was eligible to receive a Qualified Joint and
Survivor Annuity and he or she elects an optional form of distribution pursuant
to a Qualified Election within 90 days before the date on which distributions
under this Section 9 would commence or if this Plan is adopted as a profit
sharing plan and Section 9.03(a) does not apply to the Participant, a
Participant's Account will normally be distributed in monthly installments over
a period equal to the shorter of 120 months or the joint life and last survivor
expectancy of the Participant and his or her spouse (as calculated by using the
return multiples specified in Section 1.72-9 of the Treasury Regulations at the
time of the first distribution). The monthly account shall normally be the
balance of the Participant's Account divided by the remaining number of months
in such period, all rounded to the nearest cent. However, the amount of each
monthly installment may be recomputed and adjusted from time to time no more
frequently than monthly as the Trustee may reasonably determine.
(c) If this Plan is adopted as a money purchase pension plan and the
Participant elects an optional form of distribution pursuant to Qualified
Election within 90 days before the date on which distributions under this
Section 9 will commence and such optional form of distribution is not the normal
form of distribution discussed in subsection (b) or if this Plan is adopted as a
profit sharing plan and the Participant makes a written election to receive an
optional form of distribution, the Administrator shall have the discretion to
approve or disapprove such form of distribution. Pursuant to this Section
9.03(c), the Administrator shall have the discretion to approve of the following
variation from the normal pattern of distribution, provided that the
distribution shall otherwise comply with the requirements of this Plan:
(i) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's attainment of age 59-1/2,
Disability, or separation from Service, if this Plan is adopted as a profit
sharing plan.
(ii) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's Disability or separation
from Service, if this Plan is adopted as a money purchase pension plan.
(iii) Distributions made or commencing after the normal time of
distribution described in Section 9.02; provided, however, that any such
deferred distribution must commence no later than the first April 1 after the
calendar year in which the Participant attains age 70-1/2.
(iv) Distribution of the Participant's entire vested Account
balance at one time, provided that the Participant requests such distribution in
writing.
(v) Installment payments of a fixed amount, such payments to be
made until exhaustion of the Participant's Account.
(vi) Distribution in kind.
(vii) Any reasonable combination of the foregoing or any
reasonable time or manner of distribution within the above-stated limitations.
Notwithstanding the above, if this Plan is adopted as a money purchase
pension plan and a married Participant's vested Account Balance (exclusive of
the Participant's Rollover Account and Deductible Voluntary Contribution
Account) exceeds $3,500, no amount may be distributed to a participant unless
the Participant's Spouse consents in writing to such distribution.
9.04 Required Minimum Distributions. In the case of any Participant to
whom Section 9.01 applies, to whom Section 9.03(a) does not apply, or to whom
Section 9.03(a) applies and who elects an option form of distribution, the
annual distribution from his or her Account must equal or exceed the applicable
required minimum distribution. The minimum distribution to be made for each
calendar year beginning with the calendar year during which distribution is
required to commence pursuant to Section 9.01 or 9.03(b) or (c) shall be the
amount equal to the quotient obtained by dividing the Participant's Account
balance at the beginning of the year by the greater of the life expectancy of
the Participant or the joint life and last survivor expectancy of the
Participant and Beneficiary. For purposes of this minimum distribution rule,
life expectancy and joint life and last survivor expectancy shall be calculated
by using the return multiples specified in section 1.72-9 of the Treasury
Regulations either once, at the time of the first distribution, or in the case
of an expectancy involving only a spousal Beneficiary, annually in a consistent
manner. If the Participant's Spouse is not the Beneficiary, the method of
distribution used must ensure that at least 50% of Present Value (as defined in
Section 21.02(h) hereof) of the Participant's Account balance at the time
distributions commence is paid within the life expectancy of the Participant.
9.05 Nonconsensual Distributions. Notwithstanding any provision of this
Section 9 to the contrary, if a former Participant's vested Account balance
(exclusive of his or her Rollover Account and Deductible Voluntary Contribution
Account) equals $3,500 or less, the Administrator may direct that the entire
vested Account balance be distributed to the former Participant regardless or
whether the former Participant (or his or her Spouse, if applicable) requests or
otherwise consents to such distribution.
9.06 Special One-Time Distribution Election. Notwithstanding any Plan
provision to the contrary and subject to the requirements of Section 9.03(a)
above, distribution on behalf of any Employee, including a 5-percent owner (as
defined in Code Section 416(i)(1)(B)(i)), may be made in accordance with the
following requirements (regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the
Plan under Code Section 401(a)(9) as it was in effect prior to its amendment by
the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being distributed
or, if the Participant has died, by a beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or
the beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of
December 31, 1983.
(e) The method of distribution designated by the Participant or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant are listed in
order of priority.
(f) If the distribution is one to which the provisions of Section
9.03(a) hereof would otherwise have applied and the Participant is married, the
Participant's spouse consents to the election in a writing filed with the
Administrator.
A distribution upon death will not be covered by this section 9.06 unless
the information in the designation contains the required information
<PAGE>
described above with respect to the distributions to be made upon the death of
the Participant.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, or the Beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirement in subsections (a) and (e) above.
If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) as amended. Any changes in the
designation will be considered to be a revocation of the designation. However,
the mere substitution or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life).
SECTION 10.
LOANS
10.01 Availability of Loans. If, in the Adoption Agreement, the Employer
has specified that loans to Participants are permitted, the Loan Trustee shall,
upon the direction of the Administrator, make one or more loans, including any
renewal thereof, to a Participant (other than a Participant who is an Owner-
Employee). Any such loan shall be subject to such terms and conditions as the
Administrator shall determine pursuant to a uniform policy adopted by the
Administrator for this purpose, which policy shall be at least as restrictive as
required by this Section 10.
10.02 Spousal Consent Required. To obtain a loan, a Participant must
obtain the consent of his or her Spouse, if any, within the 90-day period before
the time his or her Account balance is used as security for the loan.
Furthermore, a new consent is required if an increase in the amount of the
security is necessary and any of the remaining balance of the Account is used.
A spousal consent to a loan must be in writing, witnessed by a Plan
representative or notary public, and acknowledge that as a result of a default
repayment of the loan the Spouse may be entitled to a lesser death benefit than
he or she would otherwise receive under the Plan. A Spouse shall be deemed to
consent to any loan which is outstanding at the time or his or her marriage to
the Participant.
10.03 Equivalent Basis. No such loan may be made to a disqualified person
within the meaning of Code Section 4975(e), unless such loans are available to
all Participants on a reasonably equivalent basis and are not made available to
officers, shareholders or highly paid Participants in an amount which, when
stated as a percentage of any such Participant's Account, is greater than is
available to any other Participants.
10.04 Limitation on Amount. The amount of any such loan, when added to
the outstanding balance of all other loans from the Plan (and any other
qualified retirement plans of the Employer's) to the Participant, shall not
exceed the following:
Participant's Vested Maximum Amount
Account Balance of Loan
$0 - $10,000 100% of vested Account balance
$10,000 - $20,000 $10,000
$20,000 - $100,000 50% of vested Account balance
over $100,000 $50,000
The value of the Participant's Account balance shall be as determined by
the Administrator; provided, however, that such determination shall in no event
take into account the portion of the Participant's Account attributable to the
Participant's Deductible Voluntary Contribution Account.
10.05 Maximum Term. The term of the any such loan shall not exceed 5
years; provided, however, that such limitation shall not apply to any loan used
to acquire, construct, reconstruct, or substantially rehabilitate any dwelling
unit which within a reasonable time is to be sued (determined at the time the
loan is made) as a principal residence of the Participant or a member of the
Participant's family (within the meaning of Code Section 267(c)(4)).
10.06 Promissory Note. Any such loan shall be evidenced by a promissory
note executed by the Participant and payable to the Loan Trustee, on the
earliest of (i) a fixed maturity date meeting the requirements of Section 10.05
above, but in no event later than the Participant's Normal Retirement Date, (ii)
the Participant's death, or (iii) when distribution hereunder is to be made to
the Participant (other than a withdrawal which will not reduce the value of his
or her Account to the extent that the aggregate amount owing could not be made
as a new loan within the limitation set forth in Section 10.04 above). Such
promissory note shall be secured by an assignment of the Participant's Account
to the Loan Trustee. Such promissory note shall evidence such terms as are
required by this Section 10.
10.07 Interest. Any such loan shall be subject to a reasonable rate of
interest.
10.08 Repayment. If a note is not paid when the Participant's benefits
hereunder are to be distributed, then any unpaid portion of such loan and unpaid
interest thereon shall be deducted by the Loan Trustee from the Participant's
Account before benefits are paid from or purchased out of the Account. Such
deduction shall, to the extent thereof, cancel the indebtedness of the
Participant. If a note is not paid when it otherwise becomes payable under
Section 10.05 hereof, or if at any time the Administrator determines that the
aggregate amounts owing by a Participant upon such notes exceed the vested value
of the Participant's Account, the Participant shall be promptly notified in
writing that unless such loan or excess is repaid within 30 days, action will be
taken to collect the same plus any cost of collections. Notwithstanding any
implication of the preceding sentence to the contrary, no attachment of the
Participant's Account shall occur until a distributable event occurs under
Sections 8 or 9 (or if it is otherwise applicable, Section 22) hereof.
10.09 Accounting. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the account attributable to the
Participant's Deductible Voluntary Contribution Account) requesting the loan,
and shall be treated as an investment of such Account. All interest payments
made with respect to such loan shall be credited to the Participant's Account.
10.10 Precedence. This Section 10 overrides Section 16.01 below.
SECTION 11.
TRUST PROVISIONS
11.01 Manner of Investment. All contributions to the Account of a
Participant shall be held in trust by the Trustee designated in the Adoption
Agreement. Except to the extent that a Participant's Account is invested in a
loan pursuant to Section 10 hereof, the Account of a Participant may only be
invested and reinvested in shares of Designated Investment Companies, unless the
Distributor permits less than 100% of the Trust assets to be so invested. If
the Administrator or the Participant, as the case may be, has elected to have a
portion of an Account invested in other than shares of Designated Investment
Companies and the Distributor has authorized the investment of less than 100% of
Trust assets in such shares, the Trustee shall invest such amount in such
investments as it is empowered to invest in under Section 11.03 hereof. The
Designated Investment Companies available for investment may be limited by the
Employer. Investment in the shares of more than one Designated Investment
Company is not permitted unless the value of the Participant's Account and the
value of the investment in each additional Designated Investment Company exceed
amounts from time to time determined by the Distributor.
11.02 Investment Decision.
(a) The decision as to the investment of an Account shall be made by
the person designated in the Adoption Agreement, and the Trustee shall have no
responsibility for determining how an Account is to be invested or to see that
investment directions communicated to it comply with the terms of the Plan. If
the decision is made by the Participant, the Participant shall convey investment
instructions to the Administrator and the Administrator shall promptly transmit
those instructions to the Trustee. Further, if the decision is to be made by
the Participant, the right to make such a decision shall remain with the
Participant upon retirement and shall pass to the Distributee upon death.
(b) The person designated to make the decision as to the investment
of an Account may direct that the investment medium of an Account be changed
provided that no such change may be made from or to an investment other than a
Designated Investment Company except to the extent permitted under Section 11.10
above and by the terms of that other investment vehicle. If the Distributor
determines in its own judgment that there has been trading of shares of
Designated Investment Companies in the Accounts of the Participants, any
Designated Investment Company may refuse to sell its shares to such Accounts.
When an investment is being made or changed, the person designated to do so
shall specify the type of account to which the change refers.
(c) If any decision as to investments is to be made by the
Administrator, it shall be made on a uniform basis with respect to all
Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the Trustee or
to the transfer agent for the Designated Investment Company or Companies or for
any other investment permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the
decision as to the investment of an Account, the Administrator shall ascertain
that the Participant has received a copy of the current prospectus relating to
the shares of any Designated Investment Company in which such Account is to be
invested plus, where required by any state or federal law, the current
prospectus relating to any other investment in which the Account is to be
invested. With respect to contributions designated for investment by a
Participant, by remitting such a contribution to the Trustee, the Administrator
shall be deemed to warrant to the Trustee fro the benefit of the appropriate
Designated Investment Company or Companies and its or their principal
underwriter that the Participant has received all such prospectuses. By
remitting any other contribution to the Trustee, the Administrator shall be
deemed to warrant to the Trustee for the benefit of the appropriate Designated
Investment Company or Companies and its or their principal underwriter that the
Administrator has received a current prospectus of any Designated Investment
Company in which the contribution is to be invested, plus, where required by any
state or federal law, the current prospectus relating to any other investment in
which contributions are to be invested.
11.03 Investment Powers. To the extent that a portion of the Trust assets
are invested other than in shares of Designated Investment Companies pursuant to
Section 11.01 above, the Trustee is hereby granted full power and authority to
invest and reinvest the Trust assets in any property of any kind or nature
whatsoever (speculative or otherwise) or in any rights or interests therein, or
in any evidences or indicia thereof and whether real, personal or mixed or
whether tangible or intangible (including for illustration but not to be limited
to the following, or anything of a similar kind, character or class: common or
preferred stocks, evidences or ownership in so-called Massachusetts business
trusts, fees, beneficial interests, leaseholds, bonds, mortgages, leases, notes
or obligations, oil and gas payments, oil and gas contracts, other securities,
instruments or commodities, investments in property yielding little or no income
and shares of regulated investment companies) without regard to any rule of law
or statute of the state of the Trustee designation investments eligible for
trust funds, and without respect to any custom or practice either as to types of
investments or diversification of investments, and to hold cash uninvested at
any time and from time to time in such amounts and to such extent as the Trustee
in its own uncontrolled discretion and judgment deems advisable; provided,
however, that the Trustee is to act with the care, skill and diligence, under
the circumstances then prevailing, which would characterize the actions of a
prudent man who is acting as such a Trustee and who is familiar with the duties
of such a Trustee; further provided that the Trustee shall diversify the
investments of the Trust Fund so as to minimize the risk of large losses unless,
under the circumstances, such diversification would not be prudent; further
provided that the Trustee is not empowered to enter into any investment which
would be prohibited under the Act or otherwise by the provisions of this Plan.
Notwithstanding the above, the following restrictions on the investment of
a Participant's Account shall apply:
<PAGE>
(a) No part of a Participant's Deductible Voluntary Contribution
Account may be used to purchase life insurance.
(b) At most, less than one-half of the aggregate Employer
Contributions allocated to a Participant's Employer Contribution Account may be
used to pay premiums attributable to the purchase of ordinary life insurance
contracts (life insurance contracts with both nondecreasing death benefits and
nonincreasing premiums).
(c) No more than one-quarter of aggregate Employer Contributions
allocated to a Participant's Employer Contribution Account may be used to pay
premiums on term life insurance contracts, universal life insurance contracts,
and all other life insurance contracts which are not ordinary life insurance
contracts.
(d) One-half of the amount used to pay premiums on ordinary life
insurance contracts plus the amount used to pay premiums on all other life
insurance contracts may not exceed an amount equal to one-quarter of the
aggregate Employer Contributions allocated to a Participant's Employer
Contribution Account.
(e) No part of a Participant's Account shall be applied towards the
purchase of any insurance contract unless (i) the Trustee applies for and is the
owner of such contract, (ii) the contract provides that all contract proceeds
shall be paid to the Trustee, and (iii) the contract provides for distributions
to the Participant's Spouse, as necessary to ensure compliance with the
applicable requirements of Sections 8, 9, and 22.
If a Participant's Account is invested in one or more insurance contracts,
the Trustee is required to pay over all proceeds of the contract(s) to the
Participant's Beneficiary or Beneficiaries in accordance with the terms of this
Plan and under no circumstances shall the Trust retain any contract proceeds.
11.04 Appointment of Investment Manager. Subject to Sections 11.01 and
11.03 above, the Administrator may designate, and the Employer may contract
with, Scudder, Stevens & Clark, or its successor or any affiliate, to act as
investment manager (within the meaning of the Act), and may at any time revoke
such designation. If an investment manager is so designated, the Trustee shall
follow all investment directions given by the investment manager with respect to
the retention, investment and reinvestment of the Plan assets to the extent they
are under the control of such investment manager. If permitted by the Trustee,
the investment manager may issue orders for the purchase and sale of securities,
including orders through any affiliate of such investment manager. Such an
investment manager is specifically allowed to direct or make investments in
shares of any Designated Investment Company. The Trustee shall not be liable
for following any direction given by, or any actions of, an investment manager
so appointed.
11.05 Trustee: Number, Qualifications and Majority Action.
(a) The number of Trustees shall be one, two or three. Any natural
person and any corporation having the power under applicable law to act as a
trustee of a pension or profit sharing plan may be a Trustee. No person shall
be disqualified from being a Trustee by being employed by the Employer, by being
the Administrator, by being a trustee under any other qualified retirement plan
of the Employer or by being a Participant in this Plan or such other qualified
plan.
(b) A Trustee holding office as sole Trustee hereunder shall have all
the powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. There are two or three Trustees hereunder,
they may, by written instrument communicated to the Employer and the
Administrator, allocate among themselves the powers and duties herein given to
the Trustee hereunder. If such an allocation is made, to the extent permitted
by applicable law, no Trustee shall be liable either individually or as a
trustee for loss to the Plan from the acts or omissions of another Trustee with
respect to duties allocated to such other Trustee.
11.06 Change of Trustee
(a) Any Trustee may resign as Trustee upon notice in writing to the
Employer, and the Employer may remove any Trustee upon notice in writing to each
Trustee. The removal of a Trustee shall be effective immediately, except that a
corporation serving as a Trustee shall be entitled to 60 days' notice which it
may waive, and the resignation of a Trustee shall be effective immediately,
provided that, if the Trustee is the sole Trustee, neither a removal nor a
resignation of a Trustee shall be effective until a successor Trustee has been
appointed and has accepted the appointment. If within 60 days of the delivery
of the written resignation or removal of a sole Trustee another Trustee shall
not have been appointed and have accepted, the resigning or removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or may terminate the Plan pursuant to Section 18 of the Prototype Plan.
The Trustee shall not be liable for the acts and omissions of any successor
trustee.
(b) At any time when the number of Trustees is one or two the
Employer may but need not appoint one or two additional Trustees, provided that
the number of Trustees shall not be more than three. Such an appointment and
the acceptance thereof shall be in writing, and shall take effect upon the
delivery of written notice thereof to all the Trustees and the Administrator and
such acceptance by the appointed Trustee, provided that if a corporation is a
Trustee then in the absence of its consent, such an appointment of an additional
or successor Trustee shall not become effective until 60 days after its receipt
of notice.
(c) Although any Employer adopting the Plan may choose any Trustee
who is willing to accept the Trust, the Distributor or its successor may make or
may have made tentative standard arrangements with any bank or trust company
with the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be obtained
with a substantial volume of business, and that it may become advisable to
remove such bank or trust company as the Trustee and substitute another Trustee.
Therefore, anything in the prior to subsections of this Section 11.06
notwithstanding, each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice of at least 30 days to the
affect Employer and in the absence of written objection by the Employer received
by the Distributor before such date (i) remove any such Trustee and in that
case, or if such a Trustee has resigned as to a group of Employers, (ii) appoint
such a successor Trustee, provided such action is taken with respect to all
Employers similarly circumstanced of which the Distributor has knowledge, and
provided such notice is given in writing mailed postage prepaid to the Employer
at the latest address furnished to the Distributor directly or supplied to it by
such Trustee which is to be succeeded. If within 60 days after such Trustee's
resignation or removal, the Employer has not appointed a successor which has
accepted such appointment (unless the appointment of a successor Trustee is
waiting for action by the Distributor pursuant to the next preceding sentence
according to notice which has been given), the Trustee may petition an
appropriate court for the appointment of its successor. The Trustee shall not
be liable for the acts and omissions of such successor.
(d) Successor Trustees qualifying under this Section 11.06 shall have
all rights and powers and all the duties and obligations of original Trustees.
11.07 Valuation. Annually, on the Valuation Date, or more frequently in
the discretion of the Trustee, the assets of the Trust shall be revalued at fair
market value and the accounts of the Trust shall be proportionately adjusted to
reflect income, gains, losses or expenses, if the system of accounting does not
directly accomplish all such adjustments. Each account shall share in income
gains, loses, or expenses connected with an asset in which it is invested
according to the proportion which the account's investment in the asset bears to
the total amount of the Trust Fund invested in the asset. Any dividends or
credits earned on insurance contracts shall be allocated to the specific account
of the Participant from which the funds originated for investment in the
contract.
The Trust Fund shall be administered separately from, and shall not include
any assets being administered under, any other plan of an Employer. Interim
valuations, if any, shall be applied uniformly and in a non-discriminatory
manner for all Employees.
11.08 Registration. Any assets in the Trust Fund may be registered in the
name of the Trustee or any nominee designated by the Trustee.
11.09 Certifications and Instructions.
(a) Any pertinent vote or resolution of the Board of Directors of the
Employer (if it is a corporation) shall be certified to the Trustee over the
signature of the Secretary or an Assistant Secretary of the Employer and under
its corporate seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and termination of the
individual or individuals serving as Administrator under Section 12.01 of the
Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures. All
requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
11.10 Accounts and Approval
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all books and records relating thereto shall be open at all reasonable times to
inspection and audit by any person or persons designated by the Administrator or
by the Employer.
(b) Within 90 days following the close of each Plan Year the Trustee
may, and upon the request of the Employer or the Administrator shall, file with
the Administrator and the Employer a written report setting forth all securities
or other investments (including insurance contracts) purchased and sold, all
receipts, disbursements and other transactions effected by it during the period
since the date covered by the next proper report, and showing the securities and
other property held at the end of such period, and such other information about
the Trust Fund as the Administrator shall request. Unless the Employer or
Administrator, within 90 days from the date of mailing of such report, objects
to the contents of such report, the report shall be deemed approved. Any such
objections shall set forth the specific grounds on which they are based.
11.11 Taxes. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator shall
in writing advise the Trustee that in the opinion of counsel fro the Employer
such taxes are not lawfully assessed. In the event that the Administrator shall
so advise the Trustee, the Trustee, if so requested by the Administrator and
suitable provision for their indemnity having made, shall contest the validity
of such taxes in any manner deemed appropriate by the Administrator or counsel
for the Employer. The word "taxes" in this Section 11 shall be deemed to
include any interest or penalties that may be levied or imposed in respect to
any taxes assessed. Any taxes, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the Trust Fund that may be
levied or assessed in respect to such assets shall, if allocable to the Accounts
of specific Participants, be charged to such Accounts, and if not so allocable,
they shall be equitably apportioned among all such Participant's Accounts.
11.12 Employment of Counsel. The Trustee may employ legal counsel (who
may be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
11.13 Compensation of Trustee. An individual Trustee who is an Employee
of the Employer shall not be compensated for services as Trustee. A
corporation, or an individual who is not an Employee of the Employer, serving as
a Trustee shall be entitled to reasonable compensation for services; such
compensation shall be paid in accordance with Section 13.
11.14 Limitation of Trustee's Liability.
(a) The Trustee shall have no duty to take any action other than as
herein specified, unless the Administrator shall furnish it with instructions in
proper form and such instructions shall have been specifically agreed to by it,
or to defend or engage in any suit unless it shall have first agreed in writing
to do so and shall have been fully indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected in
acting in good faith upon any written representation or order from the
Administrator or any other notice, request, consent, certifi-
<PAGE>
cate or other instrument or paper believed by the Trustee to be genuine and
properly executed, or any instrument or paper if the Trustee believes the
signature thereon to be genuine.
(c) The Trustee shall not be liable for interest on any reasonable
cash balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its
discretion, receive a contribution directly from a participant.
11.15 Successor Trustee. Any corporation into which a corporation acting
as a Trustee hereunder may be merged or with which it may be consolidated, or
any corporation resulting from any merger, reorganization or consolidation to
which such Trustee may be a party, shall be the successor of the Trustee
hereunder, without the necessity of any appointment or other action, provided
the Trustee does not resign and is not removed.
11.16 Enforcement of Provisions. To the extent permitted by applicable
law, the Employer and the Administrator shall have the exclusive right to
enforce any and all provisions of this Agreement on behalf of all Employees and
former Employees of the Employer or their Beneficiaries or other persons having
or claiming to have an interest in the Trust Fund or under the Plan. In any
action or proceeding affecting the Trust Fund or any property constituting a
part or all thereof, or the administration thereof or for instructions to the
Trustee, the Employer, the Administrator and the Trustee shall be the only
necessary parties and shall be solely entitled to any notice of process in
connection therewith; any judgment that may be entered in such action or
proceeding shall be binding and conclusive on all persons having or claiming to
have any interest in the Trust Fund or under the Plan.
11.17 Voting. The Trustee shall deliver, or cause to be executed and
delivered, to the Administrator all notices, prospectuses, financial statements,
proxies and proxy soliciting materials received by the Trustee relating to
securities held by the Trust. The Administrator shall deliver these to the
appropriate Participant or Beneficiary of a deceased Participant, but only if
the Employer has specified in the Adoption Agreement that investment decisions
shall be made by Participants pursuant to Section 11.02 hereof. The Trustee
shall vote securities held by the Trust in accordance with the written
instructions of the person or persons entitled to make investment decisions
pursuant to Section 11.02. If, however, the Trustee is not State Street Bank
and Trust Company and has not received instructions with respect to how to vote
given securities before five full business days prior to the meeting at which
such securities are to be voted, the Trustee may vote such securities. If the
Trustee is State Street Bank and Trust Company and it has not received
instructions with respect to how to vote given securities before two full
business days prior to the meeting at which such securities are to be voted, it
shall not vote such securities except to the extent they are shares of a
Designated Investment Company, in which case it shall vote such securities for
or against each proposal, or abstain from voting on each proposal, in the same
proportion as all other shares of such Designated Investment Company vote or
abstain from voting at the shareholder meeting either in person or by proxy. In
applying the foregoing, the Trustee is not required to vote particular shares of
a Designated Investment Company in the manner specified in the preceding
sentence, so long as all of the shares of the Designated Investment Company as
to which the Trustee has not received instructions are voted in the aggregate in
accordance with the preceding sentence. Notwithstanding the foregoing, the
Trustee shall not have the authority to vote shares of a Designated Investment
Company without instructions from the person or persons entitled to make
investment decisions unless either (a) the Securities and Exchange Commission
shall have issued an exemptive order pursuant to Section 6(c) of the Investment
Company Act of 1940, as amended, the application for which order describes the
Trustee's authorization to so vote without instructions, or (b) the Trustee has
received an opinion of its counsel that the exercise of the authority to vote
shares of a Designated Investment Company without instructions will not render
the Trustee an "affiliated person" as defined in the Investment Company Act of
1940, as amended.
11.18 Applicability to Loan Trustee. Where appropriate, the foregoing
provisions of this Section 11 shall apply to the Loan Trustee on the same basis
as if the Loan Trustee were the Trustee.
SECTION 12.
ADMINISTRATION
12.01 Appointment of Administrator. From time to time, the Employer may,
by identifying such person(s) in writing to both the Trustee and the
Participants, appoint one or more persons as Administrator (hereinafter referred
to in the singular). Such Administrator shall have all power and authority
necessary to carry out the terms of the Plan. A person appointed as
Administrator may also serve in any other fiduciary capacity, including that of
Trustee, with respect to the Plan. The Administrator may resign upon 15 days'
advance written notice to the Employer, and the Employer may at any time revoke
the appointment of the Administrator with or without cause. The Employer shall
exercise the power and fulfill the duties of the Administrator if at any time,
an Administrator has not been properly appointed in accordance with this Section
12.01 or the position is otherwise vacant.
12.02 Named Fiduciaries. The "Named Fiduciaries" within the meaning of
the Act shall be the Administrator and the Trustee.
12.03 Allocation of Responsibilities. Responsibilities under the Plan
shall be allocated among the Trustee, the Administrator, and the Employer as
follows:
(a) Trustee: The Trustee shall have exclusive responsibility to
hold, manage and invest, pursuant to instructions communicated to it in
accordance with Section 11.02 above, the funds received by it subject to the
powers granted to it under Section 11 hereof. To the extent that loans are made
to Participants in accordance with Section 10 hereof, these responsibilities
shall fall to the Loan Trustee.
(b) The Administrator: The Administrator shall have the
responsibility and authority to control the operation and administration of the
Plan in accordance with its terms including, without limiting the generality of
the foregoing, (i) any investment decisions assigned to it under the Adoption
Agreement or transmission to the Trustee of any participant investment decision
under Section 11.02; (ii) interpretation of the Plan, conclusive determination
of all questions of eligibility, status, benefits and rights under the Plan and
certification to the Trustee of all benefits payments under the Plan; (iii)
hiring of persons to provide necessary services to the Plan not provided by
Employees; (iv) preparation and filing of all statements, returns and reports
required to be filed by the Plan with any agency of Government; (v) compliance
with all disclosure requirements of all state or federal law; (vi) maintenance
and retention of all Plan records as required by law, except those required to
be maintained by the Trustee; and (vii) all functions otherwise assigned to it
under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of
the Plan, as adopted or amended, the designation of the Administrator and
Trustee (and, if appropriate, the Loan Trustee) as provided in the Plan, the
delivery to the Administrator and the Trustee of Employee information necessary
for operation of the Plan, the timely making of the Employer Contributions
pursuant to Section 4.01 hereof, and the exercise of all functions provided in
or necessary to the Plan except those assigned in the Plan to other persons.
(d) This Section 12.03 is intended to allocate individual
responsibility for the prudent execution of the functions assigned to each of
the Trustees, the Loan Trustee, the Administrator and the Employer and none of
such responsibilities or any other responsibility shall be shared among them
unless specifically provided in the Plan. Whenever one such person is required
by the Plan to follow the directions of another, the two shall not be deemed to
share responsibility, but the person who gives the direction shall be
responsible for giving it and the responsibility of the person receiving the
direction shall be to follow it insofar as it is on its face proper under
applicable law.
12.04 More Than One Administrator. If more than one individual is
appointed as Administrator under Section 12.01, such individuals shall either
exercise the duties of the Administrator in concert, acting by a majority vote
or allocate such duties among themselves by written agreement delivered to the
Employer and the Trustee. In such a case, the Trustee may rely upon the
instruction of any one of the individuals appointed as Administrator regardless
of the allocation of duties among them.
12.05 No Compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
12.06 Record of Acts. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the Employer
at any time. The Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to administer the
Plan.
12.07 Bond. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
12.08 Agent for Service of Legal Process. The Administrator shall be
agent for service of legal process on the Plan.
12.09 Rules. The Administrator may adopt or amend and shall publish to
the Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
12.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
12.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the original
claim was filed. This notice of denial shall set forth in a manner calculated
to be understood by the claimant (i) the reason or reasons for denial, (ii)
specific reference to pertinent plan provisions on which the denial is based,
(iii) a description of any additional information needed to perfect the claim
and an explanation of why such information is necessary, and (iv) an explanation
of the Plan's claims procedure.
(c) The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review by the
Administrator. The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall have the rights
(i) to have representation, (ii) to review pertinent documents, and (iii) to
submit comments in writing.
(d) The Administrator shall issue a decision on such review within 60
days after receipt of an application fro review, except that such period may be
extended for a period of time not to exceed an additional 60 days if the
Administrator determines that special circumstances (such as the need to hold a
hearing) requires such extension. The decision on review shall be in writing
and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific references to the
pertinent Plan provisions on which the decision is based.
SECTION 13.
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust shall be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and the Trustee is
authorized to charge the same to the Accounts of the
<PAGE>
Participants, and unless allocable to the Accounts of specific Participants,
they shall be charged against the respective accounts of all or a reasonable
group of Participants in such reasonable manner as the Trustee shall determine.
SECTION 14.
BENEFIT RECIPIENT INCOMPETENT OR
DIFFICULT TO ASCERTAIN OR LOCATE
14.01 Incompetency. If any portion of the Trust Fund becomes
distributable to a minor or to a Participant or Beneficiary who, as determined
by the sole discretion of the Administrator, is physically or mentally incapable
of handling his or her financial affairs, the Administrator may direct the
Trustee to make such distribution either to the legal representative or
custodian of, or any of the relatives and friends of, the incompetent or to
apply such distribution directly for the incompetent's support and maintenance.
Payments which are made in good faith shall completely discharge the Employer,
Administrator and Trustee from liability therefor.
14.02 Difficulty to Ascertain or Locate. If it is impossible or difficult
to ascertain the person who is entitled to receive any benefit under the Plan,
the Administrator in its discretion may direct that such benefit be (a) paid to
another person in order to carry out the Plan's purposes; or (b) retained in the
Trust; or (c) paid to a court pending judicial determination of the right
thereto.
SECTION 15.
DESIGNATION OF BENEFICIARY
Each participant and beneficiary may submit to the Trustee a properly
executed Designation of Beneficiary form. In order to be effective, such
designation (a) must have been properly executed and submitted to the Trustee
before the death of the Participant or beneficiary, as the case may be, and (b)
for Participants who die after August 22, 1984 leaving a surviving Spouse, must
be accompanied, or preceded, by a consent of the Participant's Spouse (unless
said Spouse is designated as the sole, primary Beneficiary). Such consent of
the Spouse must be in writing, acknowledge that the effect of such consent is
that the Spouse may receive no benefits under the Plan, be witnessed by a Plan
representative or a notary public, and be a limited consent to the payment of
death benefits to a specific person or persons. The last effective Designation
accepted by the Trustee shall be controlling, and whether or not fully
dispositive of the Participant's Account, thereupon shall revoke all
Designations (and related spousal consents) previously submitted by the
Participant or beneficiary, as the case may be. Each such executed Designation
(and related spousal consent) is hereby specifically incorporated herein by
reference and shall be construed and enforced in accordance with the laws of the
state in which the Trustee has its principal place of business.
SECTION 16.
SPENDTHRIFT PROVISION AND
DISTRIBUTIONS PURSUANT TO QUALIFIED
DOMESTIC RELATIONS ORDERS
16.01 General Spendthrift Rule. No interest of any Participant or
Beneficiary shall be assigned, anticipated or alienated in any manner nor shall
it be subject to attachment, to bankruptcy proceedings or to any other legal
process or to the interference or control of creditors or others, except (a) to
the extent that Participants may secure loans from the Trust with their Accounts
pursuant to Section 10 hereof and (b) pursuant to Section 16.02 hereof.
16.02 Account Division and Distribution Pursuant to Qualified Domestic
Relations Orders. The interest of a Participant may be assigned pursuant to a
"Qualified Domestic Relations Order" (as defined below). The Trustee shall make
distributions of such Participant's interest as are required by the order and
this Section 16.02.
(a) A "Qualified Domestic Relations Order" is any judgment, decree or
order, including the approval of a property settlement agreement (collectively
hereinafter referred to as an "order"), provided that:
(i) The order related to the provision of child support, alimony
or marital property rights and is made pursuant to state domestic relations or
community property laws;
(ii) The order creates or recognizes the existence of an
alternate payee's right to or assigns to an alternative payee rights to, receive
all or a portion of the benefits payable with respect to the Participant under
this Plan;
(iii) The order specifies the name and last known mailing
address of the Participant and each alternative payee covered by the order;
(iv) The order precisely specifies the amount or percentage of
the Participant's benefits to be paid to each alternate payee or the manner in
which the amount of percentage is to be determined;
(v) The order specifies the number of payments or the period to
which the order applies;
(vi) The order specifically names this Plan as a plan to which
the order applies;
(vii) The order does not require the Trustee to provide any form
of distribution other than those contained in Sections 8 and 9 hereof (or
Section 22 hereof, if that Section applies in the Participant's case) other than
in the form of a Qualified Joint and Survivor Annuity with respect to the
alternative payee and his or her subsequent spouse;
(viii) The order does not require the Trustee to provide
benefits at any time in excess of the Account balance;
(ix) If the order requires that distribution to the alternative
payee commence before distribution to the Participant commences, the order:
(A) specifies that, unless the Administrator otherwise
consents, distribution to the alternative payee will not commence prior to ten
years before the Participant's Normal Retirement Date; and
(B) specifies that the amount distributed is to be
calculated as if the Participant had retired on the date on which distributions
are required to commence; and
(x) The order does not require the payment of benefits to an
alternative payee which are required to be paid to another alternative payee
under a previously entered Qualified Domestic Relations Order.
(b) At the request of an alternative payee and pursuant to a
Qualified Domestic Relations Order, the Administrator may, in its discretion,
direct the Trustee to make a lump-sum distribution from a Participant's Account
to an alternative payee at any time prior to time when distribution of such
Account would otherwise occur pursuant to Section 8, 9 or 22 hereof.
(c) The Administrator may, in its discretion, provide a standard form
Qualified Domestic Relations Order to a Participant or any other person, on
request. If this form is properly completed, used without substantial
modification, and incorporated into an order which on its face appears to be
valid, the Administrator shall treat it as a Qualified Domestic Relations Order
and shall distribute named Participant's Account according to its terms. Any
manner of distribution authorized by the Administrator in such a standard form,
other than a manner of distribution specified in Section 8 and 9 hereof, shall
be authorized only as to the alternate payees by whom the standard form has been
used.
(d) The Administrator shall not treat any order entered after January
1, 1985 as a Qualified Domestic Relations Order unless it meets all of the
requirements of subsection (a). For the purposes of this subsection (d), the
Administrator shall treat a domestic relations order entered before January 1985
as a Qualified Domestic Relations Order regardless of whether it meets the
requirements of subsection (a). The Administrator and Trustee shall follow the
terms of a Qualified Domestic Relations Order regardless of whether the Plan has
been joined as a party to the litigation out of which the order arises.
Upon receipt of a domestic relations order entered after January 1, 1985,
the Administrator shall notify the Participant and alternate payee of (i) its
receipt of the order and (ii) its procedures to determine the qualified status
of the order in accordance with subsection (a). Within a reasonable period
after receipt of such order, the Administrator shall determine whether such
order is a Qualified Domestic Relations Order and notify the Participant and
each alternative payee of such determination. The alternate payee may designate
a representative to receive copies of future notices with respect to the
qualified status of the order.
(e) To the extent an order entered after January 1, 1985 calls for
the benefits to be paid to an alternate payee before the qualified nature of the
order is determined, a separate account shall be established to hold the benefit
payments affected by the order. If within 18 months, the Administrator
determines that the order (or a modification thereof) is a Qualified Domestic
Relations Order, the Administrator shall deal with the funds in the separate
account (increased by any earning and decreased by any losses thereon) in
accordance with the instructions of the Qualified Domestic Relations Order. If
within 18 months, the Administrator either (i) determines that the order is not
a Qualified Domestic Relations Order or (ii) is unable to determine whether the
order is a Qualified Domestic Relations Order, the Administrator shall return
the funds in the separate account (increased by any earnings and decreased by
any losses thereon) to the account(s) from which the funds were originally
removed. Any determination by the Administrator that an order is a Qualified
Domestic Relations Order after the expiration of the above discussed 18-month
period shall be applied on a prospective-only basis.
(f) The "alternate payee" referred to in this Section 16.02 shall be
any spouse, former spouse, child or other dependent of the Participant who is
recognized by a domestic relations order as being entitled to receive benefits
payable under the Plan with respect to the Participant. Such alternate payee
shall be considered a "beneficiary" for purposes of the reporting and disclosure
requirements of the Act.
SECTION 17.
NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401(a) as that Section exists at the time the Plan is established. If
the Plan as adopted by the Employer fails to attain such qualification, the Plan
will no longer participate in this Prototype Plan and will be considered an
individually designed plan. If the Plan as adopted by the Employer fails to
attain or retain such qualification, the Employer shall promptly either amend
the Plan under Code Section 401(b) so that it does qualify, or direct the
Trustee to terminate the Trust, and distribute all the assets of the Trust
equitably among the contributors thereto in proportion to their contributions,
and the Plan and the Trust shall be considered to be rescinded and of no force
and effect.
SECTION 18.
AMENDMENT AND TERMINATION
18.01 Amendment or Termination by the Employer. The Employer may at any
time, and from time to time amend this Prototype Plan and the Adoption Agreement
(including a change in any election it has made in the Adoption Agreement), or
suspend or terminate this Plan by giving written notice to the Trustee, but the
Trust may not thereby be diverted from the exclusive benefit of the
Participants, their Beneficiaries, survivors or estates, or the administrative
expenses of the Plan, nor revert to the Employer, nor may an allocation or
contribution theretofore made be changed thereby, nor may any amendment directly
or indirectly deprive a Participant of such Participant's nonforfeitable rights
to benefits accrued to the date of the amendment.
No amendment to the Plan shall be effective to the extent that it would
have the effect of decreasing a Participant's Account balance or eliminating an
optional form of distribution. Notwithstanding the preceding sentence, a
Participant's Account balance may be reduced to the extent permitted under Code
Section 412(c)(8). Furthermore, no amendment to the Plan shall have the effect
of decreasing a Participant's vested interest determined without regard to such
amendment as of the later of the date such amendment is adopted or the date on
which it becomes effective.
The Employer may amend the Plan by adding overriding Plan language to the
Adoption Agreement where such language is necessary to satisfy Code Sections 415
or 416 because of the required aggregation of multiple plans under these Code
Sections. The Employer may also amend the Plan by adding language to allow the
Plan to operate under a waiver of the minimum funding requirement.
Any amendment by the Employer which is other than (a) a change in the
Employer's prior designation of an option in the Adoption Agreement (b) an
amendment referred in the Adoption Agreement which will allow the Plan to
satisfy the requirements of Code Section 415 or to avoid duplication of minimum
<PAGE>
benefits or accruals under Code Section 416 because of the required aggregation
of multiple plans, or (c) an amendment which allows the Plan to operate under a
waiver of the minimum funding requirement, will constitute a substitution by the
Employer of an individually designed plan for this Prototype Plan; thereafter,
the Plan shall no longer participate in the Prototype Plan and the general
amendment procedure of the Internal Revenue Service governing individually
designed plans will be applicable.
If an amendment changing the vesting schedule is executed (including
execution of this Adoption Agreement as an amendment to an existing plan),
Participants with five or more Vesting Years before the expiration of the
election period described in the next sentence shall have the right to elect the
vesting schedule in effect on the day before the election period. The election
period shall commence on the date the amendment is adopted and end on the latest
of (a) 60 days after the amendment is adopted, (b) 60 days after the Effective
Date, or (c) 60 days after the Participant is issued written notice of the
amendment by the Administrator. Failure to so elect shall be treated as a
rejection and such election or rejection shall be final.
Nothing contained herein shall constitute an agreement or representation by
any Sponsor or the Distributor that it will continue to maintain its sponsorship
of the Plan indefinitely.
18.02 Delegation. The Employer hereby delegates to the Sponsor the
authority to amend so much of the Adoption Agreement and this Prototype Plan as
in prototype form and, to the extent to which the Employer could effect such
amendment, the Employer shall be deemed to have consented to any amendment so
made. When an election within the prototype form has been made by the Employer,
it shall be deemed to continue after amendment of the prototype form unless and
until the Employer expressly further amends the election, notwithstanding that
the provision for the election in the amended prototype form is in a different
form or place; provided, however, that if the amended from inadvertently fails
to provide means to duplicate exactly the earlier election, such earlier
election shall continue until such further amendment. The immediately preceding
sentence is subject to the qualification that each Employer hereby delegates to
the Sponsor, in the event of such an amendment of the prototype form, authority
to determine conclusively that such a continuation of an earlier election by the
Employer is not advisable and to make the election for the Employer in the
amended prototype form which in the judgment of the Sponsor most nearly
corresponds with the election made by the Employer before the amendment of the
prototype form, provided the following procedure is followed: the election for
the Employer may be made with respect to any specified Employers as to whom it
may be made applicable singly, or such election may be made with respect to all
Employers as to whom it may be made applicable as a group; and the election
shall be made as of an effective date which has been specified on a notice
mailed or delivered, at the last address(es) of the Employer(s) on the records
of the Distributor, to the Employer(s) at least 20 days before the end of the
remedial amendment period. Such notice may be mailed to Employers to whom it
cannot be applicable by reason of a previous election made by the Employer or
otherwise, but it shall be effective only as to those Employers who have
received the notice and have not themselves made a new election with respect to
that item since the amendment of the prototype form and previous to the
effective date of such election by the Sponsor. The foregoing delegations of
authority to make elections, or to make amendments, shall not impose any duty on
the Sponsor to make a given election or amendment and shall not affect the
interpretation of the Plan if any so delegated authority is not used.
18.03 Distribution of Accounts Upon Termination. Upon termination or
partial termination of the Plan or, if this Plan is adopted as a profit sharing
plan, complete discontinuance of Employer Contributions under it, the
Administrator shall determine whether to pay the interests of Participants,
former Participants and Beneficiaries immediately, to retain such interest in
the Trust and pay them in the future according to Section 8, 9 and/or 22 as
applicable, or to use what other methods the Administrator deems advisable in
order to furnish whatever benefits the Trust will provide; provided any such
distributions pursuant to this Section 18.03 shall comply with the requirements
of Section 8, 9, and/or 22 hereof.
SECTION 19.
TRANSFERS
Nothing contained herein shall prevent the merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to, another plan
meeting the requirements of Code Section 401(a) or the transfer to the Plan of
assets or liabilities of another such plan so qualified under the Code. Any
such merger, consolidation or transfer shall be accompanied by the transfer of
such existing records and information as may be necessary to properly allocate
such assets among Participants, including any tax or other information necessary
for the Participants or persons administering the plan which is receiving the
assets. The terms of such merger, consolidation or transfer must be such that
if this Plan is then terminated, the requirements of Section 18.01 hereof would
be satisfied and each Participant would receive a benefit immediately after the
merger, consolidation or transfer equal to or greater than the benefit he or she
would have received if the Plan had terminated immediately before the merger,
consolidation or transfer.
SECTION 20.
OWNER-EMPLOYEE PROVISIONS
20.01 Purpose of Section. This Section is intended to insure that the
Plan complies with Code Section 401(d). Any ambiguity herein will be construed
to that end, and this Section 20 will override any other provision of the Plan
with which it may be inconsistent.
20.02 Control. For purposes of this Section 20, "Control" means the
ownership directly or indirectly of more than 50% of either the capital interest
or the profits interest in a partnership or an unincorporated trade or business.
For the purposes of applying the preceding sentence, an Owner-Employee, or 2 or
more Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such Owner-
Employee, or such 2 or more Owner-Employees, are considered to Control.
20.03 Limitations. No benefits shall be provided to an Owner-Employee
under this Plan unless:
(a) if an Owner-Employee or group of Owner-Employees Controls the
trade or business covered by this Plan and also Control as an Owner-Employee or
Owner-Employees one or more other trades or businesses, this Plan and the plans
established for such other trades or businesses, when taken together, form a
single plan which satisfies the requirements of Sections 401(a) and (d) of the
Code with respect to the Employees of all the controlled trades or businesses;
and
(b) if an Owner-Employee or group of Owner-Employees controls another
trade or business but does not control the trade or business covered by this
Plan, the employees of such other trades or business are included in a Plan
which satisfies the requirements of Sections 401(a) and (d) of the Code and
which provides contributions and benefits for such employees which are not less
favorable than those provided for Owner-Employees under this Plan; and
(c) if an Owner-Employee is covered under the qualified retirement
plans of two or more trades or businesses which he or she does not Control but
the Owner-Employee Controls a trade or business, contributions or benefits for
the employers under the plan of the trade or business which the Owner-Employee
Controls are not less favorable than those provided for the Owner-Employee in
the most favorable qualified retirement plan of the trade(s) or business(es)
which the Owner-Employee does not Control.
SECTION 21.
TOP-HEAVY PROVISIONS
21.01 Purpose of Section. This Section is intended to insure that the
Plan complies with Code Section 416. If the Plan is or becomes Top-Heavy in any
Plan Year beginning after December 31, 1983, the provisions of this Section will
supersede any conflicting provision in the Plan.
21.02 Definitions. The terms used in this Section shall have the
following meanings:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was (i) an officer of the Employer having an annual compensation greater than
1.5 multiplied by the amount in effect under Code Section 415(c)(1)(A) for the
Plan Year (subject to the limitation that no more than the lesser of (A) 50
Employees or (B) the greater of 3 Employees or 10% of the Employees shall be
deemed to be officers), (ii) an owner (or considered an owner under Code Section
318) or 1 of the 10 largest interest in the Employer if both such individual was
an owner of more than 5% interest in the Employer (aggregated with the Employer
for this purpose are all members of (i) a controlled group of corporations (as
defined in Code Section 414(c) as modified by Code Section 415(h)), or (iii)
affiliated service groups (as defined in Code Section 414(m)) of which the
Employer is a part) and such individual's compensation exceeds the dollar
limitation under Code Section 415(c)(1)(A), (iii) a five-percent owner of the
Employer, or (iv) a one-percent owner of the Employer who has an annual
compensation of more than $150,000. The determination period is the Plan Year
containing the Determination Date and the 4 preceding Plan Years. The
determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder.
(b) Top-Heavy Plan. For any Plan Year beginning after December 31,
1983, this Plan is Top-Heavy if any of the following conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and this
Plan is not part of any Required Aggregation Group or Permissive Aggregation
Group of plans.
(ii) If this Plan is part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the Required Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(c) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer has not maintained any defined benefit plan
which during the five-year period ending on the Determination Date(s) has or has
had accrued benefits. Top-Heavy Ratio for this Plan alone or for the Required
Aggregation Group or Permissive Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of the account balances under all of
the plans as of the Determination Date(s) (including any part of any account
balance distributed in the five-year period ending on the Determination Date(s))
of all Key Employees who have received compensation from the Employer (other
than benefits under a qualified retirement plan) at any time during the five-
year period ending on the Determination Date(s), and the denominator of which is
the sum of all account balances as of the Determination Date(s) (including any
part of any account balance distributed in the five-year period ending on the
Determination Date(s)), of all Participants who have received compensation from
the Employer (other than benefits under a qualified retirement plan) at any time
during the five-year period ending on the Determination Date(s). Both the
numerator and denominator of the fraction shall be computed in accordance with
Code Section 416 and the Treasury Regulations promulgated thereunder. In
addition, both the numerator and denominator of the Top-Heavy Ratio shall be
adjusted to reflect any contribution which is not actually made as of the
Determination Date(s), but which is required to be taken into account on that
date under Code Section 416 and the Treasury Regulations promulgated thereunder.
(ii) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer maintains or has maintained one or more defined
benefit plans which during the five-year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy Ratio for any Required
Aggregation Group or Permissive Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of (A) account balances under the
defined contribution plans as of the Determination Date(s) (including any part
of any account balance distributed in the five-year period ending on
<PAGE>
the Determination Date(s)) of all Key Employees who have received compensation
from the Employer (other than benefits under a qualified retirement plan) at any
time during the five-year period ending on the Determination Date(s) and (B) the
present value of accrued benefits under the defined benefit plans for all Key
Employees, who have received compensation from the Employer (other than benefits
under a qualified retirement plan) at any time during the five-year period
ending on the Determination Date(s) and the denominator of which is the sum of
(A) the account balances under the defined contribution plans as of the
Determination Date(s) (including any part of any account balance distributed in
the five-year period ending on the Determination Date(s)) of all participants
who have received compensation from the Employer (other than benefits under this
Plan) at any time during the five-year period ending on the Determination
Date(s) and (B) the present value of accrued benefits under the defined benefit
plans for all participants who have received compensation from the Employer
(other than benefits under this Plan) at any time during the five-year period
ending on the Determination Date(s). Both the numerator and denominator of the
fraction shall be computed in accordance with Code Section 416 and the Treasury
Regulations promulgated thereunder. In addition, both the numerator and
denominator of the Top-Heavy Ratio shall include aggregate distribution(s) of an
account balance or an accrued benefit made during the five-year period ending on
the Determination Date(s) and any contribution which is not actually made as of
the Determination Date(s), but which is required to be taken into account on
that date under Code Section 416 and the Treasury Regulations promulgated
thereunder.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of the
most recent Valuation Date that falls within, or ends with, the 12-month period
ending on the Determination Date, except as provided in Code Section 416 and the
Treasury Regulations promulgated thereunder for the first and second plan years
of a defined benefit plan. The account balances and accrued benefits of a
Participant (A) who is not a Key Employee but who was a Key Employee in a prior
Plan Year or (B) who has not been credited with at least one Hour of Service at
any time during the five-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account will be made in
accordance with Code Section 416 and the Treasury Regulations promulgated
thereunder. Deductible Voluntary Contributions and any deductible employee
contributions under any other qualified plan maintained by the Employer will not
be taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year.
(d) Permissive Aggregation Group. The Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group. (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Employer which enables a
plan described in (i) to meet the requirements of Code Sections 401(a)(4) or
410.
(f) Determination Date. For any Plan Year subsequent to the first
Plan Year, the Determination Date shall be the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the Determination Date shall be the
last day of that year.
(g) Valuation Date. See Section 2.49.
(h) Present Value. Present value shall be based only on the interest
rate employed as of the date in question by the Pension Benefit Guaranty
Corporation to value immediate annuities and the mortality rate specified in
Table LN at Treas. Reg. 20.2031-10, unless otherwise specified in the most
recently adopted or amended defined benefit plan maintained by the Employer.
21.03 Minimum Allocation.
(a) In any Plan Year in which this Plan is Top-Heavy, except as
otherwise provided in (d), (e) and (f) below, the Employer Contributions and
forfeitures allocated on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of 3% of such Participant's Compensation or,
in the case where the Employer has no defined benefit plan which designates this
Plan to satisfy Code Section 401, the largest percentage of Employer
Contributions and forfeitures stated as a percentage of the first $200,000 of a
Key Employee's Compensation, allocated on behalf of any Key Employee for that
Plan Year. The minimum allocation is determined without regard to any Social
Security contribution by the Employer. This minimum allocation shall be made
even though, under other provisions of this Plan, the Participant would not
otherwise be entitled to receive an allocation, or would have received a lesser
allocation for the year because (i) the Participant failed to complete the
minimum number of Hours of Service specified in the Adoption Agreement for
receiving an allocation, (ii) the Participant's Compensation was less than a
stated amount, or (iii) the Participant made insufficient mandatory
contributions to receive an Employer Contribution (allocated on a thrift
matching basis) sufficient to alleviate the need a minimum allocation under this
Section 21.03.
(b) For purposes of computing the minimum allocation, "Compensation"
will have the same meaning as in Section 2.07, disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement.
(c) During any Plan Year for which a minimum allocation is required
under subsections (a) or (f) to a plan under which allocations shall be made on
an integrated basis pursuant to Section 4.01(a)(iii) or 4.01(b) or a matching
basis pursuant to Section 4.01(a)(ii)(B), Employer Contributions and forfeitures
will be allocated to each Participant's Employer Contribution Account in the
ratio that the Participant's Compensation for the Plan Year bears to all
Participants' Compensation for the Plan Year but not in excess of 3% of such
Compensation. The provisions of this Section 21.03(c) shall take precedence
over any conflicting provisions of Section 4.01. To the extent any amount of
Employer Contributions and forfeitures remains unallocated after the application
of this subsection (c), such amount shall be allocated in accordance with the
provisions of Section 4.01 hereof.
(d) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(e) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan (other
than a plan which incorporates the Prototype Plan) or plans of the Employer, and
the Employer has provided in the Adoption Agreement that the minimum allocation
or benefit requirement applicable to Top-Heavy Plans will be met in such other
plan or plans.
(f) The provision in subsection (a) above shall not apply in the
case of a Participant who is an Employee of an Employer who has adopted both a
profit sharing plan and a money purchase pension plan which incorporate this
Prototype Plan. In such case, the aggregate total of the Employer Contributions
and forfeitures under both plans allocated to the Employer Contribution Account
of a Participant who is not a Key Employee shall not be less than 3% of such
Participant's Compensation. Unless the Employer has specified otherwise in the
Adoption Agreement and such specification is sufficient to satisfy the minimum
allocation requirement referred to in the preceding sentence, subsection (c)
above shall apply to the allocation of Employer Contributions and forfeitures
under the profit sharing plan and, only to the extent that such allocation is
insufficient to satisfy the minimum allocation requirement referred to in the
preceding sentence, the money purchase pension plan.
21.04 Nonforfeitability of Minimum Allocation. The minimum allocation
required (to the extent required to be nonforfeitable under Code Section 416(b))
may not be forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
21.05 Limitation on Compensation. For any Plan Year in which the Plan is
Top-Heavy, only the first $200,000 (or such larger amount as may be prescribed
by the Secretary of the Treasury or his or her delegate) of a Participant's
Compensation for the Plan Year shall be taken into account for purposes of
allocating Employer Contributions under the Plan.
21.06 Minimum Vesting Schedule. Unless the Employer has specified a more
rapid vesting schedule in the Adoption Agreement, for any Plan Year in which
this Plan is Top-Heavy, the following minimum vesting schedule shall apply:
Nonforfeitable Percentage of
Vesting Years Employer Contribution Account
1 0%
2 20
3 40
4 60
5 80
6 or more 100
The minimum vesting schedule applies to all benefits within the meaning of
Code Section 411(a)(7) attributable to Employer Contributions and forfeitures,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. Further, no reduction in
vested benefits may occur in the event the Plan's status as Top-Heavy changes
for any Plan Year. IF conversion of the Plan into a Top-Heavy Plan has resulted
in a change of the Plan's vesting schedule to the minimum vesting schedule
discussed above, the change shall be treated as an amendment to the Plan and the
election referred to in Section 18.01 hereof shall apply. This Section 21.06
does not apply to the Employer Contribution Account balances of any former
Participant who does not have an Hour of Service after the Plan has initially
become Top-Heavy and such former Participant's vested Employer Contribution
Account balance will be determined without regard to this Section.
21.07 Effect on Code Section 415 Limitations. Notwithstanding anything to
the contrary in Section 5 above, the following provisions apply if the Plan is
Top-Heavy.
(a) In any Plan Year in which the Top-Heavy ratio exceeds 90% (and
the Plan therefore becomes super Top-Heavy) the denominators of the Defined
Benefit Fraction (as defined in Section 5.05(c) above) and the Defined
Contribution Fraction (as defined in Section 5.05(d) above) shall be computed
using 100% of the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%, but is
less than 90%, the denominators of the Defined Benefit Fraction (as defined in
Section 5.05(c) above) and the Defined Contribution Fraction (as defined in
Section 5.05(d) above) shall be computed using 100% of the dollar limitation
described therein instead of 125%, unless the Employer has specified in the
Adoption Agreement that the minimum allocation provisions of Section 21.03 above
shall be computed using 4% of a Participant's Compensation, in which case the
dollar limitations of the Defined Benefit Fraction (as defined in Section
5.05(c) above) and the Defined Contribution Fraction (as defined in Section
5.05(d) above) shall continue to be computed using 125% of the dollar
limitations.
21.08 Termination of Top-Heavy Status. If the Plan ceases to be Top-Heavy
for any Plan Year and if the Employer has not specified otherwise in the
Adoption Agreement, the minimum vesting schedule described in Section 21.06
shall continue to apply. If the Employer has specified in the Adoption
Agreement that, upon conversion of the Plan to non-Top-Heavy status,
Participants' vested benefits are to be determined according to a schedule other
than the minimum vesting schedule described in Section 21.06, such change in
vesting schedules shall be treated as an amendment, and the election referred to
in Section 18.01 hereof shall apply.
SECTION 22.
SPECIAL DISTRIBUTION RULES
22.01 Special Rule for Profit Sharing Plan Participants. If this Plan is
adopted as a profit sharing plan and (a) it is determined that this Plan is a
direct or indirect transferee (including a plan which is amended into this Plan)
of a defined benefit plan, money purchase pension plan (including a target
benefit plan), stock bonus or profit sharing plan which would otherwise provide
a life annuity form of payment with respect to such Participant, (b) the Plan is
amended so as to allow a Participant to elect to receive his or her benefits in
the form of a life annuity and Participant elects to receive his or her
<PAGE>
benefits in such form, (c) the Plan is amended to provide that absent a
Qualified Election of a Participant's surviving spouse, someone other than the
Participant's surviving spouse becomes entitled to the Participant's vested
Account balance, or (d) if someone other than the Participant's surviving spouse
is the beneficiary of any insurance purchased with funds from the Participant's
Account, the provisions of Sections 8, 9, and 15 shall apply as if this Plan
were adopted as a money purchase pension plan.
22.02 Elections for Former Participants. An opportunity to make the
applicable distribution elections discussed below in this Section 22.02 must be
given to any living former Participant who had not begun receiving benefits from
this Plan on August 23, 1984 and who would not otherwise receive the benefit
forms prescribed by Sections 8 and 9 above.
(a) In the case of a former Participant who:
(i) would have been entitled to receive his or her benefits in
the form of a life annuity had he or she completed an Hour of Service during a
Plan Year commencing after December 31, 1984,
(ii) was credited with Service under this Plan or a predecessor
plan in a plan year beginning after December 31, 1975, and
(iii) had at least ten years of vesting Service when he or she
separated from Service,
the former Participant must be given an opportunity to elect to receive his or
her benefits in accordance with the provisions of Sections 8 and 9 applied as if
this Plan were adopted as a money purchase pension plan.
(b) In the case of a former Participant:
(i) who was credited with service under this Plan or a
predecessor plan after September 1, 1974;
(ii) who was not credited with service under this plan or a
predecessor plan in a plan year beginning after December 31, 1975; and
(iii) whose benefits would have been payable in the form of a
life annuity
the Participant must be given an opportunity to elect to receive his or her
benefits in accordance with the provisions of Section 22.04.
(c) In the case of a former Participant who:
(i) satisfies the requirements of subsection (a) but does not
exercise the election made available to him or her in subsection (a), or
(ii) satisfies the requirements of subsection (a) other than the
requirement of paragraph (iii),
the former participant shall have his or her benefits distributed in accordance
with the provisions of Section 22.04.
22.03 Election Period for Certain Elections by Separated Participants.
The period during which a former Participant entitled to make an election
pursuant to Section 22.02 shall commence on August 23, 1984 and end on the
earlier of the former Participant's death or the date benefits would otherwise
commence to said former Participant.
22.04 Benefit Form for Certain Former Participants. The benefits of a
former Participant who is entitled to elect, and has elected to have his or her
benefits distributed pursuant to this Section 22.04 or a former Participant
whose benefits are required to be distributed in accordance with the provisions
of this Section 22.04 shall be distributed in accordance with the following
provisions:
(a) If benefits in the form of a life annuity become payable to a
married former Participant who:
(i) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(ii) dies on or after Normal Retirement Age while still working
for the Employer; or
(iii) begins to receive payments prior to Normal Retirement Age;
or
(iv) separates from Service on or after attaining Normal
Retirement Age (or the qualified early retirement age) after satisfying the
eligibility requirement for the payment of benefits under the Plan and
thereafter dies before beginning to receive such benefits;
then such benefits will be received under this plan in the form of a Qualified
Joint and Survivor Annuity, unless the former Participant has elected otherwise
during the election period. For this purpose, the election period must begin at
least six months before the participant attains qualified early retirement age
and end not more than 90 days before the commencement of benefit distributions.
Any election hereunder must be in writing and delivered to the Administrator;
such election may be changed by the former Participant at any time by delivery
of written notification of such change and/or a separate written election to the
Administrator.
(b) A former Participant who is employed at the start of the election
period defined below will be given the opportunity to elect, during such
election period, to have a survivor annuity payable on death. If the former
Participant elects the survivor annuity, payments under such annuity must not be
less than the payments which would have been made to the Spouse under the
Qualified Joint and Survivor Annuity if the former Participant had retired on
the day before his or her death. Any election under this provision must be in
writing and delivered to the Administrator; such election may be changed by the
former Participant at any time by delivery of written notification of such
change and/or a separate written election to the Administrator. The election
period begins on the later of (i) the 90th day before the former Participant
attains the qualified early retirement age or (ii) the date the former
Participant terminates employment with the Employer.
(c) The qualified early retirement age referred to in this Section
22.04 shall mean the latest of:
(i) the earliest date, under the plan, on which the former
Participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before the
former Participant reaches Normal Retirement Age, or
(iii) the date the former Participant began participation.
SECTION 23.
DISTRIBUTION OPTION
NOTICE REQUIREMENTS
23.01 Notice of Waivability of Qualified Preretirement Survivor Annuity.
In the case of a Participant who is scheduled to receive Qualified Preretirement
Survivor Annuity pursuant to section 8.01 hereof, the Administrator shall
provide the Participant within the period beginning on the first day of the Plan
Year in which the Participant attains age 32 and ending with the close of the
Plan Year in which the Participant attains age 35, a written explanation of: (a)
the terms and conditions of a Qualified Preretirement Survivor Annuity; (b) the
Participant's right to make, and the effect of, an election to waive Qualified
Preretirement Survivor Annuity coverage; (c) the rights of a Participant's
Spouse; and (d) the Participant's right to make, and the effect of, a revocation
of a previous election to waive Qualified Preretirement Survivor Annuity
coverage. In the case of a Participant who becomes a Participant after the
first day of the Plan Year in which the Participant attained age 32 and who is
scheduled to receive a Qualified Preretirement Survivor Annuity pursuant to
Section 8.01 hereof, the Administrator shall provide the notice required by this
Section 23.01 no later than the close of the third Plan Year subsequent to the
Participant's commencement of participation in the Plan.
23.02 Notice of Waivability of Qualified Joint and Survivor Annuity. In
the case of a Participant who is scheduled to receive a Qualified Joint and
Survivor Annuity pursuant to the provisions of Section 9.03 hereof, the
Administrator shall provide to the Participant, within a reasonable period prior
to the commencement of distributions, a written explanation of: (a) the terms
and conditions of a Qualified Joint and Survivor Annuity; (b) the Participant's
right to make, and the effect of, an election to waive distribution in the form
of a Qualified and Joint Survivor Annuity coverage; (c) the rights of the
Participant's Spouse; and (d) the Participant's right to make, and the effect
of, a revocation of a previous election to waive distribution in the form of the
Qualified and Joint Survivor Annuity.
SECTION 24.
WAIVER OF MINIMUM FUNDING STANDARD
If an Employer who has adopted this Prototype Plan as a money purchase
pension plan is unable to satisfy the minimum funding standard (as described in
Code Section 412) for a given Plan Year, it may apply to the Internal Revenue
Service for a waiver of such minimum funding standard. If the waiver is
granted, the following provisions apply:
(a) An adjusted Account balance shall be maintained for each
Participant whose actual Account balance is less than or equal to his or her
adjusted Account balance.
(i) For the Plan Year for which the first waiver is granted, the
adjusted Account balance as of the Valuation Date for each affected Participant
equals:
(A) the Participant's actual Account balance, plus
(B) the amount that such Participant would have received if
the amount waived had been contributed.
(ii) For each Plan Year following the Plan Year for which a
waiver is granted, the adjusted Account balance for each Participant affected by
such waiver (calculated as of the Valuation Date for that Plan Year) equals:
(A) the adjusted Account balance as of the Valuation Date
in the prior Plan Year, plus
(B) the amount equal to the actual investment return
credited or charged to the Participant's actual Account balance, plus
(C) the amount equal to 5% of the excess of the amount in
(A) over the Participant's actual Account balance calculated as of the same
date, plus
(D) the amount equal to such Participant's allocated share
of the required Employer Contribution (whether or not waived) for the Plan Year
(determined without regard to adjusted waiver payments and discretionary
Employer Contributions), minus
(E) the amount of the Participant's adjusted Account
balance forfeited during the Plan Year under the Plan's provisions.
(b) For a given Plan Year, the Employer is required to contribute a
certain amount in order to satisfy the minimum funding standard for such Plan
Year. For each Plan Year which follows a Plan Year for which a waiver of the
minimum funding standard was granted the amount equals:
(i) the amount due as determined under Section 4.01(b) above
without regard to this Section), plus
(ii) the adjusted waiver amount.
(c) The adjusted waiver amount for a given Plan Year equals:
(i) the sum of the amounts necessary to amortize each waived
funding deficiency over a period of fifteen Plan Years (measured from the
Valuation Date of the Plan Year for which the corresponding waiver was granted)
at 5% interest, compounded annually, minus
(ii) the sum of the amounts necessary to amortize the total of
each Plan Year's forfeitures (which have arisen since the first waiver was
granted) over a period of fifteen Plan Years (measured from the Valuation Date
of the Plan Year in which the corresponding forfeitures arose) at 5% interest,
compounded annually.
(d) An amount equal to the adjusted waiver amount must be contributed
only until each Participant's actual Account balance equals the Participant's
adjusted Account balance.
(e) Any Plan provision which provides that Employer Contributions
shall be reduced immediately by forfeitures is revoked until each Participant's
actual Account balance equals that Participant's adjusted Account balance.
(f) Discretionary Employer Contributions, which are in addition to
the amounts contributed to satisfy the minimum funding standard, can be made in
any given Plan Year. However, the total Employer Contribution for the Plan Year
cannot exceed the then remaining underfunded amount (the sum of Participants'
adjusted Account balances minus total Plan assets).
(g) The adjusted waiver payments, discretionary Employer
contributions and the forfeitures of actual Account balances for the current
Plan Year shall be allocated as of that Plan Year's Valuation Date to the actual
Account balances of the affected Participants.
(h) Each time a waiver is granted, an original waiver amount ("OWA")
will be determined for each affected Participant. The OWA equals the
Participant's portion of the amount which was waived.
(i) Commencing with the Valuation Date of the Plan Year for which a
waiver is granted, a remaining original waiver amount ("ROWA") must be
calculated for each affected Participant. As of such Valuation Date the OWA
equals the ROWA. On the Valuation Date of a succeeding Plan Year the ROWA
equals the prior Plan Year's ROWA multiplied by
<PAGE>
1.05, minus the forfeiture of amounts in the prior Plan year's ROWA incurred in
the current Plan Year. For each waiver that is granted one OWA and a
corresponding ROWA will be established for each affected Participant.
(j) The sum of the adjusted waiver payments, discretionary Employer
Contributions and forfeitures of actual Account balances for a given Plan Year
are allocated to those Participants who have ROWAs by multiplying the sum of
these three amounts by the fraction:
(i) the numerator of which equals the sum of OWAs for a
particular Participant, and
(ii) the denominator of which equals the sum of the OWAs for all
Participants.
To determine the portion of this allocation which is to be assigned to a
given ROWA, multiply the allocation by the corresponding OWA, then divide by the
sum of the OWAs for the particular Participant.
(k) If the calculation of a ROWA results in a value which is less
than zero, then
(i) the ROWA is set equal to zero,
(ii) the corresponding OWA is set equal to zero, and
(iii) the excess payments will be reallocated to the remaining
ROWAs.
(l) A distribution is determined by multiplying a Participant's
vested percentage by his or her adjusted Account balance. However,
distributions from the Plan may not exceed a Participant's actual Account
balance. If so limited, plan Participants shall receive subsequent
distributions derived from future adjusted waiver payments.
SECTION 25.
MISCELLANEOUS
25.01 Misrepresentation. Notwithstanding any other provision herein, if
an Employee misrepresents his or her age or any other fact, any benefit payable
hereunder shall be the smaller of: (a) the amount that would be payable if
no facts had been misrepresented, or (b) the amount that would be payable if the
facts were as misrepresented.
25.02 Legal or Equitable Action. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs to the Employer, the Administrator or the Trust of defending or bringing
such action shall be charged against the interest, if any, of such person under
the Plan.
25.03 No Enlargement of Plan Rights. It is a condition of the Plan, and
each Participant by participating herein expressly agrees, that he or she shall
look solely to the assets of the Trust for the payment of any benefit under the
Plan.
25.04 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed (a) to give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provide herein or (b)
to create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee.
25.05 Written Orders. In taking or omitting to take any action under this
Plan, the Trustee may conclusively rely upon and shall be protected in acting
upon any written orders from or determinations by the Employer or the
Administrator as appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be genuine and to
have been properly executed, and so long as it acts in good faith, in taking or
omitting to take any other action.
25.06 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act.
Subject thereto, neither Trustee, Loan Trustee, Administrator nor Distributor
nor any other person shall have any liability under the Plan, except as a result
of negligence or wilful misconduct, and in any event the Employer shall fully
indemnify and save harmless all persons from any liability except that resulting
from their negligence or wilful misconduct.
25.07 Discretionary Actions. Any discretionary action, including the
granting of a loan pursuant to Section 10 hereof, to be taken by the Employer or
the Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
25.08 Headings. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
25.09 Applicable law. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the state in which (a) if the Trustee
is a corporation, the Trustee has its principal place of business; (b) if the
Trustee is an individual, the Trustee resides; or (c) if the Trustee is
individuals, where a majority of the individuals serving as Trustee reside. The
Employer's execution of the Adoption Agreement may be acknowledged where
required by applicable law.
25.10 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Sections 5 and 16, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
However, the Employer may request a return, and this Section 25.10 shall not
prohibit return, of an amount to the Employer under any of the following
circumstances:
(a) if the amount was all or part of an Employer contribution which
was made as a result of a mistake of fact and the amount contributed is returned
to the Employer within one year after the date on which the mistaken payment of
the contribution was made, or
(b) if the amount was all or part of an Employer contribution which
was conditioned on deductibility under Code Section 404 and this condition is
not satisfied, and the amount is returned to the Employer within one after the
date on which the deduction is disallowed, or
(c) if the amount was all or part of an Employer contribution which
was conditioned on the initial qualification of the Plan under Code Section
401(a), this condition is not satisfied, and the amount is returned to the
Employer within one year after the date on which initial qualification is
denied, or
(d) if the amount was all or part of an Employer contribution which
was conditioned on the qualification of the Plan as amended under Code Section
401(a), this condition is not satisfied, the Plan amendment was submitted to the
Internal Revenue Service for qualification within one year after it was adopted,
and the amount is returned to the Employer within one year after the date on
which requalification is denied.
For the purposes of this Section 25.10, all Employer contributions are
conditioned on initial qualification of the Plan under Code Section 401(a),
qualification of the Plan as amended under Code Section 401(a), and
deductibility under Code Section 404.
25.11 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his or her delegate with respect to the
qualification of the Plan.
25.12 Conflict. In the event of any conflict between the provisions of
this Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control. In particular, the
proceeds of any life insurance contract purchased by the Trustee and not
governed by an effective Designation of Beneficiary form shall be paid to the
Participant's Spouse regardless of who is named as the beneficiary or
beneficiaries in the contract.
<PAGE>
SCUDDER FLEXI-PLAN AMENDMENT
FOR TAX REFORM ACT OF 1986
MODEL AMENDMENT II FOR DEFINED CONTRIBUTION PLANS
SECTION I: PURPOSE AND EFFECTIVE DATE
1.1. Purpose. The purpose of this amendment is to amend the plan to comply
with those provisions of the Tax Reform Act of 1986 that are effective prior to
the first year beginning after December 31, 1988. Nothing contained in this
amendment shall permit or require Matching Employer Contributions or Employee
Contributions under the plan unless such Matching Employer contributions or
Employee Contributions have been authorized by the employer under other
provisions of the plan or under other amendments thereto.
1.2. Effective Date. Except as otherwise provided, this amendment shall be
effective as of the first day of the first Plan Year beginning after December
31, 1986.
SECTION II: DEFINITIONS
For the purposes of this amendment only, the following definitions shall
apply:
2.1. "Adoption Agreement Amendment" shall mean that portion of this
amendment in which the employer makes any elections permitted under the
amendment.
2.2. "Affiliated Employer" shall mean any corporation which is a member of
a controlled group of corporations (as defined in section 414(b) of the Code)
which includes the employer, any trade or business (whether or not incorporated)
which is under common control (as defined in section 414(c) of the Code) with
the employer; any organization (whether or not incorporated) which is a member
of an affiliated service group (as defined in section 414(m) of the Code) which
includes the employer; and any other entity required to be aggregated with the
employer pursuant to regulations under section 414(o) of the Code.
2.3. "Code" shall mean the Internal Revenue Code of 1986 and amendments
thereto.
2.4. "Compensation" shall mean, for purposes of section V of this
amendment, compensation paid by the Employer to the Participant during the Plan
Year which is required to be reported as wages on the Participant's Form W-2 or
which, in the case of a self-employed individual, constitutes payment for
services rendered includible in the self-employed individual's gross income and,
if the provisions of the plan other than this amendment so provide, shall also
include compensation which is not currently includible in the Participant's
gross income by reason of the application of sections 125, 402(a)(8),
402(h)(1)(B), or 403(b) of the Code.
2.5. "Employee" shall mean employees of the Employer and shall include
leased employees within the meaning of section 414(n) (2) of the Code.
Notwithstanding the foregoing, if such leased employees constitute less than
twenty percent of the employer's nonhighly compensated workforce within the
meaning of section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall
<PAGE>
[PLEASE NOTE PREVIOUS PAGE ENDS WITH SECTION 2.5 CURRENT PAGE BEGINS WITH 4.1]
aggregate contributions as defined in section 401(m)(6)(B), and excess
deferrals as described in section 402(g), regardless of whether such
amounts are distributed or forfeited;
(ii) Forfeitures; and
(iii) Amounts described in sections 415(l)(1) and 419A(d)(2) of the Code.
4.1(b). Maximum Annual Addition. The maximum Annual Addition that may be
contributed or allocated to a Participant's account under the plan for any
Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent of the Participant's compensation, within the meaning of
section 415(c)(3) of the Code for the Limitation Year.
4.1(c). Special Rules. The compensation limitation referred to in section
4.1(b)(ii) shall not apply to:
(i) Any contribution for medical benefits (within the meaning of section
419A(f)(2) of the Code) after separation from service which is otherwise
treated as an Annual Addition, or
(ii) Any amount otherwise treated as an Annual Addition under section
415(l)(1) of the Code.
4.1(d). Definitions. For purposes of section 4.1, "Defined Contribution
Dollar Limitation" shall mean $30,000 or, if greater, one-fourth of the defined
benefit dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
4.2. Special Rules for Plans Subject to Overall Limitations Under Code
Section 415(e).
4.2(a). Recomputation Not Required. The Annual Addition for any Limitation
Year beginning before January 1, 1987 shall not be recomputed to treat all
Employee Contributions as an Annual Addition.
4.2(b). Adjustment of Defined Contribution Plan Enrollment. If the plan
satisfied the applicable requirements of section 415 of the Code as in effect
for all Limitation Years beginning before January 1, 1987, an amount shall be
subtracted from the numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the Treasury so that
the sum of the defined benefit plan fraction and defined contribution plan
fraction computed under section 415(e)(1) of the Code (as revised by this
section IV) does not exceed 1.0 for such Limitation Year.
4.3. Limitation Year. For purposes of this section IV, "Limitation Year"
shall mean the limitation year specified in the plan, or if none is specified,
the calendar year.
4.4. Effective Date of Section IV Provisions. The provisions of this
section IV shall be effective for Limitation Years beginning after December 31,
1986.
4.5. For purposes of this section IV, Affiliated Employer shall also
include those employers described in section 415(h) of the Code.
<PAGE>
[PLEASE NOTE PREVIOUS PAGE ENDS WITH SECTION 4.5 CURRENT PAGE BEGINS WITH 5.4]
such plans were a single plan.
5.4(c). For purposes of determining the Contribution Percentage of an
Eligible Participant who is a Highly Compensated Employee, the Employee
Contributions, Matching Contributions and Compensation of such Eligible
Participant shall include the Employee Contributions, Matching Contributions and
Compensation of Family Members. Family Members with respect to Highly
Compensated Employees shall be disregarded as separate employees in determining
the Contribution Percentage both for Eligible Participants who are Nonhighly
Compensated Employees and both for Eligible Participants who are Highly
Compensated Employees.
5.4(d). The determination and treatment of the Contribution Percentage of
any Eligible Participant shall satisfy such other requirements as my be
prescribed by the Secretary of the Treasury.
5.5. Distribution of Excess Aggregate Contributions.
5.5(a). In General. Excess Aggregate Contributions plus any income and
minus any loss allocable thereto shall be forfeited, if otherwise forfeitable
under the terms of this plan, or if not forfeitable, distributed no later than
the last day of each Plan Year beginning after December 31, 1987, to
Participants to those accounts Employee Contributions or Matching Contributions
were allocated for the preceding Plan Year.(1) Excess Aggregate Contributions
shall be treated as Annual Additions under section 4.1(a) of this Amendment.
5.5(b). Excess Aggregate Contribution. For purposes of this amendment,
"Excess Aggregate Contributions" shall mean the amount described in section
401(m)(6)(B) of the Code.
5.5(c). Determination of Income or Loss. The Excess Aggregate Contributions
to be forfeited, if otherwise forfeitable under the terms of the plan, or if not
forfeitable, distributed to the Participant shall be adjusted for income or
loss. The income or loss allocable to Excess Aggregate Contributions shall be
determined by multiplying the income or loss allocable to the Participant's
Employee Contributions and Matching Contributions for the Plan Year by a
fraction, the numerator of which is the Excess Aggregate Contributions on behalf
of the Participant for the preceding Plan Year and the denominator of which is
the sum of the Participant's account balances attributable to Employee
Contributions and Matching Contributions on the last day of the preceding Plan
Year.
5.5(d). Accounting for Excess Aggregate Contributions. Excess Aggregate
Contributions shall be distributed from the Participant's Employee Contribution
account, and forfeited if otherwise forfeitable under the terms of the plan (or,
if not forfeitable, distributed) from the Participant's Matching Contribution
account in proportion to the Participant's Employee Contributions and Matching
Contributions for the Plan Year.
- ----------------------
(1)If Excess Aggregate Contributions plus any income and minus any loss
allocable thereto are forfeited (if forfeitable) or distributed more than 2 1/2
months after the last day of the Plan Year in which such Excess Aggregate
Contrbutions arose, then section 4979 of the Code imposes a ten (10) percent
excise tax on the employer maintaining the plan with respect to such accounts.
<PAGE>
[PLEASE NOTE PREVIOUS PAGE ENDS WITH SECTION 5.5 CURRENT PAGE BEGINS WITH 10.1]
would have been applied, if forfeited, to reduce employer contributions under
the plan.
SECTION X: PROFITS NOT REQUIRED
10.1. Applicability of this Section. This section X shall apply to the plan
only if such plan is a profit-sharing plan and the employer elects in the
Adoption Agreement to have this section apply.
10.2. Employer Contributions. Notwithstanding any other provision of the
plan, employer contributions for Plan Years specified in the Adoption Agreement
Amendment shall be made to the plan without regard to current or accumulated
earnings and profits for the taxable years or years ending with or within in
Plan Year. The plan shall continue to be designated to qualify as a
profit-sharing plan for purposes of section 401(a), 402, 412, and 417 of the
Code.
<PAGE>
THESE SECTIONS ARE TO REPLACE THE CORRESPONDING
SECTIONS OF THE SCUDDER FLEXI-PLAN DOCUMENT
SECTION 15.
DESIGNATION OF BENEFICIARY
Each participant and beneficiary may submit to the Trustee a properly
executed Designation of Beneficiary form. In order to be effective, such
designation (a) must have been properly executed and submitted to the Trustee
before the death of the Participant or beneficiary, as the case my be, and (b)
except in the case of the portion of a Participant's vested Account balance in a
money purchase pension plan which is not available for distribution in the form
of a Qualified Preretirement Survivor Annuity pursuant to Section 8.01 above,
for Participants who die after August 22, 1984 leaving a surviving Spouse, must
be accompanied, or preceded, by a consent of the Participant's Spouse (unless
said Spouse is designated as the sole, primary Beneficiary). Such consent of the
Spouse must be in writing, acknowledge that the effect of such consent is that
the Spouse may receive no benefits under the Plan, be witnessed by a Plan
representative or a notary public, and be limited consent to the payment of
death benefits to a specific person or persons. The last effective Designation
accepted by the Trustee shall be controlling, and whether or not fully
dispositive of the Participant's Account, thereupon shall revoke all
Designations (and related spousal consents) previously submitted by the
Participant or beneficiary, as the case may be. Each such executed Designation
(and related spousal consent) is hereby specifically incorporated herein by
reference and shall be construed and enforced in accordance with the laws of the
state in which the Trustee has its principal place of business.
SECTION 22.
SPECIAL DISTRIBUTION RULES
22.01 Special Rule for Profit Sharing Plan Participants. If this Plan is
adopted as a profit sharing plan and (a) it is determined that this Plan is a
direct or indirect transferee (including a plan which is amended into this Plan)
of a defined benefit plan, money purchase pension plan (including a target
benefit plan), stock bonus or profit sharing plan which would otherwise provide
a life annuity form of payment with respect to such Participant, (b) the Plan is
amended so as to allow a Participant to elect to receive his or her benefits in
the form of a life annuity and a Participant elects to receive his or her
benefits in such form, (c) the Plan is amended to provide that absent a
Qualified Election of a Participant's surviving spouse, someone other than the
Participant's surviving spouse becomes entitled to the Participant's vested
Account balance, or (d) if someone other than the Participant's surviving Spouse
is the beneficiary of any insurance purchased with funds from the Participant's
Account, the provisions of Section 8, 9 and 15 shall apply as if this Plan were
adopted as a money Purchase pension plan.
<PAGE>
SCUDDER FLEXI-PLAN
ENROLLMENT BOOKLET
=======================================================
- -------------------------=======================================================
Adoption Agreements
- -------------------------=======================================================
Contribution Forms
- -------------------------=======================================================
Transfer Forms
- -------------------------=======================================================
Designation of Beneficiary Forms
- -------------------------=======================================================
Notice to Interested Parties
SCUDDER
SERVING INVESTORS SINCE 1919
- -------------------------=======================================================
<PAGE>
- --------------------------------------------------------------------------------
HOW TO START
YOUR FLEXI-PLAN
================================================================================
Everything you need is right in this booklet. After reading all of the enclosed
material, just follow these simple steps:
- --------------------------------------------------------------------------------
1 Fill out the appropriate Adoption Agreements. You can choose the profit
sharing plan, the pension plan, or both. Build a customized retirement plan
by selecting the appropriate features.
- --------------------------------------------------------------------------------
2 Complete a Transfer Form if you are transferring assets from an existing plan
to Scudder.
- --------------------------------------------------------------------------------
3 Choose the fund or funds you and any participants would like to invest in and
complete the appropriate Contribution Form. Be sure that you and any
participants read the prospectus of the fund(s) selected.
- --------------------------------------------------------------------------------
4 Have your plan's participants fill out a Designation of Beneficiary for each
plan you adopt. If necessary, you can make copies of these forms for
additional participants.
- --------------------------------------------------------------------------------
5 Make copies of all the forms for your records
- --------------------------------------------------------------------------------
6 Send these forms with your check payable to State Street Bank and Trust Co.
in the reply envelope provided.
- --------------------------------------------------------------------------------
7 Post the "Notice to Interested Parties" for your employees.
- --------------------------------------------------------------------------------
If you have any questions or would like assistance in filling out these forms,
please call our Retirement Plan Specialists at 1-800-323-6105
They'll be happy to help you.
THIS BOOKLET CONTAINS:
================================================================================
Adoption Agreements
o A Flexi-Profit Sharing Plan Adoption Agreement. Complete this application to
establish a profit sharing plan.
o A Flexi-Money Purchase Pension Plan Adoption Agreement. Complete this
application to establish a pension plan.
- --------------------------------------------------------------------------------
Plan Contribution Forms
o A Flexi-Profit Sharing Plan Contribution Form. Use this form to tell us how to
divide and invest any contribution to the profit sharing plan.
o A Flexi-Money Purchase Pension Plan Contribution Form. Use this form to tell
us how to divide and invest any contribution to the pension plan.
- --------------------------------------------------------------------------------
Transfer Forms
o A Flexi-Profit Sharing Plan Transfer Form. Fill out this form to
move the assets of an existing profit sharing plan to Scudder.
o A Flexi-Money Purchase Pension Plan Transfer Form. Fill out this form to move
the assets of an existing pension plan to Scudder.
- --------------------------------------------------------------------------------
Designation of Beneficiary Forms
o A Flexi-Profit Sharing Plan Designation of Beneficiary. Each participant in
the profit sharing plan should complete one to name a beneficiary for his or her
vested balance.
o A Flexi-Money Purchase Pension Plan Designation of Beneficiary. Each
participant in the pension plan should complete one to name a beneficiary for
his or her vested balance.
- --------------------------------------------------------------------------------
Notice to Interested Parties
o Please post this notice for your employees in a common area of your workplace.
See instructions for posting at the top of the form.
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Profit Sharing Plan
Adoption Agreement
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Plan number 003 Boston, MA 02205-9047
- --------------------------------------------------------------------------------
INSTRUCTIONS:
These instructions are provided to help you make selections in the
corresponding sections of the Profit Sharing Plan Adoption Agreement. The
Adoption Agreement is designed with "pre-selected" options shaded in each
section. If you want the pre-selected option, please do not check or complete
the unshaded option below it. If you prefer the unshaded option, check the box
and fill in any blanks.
1. ELIGIBILITY
This section determines who will be covered by the plan. You determine the
waiting period, how many hours constitute a year of service, minimum age
required, and starting day for participation. You also decide whether you wish
to exclude certain classes of employees from participation in the plan. If this
is your first year of business, you must reduce the waiting period to make
contributions for this year.
2. VESTING OF EMPLOYER CONTRIBUTIONS
A. If you choose a waiting period of more than one year in 1.A., you must select
full and immediate vesting. If you choose a waiting period of one year or
less and want graduated vesting, check the unshaded option to select the
vesting schedule in Column 1. For a more rapid schedule, check the box and
complete Column 2.
B. If you choose immediate vesting, skip this section. If you choose graduated
vesting, you may select the 12 month period on which vesting years are
calculated. If you check the unshaded option, you may not check the box in
2.C., the following section.
C. Do not check the unshaded option if you checked the box in 2.B. If you did
not check the box in 2.B. and want participants to accrue a vesting year for
years they receive an employer contribution, whether or not the participant
completes the number of Hours of Service specified in Section 1.B., check the
box in 2.C.
D. Checking a box(es) in this section allows you to calculate vesting years
including a participant's service before the plan (or predecessor plan) was
established or before the plan year in which a participant turned 18.
3. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. This option allows you to decide whether you will make contributions for
former participants who retired or otherwise terminated participation in the
plan during the plan year. If you do not wish to make contributions for these
former participants, check the unshaded option.
B. If your plan is top heavy, you may be required to make minimum contributions
for non-key employees. If you maintain more than one qualified retirement
plan, this election lets you select the plan responsible for making these
minimum contributions.
Check and complete the unshaded option if you want to make any minimum plan
contributions from another tax qualified plan or from the Scudder Pension
Plan if you have adopted both the Scudder Profit Sharing and Pension Plans.
Do not check the unshaded option if you are adopting only the Profit Sharing
plan.
4. INTEGRATION WITH SOCIAL SECURITY
If you do not want your plan integrated with Social Security, skip this section.
If you do wish to integrate the plan, check the unshaded option and make the
selection in 4.A. for the wage level to which you want integration to apply and
in 4.B. for the rate of integration (check and complete the desired options).
5. NORMAL RETIREMENT DATE
The normal retirement date for plan participants will be 59-1/2 unless you check
and complete the unshaded option.
6. COMPENSATION
The unshaded option in this section allows you to base contributions on
compensation for the entire year an employee becomes a participant, even if the
employee becomes a participant during the year.
7. PARTICIPANT CONTRIBUTIONS
Non-deductible voluntary contributions (after-tax) are allowed by the plan
unless you select otherwise by checking the unshaded option.
8. INVESTMENT
Plan participants will have discretion over the investment of plan contributions
made for them unless the unshaded option is checked.
9. LOANS
Loans to participants from this plan are not permitted unless you check the
unshaded option. NOTE: Certain owners, including owner-employees, are prohibited
from taking loans from the plan.
10. EFFECTIVE DATE
The effective date of the plan will be the first day of the employer's fiscal
year, unless otherwise indicated by checking and completing the unshaded option.
11. PLAN YEAR
The plan year will be the employer's fiscal year unless you check and complete
the unshaded option.
12. AMENDMENT
If you are adopting the Profit Sharing Plan as an amendment to an existing plan,
please check the unshaded option.
13. LIMITATIONS ON ALLOCATIONS
This section advises you concerning the limitations on allocations of
contributions if you have other tax-qualified plans in addition to the
Flexi-Plan Profit Sharing Plan or Money Purchase Pension Plan.
14. LIMITATION YEAR
The limitation year will be the same as the plan year unless you check and
complete the unshaded option.
15. SIGNATURES
Please read and complete this section. State Street Bank and Trust Company is
predesignated as the Plan's trustee and the Adoption Agreement is presigned by
an authorized representative of State Street Bank.
If you elect to allow loans to participants in this Agreement, please designate
a loan trustee and obtain the loan trustee's signature. The loan trustee may be
an individual.
Please provide all the information requested, including the employer's tax
identification number and fiscal year. If you do not have a tax identification
number, please contact your local Internal Revenue Service office to obtain a
number.
ADOPTION AGREEMENT AMENDMENT
As permitted under the Tax Reform Act of 1986, an employer need not have profits
in a plan year in order to make employer contributions. Check the box is you
want this provision to apply to your plan.
If you have any questions about this Adoption Agreement, please call a Scudder
Retirement Plan Specialist at 1-800-323-6105.
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
Profit Sharing Plan
Adoption Agreement
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Plan number 003 Boston, MA 02205-9047
- --------------------------------------------------------------------------------
The undersigned (the "Employer") establishes, or amends, the (Scudder
automatically inserts employer's name) Profit Sharing Plan, by completing this
Adoption Agreement adopting or amending the Profit Sharing Plan in the form of
the Prototype Plan attached.
1. ELIGIBILITY
A. To become a Participant an Employee must complete 3 Years of Service
|_| or, if this box is checked, an Employee must complete ____ Year(s) of
Service, (insert less than "3"; select more than "1" only if the
employer selects full and immediate vesting in Section 2.A. below;
insert "0" for no waiting period).
B. The number of Hours of Service required to have a Year of Service is 1000
|_| or, if this box is checked, ____ (insert less than 1000 hours). However,
if the Year(s) of Service selected in A. above is or includes a
fractional year, an Employee is not required to complete any specified
number of Hours of Service to receive eligibility credit for such
fractional year.
C. To become a Participant an Employee need not attain any minimum age
|_| or, if this box is checked. a employee must be at least ____ (insert 21
or less) years of age.
D. An Employee who meets the above requirements shall become a Participant on
the first day the requirements are met
|_| or, if this box is checked, on the first day of the next month.
E. All Employees are entitled to be Participants
|_| or, if this box is checked, all Employees are entitled to be
Participants except (check one or both):
|_| Non-resident aliens who receive no earned income from the Employer which
constitutes income from sources within the United States
|_| Individuals covered by a collective bargaining contract which meets the
requirements specified in the Plan.
2. VESTING OF EMPLOYER CONTRIBUTIONS
A. Employer Contributions under the Plan shall be fully and immediately vested
and non-forfeitable
|_| or, if this box is checked, vested at the rate in Column 1 below, or at
a more rapid rate of vesting if specified in Column 2 below.
VESTING TABLE
Column 1 Column 2
-------- --------
Vesting Minimum Percentage
Years Percentage Selected
1 0 _________
2 20 _________
3 40 _________
4 60 _________
5 80 _________
6 100 _________
B. Vesting Years and One-Year Breaks in Service for the purpose of vesting
shall be measured on the Plan Year
|_| or, if this box is checked, on the 12 consecutive month period beginning
on the Participant's initial date of employment or an anniversery of
that date.
Note: If you make this election, you may not check the box in Section
2.C. below.
C. The Participant will have a Vesting Year only if the Participant completes
the number of Hours of Service specified in Section 1.B.
|_| or, if this box is checked, if the Participant either completes the
number of Hours of Service specified in Section 1.B. or receives an
allocation of the Employer Contribution for the Plan Year, or both.
D. The following Service will be included in determining Vesting Years only if
checked below:
|_| Service before the Employer maintained this Plan or a predecessor plan
|_| Service before the first Plan Year in which a Participant attained age
18.
<PAGE>
3. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. A former Participant who has retired, died, otherwise terminated Service, or
transferred to an ineligible class of Employee during the Plan Year shall
share in the allocation of Employee Contributions for the Plan Year
|_| or, if this box is checked, shall not share in the allocation of
Employer Contributions.
B. Any required minimum top heavy allocations will be made first from this Plan
|_| or, if this box is checked, first from the ____________________________
Plan (insert name of another qualified plan maintained by the Employer)
4. INTEGRATION WITH SOCIAL SECURITY
The Plan will not be integrated with Social Security
|_| or, if this box is checked, will be integrated with Social Security on
the following basis:
A. The Integration Level for a Plan Year will be the Social Security Wage
Base for such Plan Year
|_| or, if this box is checked, $_________________ (not to exceed the
Social Security Wage Base)
B. The Integration Rate for a Plan Year will be the OASDI Rate for each
Plan Year
|_| or, if this box is checked, ____________________% (not in excess of
OASDI Rate)
Note: An Employer may elect to integrate the Plan with Social Security only
if the Employer does not maintain another qualified retirement plan
integrated with Social Security.
5. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be age 59-1/2
|_| or, if this box is checked, age ________________ (insert more than
59-1/2 but not more than 65).
6. COMPENSATION
"Compensation" shall only include amounts paid during the Plan Year by the
Employer to the Employee while the Employee was a Participant
|_| or, if this box is checked, "Compensation" shall include amounts paid by
the Employer to the Employee during the entire Plan Year in which an
Employee became a Participant whether or not such Employee was a
Participant for the entire Plan Year.
7. PARTICIPANT CONTRIBUTIONS
Non-deductible Voluntary contributions by a Participant are permitted
|_| or, if this box is checked, are not permitted.
8. INVESTMENT
Investment decisions shall be made by the Participant
|_| or, if this box is checked, by the Administrator.
9. LOANS
Loans to a Participant are not permitted
|_| or, if this box is checked, are permitted.
10. EFFECTIVE DATE
The Effective Date of the Adoption Amendment shall be the first day of the
Employee's fiscal year during which the Plan is adopted or amended
|_| or, if this box is checked, ____________________ (insert date).
11. PLAN YEAR
The Plan Year shall be the same as the fiscal year of the Employee
|_| or, if this box is checked, shall end on the last day of the month of
________________.
12. AMENDMENT
Execution of the Adoption Agreement is not an amendment to an existing plan
|_| or, if this box is checked, is an amendment to an existing plan.
<PAGE>
13. LIMITATION ON ALLOCATIONS
If the Employer maintains or has even maintained another qualified defined
contribution plan other than a Scudder Money Purchase Pension Plan (Plan number
002 or 004) or a plan amended into the Prototype Plan in which any Participant
in the Plan is or was a participant or could possibly become a participant, the
provisions of Section 5.03 of the Prototype Plan will apply.
If the Employer maintains or has ever maintained a qualified defined benefit
plan in which any Participant in this Plan is or was a participant or could
possibly become a participant, the provisions of Section 5.04 of the Prototype
Plan will apply.
14. LIMITATION YEAR
The Limitation Year shall be identical for all plans maintained by the Employee
as the Plan Year.
|_| or, if this box is checked, shall end on the last day of the
month of ________________.
15. SIGNATURES
The Employer (1) covenants and agrees that whenever a Participant makes a
contribution the Employer shall ascertain the Participant has received a copy of
the current prospectus relating to the shares of any Designated Investment
Company in which such contribution is to be invested plus, where required by any
state or federal law, the current prospectus relating to any other investment in
which contributions are to be invested, and (2) by remitting such a contribution
to the Trustee the Employer shall be deemed to represent that the Employer has
received a current prospectus, and (3) by remitting any other contribution to
the Trustee the Employer shall be deemed to represent that the Employer has
received a current prospectus of any Designated Investment Company in which it
is to be invested, plus, where required by any state or federal law, the current
prospectus relating to any other investment in which contributions are to be
invested.
An Employer adopting this plan may rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Internal Revenue Code, provided that the
Employer has never maintained, is not maintaining, and will not (while
maintaining this Plan) adopt another qualified plan (other than the Scudder
Money Purchase Pension Plan (plan number 002 or 004) or a plan which is being
amended into this Plan or the Scudder Money Purchase Pension Plan (plan number
002 or 004)) or after December 31, 1985, a welfare benefit fund (as defined in
Code Section 419(e)) which provides post-retirement medical benefits allocated
to separate accounts for Key Employees (as defined in Code Section 419A(d)(3)).
An employer who adopts or maintain multiple plans other than the Scudder Profit
Sharing Plan (plan number 001 or 003) together with the Scudder Money Purchase
Pension Plan (plan number 002 or 004) may apply for a determination letter from
the appropriate Key District Director of the Internal Revenue to obtain reliance
that the plans are qualified.
This Adoption Agreement may be used only in conjunction with basic plan document
#01.
__________________________________
Name of Employer
__________________________________
Signature of Employer
__________________________________
Date
__________________________________
Street Address
__________________________________
City State Zip
__________________________________
Daytime Telephone
__________________________________
Employer Tax Identification Number
__________________________________
Employer Fiscal Year
__________________________________
Name of Loan Trustee*
__________________________________
Signature
*NOTE: If you elect to allow loans to Participants in Section 9, you must
designate a Loan Trustee.
Trustee:
State Street Bank and Trust Company
By: /s/ G. Reeves
ADOPTION AGREEMENT AMENDMENT
Employer Contributions in Profit Sharing Plan.
(check the option below if you wish it to apply to your plan)
|_| Effective for Plan Years beginning on or after ___________________
[fill in the first day of the Plan Year in which this Adoption Agreement
Amendment is executed or a subsequent anniversary of such date],
notwithstanding any other provision of the plan, the employer contributions
shall be made to the plan without regard to current or accumulated earnings and
profits for the taxable year or years ending with or within such Plan Year.
Please make copies of all completed forms for your records.
<PAGE>
To be Completed by Employer
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Profit Sharing Plan
Contribution Form
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Boston, MA 02205-9047
- --------------------------------------------------------------------------------
Employer Information
Name____________________________________ Tax I.D. #__________________
Business Address________________________ Telephone___________________
City________________________State________Zip Code____________________
- --------------------------------------------------------------------------------
Telephone Exchange Option
You or your plan participants will be able to exchange shares from one Scudder
Fund into any other Scudder Fund by telephone, telegram, or TWX. The new account
will have the identical registration as the account from which the shares are
transferred.
- --------------------------------------------------------------------------------
Participant Information
The minimum investment for the first Scudder plan you establish (either the
Profit Sharing Plan or the Pension Plan) is $500 times the number of
participants, which may be allocated in any amounts among the participants (e.g.
2 participants, minimum investment = $1000 which can be allocated $700 for one
and $300 for the other). If you are establishing both plans, the minimum
investment for the second plan is $300 times the number of participants.
Participants may invest in more than one Scudder Fund if at least $500 is
invested in each fund.
|_| Check here if assets to be invested in the Profit Sharing Plan will include
a transfer from an existing plan. Please also complete the enclosed
transfer form. (Please designate allocation of transfer money on the
transfer form, and not on this form.)
Scudder Fund(s) Contribution Amount
Selected Employer Employee Total
Participant_______________ _____________ $_______ $_______ $_____
Birth Date_______________ _____________ ________ ________ ______
Social Security #________ _____________ ________ ________ ______
Participant_______________ _____________ ________ ________ ______
Birth Date_______________ _____________ ________ ________ ______
Social Security #________ _____________ ________ ________ ______
Participant_______________ _____________ ________ ________ ______
Birth Date_______________ _____________ ________ ________ ______
Social Security #________ _____________ ________ ________ ______
(Please attach additional pages if necessary) Total investment $=====
Please make your contribution check payable to State Street Bank and Trust Co.
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Profit Sharing Plan
Transfer Form
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Boston, MA 02205-9047
- --------------------------------------------------------------------------------
1. Name and Address of Employer
Name____________________________________ Tax I.D.# _________________
Business Address________________________ Telephone _________________
City______________________ State________ Zip Code __________________
2. Instructions to Present Trustee
Name of Trustee_____________________________________________________
Address_________________________________ Telephone _________________
City______________________ State________ Zip Code __________________
Present Account #'s _______________________________
_______________________________
_______________________________
I request that the Trustee of my present qualified retirement plan transfer
the assets of my profit sharing plan to State Street Bank and Trust
Company, which I have appointed as Trustee of my Scudder Flexi-Profit
Sharing Plan. All assets should be transferred as cash according to the
following instructions:
|_| Please transfer all of my present retirement plan assets and
resign as Trustee
or
|_| Please transfer $____ of my present retirement plan assets and
retain the balance.
Other instructions (e.g. make transfer upon maturity date of __/__/__): __
__________________________________________________________________________
- --------------------------------------------------------------------------------
Trustee should make check payable to:
State Street Bank and Trust Company A/C _________________ Scudder Flexi-
(employer name)
Profit Sharing Plan.
Return check in the enclosed envelope to Scudder Fund Distributors, Inc.,
Retirement Plan Services, P.O. Box 9047, Boston, MA 02205-9047.
- --------------------------------------------------------------------------------
3. Instructions to State Street Bank and Trust Company
Upon receipt of the assets from my previous profit sharing plan trustee,
please invest them in the Scudder Flexi-Profit Sharing Plan in the Scudder
funds as indicated below:
<TABLE>
<CAPTION>
Scudder Fund(s) Account# Employer Employee
Participant Selected (if existing) Contribution Contribution Total
- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
_____________ _____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________ _____________
</TABLE>
(Please attach additional pages if necessary.)
- --------------------------------------------------------------------------------
4. Signature of Employer
__________________________ _______________________________________
Date Employer Signature
5. Acceptance by New Trustee (To be completed by Scudder Fund Distributors,
Inc. and State Street Bank and trust company)
State Street Bank and Trust Company accepts the appointment as successor trustee
of the above Profit Sharing Plan account and requests the liquidation and
transfer of assets as indicated above.
Scudder Fund Distributors, Inc. State Street Bank and Trust Company
By: __________________________
Date: ________________________ By: /s/ G. Reeves
--------------------------------
This form is valid only is signed by an authorized representative of Scudder
Fund Distributors, Inc.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Profit Sharing Plan
Designation of Beneficiary
_________________________ Return this form to:
Name of Employer
_________________________ Scudder Fund Distributors, Inc.
Fund(s) Retirement Plan Services
_________________________ P.O. Box 9047
Account #'s, if assigned Boston, MA 02205-9047
- --------------------------------------------------------------------------------
Name of Participant _______________________
Note: You must file a separate Designation of Beneficiary form for the
Flexi-Money Purchase Pension Plan.
- --------------------------------------------------------------------------------
Instructions
With this form you designate the beneficiary who will receive your Plan assets
if you die while a balance remains in your account. Your spouse must consent if
less than 100% is left to him or her. This form is not effective until filed
with the Plan Trustee.
- --------------------------------------------------------------------------------
Examples of beneficiary designations
o Sandra Casey (SS# 000-00-0000), 3 Oak Street, Chicago, IL 60060, my wife,
if living at my death; otherwise to my children who survive me, in equal
shares. If any child does not survive me, such deceased child's share shall
go by right of representation to that child's issue who survive me. (Note:
"issue" refers to children, grandchildren, etc.)
o Sandra Casey (SS# 000-00-0000) 3 Oak Street, Chicago, IL 60060, my wife, if
living at my death; otherwise to James Casey (SS# ###-##-####), 321 Elm
Street, San Mateo, CA 94042, my son, if living at my death. If he is not
living at my death, then to his issue who survive me by right of
representation.
o James Casey (SS# ###-##-####), 321 Elm Street, San Mateo, CA 94042, my son,
and Mary Casey (SS# 999-99-9999), 7 Beech Avenue, Dallas, TX 75302, my
daughter, in equal shares, if they both survive me; otherwise all to the
one of them who survives me. If neither survives me, to X charity.
These are only examples. You may wish to consult an attorney before naming
beneficiaries.
- --------------------------------------------------------------------------------
Name your plan Beneficiaries and list their Social Security Numbers and
addresses if possible
The following beneficiaries are entitled to receive the assets of my Plan upon
my death. This designation revokes any previous designation. I understand that I
can change this choice of beneficiary by submitting a new form to the Trustee
for the Scudder Plan.
Beneficiaries (Please print): _____________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
- --------------------------------------------------------------------------------
Sign here
____________________________ ____________________
Your signature Date
- --------------------------------------------------------------------------------
Obtain the consent of your spouse if necessary (both boxes may be checked). If
box (a) is checked, your spouse's signature must be witnessed by a Notary Public
or Plan Representative
|_| (a) If less than 100% of the assets in the Plan have been left to me as
primary beneficiary, I consent to such designation and limit my consent to
the beneficiaries indicated above. In addition, recognizing that I also
have a right to limit my consent to a specific form of benefits (such as a
lump sum distribution or installment payments over a period of time). I
relinquish that right and consent to any form of benefits which may be
elected under the plan. I understand that my spouse must execute a new
designation if he or she wants to designate another beneficiary.
|_| (b) As spouse of a Participant who is a resident of Arizona, California,
Idaho, Louisiana, Nevada, New Mexico, Texas, or Washington, I consent to
(1) the naming of another person as primary beneficiary to receive more
than one-half the plan distributions or (2) the naming of myself as primary
beneficiary and others as contingent beneficiaries.
I acknowledge that I have read the above election and understand the effect
its exercise shall have on me.
____________________________ _____________________
Spouse's signature Date
____________________________ |_| Plan representative
Witness or
|_| Notary Public
State: ____________
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Money Purchase Pension Plan
Adoption Agreement
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Plan number 004 Boston, MA 02205-9047
- --------------------------------------------------------------------------------
INSTRUCTIONS:
These instructions are provided to help you make selections in the
corresponding sections of the Money Purchase Pension Plan Adoption Agreement.
The Adoption Agreement is designed with "pre-selected" options shaded in each
section. If you want the pre-selected option, please do not check or complete
the unshaded option below. If you prefer the unshaded option, check the box and
fill in any blanks.
1. ELIGIBILITY
This section determines who will be covered by the plan. you determine the
waiting period, how many hours constitute a year of service, minimum age
required, and starting day for participation. You also decide whether you wish
to exclude certain classes of employees from participation in the plan. If this
is your first year of business, you must reduce the waiting period to make
contributions this year.
2. VESTING OF EMPLOYER CONTRIBUTIONS
A. If you choose a waiting period of more than one year in 1.A., you must
select full and immediate vesting. If you choose a waiting period of one
year or less and want graduated vesting, check the unshaded option to
select the vesting schedule in Column 1. For a more rapid schedule, check
the box and complete Column 2.
B. If you choose immediate vesting, skip this section. If your choose
graduated vesting, you may select the 12 month period on which vesting
years are calculated. If you check the unshaded option, you may not check
the box in 2.C., the following section.
C. Do not check the unshaded option if you checked the box in 2.B. If you did
not check the box in 2.B. and want participants to accrue a vesting year
for years they receive an employer contribution, whether or not the
participant completes the number of Hours of Service specified in Section
1.B., check the box in 2.C.
D. Checking a box(es) in this section allows you to calculate vesting years
including a participant's service before the plan (or predecessor plan) was
established or before the plan year in which a participant turned 18.
3. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. This option allows you to decide whether you will make contributions for
former participants who retired or otherwise terminated participation in
the plan during the plan year. If you do not wish to make contributions for
these former participants, check the unshaded option.
B. If you plan is top heavy, you may be required to make minimum contributions
for non-key employees. If you maintain more than one qualified retirement
plan, this election lets you select the plan responsible for making these
minimum contributions.
Check and complete the unshaded option if you want to make any minimum plan
contributions from another tax-qualified plan or from this Pension Plan if
you have adopted both the Scudder Profit Sharing and Pension Plans.
Do not check the unshaded option if you are adopting only the Money
Purchase Pension Plan.
4. NORMAL RETIREMENT DATE
The normal retirement date for plan participants will be 59 1/2 unless you check
and complete the unshaded option.
5. COMPENSATION
The unshaded option in this section allows you to base contributions on
compensation for the entire year an employee becomes a participant, even if the
employee becomes a participant during the year.
6. PARTICIPANT CONTRIBUTIONS
Non-deductible voluntary contributions (after-tax) are allowed by the plan
unless you select otherwise by checking the unshaded option.
7. INVESTMENT
[Illegible]
8. LOANS
Loans to participants from this plan are not permitted unless you check the
unshaded option. NOTE: Certain owners, including owner-employees, are prohibited
from taking loans from the Plan.
9. EFFECTIVE DATE
The effective date of the plan will be the first day of the employer's fiscal
year, unless otherwise indicated by checking and completing the unshaded option.
10. PLAN YEAR
The plan year will be the employee's fiscal year unless you check and complete
the unshaded option.
11. AMENDMENT
If you are adopting the Money Purchase Pension Plan as an amendment to an
existing plan, please check the unshaded option.
12. PENSION CONTRIBUTIONS AND INTEGRATION WITH SOCIAL SECURITY
If you do not want your plan integrated with Social Security, complete the blank
in the shaded option to designate the contribution rate for the plan. Do not
check the unshaded option.
If you do wish to integrate the plan, check the unshaded option and then specify
the integration rate and integration level. Note: If integration is selected,
please indicate, at the end of the unshaded option, the rate for contributions
made to the plan exclusive of Social Security contribution. The rate chosen
should not result in total contributions to any participant exceeding 25% of
compensation. (For a self-employed individual, the rate should not exceed 25%,
which is the same of 20% of net profits before contributions to the plan for the
self-employed. See guide for more information.)
13. LIMITATIONS ON ALLOCATIONS
This section advises you concerning the limitations on allocations of
contributions if you have other tax-qualified plans in addition to the
Flexi-Plan Profit Sharing Plan or Money Purchase Pension Plan.
14. LIMITATION YEAR
The limitation year will be the same as the plan year unless you check and
complete the unshaded option.
15. SIGNATURES
Please read and complete this section. State Street Bank and Trust Company is
predesignated as the Plan's trustee and the Adoption Agreement is presigned by
an authorized representative of State Street Bank.
If you elect to allow loans to participants in this Agreement, please designate
a loan trustee and obtain the loan trustee's signature. The loan trustee may be
an individual.
Please provide all the information requested, including the employer's tax
identification number and fiscal year. If you do not have a tax identification
number, please contact your local Internal Revenue Service office to obtain a
number.
ADOPTION AGREEMENT AMENDMENT
As permitted under the Tax Reform Act of 1986, forfeitures may be reallocated to
participants rather than reducing future contributions. Check the box if you
want this provision to apply to your plan.
If you have any questions about this Adoption Agreement [Illegible]
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
===================
Money Purchase Pension Plan
Adoption Agreement
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Plan number 004 Boston, MA 02205-9047
- --------------------------------------------------------------------------------
The undersigned (the "Employer") establishes, or amends, the (Scudder
automatically inserts employer's name) Money Purchase Pension Plan, by
completing the Adoption Agreement adopting or amending the Money Purchase
Pension Plan in the form of the Prototype Plan attached.
1. ELIGIBILITY
A. To become a Participant an Employee must complete 3 Years of Service
|_| or, if this box is checked, an Employee must complete _______ Year(s)
of Service, (insert less than "3"; select more than "1" only if the
employer selects full and immediate vesting in Section 2.A. below;
insert "0" for no waiting period).
B. The number of Hours of Service required to have a Year of Service is 1000
|_| or, if this box is checked, ______ (insert less than 1000 hours).
However, if the Year(s) of Service selected in A. above is or includes
a fraction year, an Employee is not required to complete any specified
number of Hours of Service to receive eligibility credit for such
fractional year.
C. To become a Participant an Employee need not attain any minimum age
|_| or, if this box is checked, an Employee must be at least ____ (insert
21 or less) years of age.
D. An Employee who meets the above requirements shall become a Participant on
the first day the requirements are met
|_| or, if this box if checked, on the first day of the next month.
E. All Employees are entitled to be Participants
|_| or, if this box is checked, all Employees are entitled to be
Participants except (check one or both):
|_| Non-resident aliens who receive no earned income from the
Employer which constitutes income from sources within the United
States
|_| Individuals covered by a collective bargaining contract which
meets the requirements specified in the Plan.
2. VESTING OF EMPLOYER CONTRIBUTIONS
A. Employer Contributions under the Plan shall be fully and immediately vested
and non-forfeitable
|_| or, if this box is checked, vested at the rate in Column 1 below, or
at a more rapid rate of vesting if specified in Column 2 below.
VESTING TABLE
Column 1 Column 2
----------- ----------
Vesting Minimum Percentage
Years Percentage Selected
1 0 __________
2 20 __________
3 40 __________
4 60 __________
5 80 __________
6 100 __________
B. Vesting Years and One-Year Breaks in Service for the purpose of vesting
shall be measured on the Plan Year
|_| or, if this box is checked, on the 12 consecutive month period
beginning on the Participant's initial date of employment or an
anniversary of that date.
Note: If you make this election, you may not check the box in Section 2.C.
below.
C. The Participant will have a Vesting Year only if the Participant completes
the number of Hours of Service specified in Section 1.B.
|_| or, if this box is checked, if the Participant either completes the
number of Hours of Service specified in Section 1.B. or receives an
allocation of the Employer Contribution for the Plan Year, or both.
D. The following Service will be included in determining Vesting Years only if
checked below:
|_| Service before the Employer maintained this Plan or a predecessor plan
|_| Service before the first Plan Year in which a Participant attained age
18.
<PAGE>
3. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. A former Participant who has retired, died, otherwise terminated Service,
or transferred to an ineligible class of Employees during the Plan year
shall share in the allocation of Employer Contributions for the Plan Year
|_| or, if this box is checked, shall not share in the allocation of
Employer Contributions.
B. Any required minimum top heavy allocations will be made first from this
Plan unless the Employer has also adopted a Scudder Profit Sharing Plan
(plan number 001 and 003), in which case the minimum top heavy allocations
will be made first from that plan.
|_| or, if this box is checked, first from the _______________ Plan
(insert name of another qualified plan maintained by the Employer).
4. NORMAL RETIREMENT DATE
A. Participant's Normal Retirement Date shall be age 59 1/2
|_| or, if this box is checked, age ________________ (insert more than 59
1/2 but not more than 65).
5. COMPENSATION
"Compensation" shall only include amounts paid during the Plan Year by the
Employer to the Employee while the Employee was a Participant
|_| or, if this box is checked, "Compensation" shall include amounts paid
by the Employer to the Employee during the entire Plan Year in which
an Employee became a Participant whether or not such Employee was a
Participant for the entire Plan Year.
6. PARTICIPANT CONTRIBUTIONS
Non-deductible Voluntary contributions by a Participant are permitted
|_| or, if this box is checked, are not permitted.
7. INVESTMENT
Investment decisions shall be made by the Participant
|_| or, if this box is checked, by the Administrator.
8. LOANS
Loans to a Participant are not permitted
|_| or, if this box is checked, are permitted.
9. EFFECTIVE DATE
The Effective Date of the Plan or Amendment shall be the first day of the
Employer's fiscal year during which the Plan is adopted or amended
|_| or, if this box is checked, _____________________ (insert date).
10. PLAN YEAR
The Plan Year shall be the same as the fiscal year of the Employer
|_| or, if this box is checked, shall end on the last day of the month of
___________________.
11. AMENDMENT
Execution of the Adoption Agreement is not an amendment to an existing plan
|_| or, if this box is checked, is an amendment to an existing plan.
12. PENSION CONTRIBUTIONS AND INTEGRATION WITH SOCIAL SECURITY
The Plan will not be integrated with Social Security and for each Plan Year the
Employer will contribute to the Account of each Participant entitled to an
allocation under Section 3, _____________% (insert not more than 25%) of that
Participant's Compensation for the Plan Year.
|_| or, if this box is checked,
the Plan will be integrated with Social Security and for each Plan
Year, the Employer will contribute
|_| the OASDI Rate
or
|_| ___________% (not to exceed the OASDI Rate)
of such Participant's Compensation in excess of (check one):
|_| the Social Security Wage Base
or
|_| [Illegible text] Social Security Wage Base
<PAGE>
Note: Rates chosen should not result in total contributions to any Participant
exceeding 25% of that Employee's aggregate Compensation.
Employer contributions allocable to a Participant shall be reduced by that
Participant's allocation of forfeitures arising during preceding Plan
Years.
An Employer may elect to integrate the Plan with Social Security only if
the Employer does not maintain another qualified retirement plan integrated
with Social Security.
13. LIMITATION ON ALLOCATIONS
If the Employer maintains or has ever maintained another qualified defined
contribution plan other than a Scudder Profit Sharing Plan (Plan number 001 or
003) or a plan amended into the Prototype Plan in which any Participant in this
Plan is or was a participant or could possible become a participant, the
provisions of Section 5.03 of the Prototype Plan will apply.
If the Employer maintains or has ever maintained a qualified defined benefit
plan in which any Participant in this Plan is or was a participant or could
possibly become a participant, the provisions of Section 5.04 of the Prototype
Plan will apply.
14. LIMITATION YEAR
The Limitation Year shall be identical for all plans maintained by the Employer
and is the Plan Year
|_| or, if this box is checked, shall end on the last day of the month of
_________________.
15. SIGNATURES
The Employer (1) covenants and agrees that whenever a Participant makes a
contribution the Employer shall ascertain that the Participant has received a
copy of the current prospectus relating to the shares of any Designated
Investment Company in which such contribution is to be invested plus, where
required by any state or federal law, the current prospectus relating to any
other investment in which contributions are to be invested, and (2) by remitting
such a contribution to the Trustee the Employer shall be deemed to represent
that the Participant has received such a prospectus, and (3) by remitting any
other contribution to the Trustee the Employer shall be deemed to represent that
the Employer has received a current prospectus of any Designated Investment
Company in which it is to be invested, plus, where required by any state or
federal law, the current prospectus relating to any other investment in which
contributions are to be invested.
An Employer adopting this plan may rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Internal Revenue Code, provided that the
Employer has never maintained, is not maintaining, and will not (while
maintaining this Plan) adopt a qualified plan (other than the Scudder Profit
Sharing Plan (plan number 001 or 003) or a plan which is being amended into this
Plan or the Scudder Profit Sharing Plan (plan number 001 and 003)) or after
December 31, 1985, a welfare benefit fund (as defined in Code Section 419(e))
which provides post retirement benefits allocated to separate accounts for Key
Employees (as defined in Code Section 419A(d)(3)).
An employer who adopts or maintains multiple plans other than the Scudder Profit
Sharing Plan (plan number 001 or 003) together with the Scudder Money Purchase
Pension Plan (plan number 002 or 004) may apply for a determination letter from
the appropriate Key District Director of the Internal Revenue to obtain reliance
that the plans are qualified.
This Adoption Agreement may be used only in conjunction with basic plan document
#01.
_________________________________ _____________________________
Name of Employer Name of Loan Trustee*
_________________________________ _____________________________
Signature of Employer Signature
_________________________________ *NOTE: If you elect to allow loans
Date to Participants in Section 8, you
must designate a Loan Trustee
_________________________________
Street Address Trustee:
_________________________________
City State Zip State Street Bank and Trust Company
_________________________________ By: /s/ G. Reeves
Daytime Telephone --------------------------
_________________________________ ADOPTION AGREEMENT AMENDMENT
Employer Tax Identification Number Benefit Forfeitures in Money Purchase Plan
(check the option below if you wish
_________________________________ it to apply to your plan)
Employer Fiscal Year
Please make copies of all completed forms for your records
|_| Notwithstanding any other provision of the plan, forfeitures occurring in
Plan Years beginning on or after __________ [fill in the first day of the
Plan Year in which this Adoption Agreement Amendment is executed or a
subsequent anniversary of such date] shall be allocated to those
Participants entitled to an allocation of employer contributions for the
Plan Year in which the forfeiture occurs.
<PAGE>
To be Completed by Employer
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Money Purchase Pension Plan
Contribution Form
Return this form to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
P.O. Box 9047
Boston, MA 02205-9047
- --------------------------------------------------------------------------------
Employer Information
Name____________________________________ Tax I.D. #__________________
Business Address________________________ Telephone___________________
City________________________State________Zip Code____________________
- --------------------------------------------------------------------------------
Telephone Exchange Option
You or your plan participants will be able to exchange shares from one Scudder
Fund into any other Scudder Fund by telephone, telegram, or TWX. The new account
will have the identical registration as the account from which the shares are
transferred.
- --------------------------------------------------------------------------------
Participant Information
The minimum investment for the first Scudder plan you establish (either the
Profit Sharing Plan or the Pension Plan) is $500 times the number of
participants, which may be allocated in any amounts among the participants (e.g.
2 participants, minimum investment = $1000 which can be allocated $700 for one
and $300 for the other). If you are establishing both plans, the minimum
investment for the second plan is $300 times the number of participants.
Participants may invest in more than one Scudder Fund if at least $500 is
invested in each fund.
|_| Check here if assets to be invested in the Money Purchase Pension Plan will
include a transfer from an existing plan. Please also complete the enclosed
transfer form. (Please designate allocation of transfer money on the transfer
form, and not on this form.)
Scudder Fund(s) Contribution Amount
Selected Employer Employee Total
Participant_______________ _____________ $_______ $_______ $_____
Birth Date_______________ _____________ ________ ________ ______
Social Security #________ _____________ ________ ________ ______
Participant_______________ _____________ ________ ________ ______
Birth Date_______________ _____________ ________ ________ ______
Social Security #________ _____________ ________ ________ ______
Participant_______________ _____________ ________ ________ ______
Birth Date_______________ _____________ ________ ________ ______
Social Security #________ _____________ ________ ________ ______
(Please attach additional pages if necessary) Total investment $=====
Please make your contribution check payable to State Street Bank and Trust Co.
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER FLEXI-PLAN
==================
Money Purchase Pension Plan
Designation of Beneficiary
Waiver of Qualified Preretirement Survivor Annuity
_________________________ Return this form to:
Name of Employer
_________________________ Scudder Fund Distributors, Inc.
Fund(s) Retirement Plan Services
_________________________ P.O. Box 9047
Account #'s, if assigned Boston, MA 02205-9047
- --------------------------------------------------------------------------------
Name of Participant _______________________
Note: You must file a separate Designation of Beneficiary form for the
Flexi-Profit Sharing Plan.
- --------------------------------------------------------------------------------
Instructions
With this form you designate the beneficiary who will receive your account
balance if you die while a balance remains in your account. Please not that if
you are married and you die before beginning distributions from the Plan, your
spouse is automatically entitled to 50% of the account balance in the form of a
preretirement survivor annuity, unless you make the waiver election below
(Waiver of Preretirement Survivor Annuity) and your spouse consents (on the back
of this form).
In addition, once you begin distributions from your account, the
distributions will be in the form of a joint and survivor annuity whether you
are married or unmarried, unless you waive that right (a separate waiver form is
available to waive the joint and survivor annuity).
If you waive the preretirement survivor annuity with your spouse's consent,
the beneficiary designation below will apply to your entire account balance. If
you do not waive the annuity, or if your spouse does not consent to the waiver,
the beneficiary designation will apply only to the 50% of the account not
distributable as a preretirement survivor annuity.
- --------------------------------------------------------------------------------
Examples of beneficiary designations
o Sandra Casey (SS# 000-00-0000), 3 Oak Street, Chicago, IL 60060, my wife,
if living at my death; otherwise to my children who survive me, in equal
shares. If any child does not survive me, such deceased child's share shall
go by right of representation to that child's issue who survive me. (Note:
"issue" refers to children, grandchildren, etc.)
o Sandra Casey (SS# 000-00-0000) 3 Oak Street, Chicago, IL 60060, my wife, if
living at my death; otherwise to James Casey (SS# ###-##-####), 321 Elm
Street, San Mateo, CA 94042, my son, if living at my death. If he is not
living at my death, then to his issue who survive me by right of
representation.
o James Casey (SS# ###-##-####), 321 Elm Street, San Mateo, CA 94042, my son,
and Mary Casey (SS# 999-99-9999), 7 Beech Avenue, Dallas, TX 75302, my
daughter, in equal shares, if they both survive me; otherwise all to the
one of them who survives me. If neither survives me, to X charity.
These are only examples. You may wish to consult an attorney before naming
beneficiaries.
- --------------------------------------------------------------------------------
Name your plan Beneficiaries and list their Social Security Numbers and
addresses if possible
The following beneficiaries are entitled to receive the assets of my Plan upon
my death. This designation revokes any previous designation. I understand that I
can change this choice of beneficiary by submitting a new form to the Trustee
for the Scudder Money Purchase Pension Plan.
Beneficiaries (Please print): ____________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
- --------------------------------------------------------------------------------
Waiver of Preretirement Survivor Annuity
This waiver is effective only when executed by a married individual either (a)
during or after the plan year in which such individual attains age 35, or (b)
after the individual separates from service, if earlier. Check box if you are
eligible and you wish to make a waiver election.
|_| I waive automatic payment of the portion of my account balance which would
otherwise be distributed as a preretirement survivor annuity. I acknowledge
that I have read and understood the information provided to me concerning
such annuity. I reserve the right to revoke this election to waive the
annuity coverage.
________________________________________________________________________________
Sign here
__________________________________ __________________________
Your signature Date
_________/___/______
Your Date of Birth
- --------------------------------------------------------------------------------
(over, please)
<PAGE>
Obtain the consent of your spouse if necessary (both boxes may be checked). If
box (a) is checked, your spouse's signature must be witnessed by a Notary Public
or Plan Representative
|_| (a) I, the spouse of the Participant, have read the above waiver of
preretirement survivor annuity and understand that the effect such waiver
has on me may be that all death benefits under the plan may be paid to
someone other than me. By signing below, I consent to my spouse's waiver of
a preretirement survivor annuity. My consent is limited to the
beneficiary(ies) listed above. In addition, recognizing that I also have
the right to limit my consent to a specific form of benefits (such as a
lump sum distribution or installments over a period of time), by signing
below, I relinquish that right and consent to any form of benefits which
may be elected under the Plan.
I understand that my spouse must execute a new designation if he or
she wants to designate another beneficiary.
|_| (b) As spouse of a Participant who is a resident of Arizona, California,
Idaho, Louisiana, Nevada, New Mexico, Texas, or Washington, I consent to
(1) the naming of another person as primary beneficiary to receive more
than one-half of my spouse's account balance or (2) the naming of myself as
primary beneficiary and others as contingent beneficiaries.
I acknowledge that I have read the above election and understand the
effect its exercise shall have on me.
______________________________ _________________________
Spouse's signature Date
Witness_________________________________________________
|_| Plan Rep. or |_| Notary Public
State: _________________________
Commission Expires: ____________
<PAGE>
[In the printed material, this page contains photocopies of two IRS approval
letters]
IRS
Approval
Letters
<PAGE>
- --------------------------------------------------------------------------------
NOTICE TO INTERESTED PARTIES
================================================================================
After enrolling in the Scudder Flexi-Plan, please complete this notice and post
it in a common area for your employees' information.
(Where no determination letter submission is required in order for the employer
to obtain reliance, this notice must be posted 9 to 23 days after adoption or
amendment of a plan. Where a determination letter submission is required, this
notice must be posted 7 to 21 days prior to the submission.)
An employer adopting a master or prototype plan or an amendment thereto or a
restatement thereof, is required to notify all interested parties including all
employees and any self-employed individuals) of such adoption, amendment, or
restatement. Recently, ___________________ (name of employer) |_| adopted |_|
restated the |_| __________________ Money Purchase Pension Plan |_|
_____________________ Profit Sharing Plan (the "Plan"). The Internal Revenue
Service, On August 5, 1985, issued an opinion letter with respect to this
(amended form of) plan as a tax qualified prototype.
1. Notice to employees of ____________________________________ (name of
employer)(the "Employer").
An application |_| is |_| is not to be made to the Internal Revenue Service
by the Employer for determination on the qualification of the employee
benefit pension plan described below.
2. The Employer has |_| adopted |_| restated the employee pension benefit plan
described below on ___________________________.
3. The name of the plan is _______________________________ (insert full name
of plan from first paragraph of adoption agreement).
4. The plan's identification number is ____. (For instance, the first plan
will be No. 001 and subsequent plans No. 002, 003, etc.)
5. The name and address of the Employer is _________________________
___________________________________________________________________.
6. The prototype plan's Opinion Letter number is |_| C212885a (if the Plan is
a profit sharing plan) |_| C212883a (if the Plan is a money purchase
pension plan).
7. The plan's sponsor is Scudder Fund Distributors, Inc., 175 Federal Street,
Boston, Massachusetts 02110.
8. The Employer's Tax Identification Number is _____________________.
9. The plan administrator's name and address is ____________________
___________________________________________________________________.
(If none appointed, insert Employer's name).
10. The address of the Key District Director having jurisdiction over the plan
is ______________________________________________.*
* Please refer to chart at Appendix A, attached hereto.
11. The employees eligible to participate under the plan are (describe by
class): __________________________________________________________________
_________________________________________________________________________.
12. The Internal Revenue Service |_| has |_| has not previously issued a
determination letter with respect to the qualification of this plan.
13. Check Appropriate Box:
|_| For employers who are required to make a determination letter
submission to the IRS:
The application will be filed on ____________________________ with the
Key District Director, Internal Revenue Service at ___________________
for an advance determination as to whether the plan meets the
qualification requirements of section 401, 403(a) or 405(a) of the
Internal Revenue Code with respect to the plan's |_| initial
qualification |_| amendment |_| termination |_| merger |_|
consolidation or |_| transfer of plan assets or liabilities.
|_| For employers who are not required to make a determination letter to
the IRS.
It is not contemplated that the plan will be submitted to the Internal
Revenue Service for an advance determination as to whether it meets
the qualification requirements of section 401 of the Internal Revenue
Code with respect to either its initial qualification or any
subsequent amendment.
RIGHTS OF INTERESTED PARTIES
14. You have the right to submit to the Key District Director, at the above
address, either individually or jointly with other interested parties, your
comments as to whether this plan meets the qualification requirements of
the Internal Revenue Code. You may instead, individually or jointly with
other interested parties, request the Department of Labor to submit, on
your behalf, comments to the Key District Director regarding qualification
of the plan. If the Department declines to comment on all or some of the
matters [Illegible text].
<PAGE>
REQUESTS FOR COMMENTS BY THE DOL
15. Check Appropriate Box:
|_| For employers who are required to make a determination letter
submission to the IRS:
The Department of Labor may not comment on behalf of interested
partied unless requested to do so by the lesser of 10 employees or 10% of
the employees who qualify as interested parties. The number of persons
needed for the Department to comment with respect to this plan is _____. If
you request the Department to comment, your comment must be in writing and
must specify the matters upon which comments are requested, and also must
include:
(1) the information contained in items 2 through 9 of this Notice; and
(2) the number of persons needed for the Department to comment.
|_| For employers who are not required to make a determination letter
submission to the IRS:
The Department of Labor may not comment on behalf of interested
partied unless requested to do so by the lesser of 10 employees or 10% of
the employees who qualify as interested parties. The number of persons
needed for the Department to comment with respect to this plan is _____. If
you request the Department to comment, your comment must be in writing and
must specify the matters upon which comments are requested, and must also
include:
(1) the information contained in items 2 through 9 of this Notice; and
(2) the number of persons needed for the Department to comment.
- --------------------------------------------------------------------------------
A request to the Department to comment should be addressed as follows:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20216
ATTN: 3001 Comment Request
COMMENTS TO THE IRS
16. Check Appropriate Box:
|_| For employers who are required to make a determination letter
submission to the IRS:
Comments submitted by you to the Key District Director must be in
writing and received by him by _______________________ (the 45th day
after the date on which the application for determination is received
by the Key District Director). However, if there are matters you
request the Department of Labor to comment upon your behalf, and the
Department declines, you may submit comments on these matters to the
Key District Director to be received by him on __________________
(within 15 days from the time the Department notifies you that it will
not comment on a particular matter), or by ________________________
(the 45th day after the date on which the application for
determination is received by the Key District Director), whichever is
later. A request to the Department to comment on your behalf must be
received by it by ____________________ (the 15th day after the date on
which the application for determination is received by the Key
District Director) if you wish to preserve your right to comment on a
matter upon which the Department declines to comment, or by
____________________ (the 25th day after the date on which the
application for determination is received by the Key District
Director) if you wish to waive that right.
|_| For employers who are not required to make a determination letter
submission to the IRS:
Comments submitted by you to the Key District Director must be in
writing and received by him by _______________________ (the 75th day
after the date on which the plan is adopted or amended). However, if
there are matters you request the Department of Labor to comment upon
your behalf, and the Department declines, you may submit comments on
these matters to the Key District Director to be received by him on
__________________ (within 15 days from the time the Department
notifies you that it will not comment on a particular matter), or by
________________________ (the 75th day after the date on which the
plan is adopted or amended), whichever is later. A request to the
Department to comment on your behalf must be received by it by
____________________ (the 45th day after the date on which the plan is
adopted or amended) if you wish to preserve your right to comment on a
matter upon which the Department declines to comment, or by
____________________ (the 55th day after the date on which the plan is
adopted or amended) if you wish to waive that right.
ADDITIONAL INFORMATION
17. Check Appropriate Box:
|_| For employers who are required to make a determination letter
submission to the IRS:
Detailed instruction regarding the requirements for notification of
interested parties may be found in sections 6,7 and 8 of Revenue Procedure
80-30. Additional information concerning this adoption or amendment
(including, where applicable, an updated copy of the plan and related
trust; the application for determination; and any additional documents
dealing with the application for determination; and copies of section 6 of
Revenue Procedure 80-30) is available at _________________ during the hours
of __________________ for inspection and copying. (There is a nominal
charge for copying and/or mailing.)
<PAGE>
|_| For employers who are not required to make a determination letter
submission to the IRS:
Detailed instruction regarding the requirements for notification of
interested parties may be found in sections 6,7 and 8 of Revenue Procedure
80-30. Additional information concerning this adoption or amendment
(including, where applicable, a description of the provisions providing for
nonforfeitable benefits; a description of the circumstances which may
result in ineligibility or loss of benefits; a description of the source of
financing of the plan; and copies of section 6 of Revenue Procedure 80-30)
is available at _________________ during the hours of __________________
for inspection and copying. (There is a nominal charge for copying and/or
mailing.)
Appendix A
Key District Addresses
Key District IRS Districts Covered
Mid Atlantic Region
Baltimore Baltimore, Pittsburgh, Richmond
31 Hopkins Plaza
Baltimore, MD 21201
Newark Newark, Philadelphia, Wilmington
70 Broad Street
Newark, NJ 07102
North Atlantic Region
Brooklyn Albany, Augusta, Boston, Brooklyn,
35 Tillary Street Buffalo, Burlington, Hartford,
Brooklyn, NY 11201 Manhattan, Portsmouth, Providence
Central Region
Cincinnati Cincinnati, Cleveland, Detroit,
550 Main Street Indianapolis, Louisville,
Cincinnati, OH 45202 Parkersburg
Midwest Region
Chicago Aberdeen, Chicago, Des Moines,
230 S. Dearborn Street Fargo, Helena, Milwaukee, Omaha,
Chicago, IL 60604 St. Louis, St. Paul, Springfield
Southeast Region
Atlanta Atlanta, Birmingham, Columbia,
275 Peachtree Street, NE Greensboro, Jackson, Jacksonville,
Atlanta, GA 30303 Little Rock, Nashville, New Orleans
Southwest Region
Dallas Albuquerque, Austin, Cheyenne,
1100 Commerce Street Dallas, Denver, Houston, Oklahoma
Dallas, TX 75202 City, Phoenix, Salt Lake City, Wichita
Western Region
Los Angeles Anchorage, Boise, Honolulu, Laguna
300 N. Los Angeles Street Niguel, Los Angeles, Portland, Reno,
Los Angeles, CA 90012 Sacramento, San Francisco, San Jose,
Seattle
<PAGE>
-------------
TELEPHONE
NUMBERS AND
ADDRESSES
=============
-----------------------------------------
For questions about Scudder Flexi-Plan
Call: (Toll-free)
1-800-323-6105
or
Write to:
Scudder Funds
Group Retirement Plans Dept.
175 Federal Street
Boston, MA 02110-2267
-----------------------------------------
For questions about the Scudder Funds
Call: (Toll-free)
1-800-225-2470
or
Write to:
Scudder Funds
160 Federal Street
Boston, MA 02110
-----------------------------------------
To arrange transactions and for questions
about existing accounts
Call: (Toll-free)
1-800-225-5163
or
Write to:
Scudder Funds
P.O. Box 2291
Boston, MA 02107-2291
================================================================================
Scudder Offices
Boston
160 Federal Street
Boston, Massachusetts 02110
800-225-2470
Chicago
111 East Wacker Drive, 22nd Fl.
Chicago, Illinois 60601
312-861-2700
Cincinnati
555 Carew Tower
Cincinnati, Ohio 45202
513-621-4200
Cleveland
950 Terminal Tower
Cleveland, Ohio 44113
216-241-7744
Houston
1100 Louisiana Street
Suit 2190
Houston, Texas 77002
713-659-3838
800-445-0544 (in Texas)
Los Angeles
333 South Hope Street, 37th Fl.
Los Angeles, California 90071
213-628-1144
New York
345 Park Avenue, 26th Fl.
New York, New York 10154
212-326-6200
Philadelphia
Three Mellon Bank Center
Philadelphia, Pennsylvania 19102
215-864-7200
Portland, Oregon
One S.W. Columbia Street
Suite 575
Portland, Oregon 97258
503-224-3999
San Francisco
101 California Street, 41st Fl.
San Francisco, California 94111
415-981-8191
West Palm Beach
Phillips Point, Suite 1100
777 South Flagler Drive
West Palm Beach
Florida, 33401
305-832-3600
<PAGE>
Return a copy to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
175 Federal Street
Boston, MA 02110
SCUDDER FLEX I-PLAN
Profit Sharing Plan
Plan number 005 Adoption Agreement
The undersigned (the "Employer") establishes, or amends, the (Scudder
automatically inserts employer's name) Profit Sharing Plan, by completing this
Adoption Agreement adopting or amending the Profit Sharing Plan in the form of
the Prototype Plan attached.
I. ELIGIBILITY
A. To become a Participant an Employee must complete 3 Years of
Service
|_| or, if this box is checked, an Employee must complete _____
Year(s) of Service, (insert less than "3"; select more than
"1" only if the Employer selects full and immediate vesting
in Section II.A. below; insert "0" for no waiting period).
B. The number of Hours of Service required to have a Year of Service
is 1000
|_| or, if this box is checked, _____ (insert less than 1000
hours). However, if the Year(s) of Service selected in A.
above is or includes a fractional year, an Employee is not
required to complete any specified number of Hours of
Service to receive eligibility credit for such fractional
year.
C. To become a Participant an Employee need not attain any minimum
age
|_| or, if this box is checked, an Employee must be at least
_____ (insert "21" or less) years of age.
D. An Employee who meets the above requirements shall become a
Participant on the first day the requirements are met
|_| or, if this box is checked, on the first day of the next
month.
<PAGE>
E. All Employees are entitled to be Participants except [one or more
may be selected]:
|_| Non-resident aliens who receive no earned income from the
Employer which constitutes income from sources within the
United States
|_| Individuals covered by a collective bargaining contract
which meets the requirements specified in the Plan
|_| Salaried Employees
|_| Hourly-paid Employees
|_| Piece-rate Employees
|_| Employees paid by commission
|_| Employees covered by another retirement plan to which the
Employer is required to contribute
|_| Employees in the following non-discriminatory
classification:
___________________________________________________________.
Note: If Employees are excluded from the Plan under one or more of the
classifications above (not including the first two
classifications) the exclusion must NOT result in discrimination
in favor of officers, shareholders or highly paid Employees.
-2-
<PAGE>
II. EMPLOYER CONTRIBUTIONS
Each Plan Year, the Employer shall make an Employer Contribution to
the Plan in an amount determined by it, in its discretion
|_| and, if this box is checked, an amount equal to _____% of
aggregate Nondeductible Voluntary Contributions made during the
Plan Year by Participants whose Non-deductible Voluntary
Contributions equal or exceed _____% [insert "0" or a number not
in excess of the next chosen number] of such Participant's
Compensation, but only to the extent that such Participant's
Non-deductible Voluntary Contributions do not exceed _____%
[insert "6" or less] of such Participant's Compensation; plus
such additional amount as shall be determined by the Employer, in
its discretion, to be allocated in proportion to Participant's
Non-deductible Voluntary Contributions in excess of the second
above designated percentage, but not in excess of the last above
designated percentage.
III. VESTING OF EMPLOYER CONTRIBUTIONS
A. Employer Contributions under the Plan shall be fully and
immediately vested and non-forfeitable
or, check one:
|_| Vested at the "Top-Heavy" rate in Column 1 below
|_| Vested at the "4-40 vesting" rate in Column 2 below
|_| Vested at the rate specified in Column 4 below, which rate
shall be at least as rapid as the rate in Column 3 below.
-3-
<PAGE>
VESTING TABLE
Column 1 Column 2 Column 3 Column 4
Vesting "Top-Heavy" "4-40 Vesting" Minimum Percent age
Years Percentage Percentage Percentage Elected
------- ----------- -------------- ---------- -----------
1 0 0 0 _____
2 20 0 0 _____
3 40 0 0 _____
4 60 40 0 _____
5 80 45 25 _____
6 100 50 30 _____
7 100 60 35 _____
8 100 70 40 _____
9 100 80 45 _____
10 100 90 50 _____
11 100 100 60 _____
12 100 100 70 _____
13 100 100 80 _____
14 100 100 90 _____
15 100 100 100 _____
B. Vesting Years and One-Year Breaks in Service for the purpose of
vesting shall be measured on the Plan Year
|_| or, if this box is checked, on the 12 consecutive month
period beginning on the Participant's initial date of
employment or an anniversary of that date.
Note: If you make this election, you may not make elections
in Sections III.C. or IV.B.
C. The Participant will have a Vesting Year only if the Participant
completes the number of Hours of Service specified in Section
I.B.
|_| or, if this box is checked, if the Participant either
completes the number of Hours of Service specified In
Section I.B. or receives an allocation of the Employer
Contribution for the Plan Year, or both.
-4-
<PAGE>
D. The following Service will be included in determining Vesting
Years only if checked:
|_| Service before the first Plan Year in which the Participant
attained age 18
|_| Service before the Employer maintained this Plan or a
predecessor plan
|_| Service before January 1, 1971, unless the Participant has
completed at least 3 Vesting Years after December 31, 1970
|_| Service before the first Plan Year to which ERISA is
applicable if this Plan is a continuation of an earlier plan
which would have disregarded such service
|_| Service after five consecutive One-Year Breaks in Service
(but this exclusion shall apply only for the purpose of
computing the vested percentage of Employer Contributions
made before such break)
|_| Service before a period of consecutive One-Year Breaks in
Service, if the Participant had no vested interest at the
time of such breaks and the number of consecutive One-Year
Breaks in Service equals or exceeds the greater of five or
the number of Vesting Years before such break without
counting Vesting Years excluded by an earlier application of
this provision.
E. If the Plan shifts out of Top-Heavy status for any Plan Year, the
vesting schedule in effect while the Plan was Top-Heavy will
continue to be in effect for all existing and future Participants
|_| or, if this box is checked, the Plan will shift to the
vesting schedule selected in Section III.A. for all Plan
Years during which the Plan is not Top-Heavy.
-5-
<PAGE>
IV. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. A former Participant who has retired, died, otherwise terminated
Service, or transferred to an ineligible class of Employees
during the Plan Year shall share in the allocation of Employer
Contributions for the Plan Year
|_| or, if this box is checked, shall not share in the
allocation of Employer Contributions.
B. Participants will share in the allocation of Employer
Contributions for a Plan Year regardless of the number of Hours
of Service completed in such Plan Year
|_| or, if this box is checked, in a Plan Year in which the Plan
is not Top-Heavy, only if they complete during such Plan
Year the number of Hours of Service specified in Section
I.B.
C. Any minimum Top-Heavy allocations of the Plan will be made first
by this Plan
|_| or, if this box is checked, by the ____________ Plan (insert
name of another qualified plan maintained by the Employer).
D. In any Year in which the Plan is Top-Heavy, the minimum Top-Heavy
Allocation shall be at the rate of 3%
|_| or, if this box is checked, at the rate of 4%.
Note: The Employer may not make a selection in A. or B. above, if
it has previously made an election in Section II.
V. INTEGRATION WITH SOCIAL SECURITY
The Plan will not be integrated with Social Security
|_| or, if this box is checked, will be integrated with Social
Security on the following basis:
-6-
<PAGE>
A. The Integration Level for a Plan Year will be the Social Security
Wage Base for such Plan year
|_| or, if this box is checked, $________ (not in excess of
Social Security Wage Base).
B. The Integration Rate for a Plan Year will be the OASDI Rate for
such Plan Year
|_| or, if this box is checked, ________% (not in excess of
OASDI rate).
Note: An employer may elect to integrate the Plan with Social
Security only if the Employer both does not maintain another
qualified retirement plan integrated with Social Security
and has not made an election in Section II above.
VI. NORMAL RETIREMENT DATE
A participant's Normal Retirement Date shall be age 59-1/2
|_] or, if this box is checked, age __________ (insert more than
59-1/2 but not more than 65).
VII. COMPENSATION
"Compensation" shall Include mounts paid during the Plan Year by the
Employer to the Employee while the Employee was a Participant
|_| or, if this box is checked, "Compensation" shall include
amounts paid by the Employer to the Employee during the
entire Plan Year in which an Employee became a Participant
whether or not such an Employee was a Participant for the
entire Plan Year.
|_| and, if this box is checked, "Compensation" shall not
include the following (select one or more if desired):
( ) Bonuses
( ) Commissions
( ) Overtime Payments
( ) Other (specify) ____________________.
-7-
<PAGE>
Note: The above exclusions from Compensation shall only apply if
benefits under this plan are not integrated with Social
Security Benefits. Furthermore, the above exclusions must
not result in prohibited discrimination under Code Section
401(a)(4).
VIII. PARTICIPANT CONTRIBUTIONS
A. Nondeductible Voluntary Contributions by a Participant are
permitted
|_| or, if this box is checked, are not permitted.
B. Deductible Voluntary Contributions (QVECs) by a Participant are
not permitted
|_| or, if this box is checked, are permitted.
IX. INVESTMENT
Investment decisions shall be made by the Participant
|_| or, if this box is checked, by the Administrator.
X. LOANS
Loans to a Participant are not permitted
|_| or, if this box is checked, are permitted.
XI. EFFECTIVE DATE
The Effective Date of this Plan or amendment shall be the first day of
the Employer's fiscal year during which the Plan is adopted or amended
|_| or, if this box is checked, ____________________.
-8-
<PAGE>
XII. PLAN AND LIMITATION YEARS
A. The Plan Year shall be the same as the fiscal year of the
Employer
|_| or, if this box is checked, shall end on the last day of the
month of _______________
B. The Limitation Year shall be identical for all plans of the
Employer and is the Plan Year
|_| or, if this box is checked, shall end on the last day of the
month of _________________.
XIII. AMENDMENT
Execution of this Adoption Agreement is not an amendment to an
existing plan
|_| or, if this box is checked, is an amendment to an existing
plan.
XIV. LIMITATIONS ON ALLOCATIONS
This section applies only for an employer who maintains or has ever
maintained another qualified retirement plan, other than the Scudder
Prototype Plan adopted as a Money Purchase Pension Plan, or a Plan
amended into the Scudder Prototype Plan, in which any participant in
this plan is or was a participant or could possibly become a
participant.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan, the provisions of Section 5 of the Prototype
Plan will apply as if the other plan were a master or prototype
plan
|_| or, if this box is checked, the attached rider describes the
method by which the plans will limit total Annual Addition
to the Maximum Permissible Amount described in Section 5.5
of the Plan and reduce any excess amount in a manner that
precludes Employer discretion.
-9-
<PAGE>
B. If the Participant is, or has ever been, a participant in a
defined benefit plan maintained by the Employer, the provisons
of Section 5 of the Prototype Plan will apply
or, if this box is checked, the attached rider describes the
method by which the plans involved will satisfy the 1.0
limitation described in Section 5.4 of the Plan and reduce
any excess amount in a manner that precludes Employer
discreation.
XV. APPOINTMENT OF TRUSTEES:
The Employer hereby designates the following person or persons as
Trustee(s) under the Trust:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
XVI. SIGNATURES
The Employer (1) convenants and agrees that whenever a Participant
makes a contribution the Employer shall ascertain that the Participant
has received a copy of the current prospectus relating to the shares
of any Designated Investment Company in which such contribution is to
be invested, plus, where required by any state or federal law, the
current prospectus relating to any other investment in which
contributions are to be invested, and (2) by remitting such a
contribution to the Trustee the Employer shall be deemed to represent
that the Participant has received such a prospectus, and (3) by
remitting any other contribution to the Trustee the Employer shall be
deemed to represent that the Employer has received a current
prospectus of any Designated Investment Company in which it is to be
invested, plus, where required by any state or federal law, the
current prospectus relating to any other investment in which
contributions are to be invested.
An Employer adopting this Plan may not rely on the opinion letter
issued by the National Office of the Internal Revenue Service as
evidence that this Plan is qualified under Code D Section 401. An
Employer who wishes to obtain such reliance should apply for a
determination letter from the appropriate Key District Director of the
Internal Revenue Service to obtain reliance that the Plan is
qualified.
This Adoption Agreement may be used in conjunction with basic Plan
Document #01.
-10-
<PAGE>
IN WITNESS WHEREOF, the Employer has hereunto executed this Adoption
Agreement as of the _______ day of ______________ , 19_____.
__________________________________ Trustee(s) Signature(s):
Print Name of Employer
__________________________________ _____________________________
Signature of Employer
__________________________________ _____________________________
Street Address
__________________________________ _____________________________
City State Zip
__________________________________ _____________________________
Telephone
__________________________________ _____________________________
Employer Tax Identification Number Date
__________________________________
Employer Fiscal Year
Scudder Fund Distributors, Inc., acknowledges receipt of a copy of the
executed Adoption Agreement and agrees to accept contributions under the Plan on
behalf of the Designated Investment Companies.
SCUDDER FUND DISTRIBUTORS
By:_________________________
-11-
<PAGE>
- --------------------------------------------------------------------------------
The Flexi-Plan has been amended for all Tax Reform changes effective in 1987 and
1988. The Adoption Agreement below has been included as part of this Tax Reform
Amendment.
- --------------------------------------------------------------------------------
ADOPTION AGREEMENT AMENDMENT
Employer Contributions in Profit Sharing Plan.
----------------------------------------------
(check the option below if you wish it to apply to your plan)
|_| Effective for Plan Years beginning on or after [_____________ fill in the
first day of the Plan Year in which this Adoption Aqreement Amendment is
executed or a subsequent anniversary of such date], notwithstanding any other
provision of the plan, the employer contributions shall be made to the plan
without regard to current or accumulated earnings and profits for the taxable
year or years ending with or within such Plan Year.
<PAGE>
Return to:
Scudder Fund Distributors, Inc.
Retirement Plan Services
175 Federal Street
Boston, MA 02210
SCUDDER FLEXI-PLAN
Money Purchase Pension Plan
Adoption Agreement
Plan number 006
The undersigned (the "Employer") establishes, or amends, the (Scudder
automatically inserts employer's name) Money Purchase Pension Plan, by
completing this Adoption Agreement adopting or amending the Money Purchase
Pension Plan in the form of the Prototype Plan attached.
I. ELIGIBILITY
A. To become a Participant an Employee must complete 3 Years of
Service
|_| or, if this box is checked, an Employee must complete
Year(s) of Service, (insert less than "3"; select more than
"1" only if the Employer selects full and immediate vesting
in Section II.A. below; insert "0" for no waiting period).
B. The number of Hours of Service required to have a Year of Service
is 1000
|_| or, if this box is checked, _____(insert less than 1000
hours). However, if the Year(s) of Service selected in A.
above is or includes a fractional year, an Employee is not
required to complete any specified number of Hours of
Service to receive eligibility credit for such fractional
year.
C. To become a Participant an Employee need not attain any minimum
age
|_| or, if this box is checked, an Employee must be at least
(insert "21" or less) years of age.
D. An Employee who meets the above requirements shall become a
Participant on the first day the requirements are met
|_| or, if this box is checked, on the first day of the next
month.
<PAGE>
E. All Employees are entitled to be Participants except (one or more
may be selected):
|_| Non-resident aliens who receive no earned income from the
Employer which constitutes income from sources within the
United States
|_| Individuals covered by a collective bargaining contract
which meets the requirements specified in the Plan
|_| Salaried Employees
|_| Hourly-paid Employees
|_| Piece-rate Employees
|_| Employees paid by commission
|_| Employees covered by another retirement plan to which the
Employer is required to contribute
|_| Employees in the following non-discriminatory
classification:
____________________________________________________________
Note: If Employees are excluded from the Plan under one or more of the
classifications above (not including the first two classifications)
the exclusion must NOT result in discrimination in favor of officers,
shareholders or highly paid Employees.
II. VESTING OF EMPLOYER CONTRIBUTIONS
A. Employer contributions under the Plan shall be fully and
immediately vested and non-forfeitable
or, check one:
|_| Vested at the "Top-Heavy" rate in Column 1 below
|_| Vested at the "4-40 vesting" rate in Column 2 below
-2-
<PAGE>
|_| Vested at the rate specified in Column 4 below, which rate
shall be at least as rapid as the rate in Column 3 below.
VESTING TABLE
Column 1 Column 2 Column 3 Column 4
Vesting "Top-Heavy" "4-40 Vesting" Minimum Percentage
Years Percentage Percentage Percentage Elected
------- ----------- ------------- ---------- ------------
1 0 0 0 ____________
2 20 0 0 ____________
3 40 0 0 ____________
4 60 40 0 ____________
5 80 45 25 ____________
6 100 50 30 ____________
7 100 60 35 ____________
8 100 70 40 ____________
9 100 80 45 ____________
10 100 90 50 ____________
11 100 100 60 ____________
12 100 100 70 ____________
13 100 100 80 ____________
14 100 100 90 ____________
15 100 100 100 ____________
B. Vesting Years and One-Year Breaks in Service for the purpose of
vesting shall be measured on the Plan Year
|_| or, if this box is checked, on the 12 consecutive month
period beginning on the Participant's initial date of
employment or anniversary of that date.
Note: If you make this election, you may not make elections in
Sections II.C. or IV.B.
C. The Participant will have a Vesting Year only if the Participant
completes the number of Hours of Service specified in Section
I.B.
|_| or, if this box is checked, if the Participant either
completes the number of Hours of Service specified in
Section I.B. or receives an allocation of the Employer
Contribution for the Plan Year, or both.
-3-
<PAGE>
D. The following Service will be included in determining Vesting
Years only if checked:
|_| Service before the first Plan Year in which the Participant
attained age 18
|_| Service before the Employer maintained this Plan or a
predecessor plan
|_| Service before January 1, 1971, unless the Participant has
completed at least 3 Vesting Years after December 31, 1970
|_| Service before the first Plan Year to which ERISA is
applicable if this Plan is a continuation of an earlier plan
which would have disregarded such service
|_| Service after five consecutive One-Year Breaks in Service
(but this exclusion shall apply only for the purpose of
computing the vested percentage of employer Contributions
made before such break)
|_| Service before a period of consecutive One-Year breaks in
Service, if the participant had no vested interest at the
time of such breaks and the number of consecutive One-Year
Breaks in Service equals or exceeds the greater of five or
the number of Vesting Years before such break without
counting Vesting Years excluded by an earlier application of
this provision.
E. If the Plan shifts out of Top-Heavy status for any Plan Year, the
vesting schedule in effect while the Plan was Top-Heavy will
continue to be in effect for all existing and future Participants
|_| or, if this box is checked, the Plan will shift to the
vesting schedule selected in Section II.A. for all Plan
Years during which the Plan is not Top-Heavy.
III. EMPLOYER CONTRIBUTIONS AND INTEGRATI0N WITH SOCIAL SECURITY
The Plan will not be integrated with Social Security, and for each
Plan Year the Employer will contribute to the Account of each
Participant entitled to an allocation under Section IV, __________%
(insert not more than 25%) of that Participant's compensation for the
Plan Year
-4-
<PAGE>
or, check and complete one:
|_| The Plan will be integrated with Social Security and for
each Plan Year, the Employer will contribute
|_| the OASDI Rate
or
|_| ___________% (not to exceed the OASDI Rate)
of such Participant's Compensation in excess of (check one)
|_| the Social Security Wage Base
or
|_| $__________ (not to exceed the Social Security
Wage Base)
Plus, an amount equal to _________% of each Participant's
Compensation for the Plan Year.
|_| The Plan will not be integrated with Social Security and for
each Plan Year the Employer will contribute an amount equal
to ___% of the aggregate Nondeductible Voluntary
Contributions made during the Plan Year by Participants
whose Nondeductible Voluntary Contributions for the Plan
Year equal or exceed ___% (insert "0" or a number not in
excess of the next chosen number) of such Participant's
Compensation, but only to the extent that such Participant's
Nondeductible Voluntary Contributions do not exceed ___%
insert "6" or less) of such Participant's Compensation.
Notes: Rates chosen should not result in total contributions to
any Participant exceeding 25% of that Employee's aggregate
compensation.
Employer contributions allocable to a Participant shall be
reduced by that Participant's allocation of forfeitures
arising during preceding Plan Years.
An Employer may elect to integrate the Plan with Social
Security only if the Employer does not maintain another
qualified retirement plan integrated with Social Security.
-5-
<PAGE>
IV. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. A former Participant who has retired, died, otherwise terminated
Service, or transferred to an ineligible class of Employees
during the Plan Year shall share in the allocation of Employer
Contributions for the Plan Year
|_| or, if this box is checked, shall not share in the
allocation of Employer Contributions.
B. Participants will share in the allocation of Employer
Contributions for a Plan Year regardless of the number of Hours
of Service completed in such Plan Year
|_| or, if this box is checked, in a Plan Year in which the Plan
is not Top-Heavy, only if they complete during such Plan
Year the number of Hours of Service specified in Section
I.B.
C. Any minimum Top-Heavy allocations of the Plan will be made first
by this Plan, unless the Employer has adopted the Scudder Profit
Sharing Plan, in which case, the minimum Top-Heavy allocation
will be made first from that plan
|_| or, if this box is checked, by the __________________Plan
(insert name of another qualified plan maintained by the
Employer).
D. In any Year in which the Plan is Top-Heavy, the minimum Top-Heavy
Allocation shall be at the rate of 3%
|_| or, if this box is checked, at the rate of 4%
V. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be age 59-1/2
|_| or, if this box is checked, age_________(insert more than
59-1/2 but not more than 65).
-6-
<PAGE>
VI. COMPENSATION
"Compensation" shall include amounts paid during the Plan Year by the
Employer to the Employee while the Employee was a Participant
|_| or, if this box is checked, "Compensation" shall include
amounts paid by the Employer to the Employee during the
entire Plan Year in which an Employee became a Participant
whether or not such an Employee was a Participant for the
entire Plan Year.
|_| and, if this box is checked, "Compensation" shall not
include the following (select one or more if desired):
( ) Bonuses
( ) Commissions
( ) Overtime Payments
( ) Other (specify)_________________
Note: The above exclusions from Compensation shall only apply if
benefits under this plan are not integrated with Social
Security Benefits. Furthermore, the above exclusions must
not result in prohibited discrimination under Code Section
401(a)(4).
VII. PARTICIPANT CONTRIBUTIONS
A. Nondeductible Voluntary Contributions by a Participant are
permitted
|_| or, if this box is checked, are not permitted.
B. Deductible Voluntary Contributions (QVECs) by a Participant are
not permitted
|_| or, if this box is checked, are permitted.
VIII. INVESTMENT
Investment decisions shall be made by the Participant
|_| or, if this box is checked, by the Administrator.
-7-
<PAGE>
IX. LOANS
Loans to a Participant are not permitted
|_| or, if this box is checked, are permitted.
X. EFFECTIVE DATE
The Effective Date of this Plan or amendment shall be the first day of
the Employer's fiscal year during which the Plan is adopted or amended
|_| or, if this box is checked,____________________
(Insert date)
XI. PLAN AND LIMITATION YEARS
A. The Plan Year shall be the same as the fiscal year of the
Employer
|_| or, if this box is checked, shall end on the last day of the
month of ___________.
B. The Limitation Year shall be identical for all plans of the
Employer and is the Plan Year
|_| or, if this box is checked, shall end on the last day of the
month of ___________.
XII. AMENDMENT
Execution of this Adoption Agreement is not an amendment to an
existing plan
|_| or, if this box is checked, is an amendment to an existing
plan.
XIII. LIMITATIONS ON ALLOCATIONS
This section applies only for an employer who maintains or has ever
maintained another qualified retirement plan, other than the Scudder
Prototype Plan adopted as a Profit Sharing Plan, or a Plan amended
into the Scudder Prototype Plan, in which any Participant in this plan
is or was a Participant or could possibly become a Participant.
-8-
<PAGE>
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or Prototype Plan, the provisions of Section 5 of the Prototype
Plan will apply as if the other plan were a master or prototype
plan
|_| or, if this box is checked, the attached rider describes the
method by which the plans will limit total Annual Addition
to the Maximum Permissible Amount described in Section 5.5
of the Plan and reduce any excess amount in a manner that
precludes Employer discretion.
B. If the Participant is, or has ever been, a Participant in a
defined benefit plan maintained by the Employer, the provisions
of Section 5 of the Prototype Plan will apply
|_| or, if this box is checked, the attached rider describes the
method by which the plans involved will satisfy the 1.0
limitation described in Section 5.4 of the Plan and reduce
any excess amount in a manner that precludes Employer
discretion.
XIV. APPOINTMENT OF TRUSTEES:
The Employer hereby designates the following person or persons as
Trustee(s) under the Trust:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
XV. SIGNATURES
The Employer (1) convenants and agrees that whenever a Participant
makes a contribution the Employer shall ascertain that the Participant
has received a copy of the current prospectus relating to the shares
of any Designated Investment Company in which such contribution is to
be invested, plus, where required by any state or federal law, the
current prospectus relating to any other investment in which
contributions are to be invested, and (2) by remitting such a
contribution to the Trustee the Employer shall be deemed to represent
that the Participant has received such a prospectus, and (3) by
remitting any other contribution to the Trustee the Employer shall be
deemed to represent that the Employer has received a current
prospectus of any Designated Investment Company in which it is to be
invested, plus, where required by any state or federal law, the
current prospectus relating to any other investment in which
contributions are to be invested.
-9-
<PAGE>
An Employer adopting this Plan may not rely on the opinion letter
issued by the National Office of the Internal Revenue Service as
evidence that this plan is qualified under Code Section 401. An
Employer who wishes to obtain such reliance should apply for a
determination letter from the appropriate Key District Director of the
Internal Revenue Service to obtain reliance that the plan is
qualified.
This Adoption Agreement may be used in conjunction with Basic Plan
Document #01.
IN WITNESS WHEREOF, the Employer has hereunto executed this Adoption
Agreement as of the _______ day of ______________, 19_____.
___________________________________ Trustee(s) Siqnature(s):
Print Name of Employer
___________________________________ ___________________________________
Signature of Employer
___________________________________ ___________________________________
Street Address
___________________________________ ___________________________________
City State Zip
___________________________________ ___________________________________
Telephone
___________________________________ ___________________________________
Employer Tax Identification Number
___________________________________ ___________________________________
Employer Fiscal Year Date
Scudder Fund Distributors, Inc., acknowledges receipt of a copy of the
executed Adoption Agreement and agrees to accept contributions under the Plan on
behalf of the Designated Investment Companies.
SCUDDER FUND DISTRIBUTORS, INC.
By:
-10-
Exhibit 14(b)
================================================================================
Scudder IRA
Plan
and
Disclosure
Statement
================================================================================
Scudder IRA Form 1-88
Scudder
Individual Retirement Custodial Account
(Under Section 408(a) of the Internal Revenue Code)
The Depositor whose name appears on the Scudder Application is establishing
an individual retirement account (under section 408(a) of the Internal Revenue
Code) to provide for his or her retirement and for the support of his or her
beneficiaries after death.
The Custodian named on the Application has given the Depositor the
disclosure statement required under the Income Tax Regulations under section
408(a) of the Code.
The Depositor has deposited with he Custodian the amount indicated on the
Application.
The Depositor and the Custodian make the following agreement:
Article I
- --------------------------------------------------------------------------------
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
408(d)(3) of the code or an employer contribution to a simplified employee
pension plan as described in section 408(k).
<PAGE>
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) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) of the Code).
Article IV
- --------------------------------------------------------------------------------
1. The Depositor's entire interest in the custodial account must be or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the 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.
The payments must begin by the April 1 following the calendar year in
which the Depositor reaches age 70 1/2.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
The payments must begin by the April 1 following the calendar year in
which the Depositor reaches age 70 1/2.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy
(e) Equal of substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of of Depositor and his or her designated beneficiary.
Even if distributions have begun to be made under option (d) or (e), the
Depositor may receive a distribution of the balance in the custodial account at
any time by giving written notice to the Custodian. If the Depositor does not
choose any of the methods of distribution described above by the April 1
following the calendar year in which he or she reaches age 70 1/2, distribution
to the Depositor will be made on that date by a single sum payment. If the
Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of section 408(b)(1), (3), and (4) of the
Code. If the Depositor elects as a means of distribution (d) or (e) above, the
annual payment required to be made by the Depositor's required beginning date is
for the calendar year the Depositor reached age 70 1/2. Annual payments for
subsequent years, including the year the Depositor's required beginning date
occurs, must be made by December 31 of that year.
2. 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 the Depositor's required beginning
date, distribution must continue to be made in accordance with
paragraph 1.
(b) If the Depositor dies before the Depositor's required beginning date,
the entire remaining interest will, at the election of the beneficiary
or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the 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.
The election of either (i) or (ii) must be made by December 31 of the year
following the year of the Depositor's death. If the beneficiary or beneficiaries
do not elect either of the distribution options described in (i) and (ii),
distribution will be made in accordance with (ii) if the beneficiary is the
Depositor's surviving spouse and in accordance with (i) if the beneficiary or
beneficiaries are or include anyone other than the surviving spouse. In the case
of distributions under (ii), distributions must commence by December 31 of the
year following the year of the Depositor's death. If the Depositor's spouse is
the beneficiary, distributions need not commence until December 31 of the year
the Depositor would have attained age 70 1/2, if later.
(c) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
3. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph (1), determine the initial life expectancy (or joint life and
last survivor expectancy) using the attained ages of the Depositor and
designated beneficiary as of their birthdays in the year the Depositor reaches
age 70 1/2. In the case of distribution in accordance with paragraph (2)(b)(ii),
determine life expectancy using the attained age of the designated beneficiary
as of the beneficiary's birthday in the year distributions are required to
commence. Unless the Depositor (or spouse) elects not to have life expectancy
recalculated, the Depositor's life expectancy (and the life expectancy of the
Depositor's spouse, if applicable) will be recalculated annually using their
attained age as of their birthdays in the year for which the minimum annual
payment is being determined. The life expectancy of the designated beneficiary
(other than the spouse) will not be recalculated. The minimum annual payment may
be made in a series of installments (e.g. monthly, quarterly, etc.) as long as
the total payments for the year made by the date required are not less than the
minimum amounts required.
Article V
- --------------------------------------------------------------------------------
Unless the Depositor dies, is disabled (as defined in section 72(m) of the
Code), or reaches age 59 1/2 before any amount is distributed from the custodial
account, the Custodian must receive from the Depositor a statement explaining
how he or she intends to dispose of the amount distributed.
Article VI
- --------------------------------------------------------------------------------
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) of the
Code and related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
<PAGE>
Article VII
- --------------------------------------------------------------------------------
Notwithstanding any other article which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) of the Code and
related regulations will be invalid.
Article VIII
- --------------------------------------------------------------------------------
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Application.
Article IX
- --------------------------------------------------------------------------------
1. Please refer to Scudder IRA Application which is incorporated herein by
reference.
2. Depositor's Selection of Investments
Depositor directs Custodian to invest all custodial funds in investment
shares issued by the "Mutual Funds(s)," or in the other investments which have
been designated by Scudder Fund Distributors, Inc. (or its successors) as
eligible for investment hereunder, which have been selected by Depositor until
Depositor hereafter gives custodian contrary instructions pursuant to Article
IX, paragraph ("para.") 6 below, which governs investment of the custodial
account in "Mutual Fund" shares or other investment.
3. Contributions
(a) Periodic Contributions. Periodic contributions which Depositor intends
to be tax-deductible under Internal Revenue Code Section 219 shall be in cash
and are to be invested under this Agreement. Depositor contemplates future
periodic contributions within the tax-deductible limits and in accordance with
the rules for tax-deductibility specified in the Internal Revenue Code.
Depositor assumes full and sole responsibility for making sure that the sum of
periodic contributions during a single taxable year of Depositor does not exceed
those limits or violate those rules. Depositor should not contribute to the
custodial account after it ceases to be exempt by reason of either section
408(e) or 415(g) of the Internal Revenue Code.
(b) Rollover Contributions From an Individual Retirement Account or
Individual Retirement Annuity Funded Exclusively With Deductible Contributions.
A rollover contribution by Depositor from an individual retirement account or
individual retirement annuity funded exclusively with deductible contributions
shall be a deposit in cash to be invested under this agreement, with respect to
which contribution, Depositor warrants that
(1) it meets the requirements for a rollover contribution from such an
individual requirement account or individual retirement annuity as are contained
in Code Section 408(d) and that
(2) no portion of such rollover contribution is attributable to a distribution
from an employee's trust, an employee annuity, an annuity contract or a U.S.
retirement bond as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(c)(3)(C).
(c) Rollover Contributions Attributable to Distributions From Employer
Plans. A rollover contribution by Depositor other than a contribution described
in paragraph (b) above shall be a deposit in cash to be invested under this
Agreement with respect to which contribution Depositor warrants that 91) the
amount rolled over is attributable to a distribution from an employees' trust,
an employee annuity, an annuity contract, a qualified bond purchase plan, or a
U.S. retirement bond, which meets the requirements of Code section 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C); and (2) Depositor will make no
additional contributions to the custodial account in which such contribution is
deposited, except as other wise permitted by Scudder Fund Distributors, Inc.
If permitted by Scudder Fund Distributors, Inc. rollover contributions may
be received under this Agreement with respect to qualified voluntary employee
contributions as defined in Internal Revenue Code Section 219(e)(2) and such
contributions shall thereafter be held and administered hereunder by the
Custodian in accordance with all applicable law with respect to accumulated
deductible employee contributions as defined in Internal Revenue Code Section
72(g)(5)(B).
(d) Transfer from an Individual Retirement Account or Individual Retirement
Annuity. Depositor may make an opening contribution hereunder by directing the
transfer of a cash amount from a custodian or trustee or an individual
retirement account or individual retirement annuity to the Custodian be made for
investment under this Agreement.
(1) From IRA Funded with Deductible Contributions. Where no portion of such
transferred amount is attributable to a distribution from an employees
trust, an employee annuity, an annuity contract or a U.S. retirement bond
as described in Internal Revenue Code Sections 402(a)(5), 403(a)(4),
403(b)(8), 405(d)(3), or 409(b)(3)(C). Depositor warrants that Depositor
did not inherit the account or annuity, or if Depositor did inherit the
account or annuity, that Depositor is the surviving spouse of the
individual for whose benefit the account was originally maintained or the
annuity was originally purchased.
(2) From IRA Funded with Distributions Attributable to an Employer Plan.
With respect to any other transferred amount, Depositor:
(A) agrees that no additional contributions will be made to the
custodial account in which such contribution is deposited except as
otherwise permitted by Scudder Fund Distributors Inc.
(B) that the entire amount of such transferred amount is attributable
to a distribution from an employees trust, an employee annuity, an
annuity contract, a qualified bond purchase plan, or a U.S. retirement
bond, as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), 409(b)(3)(C), or other applicable
law;
(3) that if the transferred amount had been a rollover contribution it
would have complied with he requirements of subparagraph (b) or (c) above.
4. Tax Reform Act of 1986
Notwithstanding anything to the contrary herein, the provisions of this
agreement are to be interpreted in accordance with the provisions of the
Internal Revenue Code of 1986, to the extent any provisions of this agreement
conflicts with the provisions of the Internal Revenue Code of 1986, it shall be
deemed to have been amended in such manner as best preserves the original intent
of the unamended provision of the agreement while also bringing the provision
into compliance with the relevant provision(s) of the Internal Revenue Code of
1986.
5. Custodian's Fees
(a) Custodian shall be entitled to receive such reasonable fees with
respect to the establishment and administration of this custodial account as are
established by it from time to time.
(b) Upon thirty (30) days prior written notice. Custodian may change its
fee schedule.
Custodian's fees, any income, gift, estate and inheritance taxes or other
taxes of any kind whatsoever, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the custodial account, that
may be levied or assessed in respect to such assets and all other administrative
expenses incurred by Custodian in the performance of its duties including fees
for legal services rendered to Custodian, may be charged to the custodial
account, with the right to liquidate Mutual Fund shares or other investments for
this purpose or Custodian's options to the Depositor.
<PAGE>
6. Custodial Account
(a) This Agreement shall take effect only when accepted and signed by
Custodian. As directed, Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Mutual Fund(s) or other investments selected by Depositor in
Article IX Para 1. "Mutual Fund" means a regulated investment company which is
defined in Internal Revenue Code Section 851(a) and which has been designated by
Scudder Fund Distributors, Inc. (or its successors) as appropriate for
investment hereunder.
(b) Every subsequent contribution shall be invested in accordance with
instructions authorized by Depositor indicating Depositor's choice of the Mutual
Funds or other investments designated by Scudder Fund Distributors, Inc. (or its
successors) as appropriate for investment hereunder. Depositor agrees that the
listing shall not be construed as an endorsement by Custodian of the Mutual
Funds or other investment in which contributions may be invested, final choice
of which is in the sole discretion of Depositor. The Custodian does not
undertake to render any investment advice whatsoever to Depositor; its sole
duties are those prescribed in Article IX, para. 8(c).
(c) The Custodian shall invest subsequent contributions as directed.
However, if any such instructions authorized by Depositor are not received as
required, or if received, are in the opinion of Custodian unclear, or if the
accompanying contribution would cause the Depositor to exceed the maximum
limitation on tax deductibility. Custodian may hold or return all or a portion
of the contribution uninvested without liability for loss of income or
appreciation or for other loss, and without liability for interest, pending
receipt of written instructions or clarification.
(d) All dividends and capital gains distributions received on shares of a
Mutual Fund held in the custodian account shall (unless received in additional
such shares be reinvested in shares of that Mutual Fund, if available, which
shall be credited to the account. If any distribution on such shares may be
received at the election of the shareholder in additional such shares or in cash
or other property. Custodian shall elect to receive it in additional such
shares. All accumulations on account of other investments shall be reinvested in
Depositor's custodial account.
(e) All Mutual Fund shares or other investments acquired by Custodian
hereunder shall be registered in the name of Custodian (with or without
identifying Depositor) or of its nominee. Custodian shall deliver, or cause to
be executed and delivered, to Depositor all notices, prospectuses, financial
statements, proxies, and proxy soliciting materials relating to such Mutual
Funds shares or other investments held in the custodial account. Custodian shall
not vote any such Mutual Fund shares or other investments except in accordance
with any written instructions received from Depositor.
7. Distributions
(This paragraph 7 supplements Article IV on Scudder IRA Form 12-86 of the
Agreement and must be read in conjunction with it.)
(a) Distribution of the custodial account assets in accordance with Article
IV shall be made in a manner set forth in subparagraph (c)(1) or (2), whichever
applies, except as Article IV otherwise requires and at such time as Depositor
(or Depositor's Beneficiary if Depositor is deceased) shall elect by written
order to Custodian, provided that distribution (except for distribution on
account of Depositor's disability or death, return of an "excess contribution"
referred to in subparagraph (d) or a "rollover" from this account), must be no
earlier than age 59 1/2 if Depositor wants to avoid an "early distribution
additional tax" under Code section 408(f) or other applicable law. For that
purpose, Depositor will be considered disabled if Depositor can prove, as
provided in Code section 72(m)(7), that Depositor is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or be of
long-continued and indefinite duration. Depositor's (or Depositor's Beneficiary
if Depositor is deceased) will order distribution in the manner and at the time
permitted or required by Article IV and this paragraph. Custodian assumes no
responsibility for the tax treatment of any distribution from the custodial
account, such responsibility accrues solely to person ordering the distribution.
(b) Custodian assumes (and shall have) no responsibility to make any
distribution on order of Depositor (or Depositor's Beneficiary if Depositor is
deceased) unless and until such order specifies the occasion for such
distribution, the elected manner of distribution and any declaration required by
Article V. Also, before making any such distribution or before honoring any
assignment of the custodial account. Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees, and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with an order which appears on its face to be genuine, or for refusing
to comply if not satisfied it is genuine, and assumes no duty of further
inquiry.
(c) Upon receipt of a proper written order as required above Custodian
shall distribute the assets of the custodial account in cash or kind as follows:
(1) Distribution to Depositor. If the distribution order calls for the
custodial account to be paid to Depositor under Article IV then
distribution shall be made in one or more of the following ways as
specified in the order.
(A) In a lump sum.
(B) In installments pursuant to a cash withdrawal plan, provided that
such a plan suitable for prearranging the distributions described in
this subparagraph (b) is available for Custodian's use under the rules
governing the investments held in the custodial account. A suitable
cash withdrawal plan will provide for periodic liquidation of some of
investments held in the custodial account to yield the cash necessary
to pay each installment. Prior to January 1, 1985, a suitable cash
withdrawal plan will provide for payment of installments over a period
not longer than the life expectancy of Depositor or the joint life and
the last survivor expectancy of Depositor and Depositor's spouse.
Subsequent to December 31, 1984, a suitable cash withdrawal plan will
provide for payment of installments ratably over a period of not
longer than the life expectancy of the Depositor or the joint life and
last survivor expectancy of the Depositor and the Depositor's
Beneficiary (as defined in subparagraph (c)(2) of this Para. 7). The
life expectancies referred to in this Agreement shall be determined by
using applicable Internal Revenue Service tables. The amount
distributed each year shall be at least equal to the quotient obtained
by dividing the entire custodial account remaining at the beginning of
that year by the adjusted life expectancy of Depositor, the joint life
and last survivor expectancy of Depositor and Depositor's spouse, or
the joint life and last survivor expectancy of Depositor's Beneficiary
(whichever is applicable). Prior to January 1, 1985 the life or joint
life and last survivor expectancy used to calculate the minimum amount
to be distributed in a given year shall be equal to the relevant
expectancy as it was determined as of when Depositor attained age 70
1/2 reduced by the number of whole years elapsed, if any, since
Depositor attained age 70 1/2. Subsequent to December 31, 1984, the
adjusted life of joint life and last survivor expectancy used to
calculate the minimum amount to be distributed in a given year shall
be at the Depositor's election, either determined by referring to the
<PAGE>
applicable Internal Revenue Service table and determining the relevant
expectancy as of the particular year in question of by using a
previously determined expectancy and reducing such expectancy by the
number of whole years elapsed since it was determined. Notwithstanding
any implication to the contrary in this subsection (B) no distribution
need be made in any year or a lesser amount may be distributed during
such year if the aggregate amounts distributed through the end of such
year are at least equal to the aggregate of the minimum amounts
required by this subparagraph (B) to have been distributed. Moreover,
during Depositor's lifetime the entire custodial account remaining for
distribution at any time under this subparagraph (B) may, pursuant to
proper supplementary written order as specified above be distributed
to Depositor.
(C) By the purchase and distribution of a single-premium contract
meeting the requirements of Code section 408(b)(1), (3), (4) and,
prior to January 1, 1985, (5) applicable to an "individual retirement
annuity."
(2) Distribution upon Death of Depositor or Depositor's Spouse. Prior to
January 1, 1985, if Custodian receives a proper written order for
distribution on account of the Depositor's death or the spouse's death, if
distributions were being made to the spouse over the joint life and last
survivor expectancy. Custodian shall distribute the then-remaining
custodial account to Depositor's (or, if applicable, the spouse's)
Beneficiary within five (5) years of Depositor's (or, if applicable, the
spouse's) death either in a lump sum or installments; provided, however,
that if distributions have already begun before Depositor's death for a
specified term, then Custodian may instead continue to make the
distribution in the same manner and without regard to the foregoing
five-year limitation; provided further, that if Depositor's Beneficiary is
Depositor's spouse and if Depositor's Beneficiary elects to treat the
account as if Depositor's Beneficiary were the Depositor, then the
Custodian may distribute the account as directed by the Depositor's
Beneficiary as if such person were the Depositor and in accordance with the
Articles IV and IX. Subsequent to December 31, 1984, if Custodian receives
a proper written order for distribution on account of the Depositor's death
or the spouse's death, if distributions were being made to the Depositor's
surviving spouse, then the Custodial shall distribute the then-remaining
custodial account to the Depositor's (or, if applicable, the spouse's)
Beneficiary over the life of the Depositor's (or, if applicable, the
spouse's) Beneficiary or within a period not greater than the greater of
five (5) years after the Depositor's (or, if applicable, the spouse's)
death or the life expectancy of Depositor's (or, if applicable, the
spouse's) Beneficiary; provided, however, that if distributions have
already begun before Depositor's death for a specified term. Custodian
shall continue to distribute the custodial account over a period at least
as rapid as that specified term. The term "Depositor's Beneficiary" means
the person or persons designated as such by the "designating person" (as
defined below) on a form acceptable to Custodian for use in connection with
this Agreement, signed by the designating person, and filed with the
Custodian in accordance with this subparagraph (2). The form may name
persons or estates to take upon the contingency of survival. However, the
term "Depositor's Beneficiary" means the designating persons estate to the
extent no such designation on such a form effectively disposes of the
custodial account as of when such distribution is to commence. Moreover, a
form shall not become effective for that purpose until it is filed with the
Custodian during the lifetime of the designating person. The term last
accepted by Custodian before such distribution is to commence upon becoming
effective during the designating person's lifetime, shall be controlling
and, whether or not fully dispositive of the custodial account, thereupon
shall revoke all such forms previously filed by that person. The term
"designating person" means Depositor; after Depositor's death, it also
means the person or persons (other than Depositor's estate) who begin to
receive a portion of the custodial account pursuant to such a designation
by Depositor and designations by such a person shall relate solely to the
balance of that portion remaining in the custodial account as of when
distribution pursuant to a designation by that person is to commence. The
Custodian shall accept all such forms only in the Commonwealth of
Massachusetts and they shall be considered part of this Agreement for
purposes of Article IX, para. 13(c).
(3) Any annuity which Custodian is to purchase and distribute under this
Agreement may be filed or variable, but Custodian shall not be required to
distribute in that manner unless the premium for that annuity is at least
$1,000.
(4) Depositor's beneficiary shall not have the right or power to anticipate
any part of the custodial account or to sell, assign, transfer, pledge or
hypothecate any part thereof. The custodial account shall not be liable for
the debts of Depositor's Beneficiary or subject to any seizure, attachment,
execution or other legal process in respect thereto.
(d) If during a taxable year under Article I a total amount as contributed
which exceeds the amount deductible for that year, either because such amount
exceeds the tax-deductible limits specified in the Internal Revenue Code, or
because of attainment of age 70 1/2 in that year, or for some other reason, then
upon receiving written notice specifying the year in question, the amount of the
excess, the reason it is an excess, and the amount of net income in the
custodial account attributable to such excess -- Custodian shall distribute cash
to Depositor in an amount equal to the sum of such excess and earnings. if the
excess Custodian's discretion unless otherwise instructed by depositor in lieu
of being distributed, said sum shall be treated by Depositor as a contribution
in the then current or a succeeding taxable year, in accordance with applicable
law.
8. Additional Provisions Regarding the Custodian
(a) When and after distributions of the custodial account to Depositor's
Beneficiary commence, all rights and obligations assigned to Depositor by
provisions of this Agreement shall inure to and be enjoyed and exercised by,
Depositor's beneficiary instead of Depositor. Until such distributions commence
to such a person, the Custodian shall not be responsible for treating such
person's predecessor to such rights and obligations as still possessing the
same.
(b) Custodian shall keep adequate records of transactions it is required to
perform hereunder. Not later than sixty (60) days after the close of each
calendar year or after the Custodian's resignation or removal pursuant to
Article IX, para. 10(1). Custodian shall render to Depositor a written report or
reports reflecting the transactions effected by it during such period and the
assets of the custodial account at the close of the period. Sixty (60) days
after rendering such report(s), Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions known in or reflected by such report(s), except with
respect to those as to which the recipient of such report(s) shall have filed
written objections with the Custodian within the latter such sixty-day period.
<PAGE>
(c) Custodian shall be an agent for Depositor to receive and invest
contributions as authorized by Depositor, hold and distribute such investments
and keep adequate records and report thereon, all in accordance with this
Agreement. The parties do not intend to confer any fiduciary duties on Custodian
and none shall be implied. Custodian may perform any of its administrative
duties through other persons designated by Custodian from time to time, except
the Mutual Fund shares or other investments must be registered as stated in
para. 6(e) of this Article IX and Custodian intends initially to delegate all
such duties to Boston Financial Data Services, Inc., which is partially owned by
Custodian' s parent company, but no such delegation or future change therein
shall not be liable (and assumes no responsibility) for the collection of
contributions, the deductibility of any contribution or its propriety under this
Agreement or the purpose or property of any distribution ordered in accordance
with Article IX, para. 7, or made in accordance with Article IX, para. 12. which
matters are the sole responsibility of Depositor and Depositor's Beneficiary.
(d) Depositor shall always fully indemnify Custodian and save it harmless
from any and all liability whatsoever which may arise either (1) in connection
with this Agreement and matters which it contemplates, except that which arised
due to Custodian's negligence or willful misconduct, or (2) with respect to
making or failing to make any distribution, other than for failure to make
distribution in accordance with any order therefor which is in full compliance
with both Article IV and para. 7(a) and (b) of Article IX. Custodian shall not
be obligated or expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed upon by Custodian
and Depositor, and unless fully indemnify for so doing to Custodian's
satisfaction.
(e) Custodian may conclusively rely upon and shall be protected in acting
upon any written order from or authorized by Depositor or Depositor's
beneficiary or any other notice, request, consent, certificate or their
instrument, paper, or other communication believed by it to be genuine, and to
have been issued in proper form and with proper authority and, so long as it
acts in good faith, in taking or omitting to take any other action in reliance
thereon.
9. Amendment
(This paragraph 9 supplements Article VIII on Scudder IRA Form 12-86 of the
Agreement and must be read in conjunction with it.)
(a) Depositor retains the right to amend this Agreement in any respect at
any time effective on a stated date which shall be at least sixty (60) days
after giving written notice of the amendment (including its exact terms) to
Custodian by registered or certified mail unless Custodian waives such notice as
to that amendment. If Custodian does not wish to continue serving in that
capacity under this Agreement as so amended, it may resign in accordance with
Article IX, para. 10. Depositor also delegates, to the distributor (principal
underwriter) of a plurality of the Mutual Funds described in Article IX, para.
6(b), Depositor's right so to amend, including retroactively, as necessary or
appropriate in the opinion of counsel satisfactory to the distributor, in order
to conform with pertinent provisions of the Code and other laws or successor
provisions of law or to obtain a governmental ruling that such requirements are
met, to adopt a prototype or master plan (when one becomes available) for
investment in shares of such Mutual Funds or other investment, or as otherwise
may be advisable in the opinion of such counsel provided the distributor amends
in the same manner all agreements comparable to this one, having the same
Custodian, permitting investment in shares of such Mutual Funds or other
investments, and under which such power has been delegated to it. Such an
amendment by the distributor shall be communicated in writing to Depositor and
Custodian and Depositor shall be deemed to have consented thereto unless, within
thirty (30) days after such communication to Depositor is mailed. Depositor
either (1) gives Custodian a proper written order for a lump-sum distribution of
the custodial account, or (2) removes Custodian and simultaneously appoints a
Successor Custodian under Article IX, para. 1.
(b) This paragraph 9 shall not be construed to restrict Custodian's freedom
to agree with distributors of Mutual Fund shares, or others, upon the terms by
which shares of additional Mutual Funds or other investments may be chosen for
investment as contemplated in Article IX, para. 6(b), or Custodian's freedom to
change fee schedules in the manner approved by Article IX, para. 5(b), and no
such agreement or change shall be deemed to be an amendment of this Agreement.
10. Resignation or Removal of Custodian
(a) Custodian may resign at any time upon at least thirty (30) days prior
notice in writing to Depositor, and may be removed by Depositor at any time upon
at least thirty (30) days prior notice in writing to Custodian. Upon such
resignation or removal, Depositor shall appoint a Successor Custodian to serve
under this Agreement. Upon receipt by Custodian of written acceptance of such
appointment by the Successor Custodian, Custodian shall transfer to such
Successor the assets of the custodial account and all necessary records (or
copies thereof) pertaining thereof, provided that (if so requested by Custodian)
any Successor Custodian agrees not to dispose of any such records without
Custodian's consent. Custodian is authorized, however, to reserve such a portion
of such assets as it may deem advisable for payment of all its fees,
compensation, costs, and expenses, or for payment of any other liabilities
constituting a charge on or against Custodian, with any balance of such reserve
remaining after the payment of all such items to be paid over to the Successor
Custodian.
(b) If within thirty (30) days after Custodian's resignation or removal or
such longer time as Custodian may agree to, Depositor has not appointed a
Successor Custodian which has accepted such appointment, Custodian shall
terminate the custodial account pursuant to Article IX, para. 11, unless within
that time the distributor referred to in Article IX, para. 9(a), appoints such
Successor and gives written notice thereof to Depositor and Custodian.
(c) Custodian shall not be liable for the acts or omissions of such
Successor.
(d) The Custodian, and every Successor Custodian appointed to serve under
this Agreement, must be a bank as defined in Code section 408(n) or such other
person who qualifies to serve in the manner prescribed by Code section 408(a)(2)
and satisfies the Depositor, distributor or Custodian, upon request, as to such
qualification.
(e) After Custodian has transferred the custodial account assets (including
any reserve balance as contemplated above) to the Successor Custodian, Custodian
shall be relieved of all further liability with respect to this Agreement, the
custodial account, and the assets thereof.
11. Termination of Account
(a) Custodian shall terminate the custodial account if within the time
specified in Article IX, para. 10(b), after Custodian's resignation or removal,
neither Depositor nor the distributor has appointed a Successor Custodian which
has accepted such appointment. Termination of the custodial account shall be
effected by distributing all assets thereof in a lump sum in cash or in kind to
Depositor subject to Custodian's right to reserve funds as provided in Article
IX, para 10(a).
<PAGE>
(b) Upon termination of the custodial account, this Agreement shall
terminate and have no further force and effect, and Custodian shall be relieved
from all further liability with respect to this Agreement, the custodial
account, and all assets thereof so distributed.
12. Liquidation of Account
(a) Notwithstanding anything contained in this Agreement to the contrary,
Scudder Fund Distributors, Inc. shall have the right to direct Custodian, by
written order to Custodian, to liquidate the custodial account if the value of
the account at the time of such written order is less than a minimum value
established on a non-discriminatory basis from time to time by Scudder Fund
Distributors, Inc., and upon receipt of such written order (which Scudder Fund
Distributors, Inc. shall have no duty to make and which, if made, may be made
with respect to any specified accounts as to which it may be made applicable
singly or to all accounts as to which it may be made applicable as a group),
Custodian shall forthwith proceed to liquidate the custodial account by
distributing all assets thereof in a lump sum in cash or in kind to Depositor,
subject to Custodian's right to reserve such a portion of such assets as it may
deem advisable for payment of all its fees, compensation, costs, and expenses,
or for payment to any other liabilities constituting a charge on or against the
assets of the custodial account or on or against Custodian, with any balance of
such reserve remaining after the payment of all such items to be paid over to
Depositor.
(b) Neither Scudder Fund Distributors, Inc. nor Custodian shall be liable
for, or in any way responsible with respect to, any penalty or any other loss
incurred by any person with respect to a distribution made hereunder and upon
liquidation of the custodial account as aforesaid, this Agreement shall
terminate and have no further force and effect, and Custodian and Scudder Fund
Distributors, Inc. shall be relieved from all further liability with respect to
this Agreement, the custodial account, and all assets thereof so distributed.
13. Miscellaneous
(a) References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time hereafter, including
successors to such sections.
(b) Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on Custodian's records.
(c) This agreement is accepted by Custodian in, and shall be construed and
administered in accordance with the laws of the Commonwealth of Massachusetts.
This Agreement is intended to qualify under section 408 of the Code as an
Individual Retirement Account and for the Retirement Savings deduction under
section 219 of the Code, and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one construction
which is consistent with that intent. However, neither the Custodian nor any
Mutual Fund (or company associated therewith) shall be responsible for whether
or not such intentions are achieved through use of this Agreement and Depositor
is referred to depositor's attorney for any such assurances.
CUSTODIAN
DISCLOSURE STATEMENT
The following information is being provided to you by the State Street Bank
and Trust Company, the Custodian of the Scudder Individual Retirement Accounts,
in accordance with the requirements of the Internal Revenue Service. Please read
it together with the Individual Retirement Plan and the prospectus for the
shares of each Mutual Fund selected by you for the investment of your
contributions to that Plan, copies of which you should have already received
from the distributor of those shares. The provisions of the Plan and prospectus
must prevail over this statement in any instance where the statement is
incomplete or appears to conflict.
The Employee Retirement Income Security Act of 1974 has provided an
entirely new program that may enable you to plan for your retirement by creating
a "retirement plan" with federally tax-deductible dollars. This federal income
tax deduction is available even if you do not otherwise itemize your deductions.
In addition, any earnings on the assets held in your individual retirement
account will not be subject to federal income tax until you actually begin to
receive a distribution from your account. The state income tax treatment of your
account may differ, and details should be available from your state taxing
authority or your own tax adviser.
As with most other laws that provide special tax treatment, there are
certain restrictions and limitations involved with respect to your individual
retirement account:
1. Only a limited amount of savings can qualify for the preferential tax
treatment -- 100% of your compensation or earnings from
self-employment up to an annual maximum of $2,000.
Undercertain conditions, an individual and his or her unemployed
spouse, or employed spouse with less than $250 of earnings, may each
open an IRA.
Annual deductions for contributions are allocable if a joint income
tax return is field and the deductions are limited to the lesser of
100% of the employed spouse's wages or $2,250, and the amount
contributed to either individual retirement account may not exceed
$2,000.
In the case of an individual retirement account which meets the
requirements of a so-called Simplified Employee Pension Plan, an
employer may contribute a deductible amount equal to 15% of the
employee's compensation up to an annual maximum of $30,000. The amount
of such contribution is includible in the employee's income as wages
(for federal income tax purposes) but is deductible by him or her. The
employee is also allowed an annual deduction for his or her own
individual retirement account contributions limited to the lesser of
100% of the employee's compensation of $2,000.
There is a 6% penalty tax on any so-called "excess contribution" if
you make one, that is, on the portion of a contribution made to your
IRA in excess of the amount which can be currently deducted. Some
examples of when this can occur are when you make a contribution to
your IRA in excess of the allowable deduction limitations, or you
contribute during or after the calendar year in which you reach 70
1/2. The 6% penalty tax on any "excess contribution" also attaches for
each following year until the excess is withdrawn or used up in an
excess contribution plus earnings on it is withdrawn before the time
for filing the individual's tax return for the year of the
contribution (including extensions), there will be no 6% penalty tax.
The amount withdrawn will not be considered a premature distribution
<PAGE>
nor taxes as ordinary income, except the earnings withdrawn will be
included in the income of the taxpayer. In addition, in certain cases
an excess contribution may be withdrawn after the time for filing the
individual's tax return without resulting in taxable income to the
individual. Also, excess contributions for one year may be carried
forward and deducted in the next year.
2. Contributions must be made to a Trust or Custodial Account in which
the Trustee Custodian is either a bank or such other person who has
been approved by the Secretary of the Treasury. No part of your
contribution may be invested in life insurance or be commingled with
other proiperty except in a common trust fund or common investment
fund.
3. No deduction is allowed for (a) contributions other than in cash; (b)
contributions (other than those by an employee to a Simplified
Employer Pension Plan) made during your calendar year in which you
attain age 70 1/2 or thereafter; or (c) for any amount you contribute
which was a distribution from another retirement plan ("rollover"
contribution). However, the limitations in paragraph 1 do not apply to
such rollovers.
4. Individuals receiving compensation may establish their own individual
retirement accounts even if they are already covered under
tax-qualified plans (including Keogh plans for self-employed
individuals), government plans, or certain annuities.
5. Your interest in the account must be nonforfeitable at all times.
6. An individual is allowed to transfer, or rollover, such individual's
investment in one type of individual retirement plan to another
without any tax liability. Also, under certain conditions, an
individual may roll over (tax-free) a distribution received from a
qualified plan or a tax sheltered annuity. However, strict limitations
apply to such rollovers, and you should seek a competent tax advice in
order to comply with all the rules governing rollovers.
7. Since the purpose of the IRA savings plan is to accumulate funds for
retirement, your receipt or use of any portion of this account (for
example, as collateral for a loan) before you attain age 59 1/2 would
be considered as an early distribution unless the distribution is a
result of death or disability. The amount of an early distribution
would be includible in your gross income and would also subject you to
a penalty tax equal to 10% of the distribution unless you transfer it
to another IRA under circumstances whereby it qualifies as a rollover.
8. If you or your beneficiary were to engage in any prohibited
transaction (such as any sale, exchange or leasing of any property
between you and the account, or any interference with the independent
status of the account) then the account would lose its exemption from
tax and be treated as having been distributed to you. The value of the
entire account would be includible in your gross income, and if you
were then under age 59 1/2 you would also be subject to the 10%
penalty tax on early distributions.
9. Your entire interest in your account must be distributed, or begin to
be distributed, to you no later than the first April 1st of the year
following the later of the year in which you attain age 70 1/2.
Distribution may be made at once in a imp sum or it may be made in
installments. However, installment payments cannot be scheduled to be
made over a period which extends beyond your life expectancy (as
determined annually), or the joint life and last survivor expectancy
of you and the beneficiary you designate (as determined annually, if
that beneficiary is your spouse). However, where the beneficiary is
other than the spouse, the value of the expected distributions to you,
determined at the time distributions commence, must equal at least 50%
of the total value at that time. If the amount distributed during the
calendar year is less than the minimum amount required to be
distributed, the recipient would be subject to a penalty tax equal to
50% of the difference between the amount required to be distributed
and the amount actually distributed. If you die before the entire
interest is distributed to you, but after you have begun to receive
distributions, your entire account must be distributed to your
beneficiary over a period no longer than the last determined life
expectancy or life and last survivor expectancy over which your
account was being distributed prior to your death. If you die before
the entire interest has begun to be distributed to you and your spouse
is your beneficiary, distributions to your spouse must either (a) be
completed within 5 years of your death or (b) commence before the
later of one year after your death or the date on which you would have
attained age 70 1/2 and continue over his or her life or a period not
exceeding his or her life expectancy. If you die before the entire
interest has begun to be distributed to your beneficiary must either
(a) be completed within five years of your death or (b) commence with
one year after your death and continue over your beneficiary's life or
a period not exceeding his or her life expectancy.
10. Amounts distributed to you are invaluable in your gross income when
you receive them and are taxable as ordinary income without any
special lump-sum distribution privileges. However, normal four-year
income averaging may be available.
11. You must file Treasury Form 5329 with the Internal Revenue Service for
each calendar year during which there is an excess contribution,
premature distribution, or during which there is an insufficient
distribution as refereed to in paragraph 9.
12. The Individual Retirement Account Plan has been approved as to form by
the Internal Revenue Service. This approval is a determination only as
to the form of the account and does not represent a determination of
the merits of such account.
13. Information about the shares of each mutual fund available for
investment by your individual retirement account must be furnished to
you in form of a prospectus governed by rules or the Securities and
Exchange Commission. Please refer to the prospectus for detailed
information concerning your mutual fund. Growth in the value of your
account cannot be guaranteed or projected. However, the income and
operating expenses of a mutual fund will affect the value of its
shares, and hence the value of your account, as does any increase or
decrease in the value of the assets of the mutual fund. The fund's
prospectus containing information regarding current income and
expenses of your mutual fund.
Fees and other expenses maintaining your account may be charged to you
or your account. The Custodian's fee schedule is referred to in
Article IX of the Plan document and is distributed to you with it.
<PAGE>
14. The information contained in this Disclosure Statement and the terms
of the related Custodial Account agreement are applicable to
Individual Retirement Accounts set up, and contributions made, with
respect to the 1986 calendar year. Effective January 1, 1987, the law
with regard to the establishment, maintenance and termination of
Individual Retirement Accounts has been substantially modified. For
example, a married individual will only be able to make a fully
deductible contribution to his or her account (an amount equal to the
lesser of his or her compensation or earnings from self-employment, of
$2,000) if the married couple files a joint Federal income tax return
and they satisfy either of the following standards: (a) their combined
adjusted gross income is less than $40,000 or (b) neither spouse
actively participates in an employer-sponsored retirement plan. A
single individual will be subject to similar rules except that the
adjusted gross income limit is $25,000. Married couples and single
individuals who do not satisfy the active-participant standard and
whose adjusted gross incomes exceed the applicable limit by not more
than $10,000 will be eligible to make limited deductible Individual
Retirement Account contributions. Generally speaking, for every $5 by
which a couple's or single individual's adjusted gross income exceeds
the applicable limit, the $2,000 cap on the amount of deductible
contributions is reduced by $1. Individuals who are not eligible to
make fully deductible Retirement Account contributions will be
permitted to make nondeductible contributions equal to the difference
between (a) the lesser of his or her compensation or earnings from
self-employment, or $2,000, minus (b) the maximum amount the
individual is permitted to contribute on a deductible basis. Earnings
on both deductible and non-deductible contributions will accumulate on
a tax-deferred basis.
If you have not received this Disclosure Statement at least seven calendar
days before the establishment of your Individual Retirement Account, you have
the right to revoke your Individual Retirement Account during the seven calendar
day period following the establishment of it. In order to so revoke your
Individual retirement Account, you must do so in writing and you must mail or
deliver your revocation to Scudder Fund Distributors, Inc., 175 Federal Street,
Retirement Plan Services, Boston, MA 01220. If your revocation is mailed, the
date of the postmark (or the date of certification or registration if sent by
certified or registered mail) will be considered your revocation date. If you so
revoke your individual retirement account during the seven-day period, the
entire amount of your account, without any adjustments (for items such as
administrative expenses, fees, or fluctuation in market value) will be returned
to you.
You may obtain further information from any district office of the Internal
Revenue Service.
Scudder
[Logo] IRA Portfolio
12-8-28 (c) Scudder Fund Distributors, Inc.
<PAGE>
400-28
Scudder IRA Application
&
IRA Transfer Request
for ....
- ---------------------------------------------
Return these forms to:
Scudder Fund Distributors, Inc.
P.O. Box 2291
Boston, MA 02107-2291
- ---------------------------------------------
It's easy to open a Scudder IRA. Just complete the Scudder IRA Application and
return it in the enclosed postage-paid envelope today.
A Few Tips
o Please make check(s) payable to "Scudder Funds."
o You have two forms--an IRA Application and an IRA Transfer Request.
Please do not separate them, even if you use only one.
o Please fill out each section carefully, preferably in print or type.
This helps us avoid any delays in processing your Application.
o Please be sure to sign your name exactly as it appears in your Account
Registration (Part 1).
o If you are transferring IRA assets from another IRA sponsor, please
fill out the attached IRA Transfer Request form and return it along
with your Application and a check for any investment you may be making
at this time.
If you already have a Scudder IRA, complete only the IRA Transfer
Request form.
Please return this form today. It will only take a few minutes and
will let us put your money to work for you that much sooner!
<PAGE>
Scudder
[Logo] IRA Portfolio Application
1. IRA Account Registration
___________________________________ ___________________________________
Name Social Security Number
( )
___________________________________ ___________________________________
Address Daytime Phone
/ /
________________ ________ _________ ___________________________________
City State Zip Date of Birth
2. Type of IRA & Fund Choices
/___/ New IRA. $2000 maximum per year. Contribution for tax year 198__
/___/ Transfer IRA. IRA assets transferred directly from your present
custodian to Scudder. If the transfer establishes your first Scudder
IRA, please complete this Application and an IRA Transfer Request
making sure to indicate fund(s) choices on both forms. If transferring
to an existing Scudder IRA, complete only the IRA Transfer Request. A
separate Transfer Request must be completed for each IRA being
transferred.
/___/ Rollover IRA. (check one)
/___/ Assets distributed from an employer-sponsored retirement
plan.
or
/___/ 60-day Rollover. You have taken receipt of your IRA assets
from another institution and are enclosing a check for part
or all of these funds.
The minimum initial investment is $240.
If you choose more than one fund, the minimum initial investment is $500 for
each fund.
$ Amount Money Market Funds
__________ Cash Investment Trust
__________ Government Money Fund
Income Funds
__________ GNMA Fund
__________ Income Fund
__________ Target Fund (multi-Portfolios),
__________ U.S. Government 1990_______________
__________ General 19______________
Maturity year
U.S. Gov't. Zero Coupon
__________ Target Fund _______________
Maturity year
Growth & Income Funds
__________ Equity Income Fund
__________ Growth and Income Fund
Growth Funds
__________ Japan Fund
__________ Capital Growth Fund
__________ Development Fund
__________ Global Fund
__________ International Fund
$ Total
==========
3. Designation of Beneficiary & Signatures
(Please be sure to sign your name exactly as it apears in Part 1.)
The following person(s) are to receive the balance of my IRA assets upon my
death. This designation revokes any previous one I may have filed with the
Custodian. (Provide name(s), address(es), and Social Security Number(s).)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Any resident of a Community Property State who designates a spouse as primary
beneficiary and others as contingent beneficiaries, or designates more than half
the distribution to beneficiaries other than a spouse, must obtain the spouse's
consent.
Spouse's
consent X______________________________________________________ _______________
Signature Date
I hereby designate the beneficiaries listed and adopt with the custodian this
Scudder Individual Retirement Account agreement which uses the language of IRS
Form 5305-A. Once the Custodian acknowledges receipt of this form by mail, it
shall be deemed accepted, and therefore, effective as of the date I signed it. I
have received and read the Scudder IRA plan and the prospectus(es) of the
fund(s) selected.
X /s/ G. Reeves
- -------------------------------------------------------------------------------
State Street Bank and Trust Company, Custodian
X______________________________________________________________ _______________
Your Signature Date (exactly as in Part 1) Date
<PAGE>
Scudder Extra Application
[IRA Portfolio For your spouse or friend
1. IRA Account Registration
___________________________________ ___________________________________
Name Social Security Number
( )
___________________________________ ___________________________________
Address Daytime Phone
/ /
________________ ________ _________ ___________________________________
City State Zip Date of Birth
2. Type of IRA & Fund Choices
/___/ New IRA. $2000 maximum per year. Contribution for tax year 198__
/___/ Transfer IRA. IRA assets transferred directly from your present
custodian to Scudder. If the transfer establishes your first Scudder
IRA, please complete this Application and an IRA Transfer Request
making sure to indicate fund(s) choices on both forms. If transferring
to an existing Scudder IRA, complete only the IRA Transfer Request. A
separate Transfer Request must be completed for each IRA being
transferred.
/___/ Rollover IRA. (check one)
/___/ Assets distributed from an employer-sponsored retirement
plan.
or
/___/ 60-day Rollover. You have taken receipt of your IRA assets
from another institution and are enclosing a check for part
or all of these funds.
The minimum initial investment is $240.
If you choose more than one fund, the minimum initial investment is $500 for
each fund.
$ Amount Money Market Funds
__________ Cash Investment Trust
__________ Government Money Fund
Income Funds
__________ GNMA Fund
__________ Income Fund
__________ Target Fund (multi-Portfolios),
__________ U.S. Government 1990_______________
__________ General 19______________
Maturity year
U.S. Gov't. Zero Coupon
__________ Target Fund _______________
Maturity year
Growth & Income Funds
__________ Equity Income Fund
__________ Growth and Income Fund
Growth Funds
__________ Japan Fund
__________ Capital Growth Fund
__________ Development Fund
__________ Global Fund
__________ International Fund
$ Total
==========
3. Designation of Beneficiary & Signatures
(Please be sure to sign your name exactly as it apears in Part 1.)
The following person(s) are to receive the balance of my IRA assets upon my
death. This designation revokes any previous one I may have filed with the
Custodian. (Provide name(s), address(es), and Social Security Number(s).)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Any resident of a Community Property State who designates a spouse as primary
beneficiary and others as contingent beneficiaries, or designates more than half
the distribution to beneficiaries other than a spo9use, must obtain the spouse's
consent.
Spouse's
consent X______________________________________________________ _______________
Signature Date
I hereby designate the beneficiaries listed and adopt with the custodian this
Scudder Individual Retirement Account agreement which uses the language of IRS
Form 5305-A. Once the Custodian acknowledges receipt of this form by mail, it
shall be deemed accepted, and therefore, effective as of the date I signed it. I
have received and read the Scudder IRA plan and the prospectus(es) of the
fund(s) selected.
X /s/ G. Reeves
- -------------------------------------------------------------------------------
State Street Bank and Trust Company, Custodian
X______________________________________________________________ _______________
Your Signature Date (exactly as in Part 1) Date
RETURN THIS FORM IN THE POSTPAID ENVELOPE PROVIDED, OR MAIL TO:
SCUDDER FUNDS, P.O. BOX 2291, BOSTON, MA 02107-2291.
<PAGE>
It's easy to open a Scudder IRA. Just complete this Scudder IRA Application
and return it in the enclosed postage-paid envelope today.
A Few Tips
o Please make check(s) payable to "Scudder Funds".
o You have two forms--an IRA Application and an IRA Transfer Request.
Please do not separate them, even if you use only one.
o Please fill out each section carefully, preferably in print or type.
This helps us avoid any delays in processing your Application.
o Please be sure to sign your name exactly as it appears in your Account
Registration (Part 1).
o If you are transferring IRA assets from another IRA sponsor, please
fill out an IRA Transfer Request form and return it along with your
Application and a check for any investment you may be making at this
time.
If you already have a Scudder IRA, complete only the IRA Transfer
Request form.
Please return this form today. It will only take a few minutes and
will let us put your money to work for you that much sooner!
<PAGE>
Scudder [Logo] IRA Portfolio IRA Transfer Request
Complete this form if you wish to transfer the assets in your current IRA
directly to the Scudder IRA. If establishing a new Scudder IRA, complete the
Scudder IRA Application as well. Return this form in the postpaid envelope
provided. We will send you a notice confirming that we received this form, and
arrange to complete the transfer. The amount you transfer does not affect the
amount you can invest and deduct annually. If you wish to transfer assets held
in another type of plan, e.g. Keogh, profit-sharing, 403(b), etc., please call
us for the proper forms. This form is only for IRA transfers.
1. Name & Address
___________________________________ ___________________________________
Name Social Security Number
( )
___________________________________ ___________________________________
Address Daytime Phone
/ /
________________ ________ _________
City State Zip
2. Instructions to Present Custodian
- --------------------------------------------------------------------------------
Name of Current Custodian/Trustee
- --------------------------------------------------------------------------------
Attention: (Person or department handling transfers)
___________________________________
Address
________________ ________ _________
City State Zip
/___/ Please transfer all of my IRA assets.
/___/ Please transfer $_____ of my IRA assets.
Other instructions (e.g., make transfer upon maturity)
/ /
- -------------------------------------------------------------------------------
maturity date
- --------------------------------------------------------------------------------
IRA Account Number (with this Custodian)
( )
- --------------------------------------------------------------------------------
Custodian's Phone Number
I request that the above-named Custodian or Trustee transfer my IRA assets as
cash to State Street Bank and Trust Company, Custodian of my Scudder IRA.
- --------------------------------------------------------------------------------
Please make the check payable to:
Scudder Funds, A/C (Investor name), Scudder IRA
Mail to: The Scudder Funds Retirement Plan Services,
P.O. Box 9647, Boston, MA 02205-9918
X
- --------------------------------------------------------------------------------
[ILLEGIBLE]
- -------------------------------------------------------------------------------
Please ask your present custodian if a signature guarantee is required.
3. Fund Choices (If you invest in 2 or more funds, the minimum initial
investment is $500 for each fund.
$ Amount Money Market Funds Acct. #*
_____________ Cash Investment Trust _____________
_____________ Government Money Fund _____________
Growth & Income Funds
_____________ Equity Income Fund _____________
_____________ Growth and Income Fund _____________
Growth Funds
_____________ Japan Fund _____________
_____________ Capital Growth Fund _____________
_____________ Development Fund _____________
_____________ Global Fund _____________
_____________ International Fund _____________
_____________ GNMA Fund _____________
_____________ Income Fund _____________
Target Fund
(Multi-Portfolios),
_____________ U.S. Government 1990 _____________
_____________ General 199_____________
Maturity year _____________
U.S. Government Zero Coupon
_____________ Target Fund______________ _____________
Maturity year
Total _____________
* When transferring to an existing Scudder IRA, please provide your Scudder IRA
account number.
================================================================================
For Scudder use only, do not complete.
Acceptance by Custodian
We agree to accept custodianship and the transfer described above for the
Scudder IRA Plan established on behalf of the above-names individual. State
Street Bank and Trust Company accepts its appointment as successor Custodian of
the above IRA account and requests the liquidation and transfer of assets as
indicated above.
Scudder Fund Distributors, Inc.
By _____________________________________________________________________________
Date ___________________________________________________________________________
State Street Bank & Trust Company
By /s/ G. Reeves
-----------------------------------------------------------------------------
<PAGE>
Scudder
[Logo] IRA Portfolio
Scudder Fund Distributors, Inc.
175 Federal Street, Boston, MA 02110
National Toll-Free Number
1-800-225-2470
Exhibit 14(c)
================================================================================
Scudder IRA
Plan
&
Disclosure
Statement
================================================================================
Scudder IRA Form 1-88
Scudder
Individual Retirement Custodial Account
(Under Section 408(a) of the Internal Revenue Code)
The Depositor whose name appears on the Scudder Application is establishing
an individual retirement account (under section 408(a) of the Internal Revenue
Code) to provide for this or her retirement and for the support of his or her
beneficiaries after death.
The Custodian named on the Application has given the Depositor the
disclosure statement required under the Income Tax Regulations under section
408(i) of the Code.
The Depositor has deposited with the Custodian the amount indicated on the
Application.
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(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
408(d)(3) of the Code or an employer contribution to a simplified employee
pension plan as described in section 408(k).
<PAGE>
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) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) of the Code).
Article IV
- --------------------------------------------------------------------------------
1. The Depositor's entire interest in the custodial account must be or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the 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.
The payments must begin by the April 1 following the calendar year in
which the Depositor reaches age 70 1/2.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
The payments must begin by the April 1 following the calendar year in
which the Depositor reaches age 70 1/2.
(d) Equal or substantially equal annual payments over a specified period
that my not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
Even if distributions have begun to be made under option (d) or (e), the
Depositor may receive a distribution to the balance in the custodial account at
any time by giving written notice to the Custodian. If the Depositor does not
choose any of the methods of distribution described above by the April 1
following the calendar year in which he or she reaches age 70 1/2, distribution
to the Depositor will be made on that date by a single sum payment. If the
Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of section 408(b)(1), (3), and (4) of the
Code. If the Depositor elects as a means of distribution (d) or (e) above, the
annual payment required to be made by the Depositor's required beginning date is
for the calendar year the Depositor reached age 70 1/2. Annual payments for
subsequent years, including the year the Depositor's required beginning date
occurs, must be made by December 31 of that year.
2. 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 the Depositor's required beginning
date, distribution must continue to be made in accordance with
paragraph 1.
(b) If the Depositor dies before the Depositor's required beginning date,
the entire remaining interest will, at the election of the beneficiary
or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the 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.
The election of either (i) or (ii) must be made by December 31 of the year
following the year of the Depositor's death. If the beneficiary or beneficiaries
do no elect either of the distribution options described in (i) and (ii),
distribution will be made in accordance with (ii) if the beneficiary is the
Depositor's surviving spouse and in accordance with (i) if the beneficiary or
beneficiaries are or include anyone other than the surviving spouse. In the case
of distributions under (ii), distributions must commence by December 31 of the
year following the year of the Depositor's death. If the Depositor's spouse is
the beneficiary, distributions need not commence until December 31 of the year
the Depositor would have attained age 70 1/2, if later.
(c) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
3. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph (1), determine the initial life expectancy (or joint life and
last survivor expectancy) using the attained ages of the Depositor and
designated beneficiary as of their birthdays in the year the Depositor reaches
age 70 1/2. In the case of distribution in accordance with paragraph (2)(b)(ii),
determine life expectancy using the attained age of the designated beneficiary
as of the beneficiary's birthday in the year distributions are required to
commence. Unless the Depositor (or spouse) elects not to have life expectancy
recalculated, the Depositor's life expectancy (and the life expectancy of the
Depositor's spouse, if applicable) will be recalculated annually using their
attained ages as of their birthdays in the year for which the minimum annual
payment is being determined. The life expectancy of the designated beneficiary
(other than the spouse) will not be recalculated. The minimum annual payment may
be made in a series of installments (e.g. monthly, quarterly, etc.) as long as
the total payments for the year made by the date required are not less than the
minimum amounts required.
Article V
- --------------------------------------------------------------------------------
Unless the Depositor dies, is disabled (as defined in section 72(m) of the
Code), or reaches age 59 1/2 before any amount is distributed from the custodial
account, the Custodian must receive from the Depositor a statement explaining
how he or she intends to dispose of the amount distributed.
Article VI
- --------------------------------------------------------------------------------
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) of the
Code and related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
<PAGE>
Article VII
- --------------------------------------------------------------------------------
Notwithstanding any other article which may by added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) of the Code and
related regulations will be invalid.
Article VIII
- --------------------------------------------------------------------------------
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Application.
Article IX
- --------------------------------------------------------------------------------
1. Please refer to Scudder IRA Application which is incorporated herein by
reference.
2. Depositor's Selection of Investments
Depositor directs Custodian to invest all custodial funds in investment
shares issued by the "Mutual Fund(s)," or in the other investments which have
been designated by Scudder Fund Distributors, Inc. (or its successors) as
eligible for investment hereunder, which have been selected by Depositor until
Depositor hereafter gives custodian contrary instructions pursuant to Article
IX, paragraph ("para.") 6 below, which governs investment of the custodial
account in "Mutual Fund" shares or other investments.
3. Contributions
(a) Periodic Contributions. Periodic contributions which Depositor intends
to be tax-deductible under Internal Revenue Code Section 219 shall be in cash
and are to be invested under this Agreement. Depositor contemplates future
periodic contributions within the tax-deductible limits and in accordance with
the rules for tax-deductibility specified in the Internal Revenue Code.
Depositor assumes full and sole responsibility for making sure that the sum of
periodic contributions during a single taxable year of Depositor does not exceed
those limits or violate those rules. Depositor should not contribute to the
custodial account after it ceases to be exempt by reason of either section
408(e) or 415(g) of the Internal Revenue Code.
(b) Rollover Contributions From an Individual Retirement Account or
Individual Retirement Annuity Funded Exclusively With Deductible Contributions.
A rollover contribution by Depositor from an individual retirement account or
individual retirement annuity funded exclusively with deductible contributions
shall be a deposit in cash to be invested under this agreement, with respect to
which contribution, Depositor warrants that
(1) it meets the requirements for a rollover contribution from such an
individual retirement account or individual retirement annuity as are contained
in Code Section 408(d) and that
(2) no portion of such rollover contribution is attributable to a distribution
from an employees' trust, an employees annuity, an annuity contract or a U.S.
retirement bond as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C).
(c) Rollover Contributions Attributable to Distributions From Employer
Plans. A rollover contribution by Depositor other than a contribution described
in paragraph (b) above shall be a deposit in cash to be invested under this
Agreement with respect to which contribution Depositor warrants that (1) the
amount rolled over is attributable to a distribution from an employees' trust,
an employee annuity, an annuity contract, a qualified bond purchase plan, or a
U.S. retirement bond, which meets the requirements of Code section 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C); and (2) Depositor will make no
additional contributions to the custodial account in which such contribution is
deposited, except as otherwise permitted by Scudder Fund Distributors, Inc.
If permitted by Scudder Fund Distributors, In., rollover contributions may
be received under this Agreement with respect to qualified voluntary employee
contributions as defined in Internal Revenue Code Section 219(e)(2) and such
contributions shall thereafter be held and administered hereunder by the
Custodian in accordance with all applicable law with respect to accumulated
deductible employee contributions as defined in Internal Revenue Code Section
72(o)(5)(B).
(d) Transfer from an Individual Retirement Account or Individual Retirement
Annuity. Depositor may make an opening contribution hereunder by directing the
transfer of a cash amount from a custodian or trustee of an individual
retirement account or individual retirement annuity to the Custodian be made for
investment under this Agreement.
(1) From IRA Funded with Deductible Contributions. Where no portion of such
transferred amount is attributable to a distribution from an employees'
trust, an employee annuity, an annuity contract or a U.S. retirement bond
as described in Internal Revenue Code Sections 402(a)(5), 403(a)(4),
403(b)(8), 405(d)(3), or 409(b)(3)(C), Depositor warrants that the
Depositor did not inherit the account or annuity, or if the Depositor did
inherit the account or annuity, that Depositor is the surviving spouse of
the individual for whose benefit the account was originally maintained or
the annuity was originally purchased.
(2) From IRA Funded with Distributions Attributable to an Employer Plan.
With respect to any other transferred amount, Depositor:
(A) agrees that no additional contributions will be made to the
custodial account in which such contribution is deposited, except as
otherwise permitted by Scudder Fund Distributors, Inc.;
(B) that the entire amount of such transferred amount is attributable
to a distribution from an employees' trust, an employee annuity, an
annuity contract, a qualified bond purchase plan, or a U.S. retirement
bond, as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C), or other applicable
law.
(3) that if the transferred amount had been a rollover contribution, it
would have complied with the requirements of subparagraph (b) or (c) above.
4. Tax Reform Act of 1986.
Notwithstanding anything to the contrary herein, the provisions of this
agreement are to interpreted in accordance with the provisions of the Internal
Revenue Code of 1986; to the extent any provision of this agreement conflicts
with the provisions of the Internal revenue Code of 1986, it shall be deemed to
have been amended in such manner as best preserves the original intent of the
unamended provision of the agreement which also bringing the provision into
compliance with the relevant provision(s) of the Internal Revenue Code of 1986.
5. Custodian's Fees
(a) Custodian shall be entitled to receive such reasonable fees with
respect to the establishment and administration of this custodial account as are
established by it from time to time.
(b) Upon thirty (30) days prior written notice, Custodian may change its
fee schedule.
Custodian's fees, any income, gift, estate and inheritance taxes or other
taxes of any kind whatsoever, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the custodial account, that
may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by Custodian in the performance of its duties
including fees for legal services rendered to Custodian, may be charged to the
custodial account, with the right to liquidate Mutual Fund shares or other
investments for this purpose, or (at Custodian's option) to the Depositor.
<PAGE>
6. Custodial Account
(a) This Agreement shall take effect only when accepted and signed by
Custodian. As directed, Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Mutual Fund(s) or other investments selected by Depositor in
Article IX Para. 1. "Mutual Fund" means a regulated investment company, which is
defined in Internal Revenue Code Section 851(a) and which has been designated by
Scudder Fund Distributors, Inc. (or its successors) as appropriate for
investment hereunder.
(b) Every subsequent contribution shall be invested in accordance with
instructions authorized by Depositor indicating Depositor's choice of the Mutual
Funds or other investments designated by Scudder Fund Distributors, Inc. (or its
successors) as appropriate for investment hereunder. Depositor agrees that the
listing shall not be construed as an endorsement by Custodian of the Mutual
Funds or other investments in which contributions may be invested, final choice
of which is in the sole discretion of Depositor. The Custodian does not
undertake to render any investment advice whatsoever to Depositor; its sole
duties are those prescribed in Article IX, para. 8(c).
(c) The Custodian shall invest subsequent contributions as directed.
However, if any such instructions authorized by Depositor are not received as
required, or if received, are in the opinion of Custodian unclear, or if the
accompanying contribution would cause the Depositor to exceed the maximum
limitation on tax deductibility, Custodian may hold or return all or a portion
of the contribution uninvested without liability for loss of income or
appreciation or for other loss, and without liability for interest, pending
receipt of written instructions or clarification.
(d) All dividends and capital gains distributions received on shares of a
Mutual Fund held in the custodial account shall (unless received in additional
such shares) be reinvested in shares of that Mutual Fund, if available, which
shall be credited to the account. If any distribution of such shares may be
received at the election of the shareholder in additional such shares or in cash
or other property, Custodian shall elect to receive it in additional such
shares. All accumulations on account of other investments shall be reinvested in
Depositor's custodial account.
(e) All Mutual Fund shares or other investments acquired by Custodian
hereunder shall be registered in the name of Custodian (with or without
identifying Depositor) or its nominee. Custodian shall deliver, or cause to be
executed and delivered, to Depositor all notices, prospectuses, financial
statements, proxies, and proxy soliciting materials relating to such Mutual
Funds shares or other investments held in the custodial account. Custodian shall
not vote any such Mutual Fund shares or other investments except in accordance
with any written instructions received from Depositor.
7. Distributions
(This paragraph 7 supplements Article IV on Scudder IRA Form 12-86 of the
Agreement and must be read in conjunction with it.)
(a) Distribution of the custodial account assets in accordance with Article
IV shall be made in a manner set forth in subparagraph (c)(1) or (2), whichever
applies, except as Article IV otherwise requires and at such time as Depositor
(or Depositor's Beneficiary if Depositor is deceased) shall elect by written
order to Custodian, provided that distribution (except for distribution on
account of Depositor's disability or death, return of an "excess contribution"
referred to in subparagraph (d) or a "rollover" from this account), must be no
earlier than age 59 1/2 if Depositor wants to avoid an "early distribution
additional tax" under Code section 408(f) or other applicable law. For that
purpose, Depositor will be considered disabled if depositor can prove, as
provided in Code section 72(m)(7), that Depositor is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or be of
long-continued and indefinite duration. Depositor's (or Depositor's Beneficiary
if Depositor is deceased) will order distribution in the manner and at the time
permitted or required by Article IV and this paragraph. Custodian assumes no
responsibility for the tax treatment of any distribution from the custodial
account; such responsibility accrues solely to the person ordering the
distribution.
(b) Custodian assumes (and shall have) no responsibility to make any
distribution on order of Depositor (or Depositor's Beneficiary if Depositor is
deceased) unless and until such order specifies the occasion for such
distribution, the elected manner of distribution, and any declaration required
by Article V. Also, before making any such distribution or before honoring any
assignment of the custodial account. Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees, and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with an order which appears on its face to be genuine, or for refusing
to comply if not satisfied it is genuine, and assumes no duty of further
inquiry.
(c) Upon receipt of a proper written order as required above, Custodian
shall distribute the assets of the custodial account in cash or kind as follows:
(1) Distribution to Depositor. If the distribution order calls for the
custodial account to be paid to Depositor under Article IV then
distribution shall be made in one or more of the following ways as
specified in the order.
(A) In a lump sum.
(B) In installments pursuant to a cash withdrawal plan, provided that
such a plan suitable for prearranging the distributions described in
this subparagraph (B) is available for Custodian's use under the rules
governing the investments held in the custodial account. A suitable
cash withdrawal plan will provide for periodic liquidation of some of
investments held in the custodial account to yield the cash necessary
to pay each installment. Prior to January 1, 1985, a suitable cash
withdrawal plan will provide for payment of installments over a period
not longer than the life expectancy of Depositor or the joint life and
last survivor expectancy of Depositor and Depositor's spouse.
Subsequent to December 31, 1984, a suitable cash withdrawal plan will
provide for payment of installments ratably over a period of not
longer than the life expectancy of the Depositor or the joint life and
last survivor expectancy of the Depositor and the Depositor's
Beneficiary (as defined in subparagraph (c)(2) of this Para. 7) The
file expectancies referred to in this Agreement shall be determined by
using applicable Internal Revenue Service tables. The amount
distributed each year shall be at least equal to the quotient obtained
by dividing the entire custodial account remaining at the beginning of
that year by the adjusted life expectancy of Depositor, the joint life
and last survivor expectancy of Depositor and Depositor's spouse, or
the joint life and last survivor expectancy of Depositor's Beneficiary
(whichever is applicable). Prior to January 1, 1985, the life or joint
life and last survivor expectancy used to calculate the minimum amount
to be distributed in a given year shall be equal to the relevant
expectancy as it was determined as of when Depositor attained age
70 1/2 reduced by the number of whole years elapsed, if any, since
Depositor attained age 70 1/2. Subsequent to December 31, 1984, the
adjusted life or joint life and last survivor expectancy used to
calculate the minimum amount to be distributed in a given year shall
be at the
<PAGE>
Depositor's election, either determined by referring to the applicable
Internal Revenue Service table and determining the relevant expectancy
as of the particular year in question or by using a previously
determined expectancy and reducing such expectancy by the number of
whole years elapsed since it was determined. Notwithstanding any
implication to the contrary in this subsection (B), no distribution
need be made in any year, or a lesser amount may be distributed during
such year, if the aggregate amounts distributed through the end of
such year are at least equal t the aggregate of the minimum amounts
required by the subparagraph (B) to have been distributed. Moreover,
during Depositor's lifetime the entire custodial account remaining for
distribution at any time under this subparagraph (B) may, pursuant to
proper supplementary written order as specified above, be distributed
to Depositor.
(C) By the purchase and distribution of a single-premium contract
meeting the requirements of Code section 408(b)(1), (3), (4) and,
prior to January 1, 1985, (5) applicable to an "individual retirement
annuity."
(2) Distribution upon Death of Depositor or Depositor's Spouse. Prior to
January 1, 1985, if Custodian receives a proper written order for
distribution on account of the Depositor's death or the spouse's death, if
distributions were being made to the spouse over the joint life and last
survivor expectancy, Custodian shall distribute the then-remaining
custodial account to Depositor's (or, if applicable, the spouse's)
Beneficiary within five (5) years of Depositor's (or, if applicable, the
spouse's) death either in a lump sum or installments; provided, however,
that if distributions have already begun before Depositor's death for a
specified term, then Custodian may instead continue to make the
distribution in the same manner and without regard to the foregoing
five-year limitation; provided further, that if Depositor's Beneficiary is
Depositor's spouse and if Depositor's Beneficiary elects to treat the
account as if Depositor's Beneficiary were the Depositor, then the
Custodian may distribute the account as directed by the Depositor's
Beneficiary as if such person were the Depositor and in accordance with
Articles IV and IX. Subsequent to December 31, 1984, if Custodian receives
a proper written order for distribution on account of the Depositor's death
or the spouse's death, if distributions were being made to the Depositor's
surviving spouse, then the Custodian shall distribute the then-remaining
custodial account to the Depositor's (or, if applicable, the spouse's)
Beneficiary over the life of the Depositor's (or, if applicable, the
spouse's) Beneficiary; provided, however, that if distributions have
already begun before Depositor's death for a specified term, Custodian
shall continue to distribute the custodial account over a period at least
as rapid as that specified term. The term "Depositor's Beneficiary" means
the person or persons designated as such by the "designating person" (as
defined below) on a form acceptable to Custodian for use in connection with
the Agreement, signed by the designating person, and filed with the
Custodian in accordance with this subparagraph (2). The form may name
persons or estates to take upon the contingency of survival. However, the
term "Depositor's Beneficiary" means the designating person's estate to the
extent no such designation on such a form effectively disposes of the
custodial account as of when such distribution is to commence. Moreover, a
form shall not become effective for that purpose until it is file with the
Custodian during the lifetime of the designating person. The form last
accepted by Custodian before such distribution is to commence, upon
becoming effective during the designating person's lifetime, shall be
controlling and, whether or not fully dispositive of the custodial account,
thereupon shall revoke all such forms previously filed by that person. The
term "designating person" means Depositor; after Depositor's death, it also
means the person or persons (other that Depositor's estate) who begin to
receive a portion of the custodial account pursuant to such a designation
by Depositor, and designations by such a person shall relate solely to the
balance of that portion remaining in the custodial account as of when
distribution pursuant to a designation by that person is to commence. The
Custodian shall accept all such forms only in the Commonwealth of
Massachusetts, and the shall be considered part of this Agreement for
purposes of Article IX, para. 13(c).
(3) Any annuity which Custodian is to purchase and distribute under this
Agreement may be fixed or variable, but Custodian shall not be required to
distribute in that manner unless the premium for that annuity is at least
$1,000.
(4) Depositor's Beneficiary shall not have the right or power to anticipate
any part of the custodial account or to sell, assign, transfer, pledge or
hypothecate any part thereof. The custodial account shall not be liable for
the debts of Depositor's Beneficiary or subject to any seizure, attachment,
execution or other legal process in respect thereto.
(d) If during a taxable year under Article I a total amount is contributed
which exceeds the amount deductible for that year, either because such amount
exceeds the tax-deductible limits specified in the Internal Revenue Code, or
because of attainment of age 70 1/2 in that year, or for some other reason, then
upon receiving written notice specifying the year in question, the amount of the
excess, the reason it is an excess, and the amount of net income in the
custodial account attributable to such excess -- Custodian shall distribute cash
to Depositor in an amount equal to the sum of such excess and earnings. If the
excess contribution did not arise because of attainment of age 70 1/2, then (in
Custodian's discretion unless otherwise instructed by Depositor) in lieu of
being distributed, said sum shall be treated by Depositor as a contribution in
the then current or a succeeding taxable year, in accordance with applicable.
Law.
8. Additional Provisions Regarding the Custodian
(a) When and after distributions of the custodial account to Depositor's
Beneficiary commence, all right and obligations assigned to Depositor by
provisions of this Agreement shall inure to, and be enjoyed and exercised by,
Depositor's Beneficiary instead of Depositor, shall not be responsible for
treating such person's predecessor to such rights and obligations as still
possessing the same.
(b) Custodian shall keep adequate records of transactions it is required to
perform hereunder. Not later than sixty (60) days after the close of each
calendar year or after the Custodian's resignation or removal pursuant to
Article IX, para. 10(a) Custodian shall render to Depositor a written report or
reports reflecting the transactions effected by it during such period and the
assets of the custodial account at the close of the period. Sixty (60) days
after rendering such report(s), Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the recipient of such report(s) shall have filed
written objections with the Custodian within the latter such sixty-day period.
<PAGE>
(c) Custodian shall be an agent for Depositor to receive and invest
contributions as authorized by Depositor, hold and distribute such investments,
and keep adequate records and report thereon, all in accordance with this
Agreement. The parties do not intend to confer any fiduciary duties on
Custodian, and none shall be implied. Custodian may perform any of its
administrative duties through other persons designated by Custodian from time to
time, except that Mutual Fund shares or other investments must be registered as
stated in para. 6(e) of this Article IX; and Custodian intends initially to
delegate all such duties to Boston Financial Data Services, Inc., which is
partially owned by Custodian's parent company; but no such delegation or future
change therein shall be considered as an amendment to this Agreement. Custodian
shall not be liable (and assumes no responsibility) for the collection of
contributions, the deductibility of any contribution or its propriety under this
Agreement, or the purpose or propriety of any distribution ordered in accordance
with Article IX, para. 7, or made in accordance with Article IX, para. 12,
which matters are the sole responsibility of Depositor and Depositor's
Beneficiary.
(d) Depositor shall always fully indemnify Custodian and save it harmless
from any and all liability whatsoever which may arise either (1) in connection
with this Agreement and matters which it contemplates, except that which arises
due to Custodian's negligence or willful misconduct, or (2) with respect to
making or failing to make any distribution, other than for failure to make
distribution in accordance with an order therefor which is in full compliance
with both Article IV and para. 7(a) and (b) of Article IX. Custodian shall not
be obligated or expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed upon by Custodian
and Depositor, and unless fully indemnified for so doing to Custodian's
satisfaction.
(e) Custodian may conclusively rely upon and shall be protected in acting
upon any written order from or authorized by Depositor or Depositor's
Beneficiary or any other notice, request, consent, certificate or other
instrument, paper, or other communication believed by it to be genuine and to
have been issued in proper from and with proper authority, and, so long as it
acts in good faith, in taking or omitting to take any other action in reliance
thereon.
9. Amendment
(This paragraph 9 supplements Article VIII on Scudder IRA From 12-86 of the
Agreement and must be read in conjunction with it.)
(a) Depositor retains the right to amend this Agreement in any respect at
any time, effective on a stated date which shall be at least sixty (60) days
after giving written notice of the amendment (including its exact terms) to
Custodian by registered or certified mail unless Custodian waives such notice as
to that amendment. If Custodian does not wish to continue serving in that
capacity under this Agreement as so amended, it may resign in accordance with
Article IX, para. 10. Depositor also delegates, to the distributor (principal
underwriter) of a plurality of the Mutual Funds described in Article IX, para.
6(b), Depositor's right so to amend, including retroactively, as necessary or
appropriate in the opinion of counsel satisfactory to the distributor, in order
to conform with pertinent provisions of the Code and other laws or successor
provisions of law or to obtain a governmental ruling that such requirements are
met, to adopt a prototype or master plan (when one becomes available) for
investment in shares of such Mutual Funds or other investments, or as otherwise
may be advisable in the opinion of such counsel, provided the distributor amends
in the same manner all agreements comparable to this one, having the same
Custodian, permitting investment in shares of such Mutual Funds or other
investments, and under which such power has been delegated to it. Such an
amendment by the distributor shall be communicated in writing to Depositor and
Custodian, and Depositor shall be deemed to have consented thereto unless,
within thirty (30) days after such communication to Depositor is mailed.
Depositor either (1) gives Custodian a proper written order for a lump-sum
distribution of the custodial account, or (2) removes Custodian and
simultaneously appoints a Successor Custodian under Article IX, para. 10.
(b) This paragraph 9 shall not be construed to restrict Custodian's freedom
to agree with distributors of Mutual Fund shares, or others, upon the terms by
which shares of additional Mutual Funds or other investments may be chosen for
investment as contemplated in Article IX, para. 6(b), or Custodian's freedom to
change fee schedules in the manner approved by Article IX, para. 5(b), and no
such agreement or change shall be deemed to be an amendment of this Agreement.
10. Resignation or Removal of Custodian
(a) Custodian may resign at any time upon at least thirty (30) days prior
notice in writing to Depositor, and may be removed by Depositor at any time upon
at least thirty (30) days prior notice in writing to Custodian. Upon such
resignation or removal, Depositor shall appoint a Successor Custodian to serve
under this Agreement. Upon receipt by Custodian of written acceptance of such
appointment by the Successor Custodian, Custodian shall transfer to such
Successor the assets of the custodial account and all necessary records (or
copies thereof) pertaining thereto, provided that (if so requested by Custodian)
any Successor Custodian agrees not to dispose of any such records without
Custodian's consent. Custodian is authorized, however, to reserve such a portion
of such assets as it may deem advisable for payment of all its fees,
compensation, costs, and expenses, or for payment of any other liabilities
constituting a charge on or against Custodian, with any balance of such reserve
remaining after the payment of all such items to be paid over to the Successor
Custodian.
(b) If within thirty (30) days after Custodian's resignation or removal or
such longer time as Custodian may agree to, Depositor has not appointed a
Successor Custodian which has accepted such appointment, Custodian shall
terminate the custodial account pursuant to Article IX, para. 11, unless within
that time the distributor referred to in Article IX, para. 9(a) appoints such
Successor and gives written notice thereof to Depositor and Custodian.
(c) Custodian shall not be liable for the acts or omissions of such
Successor.
(d) The Custodian, and every Successor Custodian appointed to serve under
this Agreement, must be a bank as defined in Code section 408(n) or such other
person who qualifies to serve in the manner prescribed by Code section 408(a)(2)
and satisfies the Depositor, distributor, or Custodian, upon request, as to such
qualification.
(e) After Custodian has transferred the custodian account assets (including
any reserve balance as contemplated above) to the Successor Custodian, Custodian
shall be relieved of all further liability with respect to this Agreement, the
custodial account, and the assets thereof.
11. Termination of Account
(a) Custodian shall terminate the custodial account if, within the time
specified in Article IX, para. 10(b), after Custodian's resignation or removal,
neither Depositor nor the distributor has appointed a Successor Custodian which
has accepted such appointment. Termination of the custodial account shall be
effected by distributing all assets thereof in a lump sum in cash or in kind to
Depositor subject to Custodian's right to reserve funds as provided in Article
IX, para. 10(a)
<PAGE>
(b) Upon termination of the custodial account, this Agreement shall
terminate and have no further force and effect, and Custodian shall be relieved
from all further liability with respect to this Agreement, the custodial
account, and all assets thereof so distributed.
12. Liquidation of Account
(a) Notwithstanding anything contained in this Agreement to the contrary,
Scudder Fund Distributors, Inc. shall have the right to direct Custodian, by
written order to Custodian, to liquidate the custodial account if the value of
the account at the time of such written order is less than a minimum value
established on a non-discriminatory basis from time to time by Scudder Fund
Distributors, Inc., and upon receipt of such written order (which Scudder Fund
Distributors, Inc. shall have no duty to make and which, if made, may be made
with respect to any specified accounts as to which it may be made applicable
singly or to all accounts as to which it may be made applicable as a group),
Custodian shall forthwith proceed to liquidate the custodial account by
distributing all assets thereof in a lump sum in cash or in kind to Depositor,
subject to Custodian's right to reserve such a portion of such assets as it may
deem advisable for payment of all its fees, compensation, costs, and expenses,
or for payment of any other liabilities constituting a charge on or against the
assets of the custodial account or on or against Custodian, with any balance of
such reserve remaining after the payment of all such items to be paid over to
Depositor.
(b) Neither Scudder Fund Distributors, Inc. nor Custodian shall be liable
for, or in any way responsible with respect to, any penalty or any other loss
incurred by any person with respect to a distribution made hereunder and upon
liquidation of the custodial account as aforesaid, this Agreement shall
terminate and have no further force and effect, and Custodian and Scudder Fund
Distributors, Inc. shall be relieved from all further liability with respect to
this Agreement, the custodial account, and all assets thereof so distributed.
13. Miscellaneous
(a) References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time hereafter, including
successors to such sections.
(b) Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on Custodian's records.
(c) This agreement is accepted by Custodian in, and shall be construed and
administered in accordance with the laws of the Commonwealth of Massachusetts.
This Agreement is intended to qualify under section 408 of the Code as an
Individual Retirement Account and for the Retirement Savings deduction under
section 219 of the Code, and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one construction,
such ambiguity shall be resolved in favor of that interpretation or construction
which is consistent with that intent. However, neither the Custodian, nor any
Mutual Fund (or company associated therewith) shall be responsible for whether
or not such intentions are achieved through use of this Agreement, and Depositor
is referred to Depositor's attorney for any such assurances.
CUSTODIAN
DISCLOSURE STATEMENT
The following information is being provided to you by the State Street Bank
and Trust Company, the Custodian of the Scudder Individual Retirement Accounts,
in accordance with the requirements of the Internal Revenue Service. Please read
it together with the Individual Retirement Plan and the prospectus for the
shares of each Mutual Fund selected by you for the investment of your
contributions to that plan, copies of which you should have already received
from the distributor of those shares. The provisions of the Plan and prospectus
must prevail over this statement in any instance where the statement is
incomplete or appears to conflict.
The Employee Retirement Income Security Act of 1974 has provided an
entirely new program that may enable you to plan for your retirement by creating
a "retirement plan" with federally tax-deductible dollars. This federal income
tax deduction is available even if you do not otherwise itemize your deductions.
In addition, any earnings on the assets held in your individual retirement
account will not be subject to federal income tax until you actually begin to
receive a distribution from your account. The state income tax treatment of your
account may differ, and details should be available from your state taxing
authority or your own tax adviser.
As with most other laws that provide special tax treatment, there are
certain restrictions and limitations involved with respect to your individual
retirement account:
1. Only a limited amount of savings can qualify for the preferential tax
treatment -- 100% of your compensation or earning from self-employment
up to an annual maximum of $2,000.
Under certain conditions, an individual and his or her unemployed
spouse, or each employed spouse with less that $250 of earnings, may
each open an IRA.
Annual deductions for contributions are allowable if a joint income
tax return is filed and the deductions are limited to the lesser of
100% of the employed spouse's wages or $2,250, and the amount
contributed to either individual retirement account may not exceed
$2,000.
In the case of an individual retirement account which meets the
requirements of a so-called Simplified Employee Pension Plan, an
employer may contribute a deductible amount equal to 15% of the
employee's compensation up to an annual maximum of $30,000. The amount
of such contribution is includible in the employee's income as wages
(for federal income tax purposes) but is deductible by him or her. The
employee is also allowed an annual deduction for his or her own
individual retirement account contributions limited to the lesser of
100% of the employee's compensation or $2,000.
There is a 6% penalty tax on any so-called "excess contribution" if
you make one, that is, on the portion of a contribution made to your
IRA in excess of the amount which can be currently deducted. Some
examples of when this can occur are when you make a contribution to
your IRA in excess of the allowable deduction limitations, or you
contribute during or after the calendar year in which you reach
70 1/2. The 6% penalty tax on any "excess contribution" also attaches
for each following year until the excess is withdrawn or used up. If
an excess contribution plus earnings on it is withdrawn before the
time for filing the individual's tax return for the year of the
contribution (including extensions), there will be no 6% penalty tax.
The amount with-
<PAGE>
drawn will not be considered a premature distribution nor taxed as
ordinary income, except the earnings withdrawn will be included in the
income of the taxpayer. In addition, in certain cases an excess
contribution may be withdrawn after the time for filing the
individual's tax return without resulting in taxable income to the
individual. Also, excess contributions for one year may be carried
forward and deducted in the next year.
2. Contributions must be made to a Trust or Custodial Account in which
the Trustee/Custodian is either a bank or such other person who has
been approved by the Secretary of the Treasury. No part of your
contribution may be invested in life insurance or be commingled with
other property, except in a common trust fund or common investment
fund.
3. No deduction is allowed for (a) contributions other than in cash; (b)
contributions (other than those by an employer to a Simplified
Employee Pension Plan) made during your calendar year in which you
attain age 70 1/2 or thereafter; or (c) for any amount you contribute
which was a distribution from another retirement plan ("rollover"
contribution). However, the limitations in paragraph 1 do not apply to
such rollovers.
4. Individuals receiving compensation may establish their own individual
retirement accounts even if they are already covered under
tax-qualified plans (including Keogh plans for self-employed
individuals), government plans, or certain annuities.
5. Your interest in the account must be nonforfeitable at all times.
6. An individual is allowed to transfer, or rollover, such individual's
investment in one type of individual retirement plan to another
without any tax liability. Also, under certain conditions, an
individual may roll over (tax-free) a distribution received from a
qualified plan or a tax-sheltered annuity. However, strict limitations
apply to such rollover, and you should seek competent tax advice in
order to comply with all the rules governing rollovers.
7. Since the purpose of the IRA savings plan is to accumulate funds for
retirement, your receipt or use of any portion of this account (for
example, as collateral for a loan) before you attain age 59 1/2 would
be considered as an early distribution unless the distribution is a
result of death or disability. The amount of an early distribution
would be includable in your gross income and could also subject you to
a penalty tax equal to 10% of the distribution unless you transfer it
to another IRA under circumstances whereby it qualifies as a rollover.
8. If you or your beneficiary were to engage in any prohibited
transaction (such as any sale, exchange or leasing of any property
between you and the account, or any interference with the independent
status of the account) then the account would lose its exemption from
tax and be treated as having been distributed to you. The value of the
entire account would be includable in your gross income, and if you
were then under age 59 1/2, you would also be subject to the 10%
penalty tax on early distributions.
9. Your entire interest in your account must be distributed, or begin to
be distributed, to you no later than the first April 1st of the year
following the later of the year in which you attain age 70 1/2.
Distribution may be made at one in a lump sum or it may be made in
installments. However, installment payments cannot be scheduled to be
made over a period which extends beyond your life expectancy (as
determined annually) or the joint life and last survivor expectancy of
you and the beneficiary you designate (as determined annually, if that
beneficiary is you spouse). However, where the beneficiary is other
than the spouse, the value of the expected distributions to you,
determined at the time distributions commence, must equal at least 50%
of the total value at that time. If the amount distributed during a
calendar year is less than the minimum amount required to be
distributed, the recipient would be subject to a penalty tax equal to
50% of the difference between the amount required to be distributed
and the amount actually distributed. If you die before the entire
interest is distributed to you, but after you have begun to receive
distributions, your entire account must be distributed to your
beneficiary over a period no longer than the last determined life
expectancy or life and last survivor expectancy over which your
account was being distributed prior to your death. If you die before
the entire interest has begun to be distributed to you and your spouse
is your beneficiary, distributions to your spouse must either (a) be
completed within 5 years of your death or (b) commence before the
later of one year after your death or the date on which you would have
attained age 70 1/2, and continue over his or her life or a period not
exceeding his or her life expectancy. If you die before the entire
interest has begun to be distributed to you and your spouse is not
your beneficiary, distributions to your beneficiary must either (a) be
completed within five years of your death and continue over your
beneficiary's life or a period not exceeding his or her life
expectancy.
10. Amounts distributed to you are includable in your gross income when
you receive them and are taxable as ordinary income without any
special lump-sum distribution privileges. However, normal four-year
income averaging may be available.
11. You must file Treasury Form 5329 with the Internal Revenue Service for
each calendar year during which there is an excess contribution,
premature distribution, or during which there is an insufficient
distribution as referred to in paragraph 9.
12. The Individual Retirement Account Plan has been approved as to form by
the Internal Revenue Service. This approval is a determination only as
to the form of the account and does not represent a determination of
the merits of such account.
13. Information about the shares of each mutual fund available for
investment by your individual retirement account must be furnished to
you in the form of a prospectus governed by the rules of the
Securities and Exchange Commission. Please refer to the prospectus for
detailed information concerning your mutual fund. Growth in the value
of your account cannot be guaranteed or projected. However, the income
and operating expenses of a mutual fund will affect the value of its
shares, and hence the value of your account, as does any increase or
decrease in the value of the assets of the mutual fund. The fund's
prospectus contains information regarding current income and expenses
of your mutual fund.
Fees and other expenses of maintaining your account may be charged to
you or your account. The Custodian's fee schedule is referred to in
Article IX of the Plan document and is distributed to you with it.
<PAGE>
14. The information contained in this Disclosure Statement and the terms
of the related Custodial Account agreement are applicable to
Individual Retirement Accounts set up, and contributions made, with
respect to the 1986 calendar year. Effective January 1, 1987, the law
with regard to the establishment, maintenance and termination of
Individual Retirement Accounts has been substantially modified. For
example, a married individual will only be able to make a fully
deductible contribution to his or her account (an amount equal to the
lesser of his or her compensation or earnings from self-employment, or
$2,000) if the married couple files a joint Federal income tax return
and they satisfy either of the following standards: (a) their combined
adjusted gross income is less than $40,000 or (b) neither spouse
actively participates in an employer-sponsored retirement plan. A
single individual will be subject to similar rules except that the
adjusted gross income limit is $25,000. Married couples and single
individuals who do not satisfy the active-participant standard and
whose adjusted gross incomes exceed the applicable limit by not more
than $10,000 will be eligible to make limited deductible Individual
Retirement Account contributions. Generally speaking, for every $5 by
which a couple's or single individual's adjusted gross income exceeds
the applicable limit, the $2,000 cap on the amount of deductible
contributions is reduced by $1. Individuals who are not eligible to
make fully deductible Retirement Account contributions will be
permitted to make nondeductible contributions equal to the difference
between (a) the lesser of his or her compensation or earnings from
self-employment, or $2,000, minus (b) the maximum amount the
individual is permitted to contribute on a deductible basis. Earnings
on both deductible and non-deductible contributions will accumulate on
a tax-deferred basis.
If you have not received this Disclosure Statement at least seven calendar
days before the establishment of your Individual Retirement Account, you have
the right to revoke your Individual Retirement Account during the seven calendar
day period following the establishment of it. In order to so revoke your
Individual Retirement Account, you must do so in writing and you must mail or
deliver your revocation to Scudder Fund Distributors, Inc., 175 Federal Street,
Retirement Plan Services, Boston, MA 02110. If your revocation is mailed, the
date of the postmark (or the date of certification or registration if sent by
certified or registered mail) will be considered your revocation date. If you so
revoke your individual retirement account during the seven-day period, the
entire amount of your account, without any adjustments (for items such as
administrative expenses, fees, or fluctuation in market value) will be returned
to you.
You may obtain further information from any district office of the Internal
Revenue Service.
Scudder
[Logo} IRA Portfolio
12-8-28 (c) Scudder Fund Distributors, Inc.
<PAGE>
SCUDDER IRA-SEP
HOW TO ADOPT THE IRS MODEL SEP (FORM 5305-SEP)
EMPLOYERS
1. Complete Form 5305-SEP
a. Fill in employer name.
b. Fill in eligibility requirements.
c. Sign and date the form and retain the original for your files.
Send a copy of the completed form to:
The Scudder Funds
175 Federal Street
Boston, MA 02110
Attn: L. Thompson
Do not send a copy to the IRS.
2. Provide each eligible employee with a copy of the completed Form
5305-SEP (including the agreement form, instructions, and questions
and answers).
3. Contact Scudder for employee IRA kits. Call toll-free at
1-800-225-2470.
4. Make timely contributions to your employees' IRAs.
IMPORTANT
Your adoption of the IRS Model SEP will not be effective until you have
given all eligible employees copies of the completed Form 5305-SEP and all
eligible employees have adopted their own IRAs.
EMPLOYEES
1. Eligible employees must adopt their own Individual Retirement
Accounts. Employees can obtain information about the Scudder IRA from
you, the employer, or by calling Scudder's toll-free number listed
above.
2. Eligible employees should notify you when they open their IRAs and
give you instructions for depositing SEP contributions to their
accounts.
35-3-97
<PAGE>
Form 5305-SEP OMB No. 1545-0499
(Rev January 1987) Expires 10-31-88
Department of the Treasury -----------------
Internal Revenue Service Do NOT File with
Internal Revenue
Service
Simplified Employee Pension-Individual
Retirement Accounts Contribution Agreement
(Under Section 408(k) of the Internal Revenue Code)
- --------------------------------------------------------------------------------
(Business name--employer) makes the following agreement under the terms of
section 408(k) of the Internal Revenue Code and the instructions to this form.
The employer agrees to provide for discretionary contribution in each
calendar year to the Individual Retirement Accounts or Individual Retirement
Annuities (IRA's) of all eligible employees who are at least _____ years old
(not over 21 years old)(see instruction "Who May Participate") and worked in at
least ____ years (not over 3 years) of the immediately preceding 5 years (see
instruction "Who May Participate"). This |_| includes |_| does not include
employees covered under a collective bargaining agreement and |_| includes |_|
does not include employees whose total compensation during the year is less than
$300.
The employer agrees that contributions made on behalf of each eligible
employee will:
o Be made only on the first $200,000 of compensation (as adjusted per Code
section 408(k)(3)(C)).
o Be made in an amount that is the same percentage of total compensation for
every employee.
o Be limited to the smaller of $30,000 (or if greater, 1/4 of the dollar
limitation in effect under section 415(b)(1)(A)) or 15% of compensation.
o Be paid to the employee's IRA trustee, custodian, or insurance company (for
an annuity contract).
___________________________________ ____________________
Signature of employer Date
___________________________________
By
- --------------------------------------------------------------------------------
Instructions for the Employer
(Section references are to the Internal Revenue Code, unless otherwise noted.)
Paperwork Reduction Act Notice. -- The Paperwork Reduction Act of 1980 says we
must tell you why we are collecting this information, how it is to be used, and
whether you have to give it to us. The information is used to determine if you
are entitled to a deduction for contributions made to a SEP. Your completing
this form is only required if you want to establish a Model SEP.
Purpose of Form. -- Form 5305-SEP (Model SEP) is used by an employer to make an
agreement to provide benefits to all employees under a Simplified Employee
Pension (SEP) plan described in section 408(k). This form is NOT to be filed
with IRS.
What is a SEP Plan? -- A SEP provides an employer with a simplified way to make
contributions toward an employee's retirement income. Under a SEP, the employer
is permitted to contribute a certain amount (see below) to an employee's
Individual Retirement Account or Individual Retirement Annuity (IRA's). The
employer makes contributions directly to an IRA set up by an employee with a
bank, insurance company, or other qualified financial institution. When using
this form to establish a SEP, the IRA must be a model IRA established on an IRS
form or a master or prototype IRA for which IRS has issued a favorable opinion
letter. Making the agreement on Form 5305-SEP does not establish an employer IRA
as described under section 408(c).
This form may not be used by an employer who:
o Currently maintains any other qualified retirement plan.
o Has maintained in the past a defined benefit plan, even if now terminated.
o Has any eligible employees for whom IRA's have not been established.
o Uses the services of leased employees (as described in section 414(n)).
o Is a member of an affiliated service group (as described in section
414(m)), a controlled group of corporations (as described in section
414(b)), or trades or businesses under common control (as described in
section 414(c)), UNLESS all eligible employees of all the members of such
groups, trades, or businesses, participate under the SEP.
o This form should only be used if the employer will pay the cost of the SEP
contributions. This form is not suitable for a SEP that provides for
contributions at the election of the employee whether or not made pursuant
to a salary reduction agreement.
Who May Participate. -- Any employee who is at least 21 years old and has
performed "service" for you in at least 3 years of the immediately preceding 5
years must be permitted to participate in the SEP. However, you may establish
less restrictive eligibility requirements if you choose. "Service" is any work
performed for you for any period of time, however short. Further, if you are a
member of an affiliated service group, a controlled group of corporations, or
trades or businesses under common control, "service" includes any work performed
for any period of time for any other member of such group, trades, or
businesses. Generally, to make the agreement, all eligible employees (including
all eligible employees, if any, of other members of an affiliated service group,
a controlled group of corporations, or trades or businesses under common
control) must participate in the plan. However, employees covered under a
collective bargaining agreement and certain nonresident aliens may be excluded
if section 410(b)(3)(A) or 410(b)(3)(C) applies to them. Employees whose total
compensation for the year is less than $300 may be excluded.
Amount of Contributions. -- You are not required to make any contributions to an
employee's SEP-IRA in a given year. However, if you do make contributions, you
must make them to the IRA's of all eligible employees, whether or not they are
still employed at the time contributions are made. The contributions made must
be the same percentage of each employee's total compensation (up to a maximum
compensation base of $200,000 as adjusted per section 408(k)(3)(C) for cost of
living changes). The contributions you make in a year for any one employee may
not be more than the smaller of $30,000 or 15% of that employee's total
compensation (figured without considering the SEP-IRA contributions).
For this purpose, compensation includes:
o Amounts received for personal services actually performed (see section
1.219-1(c) of the Income Tax Regulations); and
o Earned income defined under section 401(c)(2).
In making contributions, you may not discriminate in favor of any employee
who is highly compensated.
Under this form you may not integrate your SEP contributions with, or
offset them by, contributions made under the Federal Insurance Contributors Act
(FICA).
Currently, employers who have established a SEP using this agreement and
have provided each participant with a copy of this form, including the questions
and answers, are not required to file the annual information returns, Forms
5500, 5500-C, 5500-R, or 5500EZ for the SEP.
<PAGE>
Form 5305-SEP (Rev 1-87) Page 2
- --------------------------------------------------------------------------------
Deducting Contributions. -- You may deduct all contributions to a SEP subject to
the limitations of section 404(h). This SEP is maintained on a calendar year
basis and contributions to the SEP are deductible for your taxable year with or
within which the calendar year ends. Contributions made for a particular taxable
year and contributed by the due date of your income tax return (including
extensions) shall be deemed made in that taxable year.
Making the Agreement. -- This agreement is considered made when (1) IRA's have
been established for all of your eligible employees, (2) your have completed al
blanks on the agreement form without modification, and (3) your have given all
your eligible employees copies of the agreement form, instructions, and
questions and answers.
Keep the agreement form with your records; do not file it with IRS.
Information for the Employee
The information provided explains what a Simplified Employee Pension plan is,
how contributions are made, and how to treat your employer's contributions for
tax purposes.
Please read the questions and answers carefully. For more specific
information, also see the agreement form and instructions to your employer on
this form.
Questions and Answers
1. Q. What is a Simplified Employee Pension, or SEP?
A. A SEP is a retirement income arrangement under which your employer may
contribute any amount each year up to the smaller of $30,000 or 15% of your
compensation into your own Individual Retirement Account/Annuity (IRA).
Your employer will provide you with a copy of the agreement containing
participation requirements and a description of the basis upon which employer
contributions may be made to your IRA.
All amounts contributed to your IRA by your employer belong to you, even
after you separate from service with that employer.
The $30,000 limitation referred to above may be increased by 1/4 of the
dollar limitation in effect under section 415(b)(1)(A).
2. Q. Must my employer contribute to my IRA under the SEP?
A. Whether or not your employer makes a contribution to the SEP is entirely
within the employer's discretion. If a contribution is made under the SEP, it
must be allocated to all the eligible employees according to the SEP agreement.
The Model SEP specifies that the contribution on behalf of each eligible
employee will be the same percentage of compensation (excluding compensation
higher than $200,000) for all employees.
3. Q. How much may my employer contribute to my SEP-IRA in any year?
A. Under the Model SEP (Form 5305-SEP) that your employer has adopted, your
employer will determine the amount of contribution to be made to your IRA each
year. However, the contribution for any year is limited to the smaller of
$30,000 or 15% of your compensation for that year. The compensation used to
determine this limit does not include any amount which is contributed by your
employer to your IRA under the SEP. The agreement does not require an employer
to maintain a particular level of contributions. It is possible that for a given
year no employer contribution will be made on an employee's behalf.
Also see Question 5.
4. Q. How do I treat my employer's SEP contributions for my taxes?
A. The amount your employer contributes for years beginning after 1986 is
excludable from your gross income subject to certain limitations including the
lesser of $30,000 or 15% of compensation mentioned in 1.a. above and is not
includable as taxable wages on your Form W-2.
5. Q. May I also contribute to my IRA if I am a participant in a SEP?
A. Yes. You may still contribute the lesser of $2,000 or 100% of your
compensation to an IRA. However, the amount which is deductible is subject to
various limitations.
Also see Question 11.
6. Q. Are there any restrictions on the IRA I select to deposit my SEP
contributions in?
A. Under the Model SEP that is approved by IRS, contributions must be made
to either a Model IRA which is executed on an IRS form or a master or prototype
IRA for which IRS has issued a favorable opinion letter.
7. Q. What if I don't want a SEP-IRA?
A. Your employer may require that you become a participant in such an
arrangement as a condition of employment. However, if the employer does not
require all eligible employees to become participants and an eligible employee
elects not to participate, all other employees of the same employer may be
prohibited from entering into a SEP-IRA arrangement with that employer. If one
or more eligible employees do not participate and the employer attempts to
establish a SEP-IRA agreement with the remaining employees, the resulting
arrangement may result in adverse tax consequences to the participating
employees.
8. Q. Can I move funds from my SEP-IRA to another tax-sheltered IRA?
A. Yes, it is permissible for you to withdraw, or receive, funds from your
SEP-IRA, and no more than 60 days later, place such funds in another IRA, or
SEP-IRA. This is called a "rollover" and may not be done without penalty more
frequently than at one-year intervals. However, there are no restrictions on the
number of times you may make "transfers" if you arrange to have such funds
transferred between the trustees, so that you never have possession.
9. Q. What happens if I withdraw my employer's contribution from my IRA?
A. If you don't want to leave the employer's contribution in your IRA, you
may withdraw it at any time, but any amount withdrawn is includable in you
income. Also, if withdrawals occur before attainment of age 59 1/2, and not on
account of death or disability, you may be subject to a penalty tax.
10. Q. May I participate in a SEP even though I'm covered by another plan?
A. An employer may not adopt this IRS Model SEP (Form 5305-SEP) if the
employer maintains another qualified retirement plan or has ever maintained a
qualified defined benefit plan. However, if you work for several employers you
may be covered by a SEP of one employer and a different SEP or pension or
profit-sharing plan of another employer.
Also see Questions 11 and 12.
11. Q. What happens if too much is contributed to my SEP-IRA in one year?
A. Any contribution that is more than the yearly limitations may be
withdrawn without penalty by the due date (plus extensions) for filing your tax
return (normally April 15th) but is includable in your gross income. Excess
contributions left in your SEP-IRA account after that time are subject to a 6%
excise tax. Withdrawals of those contributions may be taxed as premature
withdrawals.
Also see Question 10.
12. Q. Do I need to file any additional forms with IRS because I
participate in a SEP?
A. No.
13. Q. Is my employer required to provide me with information about
SEP-IRA's and the SEP agreement?
A. Yes, your employer must provide you with a copy of the executed SEP
agreement (Form 5305-SEP), these Questions and Answers, and provide a statement
each year showing any contribution to your IRA.
Also see Question 4.
14. Q. Is the financial institution where I establish my IRA also required
to provide me with information?
A. Yes, it must provide you with a disclosure statement which contains the
following items of information in plain, nontechnical language
(1) the statutory requirements which relate to your IRA;
(2) the tax consequences which follow the exercise of various options and
what those options are;
(3) participation eligibility rules and rules on the deductiblity and
nondeductibility of retirement savings;
(4) the circumstances and procedures under which you may revoke your IRA,
including the name, address, and telephone number of the person designated to
receive notice of revocation (this explanation must be prominently displayed at
the beginning of the disclosure statement);
(5) explanations of when penalties may be assessed against you because of
specified prohibited or penalized activities concerning your IRA; and
(6) financial disclosure information which
(a) either projects value growth rates of your IRA under various
contribution and retirement schedules, or describes the method of computing and
allocating annual earnings and charges which may be assessed;
(b) describes whether, and for what period, the growth projections for
the plan are guaranteed, or a statement of the earnings rate and terms on which
the projection is based;
(c) states the sales commission to be charged in each year expressed
as a percentage of $1,000, and
(d) states the proportional amount of any nondeductible life insurance
which ma be a feature of your IRA.
See Publication 590, Individual Retirement Arrangements (IRA's), available
at most IRS offices for a more complete explanation of the disclosure
requirements.
In addition to this disclosure statement, the financial institution is
required to provide you with a financial statement each year. It may be
necessary to retain and refer to statements for more than one year in order to
evaluate the investment performance of the IRA and in order that you will know
how to report IRA distributions for tax purposes.
(c) U.S. Government Printing Offices: 1987-201-993/60175
<PAGE>
Scudder IRA Application
&
IRA Transfer Request
for ...
- --------------------------------------------
- --------------------------------------------
Return these forms to:
Scudder Fund Distributors, Inc.
P.O. Box 2291
Boston, MA 02107-2291
It's easy to open a Scudder IRA. Just complete the Scudder IRA Application and
return it in the enclosed postage-paid envelope today.
A Few Tips
o Please make check(s) payable to "Scudder Funds."
o You have two forms--an IRA Application and an IRA Transfer Request. Please
do not separate them, even if you use only one.
o Please fill out each section carefully, preferably in print or type. This
helps us avoid any delays in processing your Application.
o Please be sure to sign your name exactly as it appears in your Account
Registration (Part 1).
o If you are transferring IRA assets from another IRA sponsor, please fill
out the attached IRA Transfer Request form and return it along with your
Application and a check for any investment you may be making at this time.
If you already have a Scudder IRA, complete only the IRA Transfer Request
form.
Please return this form today. It will only take a few minutes and will let
us put your money to work for you that much sooner!
<PAGE>
Scudder
[Logo] IRA Portfolio Application
1. IRA Account Registration
____________________________________ _______________________________
Name Social Security Number
____________________________________ (___)__________________________
Address Daytime Phone
_______________________ _____ ______ ____/____/____
City State Zip Date of Birth
2. Type of IRA & Fund Choices
|_| New IRA. $2000 maximum per year. Contribution for tax year 198__.
|_| Transfer IRA. IRA assets transferred directly from your present custodian
to Scudder. If the transfer establishes your first Scudder IRA, please
complete this Application and an IRA Transfer Request making sure to
indicate fund(s) choices on both forms. If transferring to an existing
Scudder IRA, complete only the IRA Transfer Request. A separate Transfer
Request must be completed for each IRA being transferred.
|_| Rollover IRA. (check one)
|_| Assets distributed from an employer-sponsored retirement plan.
or
|_| 60-day Rollover. You have taken receipt of your IRA assets from
another institution and are enclosing a check for part or all of these
funds.
The minimum initial investment is $240.
If you choose more than one fund, the minimum initial investment is $500 for
each fund.
$ Amount
Money Market Funds
_______________ Cash Investment Trust
_______________ Government Money Fund
Income Funds
_______________ GNMA Fund
_______________ Income Fund
Target Fund (multi-Portfolios)
_______________ U.S. Government 1990
_______________ General 19_____________
Maturity year
U.S. Gov't. Zero Coupon
_______________ Target Fund __________
Maturity year
Growth & Income Funds
_______________ Equity Income Fund
_______________ Growth and Income Fund
Growth Funds
_______________ Japan Fund
_______________ Capital Growth Fund
_______________ Development Fund
_______________ Global Fund
_______________ International Fund
$ Total
===============
3. Designation of Beneficiary & Signatures
(Please be sure to sign your name exactly as it appears in Part 1.)
The following person(s) are to receive the balance of my IRA assets upon my
death. This designation revokes any previous one I may have filed with the
Custodian. (Provide name(s), address(es), and Social Security Number(s).)
______________________________________
______________________________________
______________________________________
Any resident of a Community Property State who designates a spouse as primary
beneficiary and others as contingent beneficiaries, or designates more than half
the distribution to beneficiaries other than a spouse, must obtain the spouse's
consent.
Spouse's
consent X________________________________ _________________
Signature Date
I hereby designate the beneficiaries listed and adopt with the custodian this
Scudder Individual Retirement Account agreement which uses the language of IRS
Form 5305-A. Once the Custodian acknowledges receipt of this form by mail, it
shall be deemed accepted, and therefore, effective as of the date I signed it. I
have received and read the Scudder IRA plan and the prospectus(es) of the
fund(s) selected.
X /s/ G. Reeves
- -------------------------------------------------
State Street Bank and Trust Company, Custodian
X_____________________________________ ____________________
Your Signature (Exactly as in Part 1) Date
<PAGE>
Scudder
[Logo] IRA Portfolio
- ----------------------------------------
Extra Application
- ----------------------------------------
For your spouse or a friend
1. IRA Account Registration
____________________________________ _______________________________
Name Social Security Number
____________________________________ (___)__________________________
Address Daytime Phone
_______________________ _____ ______ ____/____/____
City State Zip Date of Birth
2. Type of IRA & Fund Choices
|_| New IRA. $2000 maximum per year. Contribution for tax year 198__.
|_| Transfer IRA. IRA assets transferred directly from your present custodian
to Scudder. If the transfer establishes your first Scudder IRA, please
complete this Application and an IRA Transfer Request making sure to
indicate fund(s) choices on both forms. If transferring to an existing
Scudder IRA, complete only the IRA Transfer Request. A separate Transfer
Request must be completed for each IRA being transferred.
|_| Rollover IRA. (check one)
|_| Assets distributed from an employer-sponsored retirement plan.
or
|_| 60-day Rollover. You have taken receipt of your IRA assets from
another institution and are enclosing a check for part or all of these
funds.
The minimum initial investment is $240.
If you choose more than one fund, the minimum initial investment is $500 for
each fund.
$ Amount
Money Market Funds
_______________ Cash Investment Trust
_______________ Government Money Fund
Income Funds
_______________ GNMA Fund
_______________ Income Fund
Target Fund (multi-Portfolios)
_______________ U.S. Government 1990
_______________ General 19_____________
Maturity year
U.S. Gov't. Zero Coupon
_______________ Target Fund __________
Maturity year
Growth & Income Funds
_______________ Equity Income Fund
_______________ Growth and Income Fund
Growth Funds
_______________ Japan Fund
_______________ Capital Growth Fund
_______________ Development Fund
_______________ Global Fund
_______________ International Fund
$ Total
===============
3. Designation of Beneficiary & Signatures
(Please be sure to sign your name exactly as it appears in Part 1.)
The following person(s) are to receive the balance of my IRA assets upon my
death. This designation revokes any previous one I may have filed with the
Custodian. (Provide name(s), address(es), and Social Security Number(s).)
______________________________________
______________________________________
______________________________________
Any resident of a Community Property State who designates a spouse as primary
beneficiary and others as contingent beneficiaries, or designates more than half
the distribution to beneficiaries other than a spouse, must obtain the spouse's
consent.
Spouse's
consent X________________________________ _________________
Signature Date
I hereby designate the beneficiaries listed and adopt with the custodian this
Scudder Individual Retirement Account agreement which uses the language of IRS
Form 5305-A. Once the Custodian acknowledges receipt of this form by mail, it
shall be deemed accepted, and therefore, effective as of the date I signed it. I
have received and read the Scudder IRA plan and the prospectus(es) of the
fund(s) selected.
X /s/ G. Reeves
- -------------------------------------------------
State Street Bank and Trust Company, Custodian
X_____________________________________ ____________________
Your Signature (Exactly as in Part 1) Date
RETURN THIS FORM IN THE POSTPAID ENVELOPE PROVIDED, OR MAIL TO:
SCUDDER FUNDS, P.O. BOX 291, BOSTON, MA 02107-2291.
<PAGE>
It's easy to open a Scudder IRA. Just complete the Scudder IRA Application and
return it in the enclosed postage-paid envelope today.
A Few Tips
o Please make check(s) payable to "Scudder Funds."
o You have two forms--an IRA Application and an IRA Transfer Request. Please
do not separate them, even if you use only one.
o Please fill out each section carefully, preferably in print or type. This
helps us avoid any delays in processing your Application.
o Please be sure to sign your name exactly as it appears in your Account
Registration (Part 1).
o If you are transferring IRA assets from another IRA sponsor, please fill
out the attached IRA Transfer Request form and return it along with your
Application and a check for any investment you may be making at this time.
If you already have a Scudder IRA, complete only the IRA Transfer Request
form.
Please return this form today. It will only take a few minutes and will let
us put your money to work for you that much sooner!
<PAGE>
Scudder [Logo] IRA Portfolio IRA Transfer Request
Complete this form if you wish to transfer the assets in your current IRA
directly to the Scudder IRA. If establishing a new Scudder IRA, complete the
Scudder IRA Application as well. Return this form in the postpaid envelope
provided. We will send you a notice confirming that we received this form, and
arrange to complete the transfer. The amount you transfer does not affect the
amount you can invest and deduct annually. If you wish to transfer assets held
in another type of plan, e.g. Keogh, profit-sharing, 403(b), etc., please call
us for the proper forms. This form is only for IRA transfers.
1. Name & Address
_________________________________ ______________________________
Name Social Security Number
_________________________________ (___)_________________________
Address Daytime Phone
_____________________ _____ _____ ______________________________
City State Zip
2. Instructions to Present Custodian
_________________________________
Name of Current Custodian/Trustee
_________________________________
Attention: (Person or department
handling transfers)
_________________________________
Address
_____________________ _____ _____
City State Zip
|_| Please transfer all of my IRA assets.
|_| Please transfer $________ of my IRA assets.
Other instructions (e.g., make transfer upon maturity)
______________________________________/___/_____
maturity date
_______________________________________
IRA Account Number (with this Custodian)
_______________________________________
Custodian's Phone Number
I request that the above-named Custodian or Trustee transfer my IRA assets as
cash to State Street Bank and Trust Company, Custodian of my Scudder IRA.
Please make the check payable to:
Scudder Funds, A/C (Investor name), Scudder IRA
Mail to: The Scudder Funds Retirement Plan Services,
P.O. Box 9647, Boston, MA 02205-9918
X______________________________________
Please ask your present custodian if a signature guarantee is required.
3. Fund Choices
If you invest in 2 or more funds,
the minimum initial investment is $500 for each fund.
$ Amount Money Market Funds Acct. #*
_______________ Cash Investment Trust _______________
_______________ Government Money Fund _______________
Growth & Income Funds
_______________ Equity Income Fund _______________
_______________ Growth and Income Fund _______________
Growth Funds
_______________ Japan Fund _______________
_______________ Capital Growth Fund _______________
_______________ Development Fund _______________
_______________ Global Fund _______________
_______________ International Fund _______________
Income Funds
_______________ GNMA Fund _______________
_______________ Income Fund _______________
Target Fund (multi-Portfolios)
_______________ U.S. Government 1990 _______________
_______________ General 19_____________ _______________
Maturity year
U.S. Gov't. Zero Coupon
_______________ Target Fund __________ _______________
Maturity year
Total $
===============
* When transferring to an existing Scudder IRA, please provide your Scudder
IRA account number.
================================================================================
For Scudder use only, do not complete.
Acceptance by Custodian
We agree to accept custodianship and the transfer described above for the
Scudder IRA Plan established on behalf of the above-named individual. State
Street Bank and Trust Company accepts its appointment as successor Custodian of
the above IRA account and requests the liquidation and transfer of assets as
indicated above.
Scudder Fund Distributions, Inc.
By _______________________ State Street Bank & Trust Company
Date _____________________ By /s/ G. Reeves
-----------------------------------------
<PAGE>
Scudder
[Logo] IRA Portfolio
Scudder Fund Distributors, Inc.
175 Federal Street, Boston, MA 02110
National Toll-Free Number
1-800-225-2470
<PAGE>
SIMPLIFIED EMPLOYEE PENSIONS (SEPs)
QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
Q. 1. What is a SEP? A. A SEP is a simplified retirement
plan which allows employers to make
contributions directly to their
employees' own Individual
Retirement Accounts (IRAs).
Employers receive a tax deduction
for the full amount of each
contribution.
- --------------------------------------------------------------------------------
Advantages of a SEP
Q. 2. What are the advantages of a SEP? A. The SEP has many advantages over
other types of retirement plans. An
employer who adopts a SEP will only
have to comply with minimal
reporting and disclosure
requirements. Because the SEP is a
"simplified" plan, the IRS does not
require an annual 5500 report for
the plan, nor does it require a
Summary Plan Description, a Notice
to Interested Parties, or a Summary
Annual Report. The employer is only
required to give a copy of the SEP
agreement to each employee and to
notify participants each year of
the amount that was contributed on
their behalf to the SEP. The
employer, in most cases, does not
have to set up any accounts or
arrange for the recordkeeping of
the plan, because the contributions
are made to the employees' own
IRAs. The employees set up their
IRAs and decide how the money
should be invested.
Q. 3. How much can an employer contribute A. The employer can annually
to a SEP for each participant? contribute up to 15% of an
employee's compensation or $30,000,
whichever is less, for each
employee.
Q. 4. Can an employee also make IRA A. Yes. The employee can also make IRA
contributions to the same IRA? contributions of up to $2,000 to
the same account (starting in 1987,
an employee's IRA deduction may be
limited, see the enclosed Scudder
IRA Owners Manual for an
explanation).
<PAGE>
- --------------------------------------------------------------------------------
IRS Model SEP
Q. 5. What is the IRS Model SEP? A. It is a model SEP plan that the IRS
developed to meet all the
requirements of the Internal
Revenue Code. This model plan is
IRS Form 5305-SEP, Simplified
Employee Pension-Individual
Retirement Accounts Contribution
Agreement. If the employer elects
to use the IRS Model SEP, the
employer cannot make any changes to
this form.
Q. 6. Who may use the IRS model SEP? A. Any employer (including sole
proprietors, partnerships or
corporations) who does not
currently maintain another
qualified plan and who has never
maintained a defined benefit plan.
Q. 7. Does the employer have to file for A. No. If an employer uses the IRS
IRS approval of the plan? Model SEP, he or she is assured
that the plan meets all the
requirements of the Internal
Revenue Code, and would not have to
file for any additional ruling or
an opinion or determination letter
from the IRS.
Q. 8. Does the IRS Model SEP allow for A. No.
social security integration?
- --------------------------------------------------------------------------------
Establishing a SEP
Q. 9. When can a SEP be adopted? A. A SEP can be adopted for the 1986
calendar year any time on or before
April 15, 1987.
Q. 10. How is the SEP adopted? A. First, the employer must complete
the IRS Form 5305-SEP and
distribute copies of it to all
employees. Second, all eligible
employees must either have an IRA
or establish one.
Q. 11. Can SEPs be maintained on a A. For 1986, a SEP can only be
calendar or a taxable year? maintained on a calendar basis. For
1987 and later years, a SEP can be
maintained on either a calendar
year or on the employer's taxable
year.
<PAGE>
Q. 12. Must all employees be eligible to A. No. If the employer uses the IRS
participate? Model SEP, the following employees
may be excluded: (a) employees
under the age of 21, (b) employees
who have not worked for the
employer during at least 3 of the
last 5 calendar years, (c)
employees who were paid less than
$200 ($300, for taxable years after
1986), (d) employees covered by
certain collective bargaining
agreements, and (e) nonresident
aliens who receive no income from
the employer from a U.S. source.
Q. 13. Must all eligible employees have A. Yes, because the Model SEP is not
IRAs? established until all eligible
employees have IRAs. If an employee
cannot or will not open an IRA, the
employer can open an IRA on behalf
of that employee.
Q. 14. What information about the SEP is A. The employer must give each
the employer required to give an employee a copy of the IRS Model
employee? SEP Form once the employee becomes
eligible to participate. The
employer is also required to notify
the employee each year of the
amount contributed to that
employee's IRA for the year. If
contributions are made to an IRA in
the Scudder funds, participant
statements will confirm the amount
of the contribution and provide the
necessary notice.
Q. 15. How is the IRS notified of the SEP A. For 1986, the employer reports any
contribution and how does the SEP contributions on the employee's
employee treat the contribution? Form W-2 as wages. The employee can
then deduct the amount of the
contribution up to the lesser of
$30,000 or 15% of the employee's
compensation (not including the SEP
contribution). There is no Federal
income tax, F.I.C.A., or F.U.T.A.
withholding on contributions under
SEPs to IRAs on amounts meeting the
employee's deduction limit. If
contributions are made after the
end of the tax year, the employer
may have to issue an additional
Form W-2 showing only the amount of
the contribution. For 1987 and
later years, the amount of any SEP
contribution will be excluded from
the employee's compensation, but
must still be listed for
informational
<PAGE>
purposes on the Form W-2. If the
contributions are made after the
end of the tax year, the employer
will have to issue a revised Form
W-2 to employees.
- --------------------------------------------------------------------------------
Making Contributions to a SEP
Q. 16. Are employer contributions tax A. Yes, up to the lesser of $30,000 or
deductible? 15% of compensation, for each
employee.
Q. 17. What is the deadline for making A. For 1986, the contributions may be
contributions? made up until April 15, 1987. If
the employer's fiscal year is not
the calendar year, the
contributions may only be deducted
for the fiscal year in which the
calendar year ends. For example, if
an employer's fiscal year ends May
31, 1987, the employer may deduct
for that fiscal year only
contributions made for calendar
year 1986. For 1987, regardless of
whether the plan is a calendar year
or a fiscal year SEP, contributions
for the appropriate year can be
made up until the due date for the
employer's tax return, including
any extensions.
Q. 18. What is compensation? A. The IRS defines compensation as
wages, salaries, profession fees or
other amounts received for personal
services actually rendered by the
employee.
Q. 19. What is compensation for a A. For self-employed individuals,
self-employed individual? compensation is "earned income,"
which is the individual's net
profits less the amount of the
retirement plan contribution for
the individual. For example, assume
a self-employed individual has
$100,000 of net profits (bottom
line, Schedule C) after the
deduction for the SEP contributions
for the employees. A SEP
contribution of $13,043 (13.043% X
$100,000) may be made to the
self-employed individual's IRA.
This is equal to 15% of "earned
income" of $86,957 [15% ($100,000 -
$13,043)].
<PAGE>
Q. 20. May all of an employee's A. No, the employer's contributions
compensation be taken into may not be based on more than
account? $200,000 of an employee's
compensation.
Q. 21. How are employer contributions A. The employer contributions must
allocated? equal the same percentage of
compensation for each employee.
Q. 22. Is the employer required to make A. No, however, if the employer does
contributions to the SEP every make contributions, they must be
year? made for all employees eligible for
that year, whether or not the
employees are still employed when
the contributions are made.
Exhibit 14(d)
SCUDDER
403(b) Program
================================================================================
A tax-advantaged investment program using the Scudder family of pure no-load(TM)
mutual funds
For employees of educational and other tax-exempt organizations
Build retirement assets for tomorrow while saving on taxes today
1
<PAGE>
- ------------
CONTENTS
============
Highlights 3
- --------------------------------------------------------------------------------
How 403(b) Plans Benefit You 4
- --------------------------------------------------------------------------------
Why a Scudder 403(b)? 6
- --------------------------------------------------------------------------------
Questions and Answers 7
- --------------------------------------------------------------------------------
How to Use Your Scudder 403(b) 10
- --------------------------------------------------------------------------------
Sample Statement 11
- --------------------------------------------------------------------------------
Scudder Plan 12
- --------------------------------------------------------------------------------
Telephone Numbers and Addresses 15
- --------------------------------------------------------------------------------
Scudder Retirement Plan Specialists are ready to answer any questions you
may have about the Scudder 403(b) Program. Call toll-free 1-800-323-6105.
2
<PAGE>
---------------------------------------------
HIGHLIGHTS
================================================================================
A Unique Program
Employees of colleges, universities, public school systems, many hospitals and
other tax-exempt organizations have a unique opportunity to set aside money for
retirement by taking advantage of special tax benefits designed to encourage
early and active retirement planning. With a special mutual fund custodial
account, called a 403(b) plan, you and your employer can make tax- advantaged
investments today, for a more secure retirement tomorrow.
A 403(b) plan can help you build substantial retirement income and save on
current taxes because every dollar invested is sheltered from taxes while in
your account. You don't pay taxes while in your account. You don't pay taxes
until money is withdrawn, usually at retirement when you may be in a lower tax
bracket.
Scudder makes a good thing even better by offering the special advantages of
investing in a family of mutual funds--investment choice, flexibility, low cost,
and helpful service.
================================================================================
Scudder Funds for You
Scudder 403(d) plan investments are made in the Scudder family of mutual funds.
With the Scudder Funds you can design an investment strategy that suit your
objectives now and in the future. You get a wide range of investment choice,
including money market, income, and growth fund. And, to make your investment
even more flexible, you can exchange among funds with a free telephone call.
Such flexibility means you are never locked into an investment decision. As our
retirement investment needs or market conditions change, your 403(b) investment
strategy can change too.
And remember, you can use the Scudder Funds for your IRA as well.
================================================================================
Scudder Investment Specialists
Scudder, Stevens & Clark, investment adviser to the Scudder Funds, is one of the
largest and most experienced investment management firms in the country. Since
1919, investing has been our only business and service to the investor our only
product. Today we offer a broad range of mutual fund and investment management
products. Through our network of offices around the country, we provide
specialized investment services to employee benefit and retirement plans,
endowments and foundations, corporate case management funds, insurance plans,
individuals' portfolios and, of course, mutual funds.
As a convenience to investors, Scudder Funds Centers in Boston, Chicago,
Cincinnati, Cleveland, Houston, Los Angeles, New York, Portland, San Francisco,
and West Palm Beach offer the opportunity to conduct business in person with
professional Service Representatives. The Scudder offices, their addresses and
phone numbers are listed on the inside back cover.
3
<PAGE>
----------------------------
HOW 403(b) PLANS BENEFIT YOU
================================================================================
Retirement planning is becoming an increasingly important activity for Americans
young and old. This rising awareness of the need to build retirement savings to
help ensure a comfortable lifestyle when working years are over stems from many
factors. Concerns today about inflation, the future of Social Security benefits,
and the effect of taxes on income all play a part in causing people to plan for
retirement earlier and more actively. A 403(b) plan can help you do just that.
By making regular investments in our 403(b) program you can build retirement
income while reducing your current tax bill.
================================================================================
Current Tax Savings
There are many good reasons to make 403(b)investments. Few are so compelling as
the opportunity to reduce your taxes. Every dollar you invest in a 403(b) plan
through salary reduction is subtracted from your wages (as reported on your W-2
form) and is not included in calculating your federal income taxes. You pay no
federal income tax on this money until you start withdrawing it, normally at
retirement. Certain states also allow you to exclude 403(b) investments when
calculating state income taxes, so your tax savings may be even greater. The net
result is that you pay less in current taxes and the extra money goes to work
for you. Let's look at what this might mean for different 403(b) participants.
SINGLE TAXABLE TAXABLE
RETURN INCOME TAXES* JOINT RETURN INCOME TAXES*
- ------ ------- ------ ------------ ------- ------
No contribution $25,000 $ 4,680 No contribution $40,000 $ 7,333
to 403(b) plan to 403(b) plan
Salary reduction Salary reduction
for 403(b) for 403(b)
investment -$ 2,400 investment -$ 6,000
------- -------
After 403(b) plan After 403(b) plan
contribution $22,600 $ 4,008 contribution $34,000 $ 5,653
- --------------------------------------------------------------------------------
Savings on $ 622 Savings on $ 7,680
current taxes current taxes
* Federal income taxes calculated with the 28% marginal rate for 1988.
4
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Tax Deferred Compounding
Another way you benefit with a 403(b) is that all earnings on your
investment--whether interest, dividends, or capital gains--are reinvested, and
grow free of taxes until you're ready to use them. The advantages of investing
for your retirement through a 403(b) instead of an investment program not
offering the benefits of current tax savings and tax-deferred compounding are
highlighted in the following example.
If you start your 403(b) at age 35 and invest $2,400 each year ($200 per month),
by age 65 you will accumulate $452,098 (before taxes) assuming a 10% annual
return. By comparison, if you take the same $200 per month, pay taxes at a 28%
rate, and invest in a taxable investment plan earning a 10% pre-tax (7.2%
after-tax) annual return, you will accumulate $253,845. Of course, 403(b)
accumulations are taxed when withdrawn, but normally at retirement when you may
be in a lower tax bracket. Even after paying taxes on your distributions, a
403(b) plan can offer you a significant advantage in reaching your retirement
goals.
500
400
$452,098 (before taxes)
With the 403(b) advantage
300
$ Dollars
(Thousands)
200
$253,845 (after taxes)
Without the 403(b) advantage
100
0
10 20 30
30 years
For illustration purposes, we've assumed an annual investment
return of 10% and a 25% tax rate. Your actual return and tax
bracket aren't likely to be constant from year to year and there
can be no guarantee that a specific rate or return will be
achieved.
5
<PAGE>
- --------------------------------------------------------------------------------
WHY A SCUDDER 403(b)?
================================================================================
A Family of No-Load Mutual Funds
The Scudder 403(b) program offers you a family of mutual funds for retirement
investments. This flexible, low-cost approach provides you with a comprehensive
but not overwhelming selection of investment options. You determine how your
Scudder 403(b) plan is invested, thereby tailoring an investment strategy to
meet your needs.
For more information on the Scudder Funds, please see the blue booklet entitled
"How to select the right Scudder funds for you."
================================================================================
Wide Choice
A Scudder 403(b) plan offers you choice among a broad range of mutual funds. You
may choose from money market, income, growth and income, and growth funds, which
allow you to emphasize stability, income, or growth--or any
combination--depending on your investment objective.
================================================================================
Flexibility
With the Scudder 403(b), you're not limited to one investment choice. Invest in
as many eligible funds as you wish. You may make investment changes in writing
or with a toll-free phone call. Changes may be made at any time unless your
employer's guidelines provide otherwise. So, for example, you can start with a
growth fund and easily switch to more conservative investments as you approach
retirement.
================================================================================
Low Cost
One of the most important advantages of the Scudder 403(b) plan is its low cost
to you. All Scudder funds are pure no-load (no sales, account, or redemption
charges). This means that 100 percent of your contribution is invested in the
fund or funds of your choice. You pay no separate charges for opening,
maintaining, or closing your plan account.
================================================================================
Account Records and Investment Information
As a Scudder fund shareholder, you receive account transaction statements
describing activity in your account, fund reports listing current interest to
investors.
================================================================================
Direct Access to Scudder
Scudder Retirement Plan Specialists are available to help you with your 403(b)
plan. Call them at our toll-free number listed on the inside back cover.
6
<PAGE>
- --------------------------------------------------------------------------------
QUESTIONS AND ANSWERS
================================================================================
Making Investments
Q. What is a 403(b) plan?
A. A 403(b) is a special, tax-advantaged, retirement savings account for people
working in public school systems, colleges, universities, many hospitals and
other tax-exempt organizations described in section 501(c)(3) of the Internal
Revenue Code. Sometimes called Tax-Sheltered Annuities (TSAs) or Tax-Deferred
Annuities (TDAs), 403(b) plans shelter income from current taxes, and investment
earnings grow free of taxes while in the plan. 403(b)s that invest in mutual
funds, technically called 403(b)(7) plans after the Internal Revenue Code
section that permits them, offer the special advantages of mutual funds--choice,
flexibility, professional management, and diversification.
Q. How do I make contributions?
A. Through a salary reduction agreement with your employer, you set aside a
portion of your pay in your plan account before income taxes are withheld.
Complete the enclosed 403(b) Application and then ask your employer about any
additional procedures for starting contributions to your plan.
Q. How do I know the maximum amount I can contribute to my 403(b) plan each
year?
A. Your employer will often tell you the amount of your maximum annual
contribution. If necessary, Scudder Fund Distributors can provide a
questionnaire for you to complete. Send it to us and we can compute the amount
for you. However, the final responsibility for the accuracy of the contribution
limit is yours.
Q. May I choose any fund I wish for my initial contribution?
A. Yes. You are not limited to a specific Scudder fund for your initial
contribution. And, you may maintain investments in as many of the eligible
Scudder funds as you wish, as long as you meet the required minimums listed on
the following page.
Q. Can I exchange previously invested assets among funds?
A. Yes. You may move already invested assets among funds with a toll-free call
or by writing to us. Phone numbers and addresses for arranging transactions are
on the inside back cover. Be sure to specify account number(s) and fund name(s).
Q. Can I change my investment instructions for allocating my future
contributions among funds?
A. Yes. Group 403(b) participants may complete the Allocation Change Form
available from your employer or our Boston retirement plan office. If you are
not a group participant, just notify our employer which funds your future
contributions should be directed to. Allocation changes cannot be made by
telephone.
7
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Q. Can I change the level of my 403(b) salary reduction?
A. Yes. The Internal Revenue Service allows you to change the amount of salary
reduction once a calendar year. Please check with your employer for more
information.
Q. Can I suspend contributions to the Scudder 403(b) plan?
A. Yes. You are free to suspend or stop participation at the end of any payroll
period by notifying your employer. However, you cannot participate again for the
rest of the calendar year.
Q. Can I transfer to the Scudder 403(b) from another carrier?
A. Yes. You may transfer your existing 403(b) assets to a Scudder 403(b) without
tax liability if your existing carrier permits transfers. Just complete the
Scudder 403(b) Transfer Request form included with this kit. If you have
questions, contact a Scudder Service Representative at 1-800-225-2470.
Q. Can I continue to invest in an IRA as well as a 403(b) plan?
A. Yes, however, if your income exceeds $40,000 (for joint filers, $25,000 for
single filers), and you are a 403(b) plan participant, then part or all of your
IRA contribution will be non-deductible. All income earned in your IRA will grow
free of taxes until withdrawn. Call or write for more information on the Scudder
IRA.
================================================================================
Fees, Charges, and Minimums
Q. What fees are involved?
A. Since the Scudder funds are "no-load," you pay no sales charges when you buy
or sell fund shares. In addition, there are no separate charges for opening,
maintaining, or closing your account. Fund expenses, such as management fees,
are paid out of the gross investment income of each fund, as detailed in each
fund's prospectus.
Q. What minimums are there?
A. There is no minimum initial investment. However, you will need to invest at
least $240 during each twelve month period you are in the plan, until your
investment reaches $1,000. You may invest in more than one fund as long as you
have at least $500 in each fund.
8
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
Distributions and Withdrawals
Q. When can I withdraw my Scudder 403(b) plan assets?
A. You may withdraw 403(b) accumulations when you retire, leave your employer,
reach age 59 1/2, or become disabled. Should you encounter financial hardship,
you may withdraw part or all of your plan accumulation under certain
circumstances. However, any distribution made before you reach age 59 1/2,
become disabled, or die, will be subject to a 10% penalty by the IRS, unless:
o after you have left your employer, payments are made over your
lifetime, or over your lifetime and that of any beneficiary
or
o payments are made after you have reached age 55, because you have
retired early.
Check with your employer for any special distribution and withdrawal
requirements. (Criteria for determining financial hardship are subject
to further clarification from the Internal Revenue Service.)
Q. What happens to my 403(b) plan if I leave my employer before I retire?
A. All contributions to your 403(b) plan are yours to keep. You may be eligible
to make 403(b) contributions with your new employer. If not, you can either
"rollover" your 403(b) plan assets into an IRA or, if your employer permits,
simply leave them until you are ready to use them.
Q. What happens to the money in my 403(b) plan when I die?
A. The Custodian pays the money to the person you name as your beneficiary. This
kit includes a Designation of Beneficiary form for this purpose. You can change
your beneficiary by filing a new form. If you do not designate a beneficiary,
any undistributed plan assets will be paid to a surviving spouse, or to your
estate if no spouse survives you. The full market value of your 403(b) plan will
be paid at the time of the distribution. There are no closing costs or
administrative fees. (Since tax consequences may differ depending on your
choices, you may wish to consult your attorney or tax adviser before making a
designation.)
================================================================================
Account Information
Q. What reports do I receive about my 403(b) plan?
A. You receive comprehensive account transaction statements. Statement
information includes the trade date, dollar amount, share price, number of
shares involved, and shares owed after each transaction. A sample statement is
shown on page 11.
Q. Who can answer my questions?
A. Professionals from Scudder Fund Distributors will answer your questions about
the Scudder 403(b) plan, investment objectives and characteristics of any of the
Scudder Funds, and requests for literature. Please refer to the back page for
the appropriate toll-free number to call.
9
<PAGE>
- --------------------------------------------------------------------------------
How to Use Your Scudder 403(b)
================================================================================
Getting Started
Enrolling in the Scudder 403(b) program is easy. Simply complete the enclosed
Scudder 403(b) Application and forward it as directed by your employer. Also
complete your employer's salary reduction authorization.
================================================================================
Transferring from Another Carrier
To transfer any assets you may have from another 403(b) plan carrier to Scudder,
just complete the enclosed Scudder 403(b) Transfer Request and return it as
instructed on the form.
================================================================================
Exchanging among Scudder Funds
You may exchange dollars already invested in one Scudder fund to another, with a
toll-free call or in writing.
By phone:
Simply call toll-free: 1-800-225-5163. It will be helpful to have your
account number(s) handy. If your call is received prior to 4:00 p.m.,
Eastern time, your exchange will be made at the share price computed
that evening. If received after that time, the exchange will take
place at the next business day's share price.
In writing:
Write to Scudder Funds, P.O. Box 2291, Boston, MA 02107-2291. Written
exchanges will be processed promptly. Please be sure to reference your
existing account numbers and indicate your fund choices. Sign your
name exactly as it appears on your statement.
Exchanging assets already invested will not affect your investment instructions
for future contributions. To change the funds receiving your future investments,
please refer to the following section "Changing Contribution Allocation".
================================================================================
Changing Contribution Allocation
Group participants can change the fund or funds receiving contributions, or
change the proportionate amount received by a particular fund, by completing the
Scudder Allocation Change Form. Allocation Change Forms are available either
from your employer or from Scudder.
Participants who are not a part of a group 403(b) plan should simply notify
their employer which funds future contributions should be directed to. Please
note that change of allocation requests cannot be accepted over the telephone.
They must be in writing and will apply only to future contributions, not to
previously invested dollars.
================================================================================
Questions?
If you have any questions about a Scudder 403(b) program or the enrollment
forms, please call a Scudder Retirement Plan Specialist at: 1-800-323-6105.
10
<PAGE>
- --------------------------------------------------------------------------------
SAMPLE ACCOUNT TRANSACTION STATEMENT
The figures in the illustration below are not intended to be the actual prices
or current estimated returns of any particular Scudder fund. They are for
illustrative purposes only. Some plan statements will have all your fund
investments listed on one statement.
================================================================================
RETIREMENT PLAN STATEMENT
9/30/XX
STATE STREET BANK AND TRUST CO. SCUDDER GROWTH AND INCOME FUND
CUSTODIAN FOR THE 403(B) PLAN OF
STATE UNIVERSITY Statements are issued for each
SUSAN JUDITH JACKSON Scudder fund held.
49 CLIFF DRIVE
HOUSTON, TX 77002
<TABLE>
<CAPTION>
Tax ID or Soc. Sec. No. ###-##-#### PLEASE REFER TO THIS AND MAIL TO
Account No. 520-48-8519 JACKSSUSAJ ACCOUNT NUMBER IN ALL
CORRESPONDENCE
- ---------------------------------------------------------------------------------------------------
[?] [?] DOLLAR AMOUNT SHARE SHARES THIS TOTAL
DATE DATE TRANSACTION OF TRANSACTION PRICE TRANSACTION SHARES ORDERED
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Dates on which
retirement plan
contribution is
invested and
confirmed by the
custodian of the BEGINNING BALANCE 1446.660
funds SALARY REDUCTION 130.00 13.55 9.594 1456.254
2/28 2/28 SALARY REDUCTION 130.00 13.72 9.480 1465.734
3/1 3/1 Dividends periodically 190.54 13.77 13.840 1479.574
reinvested (.13 =
dividend per SHARE)
3/31 3/31 EMPLOYER CONTRIB. 515.00 13.85 37.184 1516.758
4/30 4/30 SALARY REDUCTION 130.00 13.58 9.572 1526.330
5/16 5/16 SALARY REDUCTION 130.00 13.78 9.433 1535.763
5/31 5/31 SALARY REDUCTION 130.00 13.72 9.480 1545.243
6/1 6/1 INCOME REINVEST .14 212.44 13.80 15.394 1560.637
6/30 6/30 EMPLOYER CONTRIB. 485.00 Price per 34.970 1595.607
SHARE of
the fund
on the
trade date
7/31 7/31 SALARY REDUCTION 130.00 13.81 Number of 1605.020
fund shares
purchased
on the date
8/31 8/31 Represents contribution
made by salary reduction 130.00 13.82 9.410 1614.430
9/1 9/1 INCOME REINVEST .15 234.15 13.79 16.980 Total Shares
owned after
latest
transaction
- ----------------------------------------------------------------------------------------------------
TOTAL DIVIDENDS LONG TERM
AND OTHER CAPITAL GAINS INCOME
CONTRIBUTIONS DISTRIBUTION DIVIDENDS ACCOUNT VALUE AS OF LATEST CONFIRM DATE
637.13 + 637.13 + Latest account value
- ----------------------------------------------------------------------------------------------------
Cumulative figures indicating
the level of current and prior
year contributions
- ----------------------------------------------------------------------------------------------------
INVESTOR COPY
====================================================================================================
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
SCUDDER PLAN
================================================================================
Scudder 403(b)
Custodial Agreement
ARTICLE I. EFFECTIVE DATE
This Scudder 403(b)(7) Custodial Agreement shall become effective on the
date on which the Custodial mails an acknowledgment of receipt of the
incorporated Scudder 403(b) Application to the Employee who executed such
Scudder 403(b) Application.
ARTICLE II. DEFINITIONS
2.01. Account means the separate account or account established and
maintained by the Custodian for an Employee pursuant to this Agreement.
2.02. Agreement or Scudder 403(b) (7) Agreement means this document and the
Application.
2.03. Application or Scudder 403(b) Application means the document(s) which
established the Agreement and is (are) executed by the Employer, Employee and
Custodian.
2.04. Beneficiary means the person or persons (including entities)
designated by the Employee as entitled to receive the Account balance, if any,
at the Employee's death. If at the time of the Employee's death, no designated
Beneficiary is alive, Beneficiary shall mean the Employee's surviving spouse or,
if the Employee does not leave a surviving spouse, the Employee's estate.
2.05. Code means the Internal Revenue Code of 1986, as amended.
2.06. Contributions shall mean Salary Reduction Contributions, Employer
Direct Contributions, and Nondeductible Voluntary Contributions.
2.07. Custodian means the party who executed the Application as Custodian,
and any successor thereto, provided that such successor is either a bank or
another person who satisfies the requirements of Code Section 401(f)(2).
2.08. Designated Investment Company means a regulated investment company
for which Scudder, Stevens & Clark Ltd., its successor or any affiliates, acts
as the investment advisor and which has been designated by the Distributor as
appropriate for investment hereunder.
2.09. Designation of Beneficiary means a form executed and submitted to the
Custodian in accordance with the terms of Article IX.
2.10. Disability means the inability of the Employee to engage in any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration.
2.11. Distributor means Scudder Fund Distributors, Inc. and any successor
thereto.
2.12. Employee means an individual who is employed by the Employer and who
has properly executed the Application.
2.13. Employer means the employer who is listed on the Application.
2.14. Employer Direct Contribution means the amount, other than Salary
Reduction Contributions, contributed by the Employer to the Account.
2.15. Salary Reduction Contribution means the amount not included in the
Employee's compensation pursuant to a written salary reduction agreement and
transmitted by the Employer to the Custodian for addition to the Employee's
Account.
ARTICLE III. MAINTENANCE OF A CUSTODIAL ACCOUNT
3.01. Salary Reduction Contributions to the Account. The Employee may make
Salary Reduction Contributions to the Account. Any salary reduction agreement
between the Employer and the Employee shall be effective only as to amounts
earned by the Employee after such agreement becomes effective. Each such
agreement shall be irrevocable as to both the Employer and the Employee except
that either party may terminate such agreement as of the end of any payroll
period so that the agreement will not apply to compensation subsequently earned.
Subject to the immediately preceding sentence, the Employee may modify a salary
reduction agreement no more than once in each calendar year.
3.02. Employer Direct Contribution to the Account. The Employer may make
Employer Direct Contributions to the Account.
3.03. Transfers to and from the Account. All direct or indirect asset
transfers to an Account from an existing custodial account described in Code
Sections 403(b)(7) or an annuity contract qualified under Code Section 403(b)(1)
shall be in cash unless the Custodian otherwise consents. The Employee has the
right by proper written instrument to cause a transfer of cash or, if agreed to
by the Custodian, shares of a Designated Investment Company, to another
custodial account described in Code Section 403(b)(7), an annuity contract
qualified under Code Section 403(b)(1), an individual retirement account
described in Code Section 408(a) or an individual retirement annuity described
in Code Section 408(b).
3.04. Rollovers to the Account. The Custodial shall accept rollover
contributions; it shall be the Employee's responsibility to ensure that such
contributions satisfy the applicable provisions of the Code.
3.05. Other Contributions. If permitted by the Custodian, the Employee may
make voluntary contributions to the Account. To the extent that such
contributions are "deductible employee contributions" (within the meaning of
Code Section 72(o)(5)(A), made with respect to calendar years ended before
January 1, 1987, they shall be administered in accordance with the provisions of
Code Section 72(o). The Employee's other voluntary contributions plus similar
contributions made by the Employee under other 403(b) arrangements and/or
qualified retirement plans may not exceed 10% of the Employee's aggregate
compensation during his or her period of participation in such arrangements
and/or plans.
ARTICLE IV. INVESTMENT OF CONTRIBUTIONS
4.01. Purchase of Shares. As soon as is practical after the Custodian
receives a Contribution, it shall invest such Contribution in shares of one or
more Designated Investment Companies in accordance with the Employee's most
recent effective investment instructions. The Account may be invested in the
shares of not more than one Designated Investment Company, provided that any
minimum investment limits specified by the Distributor are met.
4.02. Registration and Safekeeping. Any stock of a Designated Investment
Company shall be registered in the name of the Custodian or its nominee and will
be held in unissued form.
4.03. Reports and Voting of Securities. The Custodial shall deliver to the
Employee or, if applicable, to his or her Beneficiary, all notices,
prospectuses, financial statements, proxies and proxy solicitation materials
received by it with respect to investments made for the Employee's Account. The
Custodial shall vote all shares only in accordance with the instructions of the
Employee (or, if applicable, Beneficiary) as expressed in an executed proxy.
Notwithstanding the foregoing, if the Custodian has not received instructions as
to how to vote given shares before two full business days prior to the meeting
at which such securities are to be voted, it shall vote such securities for or
against each proposal, or abstain from voting on each proposal, in the same
proportion as all other shares of such Designated Investment Company vote or
abstain from voting at the shareholders meeting either in person or by proxy;
provided, however, that the Custodial shall not have the authority to vote
shares of a Designated Investment Company without instructions from the person
or persons entitled to make investment decisions unless either (a) the
Securities and Exchange Commission shall have issued an exemptive order pursuant
to Section 6(c) of the Investment Company Act of 1940, as amended, the
application for which order describes the Custodian's authorization to so vote
without instructions, or (b) the Custodian has received an opinion of its
counsel that the exercise of this authority to vote shares of a Designated
Investment Company without instructions will not render the Custodian an
"affiliated person" as defined in the Investment Company Act of 1940, as
amended.
4.04. Dividends. All capital gains distributions and dividends received on
the shares of a Designated Investment Company shall be reinvested in shares of
that Designated Investment Company.
4.05. Change of Investments. Subject to Section 4.01, an Employee (or his
or her surviving Beneficiary to whom distributions are being made or his or her
spouse or former spouse pursuant to a domestic relations order) may in any
manner specified by the Distributor direct that the investment in a Designated
Investment Company be changed, in whole or in part, to other Designated
Investment Companies. Notwithstanding the preceding sentence, if the Distributor
determines in its own judgment that there has been trading within the Account,
any Designated Investment Company may refuse to sell its shares to such Account.
Where the Beneficiary is entitled to exercise the rights enumerated in this
Section 4.05 with respect to a separate account and the Beneficiary is more than
one person, the majority of such persons must agree before any power they have
as a Beneficiary may be exercised.
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS
5.01. Instructions to Custodian. The Custodian shall not be responsible for
making any distributions until such time as it has been notified in writing by
the Employee to begin making distributions. No distribution will be made upon
the death of the Employee unless the Custodian has been notified in writing of
the Employee's death, and the Custodian, in its opinion, has been provided with
adequate verification of such death. Distributions to the Employee (or, if
applicable, his or her Beneficiary) of amounts in the Account shall be made in
cash and/or, if the Distributor consents, in kind.
5.02. Employee Withdrawals.
(a) After Attainment of Age 59 1/2. At any time after the Employee
attains age 59 1/2, he or she may withdraw amounts from his or her Account by
making written instructions to the Custodian as to the amounts to be so
withdrawn.
(b) Hardship Withdrawals. If, at any time, the Employee encounters
financial hardship, the Employee may withdraw amounts from his Account. For the
purposes of this subsection (b), determination as to whether the Employee has
encountered financial hardship shall be made according to rules of uniform
application and in accordance with applicable law, governmental regulations or
ruling. Before the Employee may exercise his withdrawal rights pursuant to this
subsection (b), the Employee must submit to the Custodian written proof of such
determination of hardship and written instructions to the Custodian as to the
amounts so withdrawn.
(c) Withdrawal of Excess Deferrals. If, on or before the first March 1
following the close of a calendar year, the Employee notifies the Custodian in
writing that an amount in the Account constitutes a deferral (including Salary
Reduction Contributions) in excess of the limit set forth in Code Section 402(g)
(generally, $9,500), the Custodian shall distribute such amount (and any income
allocable to such amount) on or before the next following April 15.
5.03 Distributions at Separation from Service. Distributions upon
separation from service will be made only upon written notice from the Employee
to the Custodian. The written notice shall list the date on which distribution
shall commence, and the manner in which and the period over which distribution
shall be made. The Employee must elect to
12
<PAGE>
commence receiving distribution(s) not later than the first April 1 following
the later of the calendar year during which the Employee attains age 70 1/2 or
the calendar year during which the employee retires. The Employee must elect a
manner of distribution which will result in (a) payment(s) which will at all
times equal or exceed the minimum distributions required under Code Sections
401(a)(9) and 403(b)(10), and (b) the present value (determined at the time
distribution commences) of payments to be made to the Employee over the
Employee's life expectancy (as determined under Section 1.72-9 of the Treasury
Regulations) equaling more than 50% of the present value of the total payments
to be made.
5.04. Distributions at the Employee's Death. At the Employee's death,
distributions shall be made in the form elected by the Beneficiary unless the
Employee has specified the form of distribution. The Beneficiary must notify the
Custodian in writing (in a form acceptable to the Custodian) of the Employee's
death. To the extent the Beneficiary may elect the form of distribution, the
Beneficiary must provide written notice to the Custodian listing the date on
which distribution shall commence, and the manner in which and the period over
which distribution shall be made. Any form of distribution must comply with the
following requirements:
(a) Death While Receiving Distributions. If the Employee has already
begun to receive distributions from the Account, the Account Balance which
remains at the time of the Employee's death shall be distributed to the
Beneficiary at least as rapidly as under the distribution method being used at
the time of the Employee's death.
(b) Death Prior to Receiving Distributions. (i) If the Employee dies
before distribution from the Account has commenced and the Employee's spouse is
not the Beneficiary, the Employee's entire Account balance must be distributed
to the Employee's Beneficiary either (A) within five years after the Employee's
death, or (B) in substantially equal annual or more frequent installments over a
period not exceeding the life expectancy of the Beneficiary (as determined as of
the date of the Employee's death using the return multiples in Section 1.72-9 of
the Treasury Regulations) provided that such distributions commence within one
year after the Employee's death.
(ii) If the Employee dies before distribution from the Account has commenced and
the Employee's spouse is the Beneficiary, the Employee's entire Account balance
must be distributed to the Employee's spouse either (A) within five years after
the Employee's death, or (B) in substantially equal annual or more frequent
installments over a period not longer than the spouse's life expectancy (as
determined as of the time distribution is commenced and recalculated annually
(if requested), by using the return multiples contained in Section 1.72-9 of the
Treasury Regulations) provided that such distribution is commenced on or before
the later of the date on which the Employee would have attained age 70 1/2 or
one year after the Employee's death.
5.05. Distributions upon Disability. If the Employee suffers a Disability,
the Employee may elect to receive distribution(s) from his or her Account by
providing written notice to the Custodian. The written notice shall list the
date on which distribution shall commence, and the manner in which and the
period over which distribution shall be made. The Employee must elect to
commence receiving distribution(s) not later than the first April 1 following
the calendar year during which the Employee attains age 70 1/2. The Employee
must elect a manner of distribution which will result in (a) payment(s) which
will at all times equal or exceed the minimum distributions required under Code
Sections 401(a)(9) and 403(b)(10), and (b) the present value (determined at the
time distribution commences) of payments to be made to the Employee over the
Employee's life expectancy (as determined under Section 1.72-9 of the Treasury
Regulations) equaling more than 50% of the present value of the total payments
to be made.
5.06. Distribution to Incompetents. If a distribution is payable to a
person known by the Custodian to be a minor or a person under a legal
disability, the Custodian may, in its absolute discretion, make all or any part
of the distribution to (a) a parent or such person, (b) the guardian, committee
or other legal representative, wherever appointed, of such person, including a
custodian for such person under a Uniform Gifts to Minors Act or similar act,
(c) any person having the control and custody of such person, or (d) to such
person directly.
5.07. Distributions Pursuant to Domestic Relations Orders. Where required
by law, the Custodian shall make distributions pursuant to any "qualified
domestic relations order" (as defined in the Employee Retirement Income Security
Act of 1974, as amended) and any other domestic relations order.
ARTICLE VI. CUSTODIAN
6.01. Duties. The Custodian shall:
(a) Receive transmitted Contributions;
(b) Provide safekeeping for the assets in the Account;
(c) Collect income;
(d) Execute orders for purchase, sale or exchange of Designated
Investment Company shares and make settlements in accordance with general
practice;
(e) Maintain records of all transactions in the Account;
(f) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation, if any,
charged to the Account;
(g) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms, and other information as may be required of
it as Custodian;
(h) Perform all other duties and services consistent with the purposes
and intentions of this Agreement.
The Custodian may perform any of its administrative duties through other
persons designated by the Custodian from time to time.
6.02. Share Redemptions. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
Beneficiary pursuant to Article V, the Employee (or Beneficiary, if applicable)
shall instruct the Custodian in writing which shares shall be redeemed or sold
if the Account is invested in shares of more than one Designated Investment
Company, unless the item for which cash is required is clearly allocable to an
investment in a specific Designated Investment Company. In the absence of such
written instructions, the Custodian shall exercise its discretion.
6.03. Limitations on Liabilities and Duties.
(a) The Custodian shall be fully protected in acting or omitting to
take any action in reliance upon any document, order (including any domestic
relations order) or other direction believed by the Custodian to be genuine and
properly given. Conversely, the Custodian shall be fully protected in acting or
omitting to take any action in reliance on its belief than any document, order
or other direction either is not genuine or was not properly given.
(b) To the extent permitted by law, 30 days after providing to the
Employee the statements required under Section 6.01(f), the Custodian shall be
released and discharged from all liability to the Employer or any third party as
to the matters contained in such statement unless the Employee files written
objections with the Custodian within such 30-day period.
(c) In no event shall the Custodian or Distributor be under a
fiduciary duty to the Employee in regard to the selection of investments or be
liable for any loss incurred on account of a selected investment.
(d) The Custodian and Distributor shall have no responsibility with
regard to the initial or continued qualification of the Account under Code
Section 403(b)(7).
(e) Neither the Custodian nor the Distributor shall be obligated to
determine the amount of any Contribution due or to collect any Contribution from
the Employee.
(f) Neither the Custodian nor the Distributor shall be held
responsible for determining the amount, character, or timing of any distribution
to the Employee.
(g) Neither the Custodian nor the Distributor shall have
responsibility, and the Employee shall have sole responsibility, with respect to
the computation of the Employee's "exclusion allowance" as defined in Code
Section 403(b)(2), any applicable limitation(s) on contributions under Code
Section 415(c), any election available to the Employee under Code Section 415,
any applicable limit on elective deferrals (including Salary Reduction
Contributions) under Code Section 402(g), or any matters relating to any tax
consequences with respect to Contributions, Account earnings, Account
distributions, transfers or rollovers.
(h) The Custodian shall not be required to carry out any instructions
not given in accordance with this Agreement and neither the Custodian nor the
Distributor shall be liable for the loss of income, or for appreciation or
depreciation in share value that shall result from the Custodian's failure to
follow instructions not given in accordance with this Agreement.
(i) If instructions are received that, in the opinion of the
Custodian, are unclear, neither the Custodian nor the Distributor shall be
liable for loss of income, or for appreciation or depreciation in share value
during the period preceding the Custodian's receipt of written clarification of
the instructions.
(j) The Custodian shall have no responsibility to make any
distribution or process any withdrawal by order of the Employee or Beneficiary
unless and until the requisite written instructions specify the occasion for
such action and the Custodian is furnished with any and all applications,
certificates, tax waivers, signature guarantees and other documents (including
proof of any legal representative's authority) deemed necessary or advisable by
the Custodian.
(k) The Custodian shall neither assume nor have any duty of inquiry
about any matter arising under the Plan.
(l) Neither the Custodian nor the Distributor shall have any liability
to the Employee or Beneficiary for any tax penalty or other damages resulting
from any inadvertent failure by the Custodian to make a distribution under this
Agreement.
(m) Neither the Custodian nor the Distributor shall be liable for
interest on temporary cash balances, if any, maintained in the Account.
(n) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and hold it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matters which it contemplates (except that which arise due to the Custodian's
negligence or willful misconduct) or (ii) with respect to making or failing to
make any distribution, other than for failure to make distribution in accordance
with instructions therefor which are in full compliance with both Article IX and
this Section 6.03.
(o) Except as required by law, the Custodian shall not be obligated or
expected to commence or to defend a legal action or proceeding in connection
with this Agreement, unless the Custodian and the Employee agree that the
Custodian will defend a given legal action and the Custodian is fully
indemnified for so doing to its satisfaction.
(p) Neither the Employer nor the Distributor shall have any
responsibility or liability for any acts or omissions of the Custodian
hereunder.
6.04. Compensation. In consideration for its services hereunder, the
Custodian shall be entitled to receive the applicable fees specified in its then
current fee schedule, if any. The Custodian may substitute a revised fee
schedule from time to time upon 30 days' written notice to the Employer or
Employee. The Custodian shall be entitled to such
13
<PAGE>
reasonable additional fees as it may from time to time determine for services
required of it and not clearly identified on the fee schedule.
6.05. Resignation and Removal. The Custodian may resign by giving at least
30 days' written notice to the Employer or Employee. The Distributor may remove
the Custodian hereunder by giving at least 30 days' written notice to the
Custodian. In each case, the Distributor shall designate a successor custodian
qualified pursuant to Section 2.07 hereof, which successor shall accept such
appointment by a writing to be submitted to the Employer or Employee, and the
Custodian.
On the effective date of its resignation or removal, the Custodian shall
transfer to the designated successor custodian the assets and records (or copies
thereof) of the Account provided, however, that the Custodian may retain
whatever assets it deems necessary for payment of its fees, costs, expenses,
compensation, and any other liabilities which constitute a charge on or against
the assets of the Account or on or against the Custodian.
ARTICLE VII. FEES, TAXES, AND OTHER EXPENSES
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon or in respect of the Account (including any transfer taxes
incurred in connection with the investment and reinvestment of Account assets),
expenses, fees and administrative costs incurred by the Custodian in the
performance of its duties (including fees for legal services rendered to the
Custodian), and the Custodian's compensation as determined under Section 6.04,
if any, shall constitute a charge upon the assets of the Account. At the
Custodian's option, such fee, tax or expense shall be paid from the Account or
by the Employee.
ARTICLE VIII. PROTECTION OF EMPLOYEE BENEFITS
8.01. Nonforfeitability. At no time shall any part of the Account be used
for purposes other than for the exclusive benefit of the Employee. The
Employee's rights to Contributions shall be nonforfeitable at all times after
such Contributions are transferred to the Custodian.
8.02. Non-alienability. Any right or benefit which shall be payable under
the terms of this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt at such shall be void. Furthermore, no right or benefit shall be subject
to the debts, contracts, liabilities, engagements or torts of the person who is
entitled to such right or benefit, and no such right or benefit shall be subject
to attachment or legal process for or against such person.
ARTICLE IX. BENEFICIARY DESIGNATION
Each Employee may submit to the Custodian a properly executed written
Designation of Beneficiary acceptable to the Custodian for use in connection
with this Agreement. Any such Designation of Beneficiary shall not be effective
unless it is filed during the Employee's lifetime with the Custodian at the
Custodian's home office. Whether or not fully dispositive of the Account, the
most recently filed Designation of Beneficiary accepted by the Custodian shall
be controlling and all previously filed designations shall be considered
superseded and shall have no effect. If a Beneficiary dies while receiving
distributions, the portion of the Account to which the Beneficiary would have
been entitled (had he or she survived) shall be paid to the Beneficiary's
beneficiary or beneficiaries (or if impossible, to the Beneficiary's estate) in
a lump sum within 90 days after the Custodian receives notification of the
Beneficiary's death.
ARTICLE X. AMENDMENT
10.01. By the Distributor. The Distributor may amend this Agreement in its
entirety or any portion thereof. The Distributor shall provide copies of such
amendment to the Employer and/or Employee. Neither this Section nor any other
portion of this Agreement shall impose on the Distributor an affirmative
obligation to amend the Agreement.
10.02. Limitations. No amendment shall be made:
(a) Which would cause or permit any part of the Account to be diverted
to purposes other than for the exclusive benefit of the Employee and/or his or
her Beneficiary, or cause or permit any portion of such assets to revert to or
become the property of the Employer.
(b) Without the written consent of the Custodian, or
(c) Which would retroactively deprive any Employee of any benefit to
which he or she was entitled under the Agreement, unless such amendment is
necessary, in the opinion of counsel, to conform the Agreement to, or satisfy
the conditions of Code Section 403(b), any other law, or any governmental
regulation or ruling, provided that this prohibition shall not be construed to
prohibit prospective amendment of the Agreement (including prospective amendment
to eliminate a benefit) where such prospective amendment is permitted by law.
ARTICLE XI. TERMINATION
11.01. Automatic Termination on Distribution. This Agreement shall
terminate when all the assets held in the Account established hereunder have
been distributed or otherwise transferred out of the Account.
11.02. Termination on Disqualification. This Agreement shall terminate if,
after notification by the Internal Revenue Service that the Employee's Account
does not qualify under Code Section 403(b)(7), the Employer and/or Distributor
do not make the amendments necessary to so qualify the Account. On such
termination of this Agreement, the Custodian shall distribute all assets in an
Account, in its discretion in cash or in kind, to the Employee or, in the event
of the Employee's death, to the Beneficiary, subject to the Custodian's right to
reserve funds as provided in Section 6.05.
ARTICLE XII. MISCELLANEOUS
12.01. Applicable Law. This Agreement shall be construed and administered
in accordance with the laws of the state in which the home office of the
Custodian is located.
12.02. Employer's Signature. If the Employer does not sign the Application
and is not required to do so under the Code and the regulations thereunder, the
Employee, to the extent allowed by law, assumes all obligations and
responsibilities of the Employer under this Agreement.
12.03. Change of Address. The Employer, or if permitted by the Custodian,
the Employee, shall notify the Custodian in writing of any change of address
within 30 days of such change.
12.04. Notice. Any notice from the Custodian to the Employee pursuant to
this Agreement shall be effective when sent by U.S. Mail to the address of
record of the Employer or Employee. Any notice to the Custodian pursuant to this
Agreement shall be by first class mail addressed to its home office.
12.05. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the successors in interest of the parties hereto.
12.06. Construction. It is intended that this Agreement, together with the
other documents comprising the 403(b)(7) arrangement pursuant to which the
Employee's funds are invested under this Agreement, qualify as a custodial
account under Code Section (403(b)(7). This Agreement shall be construed and
limited by applicable laws, and the powers and discretions conferred hereunder
shall be exercised in a manner consistent with that purpose. Subject to the
provisions of this Section and Section 12.09 below, in the event of any conflict
between this Agreement and the documents incorporated in this Agreement by
reference, the provisions of this Agreement shall prevail.
12.07. Separability. If any provision of this Agreement shall be held
invalid or illegal for any reason, such determination shall not affect any
remaining provisions of this Agreement, but this Agreement shall be construed
and enforced as if such invalid or illegal provision has never been included in
this Agreement.
12.08. Statutory Requirements. In the event any applicable state or local
law, regulation or rule conflicts with and/or supplements the terms of this
Agreement, such law, regulation or rule shall be deemed to supersede and/or
supplement the terms of this Agreement, provided that the Distributor and the
Custodian receive written notice of such law, regulation, or rule.
12.09. Separate Employer Plan. If the Employer has established a written
separate 403(b) plan, the terms of such plan will supersede any provisions of
this Agreement which conflict with such terms; provided that the Employer has
furnished the Distributor with a copy of such written plan and the Custodian has
agreed in writing to be bound by the terms thereof.
14
<PAGE>
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TELEPHONE
NUMBERS AND
ADDRESSES
================================================
For questions about Call: (Toll-free)
the Scudder Funds 1-800-225-2470
or
Write to:
Scudder Funds
160 Federal Street
Boston, MA 02110
================================================
To arrange Call: (Toll-free)
transactions and 1-800-225-5163
for questions about or
existing accounts Write to:
Scudder Funds
P.O. Box 2291
Boston, MA 02107-2291
================================================
For questions Call: (Toll-free)
about your Scudder 1-800-323-6105
403(b) plan or
Write to:
Scudder Funds
Group Retirement Plans Dept.
175 Federal Street
Boston, MA 02110-2267
================================================================================
Scudder Offices
Boston
166 Federal Street
Boston, Massachusetts 02110
800-225-2470
Chicago
111 East Wacker Drive (22nd Fl.)
Chicago, Illinois 60601
312-861-2700
Cincinnati
555 Carew Tower
Cincinnati, Ohio 45202
513-721-4200
Cleveland
950 Terminal Tower
Cleveland, Ohio 44113
216-241-7744
Houston
1000 Louisiana Street
Suite 2190
Houston, Texas 77002
713-659-3838
800-445-0544 (in Texas)
Los Angeles
333 South Hope Street (37th Fl.)
Los Angeles, California 90071
213-628-1144
New York
345 Park Avenue (26th Fl.)
New York, New York 10154
212-326-6370
Philadelphia
Three Mellon Bank Center
Philadelphia, Pennsylvania 19102
215-864-7200
Portland, Oregon
One S.W. Columbia Street
Suite 575
Portland, Oregon 97258
503-224-3999
San Francisco
101 California Street (41st Fl.)
San Francisco, California 94111
415-981-8191
West Palm Beach
Phillips Point, Suite 1100
777 South Flagler Drive
West Palm Beach, Florida 33401
401-832-3600
800-422-0323 (in Florida)
15
<PAGE>
- -----------------
SCUDDER FUNDS
================= -------------------------------------
403(b) Application Please return to your Benefits Office
unless otherwise instructed
-------------------------------------
- --------------------------------------------------------------------------------
1. PARTICIPANT INFORMATION (please print)
- --------------------------------------------------------------------------------
Name___________________________________________ Daytime Telephone (___)________
Address_________________________________________________________________________
City_______________________________ State_______________________ Zip____________
Social Security Number - - Date of Birth________________
- --------------------------------------------------------------------------------
2. EMPLOYER INFORMATION
- --------------------------------------------------------------------------------
Name____________________________________________________________________________
Address_________________________________________________________________________
City_______________________________ State_______________________ Zip____________
Employer Group Number (obtain from employer if your account is
part of a group program)
- --------------------------------------------------------------------------------
3. INVESTMENT INSTRUCTIONS
- --------------------------------------------------------------------------------
Check appropriate box(es) for initial contribution source:
|_| Employee contribution |_| Transfer of assets (please complete the Scudder
|_| Employer contribution 403(b) Transfer Request form and send it with
|_| Rollover check for $____ this application)
%
MONEY MARKET $ Amount or (group programs only)
Scudder Cash Investment Trust ______________ ____________________
Scudder Government Money Fund ______________ ____________________
INCOME
Scudder GNMA Fund ______________ ____________________
Scudder Income Fund ______________ ____________________
Scudder Target Fund
(multi-Portfolios)
U.S. Government 1990 ______________ ____________________
General 19______________ ______________ ____________________
Maturity Year
Scudder U.S. Government Zero ______________ ____________________
Coupon
Target Fund______________ ______________ ____________________
Maturity Year
GROWTH AND INCOME
Scudder Equity Income Fund ______________ ____________________
Scudder Growth and Income Fund ______________ ____________________
GROWTH
The Japan Fund ______________ ____________________
Scudder Capital Growth Fund ______________ ____________________
Scudder Development Fund ______________ ____________________
Scudder Global Fund ______________ ____________________
Scudder International Fund ______________ ____________________
TOTAL $
______________ ____________________
______________ ____________________
Do not select a fund for which you have not received a prospectus. If you would
like additional prospectuses, please call 1-800-225-2470.
- --------------------------------------------------------------------------------
4. TELEPHONE EXCHANGE
- --------------------------------------------------------------------------------
Shareholders are able to exchange by telephone, telegram, or TWX shares in one
Scudder fund for shares of any other Scudder fund. The recipient account must
have the identical registration and address as the account from which it is
exchanged.
- --------------------------------------------------------------------------------
5. ADOPTION OF AGREEMENT AND SIGNATURE
- --------------------------------------------------------------------------------
By this application, my employer and I direct the Custodian to open a separate
Custodial Investment Account for my benefit according to the Scudder 403(b)
Custodial Agreement, and agree to the provisions contained in the Agreement. I
acknowledge that I have received a current prospectus for the fund(s) selected
for investment.
__________________________ ______________________________________________
Employee's Signature Signature of Employer
/s/ G. Reeves
__________________________ ______________________________________________
Date State Street Bank and Trust Company, Custodian
IMPORTANT: This Agreement is not effective until acknowledgement of the receipt
of this Application is mailed by the Custodian to the Employee. Please complete
Designation of Beneficiary on reverse side.
---------------------------------------------------------
For Benefits Office use only:
After reviewing and signing this application, sent it to:
Scudder Funds P.O. Box 2291 Boston, MA 02107-2291
---------------------------------------------------------
16
<PAGE>
- -----------------
SCUDDER FUNDS
=================
403(b) Designation of Beneficiary
- --------------------------------------------------------------------------------
Instructions With this form you designate the beneficiary who is to
receive your Plan assets if you die while a balance remains
in your account. This designation is not effective until
filed with the Custodian.
Section 2.04 and Article IX of the Custodial Agreement
provide for the distribution of plan assets when the
beneficiary form on file does not completely dispose of the
plan assets.
- --------------------------------------------------------------------------------
Examples of o Sandra Casey (SS #000-00-0000), 3 Oak Street, Chicago,
beneficiary Il 60060, my wife, if living at my death; otherwise, in
designations equal shares, to my children who survive me. If any
child does not survive me, such deceased child's share
shall go by right of representation to that child's
issue who survive me. (Note: "issue" refers to
children, grandchildren, etc.)
o Sandra Casey (SS #000-00-0000), 3 Oak Street, Chicago,
Il 60060, my wife, if living at my death; otherwise, to
James Casey (SS ####-##-####), 231 Elm Street, San
Mateo, CA 94042, my son, if living at my death. If he
is not living at my death, then to his issue who
survive me by right of representation.
o James Casey (SS ####-##-####), 231 Elm Street, San
Mateo, CA 94042, my son, and Mary Casey (SS
#999-99-9999), 17 Beech Avenue, Dallas, TX 73302, my
daughter, in equal shares, if they both survive me;
otherwise all to the one of them who survive me. If
neither survives me, to XYZ charity.
These are only examples. You may wish to consult an attorney
before naming beneficiaries.
- --------------------------------------------------------------------------------
Name your Plan The following beneficiaries are entitled to receive the
beneficiaries and assets of my Plan upon my death. This designation revoked
provide their any previous designation. I understand that I can change
Social Security this choice of beneficiary by submitting a new form to State
Numbers and Street Bank and Trust Company, the Custodian for the Scudder
addresses if Plan.
possible.
Beneficiaries (please print):_______________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
- --------------------------------------------------------------------------------
Sign here ______________________________________ ____________________
Your signature Date
- --------------------------------------------------------------------------------
Spousal consent
Obtain the consent (a) |_| The Participant's employer makes contributions to
of your spouse if the Plan account (or, if, for any other reason, this
your designation is an employer-sponsored plan) and lese than 100% of
above results in the assets in the Plan have been left to me as
either or both of primary beneficiary. I consent to such designation
the circumstances and limit my consent to the beneficiaries indicated
described in (a) above. In addition, recognizing that I also have a
and (b). right to limit my consent to a specific form of
benefit (such as a lump sum distribution or
installment payments over a period of time), I
relinquish that right and consent to any form of
benefits which may be elected under the Plan.
and/or
Either or both boxes
may be checked. (b) |_| As spouse of a Participant who is a resident of
Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, or Washington, I consent to (1) the
naming of another person as primary beneficiary to
receive more than one-half the Plan distributions or
(2) the naming of myself as primary beneficiary and
others as contingent beneficiaries.
I acknowledge that I have read the above elections and
understand the effect their exercise will have on me. I also
understand that my spouse must execute a new designation if
he or she wants to designate another beneficiary.
______________________________________ ____________________
Spouse's signature Date
Witness |_| Plan Representative
If box (a) is checked _________________________ or
spouse's signature Witness |_| Notary Public
must be witnessed by State: ___________________
a Notary Public or a Commission expires:_______
Plan Representative.
17
<PAGE>
SCUDDER 403(b)
EMPLOYER ADOPTION AGREEMENT
All Employees will be eligible to participate in the plan, unless the
Employer specifies otherwise in writing attached to this Adoption Agreement.
I. PLAN NAME
The name of this Plan will be:
The ___________________________________________ 403(b) Plan.
(insert name of Employer)
II. EMPLOYER CONTRIBUTIONS BY SALARY REDUCTION
Employer Contributions |_| may |_| may not be made by Salary
Reduction Contributions. If allowed, these Contributions must be
made according to a salary reduction agreement, described in
Section 3.01 of the Custodial Agreement, between the Employer and
the Employee.
NOTE: If the Employer chooses either mandatory contributions or
employee thrift contributions (see sections III and IV below),
Employer Contributions by salary reduction must be allowed.
III. MANDATORY CONTRIBUTIONS BY SALARY REDUCTION
|_| In order to participate in any Employer Direct Contributions
which the Employer may make directly to the Employee's Account
for any taxable year of the Employee, the Employee must agree
with the Employer to make mandatory contributions of at least
___% of the Employee's compensation according to a salary
reduction agreement between the Employer and the Employee.
NOTE: The Employer may not require both mandatory contributions and
employee thrift contributions (see section IV below).
IV. EMPLOYER MATCHING AND EMPLOYEE THRIFT CONTRIBUTIONS
|_| For each taxable year of the Employee that the Employee has
agreed to make thrift contributions under a salary reduction
agreement with the Employer, the Employee may contribute up to
___ % (not over 6%) of compensation as a thrift contribution for
that taxable year and the Employer will match the Employee's
thrift contribution by contributing ___% of the Employee's thrift
contribution.
<PAGE>
|_| For each taxable year of the Employee that the Employee has
agreed to make thrift contributions under a salary reduction
agreement with the Employer, the amount of the allowable employee
thrift contribution, which cannot exceed 6% of compensation, and
the amount of the employer matching contribution will be
determined according to the provisions specified in an attachment
to this Adoption Agreement.
V. EMPLOYEE CONTRIBUTIONS
Employee non-deductible voluntary contributions are:
|_| permitted.
|_| not permitted.
VI. PERMITTED INVESTMENTS
Contributions under the provisions of the Scudder 403(b)
Custodial Agreement may be invested in:
|_| All Scudder funds (except tax-free funds)
|_| __________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
(please list permitted Scudder Funds).
VII. PROCEDURES FOR CHANGING INVESTMENTS
Employees or Employees' beneficiaries may change the investments
of their 403(b) Accounts by giving instructions directly to the:
|_| Plan Administrator.
|_| Custodian.
VIII. DISTRIBUTION INSTRUCTIONS TO CUSTODIAN
The Custodian will make distributions upon a written request from
the:
|_| Employer or Plan Administrator.
|_| Employee.
|_| Employer, Plan Administrator or Employee.
<PAGE>
IX. WITHDRAWALS BY AN EMPLOYEE WHO HAS REACHED AGE 59-1/2
Withdrawals from an account by an Employee who has reached the
age of 59-1/2:
|_| are not permitted.
|_| are permitted.
X. WITHDRAWALS BY AN EMPLOYEE ON ACCOUNT OF FINANCIAL HARDSHIP*
Withdrawals from an account by an Employee who has encountered
financial hardship:
|_| are not permitted.
|_| are permitted.
XI. DISTRIBUTION TO AN EMPLOYEE UPON SEPARATION FROM SERVICE*
Distributions to an Employee will commence:
|_| upon the Employee's separation from service.
|_| upon the Employee's separation from service, or at age
____, if later.
|_| at the times specified in an attachment to this
Adoption Agreement.
XII. AMENDMENT
This adoption agreement |_| is |_| is not an amendment to an
existing plan.
XIII. ADOPTION OF AGREEMENT BY EMPLOYER AND CUSTODIAN
By completing and signing this Adoption Agreement, the
Employer agrees to open a custodial account under Internal
Revenue Code Section 403(b)(7) for each Employee who signs a
Scudder 403(b) Application Form. The Employer also adopts a
Scudder 403(b) Plan according to the provisions in this
Adoption Agreement and the Scudder 403(b) Custodial
Agreement. If any selections in this Adoption Agreement are
inconsistent with the applicable provisions of the Custodial
Agreement, the selections here will control.
<PAGE>
The Scudder 403(b) Custodial Agreement, including this Employer Adoption
Agreement, becomes effective on the date both the Custodian and the Employer
have signed this Agreement.
__________________________________________ State Street Bank and Trust
Name of Employer Company
__________________________________________
Signature of Employer BY__________________________
__________________________________________ __________________________
Street Address
__________________________________________
City/Town and Zip
__________________________________________
Date
* Please note that, in general, if an Employee receives a hardship
withdrawal or a distribution before reaching the age of 59-1/2, dying or
becoming disabled, the withdrawal or distribution may be subject to a 10% IRS
early withdrawal penalty tax. A distribution which is rolled over into an IRA
will not be subject to this penalty, however.
<PAGE>
SCUDDER 403(b)
EMPLOYER ADOPTION AGREEMENT
All Employees will be eligible to participate in the plan, unless the Employer
specifies otherwise in writing attached to this Adoption Agreement.
I. PLAN NAME
The name of this Plan will be:
The ______________________________________ 403(b) Plan.
(insert name of Employer)
II. EMPLOYER CONTRIBUTIONS BY SALARY REDUCTION
Employer Contributions |_| may |_| may not be made by Salary
Reduction Contributions. If allowed, these Contributions must be
made according to a salary reduction agreement, described in
Section 3.01 of the Custodial Agreement, between the Employer and
the Employee.
NOTE: If the Employer chooses either mandatory contributions or
employee thrift contributions (see sections III and IV below),
Employer Contributions by salary reduction must be allowed.
III. MANDATORY CONTRIBUTIONS BY SALARY REDUCTION
|_| In order to participate in any Employer Direct Contributions
which the Employer may make directly to the Employee's Account
for any taxable year of the Employee, the Employee must agree
with the Employer to make mandatory contributions of at least
___% of the Employee's compensation according to a salary
reduction agreement between the Employer and the Employee.
NOTE: The Employer may not require both mandatory contributions and
employee thrift contributions (see section IV below).
IV. EMPLOYER MATCHING AND EMPLOYEE THRIFT CONTRIBUTIONS
|_| For each taxable year of the Employee that the Employee has
agreed to make thrift contributions under a salary reduction
agreement with the Employer, the Employee may contribute up to
___ % (not over 6%) of compensation as a thrift contribution for
that taxable year and the Employer will match the Employee's
thrift contribution by contributing ___% of the Employee's thrift
contribution.
<PAGE>
|_| For each taxable year of the Employee that the Employee has
agreed to make thrift contributions under a salary reduction
agreement with the Employer, the amount of the allowable employee
thrift contribution, which cannot exceed 6% of compensation, and
the amount of the employer matching contribution will be
determined according to the provisions specified in an attachment
to this Adoption Agreement.
V. EMPLOYEE CONTRIBUTIONS
Employee non-deductible voluntary contributions are:
|_| permitted.
|_| not permitted.
VI. PERMITTED INVESTMENTS
Contributions under the provisions of the Scudder 403(b)
Custodial Agreement may be invested in:
|_| All Scudder funds (except tax-free funds).
|_| __________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
(please list permitted Scudder Funds).
VII. LOANS
Loans to an Employee are:
|_| permitted according to the provisions specified in an
attachment to this Adoption Agreement.
|_| not permitted.
VIII. PROCEDURES FOR CHANGING INVESTMENTS
Employees or Employees' beneficiaries may change the investments
of their 403(b) Accounts by giving instructions directly to the:
|_| Plan Administrator.
|_| Custodian.
<PAGE>
IX. DISTRIBUTION INSTRUCTIONS TO CUSTODIAN
The Custodian will make distributions upon a written request from
the:
|_| Employer or Plan Administrator.
|_| Employee.
|_| Employer, Plan Administrator or Employee.
X. WITHDRAWALS BY AN EMPLOYEE WHO HAS REACHED AGE 59-1/2
Withdrawals from an account by an Employee who has reached the
age of 59-1/2:
|_| are not permitted.
|_| are permitted.
XI. WITHDRAWALS BY AN EMPLOYEE ON ACCOUNT OF FINANCIAL HARDSHIP*
Withdrawals from an account by an Employee who has encountered
financial hardship:
|_| are not permitted.
|_| are permitted.
XII. DISTRIBUTION TO AN EMPLOYEE UPON SEPARATION FROM SERVICE*
Distributions to an Employee will commence:
|_| upon the Employee's separation from service.
|_| upon the Employee's separation from service, or at age
____, if later.
|_| at the times specified in an attachment to this
Adoption Agreement.
XIII. AMENDMENT
This adoption agreement |_| is |_| is not an amendment to an
existing plan.
<PAGE>
XIV. ADOPTION OF AGREEMENT BY EMPLOYER AND CUSTODIAN
By completing and signing this Adoption Agreement, the Employer
agrees to open a custodial account under Internal Revenue Code
Section 403(b)(7) for each Employee who signs a Scudder 403(b)
Application Form. The Employer also adopts a Scudder 403(b) Plan
according to the provisions in this Adoption Agreement and the
Scudder 403(b) Custodial Agreement. If any selections in this
Adoption Agreement are inconsistent with the applicable
provisions of the Custodial Agreement, the selections here will
control.
The Scudder 403(b) Custodial Agreement, including this Employer Adoption
Agreement, becomes effective on the date both the Custodian and the Employer
have signed this Agreement.
_______________________________________________ State Street Bank and Trust
Name of Employer Company
_______________________________________________
Signature of Employer BY ________________________
_______________________________________________ ________________________
Street Address
_______________________________________________
City/Town and Zip
_______________________________________________
Date
* Please note that, in general, if an Employee receives a hardship
withdrawal or a distribution before reaching the age of 59-1/2, dying or
becoming disabled, the withdrawal or distribution may be subject to a 10% IRS
early withdrawal penalty tax. A distribution which is rolled over into an IRA
will not be subject to this penalty, however.
Exhibit 14(e)
SCUDDER
401(k) PROGRAM
- --------------------------------------------------------------------------------
A Family of Pure No-Load(TM) Mutual Funds
A Flexible Prototype Plan
Versatile Administrative Systems
- --------------------------------------------------------------------------------
Choose a turn-key 401(k) program or
enhance your current plan with the
Scudder Funds
<PAGE>
- --------------------
INTRODUCTION
- --------------------
Today, more and more successful firms are discovering the advantages of
flexible, cost-effective 401(k) plans. Over 80% of the nation's largest
companies already have 401(k) plans in place.
The Scudder 401(k) Program consists of the Scudder funds, the Scudder
prototype plan, and the Scudder administrative systems.
You can adopt an entire turn-key program, or use the Scudder funds as high
quality, performance-driven alternatives to the investments offered by a
separately designed 401(k) plan. You will not find a more flexible
program.
This brochure is your opportunity to learn all the advantages of the
Scudder 401(k) Program. The accompanying booklet "How to select the right
Scudder funds for you" is your in-depth guide to the Scudder funds.
Scudder Retirement Plan Specialists are ready to answer any questions you
may have about the Scudder 401(k) Program. Call toll-free 1-800-323-6105.
<PAGE>
- --------------------------------------------------------------------------------
The
Scudder
401(k) Program
|
|
------------------------------------------------------------------
| | |
| | |
Family of Model Administrative
Mutual Plan Systems
Funds |
|
-------------------------------
| |
| |
Employer Employee
Contributions Contributions
This brochure is divided into several sections, each highlighting a
specific segment of the Scudder 401(k) Program.
2
<PAGE>
SCUDDER: OVER 65 YEARS OF
EXPERIENCE
- --------------------------------------------------------------------------------
Founded in Boston in Scudder, Stevens & Clark is one of the
1919 nation's largest and most respected
investment counsel firms, managing
over $30 billion for individual,
corporate, and institutional clients
worldwide. Scudder is independent and
privately owned.
- --------------------------------------------------------------------------------
First for investors Right from the start, Scudder has put
performance and investor service
first. That's why Scudder introduced
the first no-load mutual funds in
1928, offered the nation's first
international growth fund, and is a
leader in offering mutual funds for
retirement plans. Today, Scudder
maintains one of the largest
independent research staffs in the
industry.
- --------------------------------------------------------------------------------
National service Scudder has offices in eleven cities
network across the country to better serve
investors who prefer to conduct
business in person. For more
information about any of the Scudder
funds, you're welcome to visit us in
Boston, Chicago, Cincinnati,
Cleveland, Houston, Los Angeles, New
York, Philadelphia, Portland, San
Francisco, or West Palm Beach.
[PHOTO OMITTED]
CAPTION: Scudder Retirement Plan Specialists
will work with you when you use the
Scudder 401(k) program.
3
<PAGE>
THE SCUDDER MUTUAL FUNDS
FOR YOUR 401(k) PLAN
- --------------------------------------------------------------------------------
Traditional advantages Choosing the Scudder Funds as
investment options for your plan
gives you all the traditional
advantages of a no-load mutual fund
family, like broad diversification,
professional management, and more.
- --------------------------------------------------------------------------------
Choice Scudder offers you a full range of
funds to choose from. We can help
you meet virtually any objective,
from capital preservation to high
current income to aggressive growth.
Many employers prefer a balanced
approach when selecting funds for
their plan, including at least one
money market, income, growth and
income, and growth fund.
- --------------------------------------------------------------------------------
Flexibility Scudder offers participants free
exchange privileges, so they can move
among eligible funds as their needs
or objectives change. You can
specify the frequency with which
these changes are permitted in your
plan.
- --------------------------------------------------------------------------------
Low cost All of the Scudder funds are pure no-
load(TM) (commission-free). Your
employees pay no set-up fees, no
maintenance fees, no termination
fees, and no sales charges to buy or
sell fund shares.
- --------------------------------------------------------------------------------
Convenience Scudder fund investors can easily
follow the prices of their shares
each day in the local paper--or by
calling Scudder's toll-free 24-hour
price/yield information line.
- --------------------------------------------------------------------------------
Service Friendly, professional Service
Representatives are always available
to answer a question or explain the
objectives of a fund. Scudder is as
close as your phone.
[PHOTO OMITTED]
CAPTION: Scudder's Service Representatives
can answer your Scudder fund
questions.
4
<PAGE>
ADVANTAGES OF THE SCUDDER
401(k) PLAN FOR YOU--THE EMPLOYER
- --------------------------------------------------------------------------------
The Scudder 401(k) plan The Scudder prototype plan can be used
is flexible by a wide variety of employers. You
can amend an existing profit sharing
or thrift plan into the Scudder 401(k)
plan, or use the Scudder plan to start
a new retirement program.
The essence of a 401(k) plan is the
ability to combine salary deferral
contributions from employees with
profit sharing contributions from
employers, in a single tax-advantaged
plan. The Scudder 401(k) plan offers
you all the advantages of a thrift or
profit sharing plan, plus the added
benefit of a systematic savings
program using pre-tax dollars. It's
an attractive, popular plan offering
employees a unique opportunity for
asset accumulation and favorable tax
treatment.
- --------------------------------------------------------------------------------
The Scudder 401(k) plan The low cost and simplicity of
is cost-effective and maintaining the Scudder 401(k) plan
convenient will surprise you. You will not incur
any fees for using either the Scudder
funds or the Scudder prototype plan.
Take advantage of the Scudder Plan,
and you'll also save the time and
expense of writing your own. Scudder
will work to keep you informed so you
can keep your plan up-to-date as tax
laws change.
- --------------------------------------------------------------------------------
401(k) contributions are The contributions you make and the pre-
tax-deductible tax contributions made by your
employees are fully tax-deductible by
the employer as contributions to a
retirement plan.
In addition, with a 401(k) plan in
place, state unemployment insurance
and worker's compensation costs may be
reduced because they are based on
employee compensation--which is
lowered (actually deferred) by
participation in your 401(k) plan.
- --------------------------------------------------------------------------------
The Scudder 401(k) plan Adopting the Scudder 401(k) plan can
will enhance your improve your firm's image and employee
benefits package morale. Most important, you will find
it helps you attract, motivate, and
retain highly qualified personnel. A
401(k) plan is an innovative,
responsive addition to your employee
benefits package.
- --------------------------------------------------------------------------------
A 401(k) plan will The availability of a salary deferral
encourage your employees plan makes it easy and convenient for
to save for retirement your employees to invest for their
futures. Changing tax laws make
401(k) plans even more attractive
alternatives for employees who have
lost their IRA deductions.
5
<PAGE>
ADVANTAGES OF THE SCUDDER
401(k) PLAN FOR YOUR EMPLOYEES
- --------------------------------------------------------------------------------
There are two major First, your employees can contribute pre-
tax benefits for 401(k) tax dollars to a 401(k) plan, cutting their
plan participants. current taxes.
[BAR CHART OMITTED] Second, all contributions to a 401(k) plan
The Power of Tax- compound tax-deferred, allowing
Deferred Investing participants to accumulate substantially
greater assets than they could with a
The chart compares tax- conventional savings program. Tax-deferred
deferred programs like compounding is one of the keys to real
the Scudder 401(k) growth.
with taxable savings
programs over 10, 20, For example, an employee earning $20,000
and 30 years. who defers 5% of salary--just $1,000 each
year--would build an account worth over
$170,000 after 30 years (before taxes)
assuming a constant 10% rate of return.
This employee would accumulate only $74,000
(after taxes, assuming 28% bracket)
investing the same amount and earning the
same return in a taxable savings program.
401(k) accumulations are only taxed when
withdrawn, usually during retirement.
(There is no assurance that a participant
will earn 10% annually--actual earnings
could be more or less. A participant's
salary would also be likely to rise over
this period. Savings are more significant
at higher wage levels.)
- --------------------------------------------------------------------------------
Employer matching You may elect to make matching
contributions help contributions, providing your employees
build a retirement with added incentive to plan for their
account. retirement income needs.
In addition, your plan may allow
participants to make voluntary, non-
deductible contributions of up to 10% of
their salaries. All earnings on this money
are tax deferred until withdrawn. This
greatly enhances your employees' ability to
defer taxes and accumulate assets.
- --------------------------------------------------------------------------------
401(k) plan There is no easier nor more convenient way
participants can to save than through payroll deduction.
save conveniently
- --and direct their Participants personally select the
own accounts investment options that best meet their
individual goals. A 401(k) plan gives your
employees the freedom to actively plan for
their futures. And regular account
statements keep employees informed of their
progress--and aware of the value of this
important employee benefit.
- --------------------------------------------------------------------------------
Participants have Distributions can be taken when a plan
access to their participant retires or separates from
accounts in special service, but these may be subject to an
circumstances early withdrawal penalty. Once a plan
participant reaches age 59-1/2,
distributions can be taken without penalty.
In addition, withdrawals can be made under
certain hardship conditions, if you select
this distribution option for your plan.
Participants may also be permitted to
borrow from their accounts, which can be an
important source of funds in times of need.
6
<PAGE>
TAILOR THE SCUDDER 401(k) PLAN
TO YOUR OWN SPECIFICATIONS
- --------------------------------------------------------------------------------
A flexible plan you can The Scudder 401(k) plan is a unique and
customize flexible profit sharing plan with many
distinct advantages for both employers and
employees. It's the product of 30 years of
retirement planning experience. Adopting
the Scudder plan allows you to tailor your
401(k) to specific requirements.
Below are just a few of the options at your
command when you build a 401(k) plan at
Scudder.
- --------------------------------------------------------------------------------
Employee eligibility You determine eligibility. You can require
a waiting period of up to three years and a
minimum age of up to 21 before allowing an
employee to participate in the plan. You
may also limit participation to certain
classes of employees.
Starting in 1989, you may require that
employees wait one year before contributing
to the plan, and up to two years before
becoming eligible for employer
contributions.
- --------------------------------------------------------------------------------
Includable You can elect to either include or exclude
compensation certain types of compensation such as
bonuses, commissions, and overtime pay for
the purpose of calculating 401(k)
contributions.
- --------------------------------------------------------------------------------
Vesting schedules If you make contributions on behalf of your
employees you are free to select a vesting
schedule which encourages extended service.
- --------------------------------------------------------------------------------
Loans and hardship You can permit participants to borrow from
withdrawals their balances in the plan, at a reasonable
interest rate, and/or take early
distributions in cases of hardship.
- --------------------------------------------------------------------------------
Types of permissible You have great leeway in selecting the
contributions kinds of contributions to allow in your
plan. The different types can be divided
into employer and employee contributions.
o Employer Matching contributions. You can match your
contributions participant's contributions with employer
dollars to encourage participation in the
plan.
Profit sharing contributions. You can make
annual profit sharing contributions to the
plan on behalf of each participant. As
with all profit sharing plans,
contributions can be varied each year, or
even skipped if desired.
o Employee Salary deferral contributions. Salary
contributions deferral contributions allow participants
to reduce their current income taxes and
save for their retirement through automatic
contributions to a tax-qualified retirement
plan. Participants can contribute up to
$7,313* through salary reduction in 1988.
Deferred cash contributions. You can
reward employees with bonus payments, and
allow them to take these bonuses in cash or
in the form of a contribution of the entire
amount to your 401(k) plan.
*This amount is indexed to inflation, and
adjusted annually.
7
<PAGE>
PROFESSIONAL ADMINISTRATIVE
SUPPORT
- --------------------------------------------------------------------------------
Whether you adopt the complete Scudder
401(k) Program, or simply use the Scudder
funds as investments for your 401(k) plan,
we'll provide the recordkeeping system
which is right for you. We recognize that
no two organizations have identical needs,
so we offer two different systems.
- --------------------------------------------------------------------------------
For employers with Scudder Benefit Plan Administration System
larger plans requiring (SBPAS). SBPAS is appropriate for larger
more complete and more complex 401(k) plans, plans
recordkeeping requiring non-discrimination testing, loan
processing, or vesting schedules, and plans
offering company stock or GICs as
investment options.
SBPAS maintains detailed participant and
plan account records, and prepares 1099-Rs
and W-2Ps. SBPAS can record contributions,
process exchanges and withdrawals, add new
participants, allocate earnings, track
vesting schedules, and record loan
activity. SBPAS generates comprehensive
reports for management, and consolidated
quarterly statements for participants.
There is an annual fee for this system
which is based upon the services your
program requires.
- --------------------------------------------------------------------------------
For employers with less Scudder Plan Accounting. This system is
complicated designed for employers using the Scudder
administrative needs prototype 401(k) plan. The employer
allocates contributions among the funds,
while the system maintains detailed
participant account and beneficiary records
and prepares 1099-Rs and W-2Ps. The system
links all the accounts in your plan,
producing a master management report for
you. There is no fee for using this
system.
Benefits of Scudder 401(k)
Recordkeeping Systems
<TABLE>
<CAPTION>
# of Comprehensive Exchange Employer
Participants Participant Between Vesting Management Distribution 1099-R Loan
Accepted Statements Funds Schedules Reports Processing W-2P Processing*
-------- ---------- ----- --------- ------- ---------- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scudder
Benefit any X X X X X X X
Plan number
Administration
System
Scudder
Accounting 10 or X X -- X X X --
Plan more**
</TABLE>
<TABLE>
<CAPTION>
Non-
discrimi-
nation 5500 Annual Beneficiary
Testing Preparation Fees Files
------- ----------- ---- -----
<S> <C> <C> <C> <C>
Scudder
Benefit X X X --
Plan
Administration
System
Scudder
Accounting -- -- -- X
Plan
</TABLE>
* These are optional services which incur an extra charge.
** The Scudder 401(k) plan is also appropriate for employers with less than 10
participants. Call our Retirement Plan Specialists for more information.
8
<PAGE>
SCUDDER SERVICE AND
ASSISTANCE
- --------------------------------------------------------------------------------
Employee Scudder knows that the success of a 401(k)
communications program is often measured by the level of
assistance employee participation. Toward that end
Scudder will help you introduce your plan
and help you design employee information
kits. Scudder's communication kits explain
in plain English the advantages of salary
deferral, tax-deferred compounding, and the
different Scudder funds offered by your
plan. Scudder will also work with you to
design employee presentations to encourage
participation.
Of course, each of your employees has toll-
free telephone access to Scudder's
professional Service Representatives.
These helpful, knowledgeable people can
answer their questions, and explain the
objectives of each Scudder Fund
[PHOTO OMITTED]
CAPTION: You can put Scudder's experienced,
dedicated Retirement Plan Specialists
to work for your company's plan.
- --------------------------------------------------------------------------------
Conclusion The Scudder 401(k) Program can meet the
401(k) needs of virtually any organization.
You can create your own unique plan using
the distinctive elements of the Scudder
program:
o a wide range of performance-driven
investments
o a flexible, comprehensive prototype plan
o administrative systems to meet virtually
any need
The Scudder 401(k) Program is backed by our
commitment to service and assistance--a
commitment to the success of your plan.
9
<PAGE>
TELEPHONE NUMBERS AND
ADDRESSES
- --------------------------------------------------------------------------------
For questions about the Call: (Toll-free)
Scudder 401(k) Program 1-800-323-6105
and help in selecting
the right Scudder Funds or
to offer
Write To:
The Scudder Funds
Group Retirement Plan Department
175 Federal Street
Boston, MA 02110-2267
Retirement Plan Specialists will answer
your 401(k) questions and help you complete
our enrollment forms.
- --------------------------------------------------------------------------------
Scudder Offices Boston New York
166 Federal Street 345 Park Avenue
Boston, MA 02110 (26th Floor)
800-225-2470 New York, NY 10154
212-326-6370
Chicago
111 East Wacker Drive Philadelphia
(22nd Floor) Three Mellon Bank
Chicago, IL 60601 Center
312-861-2700 Philadelphia, PA 19102
215-864-7200
Cincinnati
555 Carew Tower Portland, Oregon
Cincinnati, OH 45202 One S.W. Columbia
513-621-4200 Street
Suite 575
Cleveland Portland, OR 97258
950 Terminal Tower 503-224-3999
Cleveland, OH 44113
216-241-7744 San Francisco
101 California Street
Houston (41st Floor)
1000 Louisiana Street San Francisco, CA
Suite 2190 94111
Houston, TX 77002 415-981-8191
713-659-3838
800-445-0544 (in Texas) West Palm Beach
Phillips Point
Los Angeles Suite 1100
333 South Hope Street 777 South Flagler Drive
(37th Floor) West Palm Beach, FL
Los Angeles, CA 90071 33401
213-628-1144 407-832-3600
800-422-0323 (in
Florida)
<PAGE>
This booklet is being sent to you by
Scudder Fund Distributors, Inc.,
underwriter of the Scudder funds, and
must be preceded or accompanied by a
current fund prospectus. SCUDDER
- --------------------------------------------------------------------------------
1-800-323-6105 175 Federal Street, Boston, MA 02110
(ask for a Retirement Plan Specialist) 17-58(c)1988, Scudder Fund
Distributors, Inc.
<PAGE>
Complete and post this Notice in a common area for your employees'
information. If you are required to file for a determination letter on the
qualified status of your plan, you must post this Notice 7 to 21 days
before you submit your determination letter request. If you are not
required to file for a determination letter, you must post the Notice 9 to
23 days after you adopt or amend the Plan.
SCUDDER 401(k) PROTOTYPE PLAN
NOTICE TO INTERESTED PARTIES
An employer adopting a master or prototype plan or an amendment
thereto or a restatement thereof, is required to notify all interested
parties (including all employees and any self-employed individuals) of such
adoption, amendment or restatement. Recently, ____________________ (name
of employer) [_] adopted [_] restated the [_] _________________ Money
Purchase Pension Plan [_] __________________________________ Profit Sharing
Plan (the "Plan"). The Internal Revenue Service, on May 1, 1987, issued an
opinion letter with respect to this (amended form of) plan as a tax
qualified prototype.
1. Notice to employees of ____________________________________________
(name of employer) (the "Employer").
An application [_] is [_] is not to be made to the Internal Revenue Service
by the Employer for a determination on the qualification of the employee
benefit pension plan described below.
2. The Employer has [_] adopted [_] restated the employee pension benefit
plan described below on ____________________________________.
3. The name of the Plan is _____________________________________. (insert
full name of plan from first paragraph of Adoption Agreement).
4. The Plan's identification number is _________________________. (For
instance, the first plan will be No. 001 and subsequent plans No. 002, 003,
etc.)
5. The name and address of the Employer is ______________________________
___________________________________________________________________________
__________________________________________________________________________.
6. The prototype plan's Opinion Letter number is C212885a-k.
7. The Plan's sponsor is Scudder Fund Distributors, Inc., 175 Federal
Street, Boston, Massachusetts 02110.
8. The Employer's Tax Identification Number is _________________________.
9. The Plan Administrator's name and address is _________________________
___________________________________________________________________________
__________________________________________________________________________.
(If none appointed, insert Employer's name.)
<PAGE>
10. The address of the Key District Director having jurisdiction over the
Plan is __________________________________________________________________.
* Please refer to chart at Appendix A, attached hereto.
11. The employees eligible to participate under the plan are (describe by
class): ___________________________________________________________________
__________________________________________________________________________.
12. The Internal Revenue Service [_] has [_] has not previously issued a
determination letter with respect to the qualification of this plan.
13. Check appropriate box:
[_] For employers who are required to make a determination letter
submission to the IRS:
The application will be filed on _______________________ with the Key
District Director, Internal Revenue Service at ______________________
_________________________ for an advance determination as to whether
the plan meets the qualification requirements of section 401, 403(a)
or 405(a) of the Internal Revenue Service Code with respect to the
plan's [_] initial qualification [_] amendment [_] termination [_]
[_] merger [_] consolidation or [_] transfer of plan assets or
liabilities.
[_] For employers who are not required to make a determination letter
submission to the IRS:
It is not contemplated that the plan will be submitted to the Internal
Revenue Service for an advance determination as to whether it meets
the qualification requirements of section 401 of the Internal Revenue
Code with respect to either its initial qualification of any
subsequent amendment.
RIGHTS OF INTEREST PARTIES
14. You have the right to submit to the Key District Director, at the
above address, either individually or jointly with other interested
parties, your comments as to whether this plan meets the qualification
requirements of the Internal Revenue Code. You may instead, individually
or jointly with other interested parties, request the Department of Labor
to submit, on your behalf, comments to the Key District Director regarding
qualification of the plan. If the Department declines to common on all or
some of the matters you raise, you may, individually, or jointly if your
request was made to the Department jointly, submit your comments to these
matters directly to the Key District Director.
REQUESTS FOR COMMENTS BY THE DOL
15. Check appropriate box:
[_] For employers who are required to make a determination letter
submission to the IRS:
<PAGE>
The Department of Labor may not comment on behalf of interested
parties unless requested to do so by the lesser of 10 employees of 10%
of the employees who qualify as interested parties. The number of
persons needed for the Department to comment with respect to this plan
is ___________. If you request the Department to comment, your
comment must be in writing and must specify the matters upon which
comments are requested, and must also include:
(1) the information contained in items 3 through 5 of this
Notice; and
(2) the number of persons needed for the Department to comment.
[_] For employers who are not required to make a determination letter
submission to the IRS:
The Department of Labor may not comment on behalf of interested
parties unless requested to do so by the lesser of 10 employees of 10%
of the employees who qualify as interested parties. The number of
persons needed for the Department to comment with respect to this plan
is ___________. If you request the Department to comment, your
comment must be in writing and must specify the matters upon which
comments are requested, and must also include:
(1) the information contained in items 2 through 9 of this
Notice; and
(2) the number of persons needed for the Department to comment.
A request to the Department to comment should be addressed as follows:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20216
ATTN: 3001 Comment Request
COMMENTS TO THE IRS
16. Check appropriate box:
[_] For employers who are required to make a determination letter
submission to the IRS:
Comments submitted by you to the Key District Director must be in
writing and received by him by ___________________________ (the 45th
day after the date on which the application for determination is
received by the Key District Director). However, if there are matters
that you request the Department of Labor to comment upon on your
behalf, and the Department declines, you may submit comments on these
matters to the Key District Director to be received by him on
__________________________ (within 15 days from the time the
Department notifies you that it will not comment on a particular
<PAGE>
matter), or by ___________________________ (the 45th day after the
date on which the application for determination is received by the Key
District Director), whichever is later. A request to the Department
to comment on our behalf must be received by it by
____________________________ (the 15th day after the date on the
application for determination is received by the Key District
Director) if you wish to preserve your right to comment on a matter
upon which the Department declines to comment, or by
_____________________ (the 25th day after the date on which the
application for determination is received by the Key District
Director) if you wish to waive that right.
[_] For employers who are not required to make a determination letter
submission to the IRS:
Comments submitted to you by the Key District Director must be in
writing and received by him by _______________________ (the 75th day
after the date on which the plan is adopted or amended). However, if
there are matters that you request the Department of Labor to comment
upon on your behalf, and the Department declines, you may submit
matters to the Key District Director to be received by him on
_________________________ (within 15 days from the time the Department
notifies you that it will not comment on a particular matter), or by
_________________________ (the 75th day after the date on which the
plan is adopted or amended), whichever is later. A request by the
Department to comment on your behalf must be received by it by
_________________________ (the 45th day after the date on which the
plan is adopted or amended) if you wish to preserve your right to
comment on a matter upon which the Department declines to comment, or
by ______________________ (the 55th day after the date on which the
plan is adopted or amended) if you wish to waive that right.
ADDITIONAL INFORMATION
17. Check appropriate box:
[_] For employers who are required to make a determination letter
submission to the IRS:
Detailed instruction regarding the requirements for notification of
interested parties may be found in sections 6, 7, and 8 of Revenue
Procedure 80-30. Additional information concerning this adoption or
amendment (including, where applicable, an updated copy of the plan
and related trust; the application for determination; any additional
documents dealing with the application for determination; and copies
of section 6 of Revenue Procedure 80-30) is available at _____________
______________________________________________________________________
during the hours of __________________________________ for inspection
and copying. (There is a nominal charge for copying and/or mailing.)
[_] For employers who are not required to make a determination letter
submission to the IRS:
<PAGE>
Detailed instruction regarding the requirements for notification of
interested parties may be found in sections 6, 7, and 8 of Revenue
Procedure 80-30. Additional information concerning this adoption or
amendment (including, where applicable, a description of the
provisions providing for nonforfeitable benefits; a description of the
circumstances which may result in ineligibility or loss of benefits; a
description of the source of financing of the plan; and copies of
section 6 of Revenue Procedure 80-30) is available at ________________
______________________________________________________________________
during the hours of __________________________________ for inspection
and copying. (There is a nominal charge for copying and/or mailing.)
Appendix A
Key District Addresses
Mid-Atlantic Region
-------------------
Key District IRS Districts Covered
- ------------ ---------------------
Baltimore Baltimore, Pittsburgh, Richmond
31 Hopkins Plaza
Baltimore, MD 21201
Newark Newark, Philadelphia
Wilmington
970 Broad Street
Newark, NJ 07102
North Atlantic Region
---------------------
Brooklyn Albany, Augusta, Boston
Brooklyn, Buffalo,
35 Tillary Street Burlington, Hartford,
Brooklyn, NY 11201 Manhattan, Portsmouth
Providence
Central Region
--------------
Cincinnati Cincinnati, Cleveland,
Detroit, Indianapolis,
550 Main Street Louisville, Parkersburg
Cincinnati, OH 45202
<PAGE>
Midwest Region
--------------
Chicago Aberdeen, Chicago,
Des Moines, Fargo
230 S. Dearborn Street Helena, Milwaukee
Chicago, IL 60604 St. Paul, Springfield
Southeast Region
----------------
Key District IRS Districts Covered
- ------------ ---------------------
Atlanta Atlanta, Birmingham,
Columbia, Greensboro,
275 Peachtree Street, N.E. Jackson, Jacksonville,
Atlanta, GA 30303 Little Rock, Nashville,
New Orleans
Southwest Region
----------------
Dallas Albuquerque, Austin,
Cheyenne, Dallas, Denver,
1100 Commerce Street Houston, Oklahoma City,
Dallas, TX 75202 Phoenix, Salt Lake City,
Wichita
Western Region
--------------
Los Angeles Anchorage, Boise, Honolulu, Laguna
Niguel, Los Angeles, Portland,
300 N. Los Angeles Street Reno, Sacramento, San Francisco, San
Los Angeles, CA 90012 Jose, Seattle
<PAGE>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Standardized Profit Sharing Plan CODA Amendment
FFN: 50250523201-003 Case: 8500550k EIN: 04-2321686
BPD: 01 Plan: 003 Letter Serial No: C212558a-k
Washington, DC 20224
Scudder Fund Distributors, Inc. Person to contact: Mrs. Fleming
175 Federal Street Telephone Number: (202) 566-6421
Boston, MA 02110 Refer Reply to: OP:E:EP:Q:I
Date: 05/01/87
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above to add a
cash or deferred arrangement CODA described in section 401(k) of the Internal
Revenue Code does not in and of itself adversely affect the plan's acceptability
under section 401 of the Code. This opinion relates only to the amendment to add
a CODA to the form of the plan. It is not an opinion as to the acceptability of
any other amendment or of the form of the plan as a whole, or as to the effect
of other Federal or local statutes. This letter does not consider the effect of
the Tax Reform Act of 1986 on the acceptability of this plan under section
401(a) of the Code.
Adoption by an employer of the CODA amendment will not by itself affect the
qualification of the employer's plan or the exempt status of any related trust.
Therefore, such employer may rely on this opinion letter, provided the
requirements of section 18 of Revenue Procedure 84-23, 1984-1 C.B.457, including
the appropriate Notice to Interested Parties, are met.
You must furnish a copy of this letter to each employer who adopts the CODA,
either as part of a new plan adoption or as an amendment to a prior adoption of
your existing master or prototype profit-sharing plan. You are also required to
send a copy of the approved form of the plan and related documents to each Key
District Director of Internal Revenue Service whose jurisdiction there are
adopting employers.
If you have any questions concerning the IRS processing of this case, please
call the above telephone number. If you write, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
Please advise those adopting the plan to contact you if they have any questions
about the operation of the plan.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ [Illegible]
Chief, Employee Plans Qualification Branch
<PAGE>
Internal Revenue Service Department of the Treasury
Plan Name:
Profit Sharing Plan
FF#: 50250523201-003 Control #: 8500550
BPD#: 01 Plan: 003 Letter Serial #: C212558a
Washington, DC 20224
Scudder Fund Distributors, Inc. Person to contact: Ms. Carr
175 Federal Street Telephone Number: (202) 566-6814
Boston, MA 02110 Refer Reply to: OP:E:EP:RQ:1:4
Date: 08/05/85
E.I.N.: 04-2321685
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts the plan. You
are also required to send a copy of the approved form of the plan and related
documents to each Key District Director of Internal Revenue Service in whose
jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 84-23, 1984-1 C.B. 457; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3). In
such situations, the employer should request a determination as to whether the
plan, considered with all related qualified plans and, if appropriate, welfare
benefit funds, satisfies the requirements of Code section 401(a)(16) as to
limitations on benefits and contributions in Code section 415.
If you have any questions concerning the IRS processing of this case, please
call the above telephone number. If you write, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number, Plan Number and File Folder Number shown in the heading of this letter.
Please advise those adopting the plan to contact you if they have any questions
about the operation of the plan.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ [Illegible]
Chief, Employee Plans
Rulings and Qualifications Branch
<PAGE>
SCUDDER
401(k) PROTOTYPE
PLAN DOCUMENT
- --------------------------------------------------------------------------------
SCUDDER
SERVING INVESTORS SINCE 1919
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Basic Plan Document #01 2
Section 1 Introduction ..................................... 2
Section 2 Definitions ...................................... 2
Section 3 Eligibility ...................................... 3
Section 4 Contributions .................................... 4
Section 5 Code Section 415 Limitations on Allocations ...... 5
Section 6 Time and Manner of Making Contributions .......... 6
Section 7 Vesting .......................................... 7
Section 8 Distribution upon Death .......................... 7
Section 9 Other Distributions .............................. 8
Section 10 Loans ............................................ 9
Section 11 Trust Provisions ................................. 9
Section 12 Administration ................................... 11
Section 13 Fees and Expenses ................................ 11
Section 14 Benefit Recipient Incompetent
or Difficult to Ascertain or Locate .......... 12
Section 15 Designation of Beneficiary ....................... 12
Section 16 Spendthrift Provision and Distributions
Pursuant to Qualified Domestic Relations
Orders ....................................... 12
Section 17 Necessity of Qualification ....................... 12
Section 18 Amendment and Termination ........................ 12
Section 19 Transfers ........................................ 13
Section 20 Owner-Employee Provisions ........................ 13
Section 21 Top-Heavy Provisions ............................. 13
Section 22 Special Distribution Rules ....................... 14
Section 23 Distribution Option Notice Requirements .......... 15
Section 24 Waiver of Minimum Funding Standard ............... 15
Section 25 Miscellaneous .................................... 16
Model Amendment II for Defined Contribution Plans 16
Section I Purpose and Effective Date ....................... 16
Section II Definitions ...................................... 16
Section III Provisions Relating to Leased Employees .......... 17
Section IV Limitations on Contributions and Benefits ........ 17
Section V Limitations on Employee Contributions ............ 17
Section VI Qualified Voluntary Employee
Contributions Not Permitted ................. 18
Section VII Determination of Top Heavy Status ................ 18
Section VIII Reserved ......................................... 18
Section IX Benefit Forfeitures .............................. 18
Section X Profits Not Required ............................. 18
Model Cash or Deferred Arrangement Amendment 18
Section I Purpose and Effective Date ....................... 18
Section II Definitions ...................................... 18
Section III Elective Deferrals ............................... 18
Section IV Top-Heavy Requirements ........................... 19
Section V Special Distribution Rules ....................... 19
Section VI Matching Contributions ........................... 19
Section VII Limitations on Employee Contributions
and Matching Contributions ................... 20
Footnotes ........................................................ 20
<PAGE>
SCUDDER
PROTOTYPE PLAN
Basic Plan Document 01
SECTION 1.
INTRODUCTION
The Employer has established this Plan (the "Plan") consisting of the
Adoption Agreement and the following provisions (the "Prototype Plan") for the
exclusive benefit of its Employees and their Beneficiaries.
SECTION 2.
DEFINITIONS
Where the following words and phrases appear in this Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.01 "Account" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's Employer
Contribution Account, Nondeductible Voluntary Contribution Account, Deductible
Voluntary Contribution Account, Rollover Account, and any transfer account
established pursuant to Section 4.04 hereof with respect to funds transferred on
the Participant's behalf.
2.02 "Act" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
2.03 "Administrator" shall mean the person or persons specified in Section
12.01 hereof.
2.04 "Adoption Agreement" shall mean the agreement by which the Employer
has most recently adopted or amended the Plan.
2.05 "Beneficiary" shall mean any person or legal representative
effectively designated by the Participant as a person entitled to receive
benefits on or after the death of a Participant within the meaning of Code
Section 401(a)(9)(E) and any regulations promulgated thereunder by the Secretary
of the Treasury.
2.06 "Code" shall mean the Internal Revenue Code of 1954, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.07 "Compensation" shall mean the amount paid during the Plan Year by the
Employer to the Employee for services rendered while a Participant, as
reportable to the Federal Government for the purpose of withholding Federal
income taxes, but not including, so long as the Plan is not integrated with
Social Security, amounts attributable to any category specified in the Adoption
Agreement. If so specified in the Adoption Agreement, Compensation shall also
mean amounts paid to the Employee for services rendered for the entire Plan Year
in which an Employee became a Participant whether or not such an Employee was a
Participant for the entire Plan Year. In the case of a Self-Employed Individual,
the above determination of Compensation shall be made on the basis of the Self-
Employed Individual's Earned Income. Notwithstanding the previous sentence, for
the purposes of the limitations imposed by Section 401(a)(i)(C)(II) below,
Compensation of a Self-Employed Individual shall be determined in accordance
with the rules provided in Code Section 404(a)(8)(D).
2.08 "Current Accumulated Earnings and Profits" of an Employer other than a
sole-proprietorship or partnership shall mean the Employer's current or
accumulated earnings and profits, as determined on the basis of the Employer's
books of account in accordance with generally accepted accounting practices,
without any deductions for Employer Contributions under the Plan (or any other
qualified plan) for the current Year or for income taxes for the current Year,
and without regard to the Employer's election to be taxed as a small business
corporation, if it has so elected. If the Employer is a sole-proprietorship or
partnership, "Current or Accumulated Earnings and Profits" shall mean the net
income of such Employer before deduction for income taxes and contributions made
hereunder.
2.09 "Deductible Voluntary Contribution Account" shall mean the separate
account maintained pursuant to Section 6.03(c) hereof for the Deductible
Voluntary Contributions made by the Participant and the income, expenses, gains
and losses attributable thereto.
2.10 "Deductible Voluntary Contributions" shall mean the contributions made
by Participants in accordance with Section 4.02 hereof, which respective
contributing Participants designate as "Deductible Voluntary Contributions" at
the time of contribution, and which comply with the requirements of Code Section
219.
2.11 "Designated Investment Company" shall mean a regulated investment
company for which Scudder, Stevens & Clark, its successor or any of its
affiliates, acts as investment adviser and which is designed by Scudder Fund
Distributors, Inc. or its successors, as eligible for investment under the Plan.
2.12 "Designation of Beneficiary" or "Designation" shall mean the document
executed by a Participant under Section 15.
2.13 "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expect to result in death or last for a continuous period
of 12 months or more, as certified by a licensed physician selected by the
Participant and approved by the Employer.
2.14 "Distributee" shall mean the Beneficiary or other person entitled to
receive the undistributed portion of the Participant's Account under Section 8
because of death or under Section 14 because of incompetency or inability to
ascertain or locate such individual.
2.15 "Distributor" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.16 "Earned Income" shall mean the net earnings from self employment in
the trade or business with respect to which the Plan is established, for which
personal services of the Owner-Employee or Self-Employed Individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
plan, including this Plan, to the extent deductible under Code Section 404.
2.17 "Effective Date" shall mean the date specified by the Employer in the
Adoption Agreement.
2.18 "Election Period" shall mean the period which begins of the first day
of the Plan Year in which the Participant attains age 35 and which ends on the
date of the Participant's death. If a Participant separates from service prior
to the first day of the Plan Year in which he or she attains age 35 the Election
Period with respect to his or her vested Account balance (as of his or her date
of separation) shall begin on his or her date of separation.
2.19 "Employee" shall mean an individual who performs services in the
business of the Employer in any capacity (including any individual deemed to be
an employee of the Employer under Code Section 414(n)).
2.20 "Employer" shall mean the organization or other entity named as such
in the Adoption Agreement and any successor organization or entity which adopts
the Plan.
Any two or more organizations or entities which are members of (a) a
controlled group of corporations (as defined under Code Section 414(b)), (b) a
group of trades or businesses (whether or not incorporated) which are under
common control (as defined under Code Section 414(c)), or (c) an affiliated
service group (as defined under Code Section 414(m)), will be considered to be
the Employer for the purposes of the Plan, unless the Plan is adopted as a
nonstandardized plan, the adopting Employer makes a written election to the
contrary and such written election is attached to the Adoption Agreement. Any
such attached, written election shall become part of the Adoption Agreement.
2.21 "Employer Contribution Account" shall mean the separate account
maintained pursuant to Section 6.03(a) hereof for the Employer Contributions
allocated to a Participant and the income, expenses, gains and losses
attributable thereto.
2.22 "Employer Contributions" shall mean the contributions made by the
Employer in accordance with Section 4.01 hereof.
2.23 "Hour of Service" shall mean:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited to
the Employee for the computation period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including Disability), layoff,
jury duty, military duty or leave of absence. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous period (whether
or not such period occurs in a single computation period). Hours under this
subsection shall be calculated and credited pursuant to section 2530.200b-2 of
the Department of Labor Relations which are incorporated herein by reference;
(c) Solely for the purpose of determining whether a One-Year Break in
Service has occurred, each hour which normally would have been credited to an
Employee (or in any case in which such house cannot be determined, eight hours
per day of such absence) but for an absence from work during a Plan Year
beginning after December 31, 1984 because of such individual's pregnancy, birth
of a child of the individual, placement of an adopted child with the individual,
or caring for an adopted or a natural child following placement or birth. Hours
of Service under this paragraph shall be credited in the Plan Year in which the
absence begins if the individual would otherwise have suffered a One-Year Break
in Service, and in all other cases, in the immediately following Plan Year. No
more than 501 Hours of Service shall be credited under this paragraph by reason
of any one placement or pregnancy. Notwithstanding any implication of this
subsection (c) to the contrary, no credit shall be give under this subsection
(c), unless the Employee makes a timely, written filing with the Administrator
which establishes valid reasons for the absence and enumerates the days for
which there was such an absence;
(d) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under subsection (a), (b) or (c), as the case
may be, and under this subsection (d). These hours shall be credited to the
Employee for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award, agreement or
payment is made.
Where the Employer maintains the plan of a predecessor employer, service
for such predecessor employer shall be treated as Service of the Employer. Where
the Employer does not maintain the plan of a predecessor employer, employment by
a predecessor employer, upon the written election of the Employer made in a
uniform and non-discriminatory manner, shall be treated as Service for the
Employer, provided that the Employer may only make such an election if he has
adopted this Plan as a nonstandardized plan.
If the Employer is a member of (a) a controlled group of corporations (as
defined under Code Section 414(b)), (b) a group of trades or businesses (whether
or not incorporated) which are under common control (as defined under Code
Section 414(c)), or (c) an affiliated service group (as defined under Code
Section 414(m)), all service of an Employee for any member of such a group shall
be treated as if it were Service for the Employer for purposes of this Section
2.23.
In addition, all service for any individual who is considered a leased
employee of the Employer under Code Section 414(n) shall be treated as if it
were Service for the Employer for purposes of this Section 2.23. However,
qualified plan contributions or benefits provided by the leasing organization
which are attributable to Services performed for the Employer shall be treated
as provided by the Employer. The provisions of this paragraph shall not apply to
any leased employee if such employee is covered by a money purchase pension plan
maintained by the leasing organization providing: (a) a nonintegrated employer
contribution rate of at least 7-12% of compensation, (b) immediate
participation, and (c) full and immediate vesting. For purposes of this Section
2.23, the term "leased employee" means any person who is not an Employee and
who, pursuant to an agreement
<PAGE>
between the recipient and any other person, has performed services for the
Employer (or for the Employer and related persons determined in accordance
with Code Section 414(n)(6)) on a substantially full-time basis for a
period of at least one year and such services are of a type historically
performed by employees in the business field of the Employer.
2.24 "Integration Level" for a Plan Year shall mean the lesser of the
Social Security Wage Base or the dollar amount specified in the Adoption
Agreement.
2.25 "Integration Rate" for a Plan Year shall mean the lesser of the OASDI
Rate (as in effect on the first day of the Plan Year) or the rate specified in
the Adoption Agreement.
2.26 "Loan Trustee" shall mean the Trustee or, if the Employer has
specified otherwise in the Adoption Agreement, the individual or individuals so
appointed to act as trustees solely for the purpose of administering the
provisions of Section 10 and holding the Trust assets to the extent that they
are invested in loans pursuant to such Section.
2.27 "Nondeductible Voluntary Contributions Account" shall mean the
separate account maintained pursuant to the Section 6.03(b) hereof for
Nondeductible Voluntary Contributions made by the Participant and the income,
expenses, gains and losses attributable thereto.
2.28 "Nondeductible Voluntary Contributions" shall mean all contributions
by Participants which are not Deductible Voluntary Contributions, Rollover
Contributions, or contributions of accumulated deductible employee contributions
made pursuant to Section 4.02(b)(vi) hereof.
2.29 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
earlier of (a) the date selected by the Employer in the Adoption Agreement or,
(b) if the Employer enforces a mandatory retirement age, the first day of the
month in which the Participant reaches that age.
2.30 "OASDI Rate" for a Plan Year shall mean the tax rate applicable, on
the first day of the Plan Year, to employer contributions for old age,
survivors, and disability insurance under the Social Security Act.
2.31 "One-Year Break in Service" shall mean a 12-consecutive-month period
in which an Employee does not complete more than 500 Hours of Service unless the
number of Hours of Service specified in the Adoption Agreement for purposes of
determining a Year of Service is less than 501, in which case a
12-consecutive-month period in which an Employee has fewer than that number of
Hours of Service shall be a One-Year Break in Service. The computation period
over which One-Year Breaks in Service shall be measured shall be the same
computation period over which Years of Service are measured.
2.32 "Owner-Employee" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than 10% of
either the capital or profits interest of a partnership adopting this Plan as
the Employer. Solely for the purposes of Section 10 hereof, Owner-Employee shall
also mean an Employee or officer who owns (or is considered as owning within the
meaning of Code Section 318(a)(1)) on any day during the Year, more than 5% of
the Employer if the Employer is an electing small business corporation.
2.33 "Participant" shall mean an Employee who is eligible to participate in
the Plan under Section 3 (other than, if this Plan is adopted as a
non-standardized plan, a Self-Employed Individual who elects not to be a
Participant in the Plan) and who has not, since becoming a Participant, died,
retired, otherwise terminated employment with the Employer or transferred from
an eligible class to a class of Employees ineligible to participate in the Plan.
2.34 "Plan" shall mean the Prototype Plan and Adoption Agreement.
2.35 "Plan Year" shall mean the fiscal year of the Employer or a different
12-consecutive-month period as specified in the Adoption Agreement.
2.36 "Prototype Plan" shall mean these Sections 1.24.
2.37 "Qualified Election" shall mean a valid waiver of a Qualified Joint
and Survivor Annuity or Qualified Preretirement Survivor Annuity, as the case
may be. To be valid, the waiver must be in writing and Participant's Spouse must
consent to it in writing. The Spouse's consent to the waiver must be witnessed
by a Plan representative or notary public and must be a limited consent to the
provision of a benefit or benefits to a specific alternate person or persons.
Notwithstanding the foregoing consent requirement, if the Participant
establishes to the satisfaction of a Plan representative that such written
consent may not be obtained because there is no Spouse or the Spouse cannot be
located, a waiver will nonetheless be deemed a Qualified Election. Any consent
necessary for a Qualified Election will be valid only with respect to the Spouse
who signs the consent, or in the event of a deemed Qualified Election, the
Spouse whose consent could not be obtained or who could not be located.
Additionally, a revocation of a prior waiver may be made by a Participant
without the consent of the Spouse at any time before the commencement of
distributions or benefits. The number of revocations shall be unlimited, but
each such revocation shall once again make the Qualified Joint and Survivor
Annuity or Qualified Preretirement Survivor Annuity applicable, as the case may
be, and the spouse must consent to any subsequent waiver in accordance with the
requirements of this Section 2.37.
2.38 "Qualified Joint and Survivor Annuity" shall mean, in the case of a
married Participant, an annuity which can be purchased with the Participant's
vested Account balance for the life of the Participant with a survivor annuity
for the life of the Spouse equal to 50% of the amount of the annuity which is
payable during the joint lives of the participant and the Spouse. In the case of
an unmarried Participant, Qualified Joint and Survivor Annuity shall mean an
annuity which can be purchased with a Participant's vested Account balance for
the life of the Participant.
2.39 "Rollover Account" shall mean the separate account maintained pursuant
to Section 6.03(d) hereof for any Rollover Contributions (as described in
Section 4.03 hereof) made by the Participant and the income, expenses, gains and
losses attributable thereto.
2.40 "Rollover Contributions" shall mean contributions made to the Trust by
Participants in accordance with Section 4.03 hereof.
2.41 "Self-Employed Individual" shall mean an Employee who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no Current or Accumulated Earnings and Profits
for the taxable year.
2.42 "Service" shall mean employment by the Employer and, if the Employer
is maintaining the plan of a predecessor employer, or if the Employer is not
maintaining the plan of a predecessor employer but has so elected in the manner
described in Section 2.23 above, employment by such predecessor employer.
2.43 "Social Security Wage Base" for a Plan Year means the maximum amount
of annual earnings which may be considered wages under Code Section 3121(a)(1)
as in effect on the first day of such Plan Year.
2.44 "Sponsor" shall mean any of the organizations (a) which have requested
a favorable opinion letter from the National Office of the Internal Revenue
Service for this Plan or (b) to which a favorable opinion letter for this Plan
has been issued by the National Office of the Internal Revenue Service.
2.45 "Spouse" shall mean the spouse or surviving spouse of the Participant,
provided that a former spouse will be treated as the spouse or surviving spouse
to the extent provided under a Qualified Domestic Relations Order (as described
in Section 16.02 hereinafter).
2.46 "Trust" shall mean the trust established under Section 11 of this Plan
for investment of Trust assets.
2.47 "Trust Fund" shall mean the contributions to the Trust and any assets
into which such contributions shall be invested or reinvested in accordance with
Sections 11.01 and 11.03 of this Plan.
2.48 "Trustee" shall mean the person or persons including any successor or
successors thereto, named in the Adoption Agreement to act as trustee of the
Trust and hold the Trust assets in accordance with Section 11 hereof.
2.49 "Valuation Date" shall mean the last day of each Plan Year.
2.50 "Vesting Years" shall be measured on the 12-consecutive-month period
specified in the Adoption Agreement. A Participant will have a Vesting Year
during such computation period only if the Participant completes the number of
Hours of Service selected in the Adoption Agreement for purposes of computing a
Year of Service. However, notwithstanding the preceding sentence, if the
Employer has so specified in the Adoption Agreement, a Participant who does not
receive credit for a Vesting Year under the preceding sentence will still have a
Vesting Year for each Plan Year for which the Participant shares in the
allocation of Employer contributions for the Plan Year. However, when
determining Vesting Years, unless the Employer has otherwise specified in the
Adoption Agreement, there shall be excluded: (a) if this Plan is a continuation
of an earlier plan which would have disregarded such service, Service before the
first Plan Year to which the Act is applicable; (b) Service after five
consecutive One-Year Breaks in Service (but this exclusion shall apply only for
the purpose of computing the vested percentage of Employer Contributions made
before such five-year period); (c) Service before a period of five One-Year
Breaks in Service, if the Participant has no vested interest in his Employer
Contribution Account at the time of such break and the number of consecutive
One-Year Breaks in Service equals or exceeds the number of Vesting Years
excluded by such break without counting Vesting Years excluded by an earlier
application of this provision; (d) Service before the first Plan Year in which
the Participant attained age 18; (e) Service before the Employer maintained this
Plan or a predecessor plan; and (f) Service before January 1, 1971, unless the
Participant has completed at least three Vesting Years after December 31, 1970.
For the purposes of subsection (a), service disregarded under a prior plan
includes service credits lost because of separation or failure to complete a
required period of service within a specified period of time; such lost service
credits may have resulted in the loss of prior vesting or benefit accruals, or
the denial of eligibility to participate.
2.51 "Year" shall mean the fiscal year of the Employer.
2.52 "Year of Service" shall mean a 12-consecutive-month period, beginning
on an Employee's initial date of employment or an anniversary thereof during
which the Employee completes the number of Hours of Service specified in the
Adoption Agreement. The initial date of employment is the first day on which the
Employee performs an Hour of Service.
SECTION 3.
ELIGIBILITY
3.01 Entry. Each Employee of the Employer, who on the Effective Date of
this Plan meets the conditions specified in the Adoption Agreement, shall become
eligible to participate in the Plan commending with Effective Date. Each other
Employee of the Employer, including future Employees, shall become eligible to
participate in the Plan when the eligibility requirements specified in the
Adoption Agreement are met. For the purposes of this Plan's eligibility
requirements, the exclusion concerning Employees who are covered by collective
bargaining agreements applies to individuals who are covered by a collective
bargaining contract between the Employer and Employee Representatives if
contract negotiations considered retirement benefits in good faith and unless
such contract specifically provides for participation in the Plan. For the
purposes of this Section 3.01, "Employee Representatives" shall mean the
representatives of an employee organization which engages in collective
bargaining negotiations with the Employer, provided that owners, officers and
executives of the Employer do not comprise more than 50% of the employee
organization's membership.
3.02 Interrupted Service. All Years of Service with the Employer are
counted towards eligibility except the following:
(a) If the Employer has specified in the Adoption Agreement that more
than one Year of Service is required before becoming a Participant, and if the
individual has a One-Year Break in Service before satisfying the Plan's
eligibility requirements. Service before such break will not be taken into
account.
(b) For Plan Years beginning before January 1, 1985, in the case of a
Participant who does not
<PAGE>
have any nonforfeitable right to his or her Employer Contributions, Years
of Service before a One-Year Break in Service will not be taken into
account in computing Years of Service for purposes of eligibility if the
number of consecutive One-Year Breaks in Service equals or exceeds the
aggregate number of such Years of Service before such break. Such
aggregate number of Years of Service before such break will not include any
Years of Service disregarded under this subsection (b) by reason of a prior
break in service.
(c) For Plan Years beginning after December 31, 1984, in the case of a
Participant who does not have any nonforfeitable right to his or her Employer
Contributions, Years of Service before a period of consecutive One-Year Breaks
in Service will not be taken into account in computing Years of Service for
purposes of eligibility, if the number of consecutive One-Year Breaks in Service
in such period equals or exceeds the greater of five or the Employee's aggregate
number of such Years of Service before such break. Such aggregate number of
Years of Service before such period will not include any Years of Service
disregarded under this subsection (c) by reason of a prior period of consecutive
One-Year Breaks in Service.
3.03 Reentry. If a former Participant either (a) had a nonforfeitable right
to all or a portion of his or her Employer Contribution Account at the time of
termination from Service or (b) did not have any nonforfeitable right to his or
her Employer Contribution Account but does not have Service prior to the break
in Service disregarded by operation of Section 3.02(b) or (e) hereof, such
former Participant shall become a Participant immediately upon return to the
employ of the Employer as a member of an eligible class of Employees.
3.04 Transfer to Eligible Class. In the event an Employee is not a member
of an eligible class of Employees becomes a member of an eligible class, such
Employee shall participate immediately if such Employee has satisfied the
minimum age and Service requirements and would have previously become a
Participant had he or she been a member of an eligible class through the period
of employ with the Employer.
3.05 Determination by Administrator. Eligibility shall be determined by the
Administrator and the Administrator shall notify each Employee upon his or her
admission as a Participant in the Plan.
SECTION 4.
CONTRIBUTIONS
4.01 Employer Contributions and Allocation
(a) Profit Sharing Plan. If the Employer has adopted this Plan as a
profit sharing plan, the following provisions shall apply:
(i) Contribution.
(A) Subject to Requirements of subparagraphs (B) and (C)
below, beginning in the Plan Year in which the Plan is adopted, and for each
Plan Year thereafter, the Employer will contribute the amount determined by it,
in its discretion, for the Plan Year in question.
(B) Subject to the requirements of subparagraph (C) below,
during any Plan Year in which the Employer has elected to provide Employer
thrift matching contributions in the Adoption Agreement, the Employer shall
contribute at least the aggregate amount specified in the Adoption Agreement.
(C) During a Plan Year, the aggregate Employer Contributions
made pursuant to this Section 4.01(a)(i) may not exceed the lesser of (I) the
Employer's Current or Accumulated Earnings and Profits for the Plan Year or (II)
15% (or such larger percentage as may be permitted by the Code as a current
deduction to the Employer with respect to any Plan Year) of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid to, or accrued by the Employer for,
Participants for that Plan Year plus any unused credit carryovers from previous
Plan Years. For this purpose, a "credit carryover" is the amount by which
Employer Contributions for a previous Plan Year were less than 15% of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid or accrued by the Employer to
Participants for such Plan Year, but such unused credit carryover shall in no
event permit the Employer Contributions for a Plan Year to exceed 25% (or such
larger percentage as may be permitted by the Code as a deduction to the
Employer) of the total Compensation (disregarding any exclusions from
Compensation specified by the Employer in the Adoption Agreement) paid to, or
accrued for, Participants by the Employer for the Plan Year in question.
(ii) Allocation Under Non-Integrated, Profit Sharing Plan. If the
Employer has adopted this Plan as a profit sharing plan under which allocations
shall be made on a non-integrated basis, Employer Contributions, plus any
forfeitures under Section 7.02, for a Plan Year shall be allocated according to
the provisions of this subsection (ii) as of the Valuation Date for such Plan
Year.
(A) Subject to the terms of subparagraph (B) below, unless
the Employer has specified otherwise in the Adoption Agreement, such amount
shall be allocated among the Employer Contribution Accounts of all Participants
and former Participants who were employed by the Employer during the Plan Year.
If the Employer has specified in the Adoption Agreement that a minimum number of
Hours of Service are necessary to share in the allocation of Employer
Contributions and forfeitures for a Plan Year in which the Plan is not Top
Heavy. Participants and former Participants, as the case may be, who fail to
complete the required number of Hours of Service during such a Plan Year shall
not share in the allocation. If the Employer has so specified in the Adoption
Agreement, Employer Contributions and forfeitures shall be allocated only among
otherwise entitled Participants who are employed by the Employer on such
Valuation Date. Employer Contributions and forfeitures shall be allocated to
Participants entitled to share in the allocation of Employer Contributions and
forfeitures for that Plan Year in proportion to their Compensation for such Plan
Year.
(B) Notwithstanding the provisions of subparagraph (A) above
but nonetheless subject to the provisions of Section 21.03 below, during any
Plan Year in which the Employer has elected to provide Employer thrift matching
contributions in the Adoption Agreement and the Plan is not a Top-Heavy Plan.
Employer Contributions and forfeitures shall be allocated in proportion to the
percentage of Participants' Nondeductible Voluntary Contributions as specified
in the Adoption Agreement.
(iii) Allocation Under Integrated, Profit Sharing Plan. If the
Employer has adopted this Plan as a profit sharing plan under which allocations
shall be made on an integrated basis. Employer Contributions, plus any
forfeitures under Section 7.02, for a Plan Year shall be allocated according to
the provisions of this subsection (iii) as of the Valuation Date for such Plan
Year. Unless the Employer has specified otherwise in the Adoption Agreement,
such amount shall be allocated among all Participants and former Participants
who were employed by the Employer during the Plan Year. If the Employer has
specified in the Adoption Agreement that a minimum number of Hours of Service
are necessary to share in the allocation of Employer Contributions and
forfeitures for a Plan Year in which the Plan is not Top Heavy, Participants and
former Participants, as the case may be, who fail to complete the required
number of Hours of Service during such a Plan Year shall not share in the
allocation. If the Employer has so specified in the Adoption Agreement, Employer
Contributions and forfeitures shall be allocated only among otherwise entitled
Participants who are employed by the Employer on such Valuation Date. Employer
Contributions and forfeitures shall be allocated to Participants entitled to
share in the allocation of Employer Contributions and forfeitures for that Plan
Year as follows:
(A) First, Employer Contributions and forfeitures will be
allocated to the Employer Contribution Account of each Participant entitled to
share in the allocation of such amounts in the ratio that each such
Participant's Compensation for the Plan Year in excess of the Integration Level
bears to the Compensation in excess of the Integration Level for all such
Participants, provided that the amount so credited to any such Participant's
Employer Contribution Account for the Plan Year shall not exceed the product of
the Integration Rate times the Participant's Compensation in excess of the
Integration Level.
(B) Next, any remaining Employer Contributions or
forfeitures will be allocated to the Employer Contribution Accounts of all
Participants entitled to share in the allocation of the Employer Contributions
for the Plan Year in the ratio that each such Participant's Compensation for the
Plan Year bears to all such Participants' Compensation for that Plan Year.
(b) Money Purchase Pension Plan. If the Employer has adopted this Plan
as a money purchase pension plan, the Employer will, beginning for the Plan Year
in which the Plan is adopted, and for each Plan Year thereafter, contribute, for
allocation to the Employer Contribution Account of each Participant entitled to
share in the allocation of Employer Contributions, the amount specified in the
Adoption Agreement reduced by any forfeitures arising during the preceding Plan
Year pursuant to Section 7.02 hereafter.
(i) Unless the Employer has specified otherwise in the Adoption
Agreement, the amount of the Employer Contribution shall be calculated on the
basis of the Compensation of all Participants and former Participants who were
employed by the Employer during the Plan Year. If the Employer has specified in
the Adoption Agreement that a minimum number of Hours of Service are necessary
to receive an Employer Contribution in a Plan Year in which the Plan is not Top
Heavy, Participants and former Participants, as the case may be, who fail to
complete the required number of Hours of Service during such a Plan Year shall
not be considered when calculating the amount of the Employer Contribution. If
the Employer has so specified in the Adoption Agreement, only Participants who
are employed by the Employer on such Valuation Date and who are otherwise
entitled to receive an allocation shall be considered when calculating the
amount of the Employer Contribution. Employer Contributions shall be allocated
to the Employer Contribution Accounts of only those Participants who were
included in the calculation of the amount of the Employer Contribution.
(ii) To the extent that the Employer Contribution for a Plan Year
is reduced by forfeitures, such forfeitures shall be added to such Employer
Contribution and allocated as a part thereof.
(iii) Any excess forfeitures not allocated pursuant to this
Section 4.01(b) shall be carried over to future Plan Years.
4.02 Participant Contributions. If, in the Adoption Agreement, the Employer
has specified that Participants may make either Deductible Voluntary
Contributions or Nondeductible Voluntary Contributions, or both, a Participant
may make such permitted contributions to his or her Account; provided, however,
that a Participant's right to make such contribution(s) shall be subject to the
conditions and limitations specified below.
(a) The following conditions and limitations shall apply if the
Employer has specified that Participants may make Nondeductible Voluntary
Contributions:
(i) The aggregate amount of a Participant's Nondeductible
Voluntary Contributions, plus any nondeductible voluntary contributions he or
she makes under any other qualified retirement plan maintained by the Employer,
shall not exceed 10% of his or her Compensation (disregarding any exclusions
from Compensation specified by the Employer in the Adoption Agreement) for the
period in which he or she has been a Participant in the Plan.
(ii) The aggregate amount of a Participant's Nondeductible
Voluntary Contributions shall not cause the Annual Addition (as defined in
Section 5.05(a) hereof) to his or her Account to exceed the limitations set
forth in Section 5.
(iii) A Participant's Nondeductible Voluntary Contributions shall
be allocated to his or her Nondeductible Voluntary Contribution Account under
Section 6.03 hereof.
(iv) A Participant's Nondeductible Voluntary Contribution Account
shall be nonforfeitable and the Participant may withdraw all or a portion of his
or her Nondeductible Voluntary Contribution Account upon 30 days' written notice
to the Administrator.
(b) The following conditions and limitations shall apply if the
Employer has specified that the Participants may made Deductible Voluntary
Contributions:
(i) The aggregate amount of a Participant's Deductible Voluntary
Contributions in any calendar year may not exceed the lesser of (1) $2,000 or
(2) the Participant's compensation for calendar year for which the contribution
is made. Compensation for this purpose means all wages, salaries, earned income
and other amounts received or derived from
<PAGE>
personal services actually rendered and includible in gross income, but does not
include amounts derived from or received as earnings or profits from property or
amounts received as a pension or annuity or as deferred compensation. This
limitation applies to all the Participant's Deductible Voluntary Contributions
made for the calendar year to all qualified retirement plans maintained by the
Employer. The Administrator shall not accept any contributions in excess of this
limitation.
(ii) A Participant may not make Deductible Voluntary
Contributions for the calendar year in which he or she attains age 70-1/2 or any
calendar year thereafter.
(iii) A Deductible Voluntary Contribution will be considered
contributed for the calendar year in which it is actually made. However, if a
Participant makes a Deductible Voluntary Contribution on or before April 15, he
or she may notify the Administrator at the time the Deductible Voluntary
Contribution is made that it is made for the preceding calendar year. A
Deductible Voluntary Contribution may only be made for a calendar year in which
the Employee was a Participant, and in no event may a Deductible Voluntary
Contribution be made by an Employee after he or she has ceased to be a
Participant.
(iv) All Participant Contributions will be considered to be
Deductible Voluntary Contributions, unless the Employer has elected in the
Adoption Agreement to allow Nondeductible Voluntary Contributions and the
Participant designates before April 15 of the calendar year following the
calendar year in which the contribution was made that the contribution was a
Nondeductible Voluntary Contribution. In such a case, the contribution will be
considered to have been a Nondeductible Voluntary Contribution made during the
calendar year in which it was contributed.
(v) A Participant's Deductible Voluntary Contributions must be in
cash and shall be allocated to his or her Deductible Voluntary Contribution
Account under Section 6.03 hereof.
(vi) A Participant's right to his or her Deductible Voluntary
Contribution Account shall be nonforfeitable and the Participant may withdraw
all or a portion of his or her Deductible Voluntary Contribution Account upon
written application to the Administrator. However, if at the time the
Participant receives the withdrawal, he or she has not attained age 59-1/2 and
is not disabled, the Participant will be subject to a federal income tax penalty
unless, within 60 days of the date he or she receives it, he or she rolls over
the amount withdrawn to an individual retirement plan or, if the Participant can
satisfy the requirement contained in section 4.03(b) below, a qualified
retirement plan.
(vii) The Administrator may, in its discretion, accept
accumulated deductible employee contributions (as defined in Code Section
72(o)(5)) that were distributed from a qualified retirement plan and rolled over
pursuant to Code Sections 402(a)(5), 402(a)(7), 403(a)(4), or 408(d)(3). The
rolled over amount will be added to the Participant's Deductible Voluntary
Contribution Account, but will not be taken into account in applying the
restrictions specified in Section 4.02(b)(i) and (ii) above. In no case may the
Administrator authorize the Plan to accept rollovers of accumulated deductible
employee contributions from a qualified plan to which a contribution was made
for the Participant while the plan was a Top-Heavy Plan (as defined in Section
21.02(b) hereof and applied to such other plan) and the Participant was a Key
Employee (as defined in Section 21.02(a) hereof and applied to such other
employer).
4.03 Rollover Contributions. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express request of
the Participant wishing to make such Rollover Contribution, the same to be held,
administered and distributed by the Trustee in accordance with the terms of this
Plan, provided that the Trustee consents if the contribution includes property
other than cash. A Rollover Contribution shall only be a contribution, comprised
of money and/or property, which is a "rollover amount" within the meaning of
Code Section 402(a)(5) or a "rollover contribution" within the meaning of Code
Section 408(d)(3)(A)(ii) (as modified by Code Section 408(d)(3)(C)) with respect
to which both of the following conditions are met:
(a) The transfer of such amount is being made within 60 days of its
receipt by the Participant and
(b) No part of such amount is attributable to contributions made on
behalf of the Participant while he or she was a Key Employee (as defined in
Section 21.02(a) and applied to such other employer) in a Top-Heavy Plan (as
defined in Section 21.02(b) and applied to such other plan).
All Rollover Contributions made under this Section 4.03 must be accepted by
the Trustee within the 60-day period referred to in paragraph (a) above. A
Participant's Rollover Contribution shall at no time be included in the
computation of the maximum allocation to a Participant's Account as set forth in
Section 5 hereof. Each Rollover Contribution made by a Participant shall be
allocated to his or her Rollover Account pursuant to Section 6.03(d) hereof.
Such Rollover Account shall be invested by the Trustee as part of the Trust
Fund, pursuant to Section 11 hereafter, except as it may be held in kind as
permitted above. A Participant may withdraw all or a portion of his or her
Rollover Account upon 30 days' written notice to the Administrator. However, if
the Participant is, or has been, a 5-percent owner (as defined in Code Section
416(i)(1)(B)(i)) and at the time of the withdrawal, he or she has not attained
age 59-1/2 and is not disabled, the Participant will be subject to a federal
income tax penalty unless, within 60 days of the date he or she receives it, he
or she rolls the amount withdrawn to an individual retirement plan or, if the
Participant can satisfy the requirement contained in subsection (b) above, a
qualified retirement plan.
4.04 Transfers from other Qualified Plans. The Administrator may, in its
discretion, direct the Trustee to accept the transfer of any assets held for the
Participant's benefit under a qualified retirement plan of a former employer of
such Participant. Such a transfer shall be made directly between the trustee or
custodian of the former employer's plan and the Trustee in the form of cash or
its equivalent, and shall be accompanied by written instruction showing
separately the portion of the transfer attributable to contributions by the
former employer and by the Participant respectively. Separate written
instructions delivered to the Administrator shall identify the portion of the
transferred funds, if any, attributable to any period during which the
Participant participated in a defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus plan or profit sharing plan which
would otherwise have provided a life annuity form of payment to the Participant.
The Administrator shall be entitled to rely on all inclusions and commissions in
such written instructions with respect to character of the transferred funds. To
the extent that the amount transferred is attributable to contributions by the
former employer, it shall be maintained in a separate transfer account. To the
extent that the amount transferred is attributable to contributions by the
Participant, it shall be maintained in the Participant's Nondeductible Voluntary
Contribution Account or Deductible Voluntary Contribution Account as is
appropriate.
SECTION 5.
CODE SECTION 415
LIMITATIONS ON ALLOCATIONS
5.01 Employers Maintaining No Other Plan.
(a) If a Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit fund (as defined in
Code Section 419(e)) maintaned by the Employer, the amount of the Annual
Addition which may be credited to the Participant's Account for any Limitation
Year shall not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in the Plan.
(b) If the Employer Contribution that would otherwide be allocated to
a Participant's Account would cause the Annual Addition for the Limitation Year
to exceed the Maximum Permissible Amount, the amount allocated will be reduced
so that any Excess Amount shall be eliminated and, consequently, the Annual
Addition for the Limitation Year will equal the Maximum Permissible Amount.
(i) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly determined for all
Participants similarly situated.
(ii) As soon as is administratively feasible after the end of
each Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of Participants' actual Compensation for the
Limitation Year.
(c) Any Excess Amount shall be eliminated pursuant to the following
procedure:
(i) The portion of the Excess Amount consisting of Nondeductible
Voluntary Contributions which are a part of the Annual Addition (as defined in
Section 5.05(a)) shall be returned to the Participant as soon as
administratively feasible;
(ii) If after the application of subparagraph (i) an Excess
Amount still exists and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's Account will be used to
reduce Employer Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary.
(iii) If after the application of subparagraph (i) an Excess
Amount still exists and the Participant is not covered by the Plan at the end of
the Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce proportionally future
Employer Contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary. If a suspense account is in existence at any time
during the Limitation Year pursuant to this subparagraph, it will not
participate in the allocation of the Trust's investment gains and losses. In the
event of termination of the Plan, the suspense account shall revert to the
Employer to the extent it may not then be allocated to any Participant's
Account.
(d) Notwithstanding any other provision in subsections (a) through
(c), the Employer shall not contribute any amount that would cause an allocation
to the suspense account as of the date the contribution is allocated.
5.02 Employers Maintaining Other Master or Prototype Defined Contribution
Plans
(a) This Section 5.02 applies if, in addition to this Plan, a
Participant is covered under another qualified Master or Prototype defined
contribution plan or a welfare benefit fund (as defined in Code Section 419(e))
maintained by the Employer during any Limitation Year. The Annual Addition which
may be allocated to any Participant's Account for any such Limitation Year shall
not exceed the Maximum Permissible Amount, reduced by the sum of any portion of
the Annual Addition credited to the Participant's account under such other plans
and welfare benefit funds for the same Limitation Year.
(b) If the Annual Addition with respect to a Participant under other
defined contribution plans and welfare benefit funds maintained by the Employer
of what would be portions of the Annual Addition (if the allocations were made
under the Plan) are less than the Maximum Permissible Amount and the Employer
Contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Addition for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Addition under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount.
(c) If the Annual Addition with respect to the Participant under such
other defined contribution plans and welfare benefit funds in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for the
Limitation Year.
(d) If an Excess Amount was allocated to a Participant under this Plan
on a date which coincides with the date an allocation was made under another
plan, the Excess Amount attributed to this Plan will be the product of,
(i) The total Excess Amount allocated as of such date, multiplied
by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
(B) the total Annual Addition allocations to the Participant
for the Limitation Year as of such date under this and all other qualified
Master or Prototype defined contribution plans maintained by the Employer.
(e) Any Excess Amount attributed to the Plan will be disposed in the
manner described in Section 5.01.
<PAGE>
5.03 Employers Maintaining Other Defined Contribution Plans. If a
Participant is covered under another qualified defined contribution plan which
is not a Master or Prototype plan, the Annual Addition credited to the
Participant's Account under this Plan for any Limitation Year will be limited in
accordance with the provisions of Section 5.02 as though the plan were a Master
or Prototype Plan, unless the Employer provides other limitations pursuant to
the Adoption Agreement.
5.04 Employers Maintaining Defined Benefit Plans. If the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering
any Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. The Annual Addition which may be credited to the Participant's
Account under this Plan for any Limitation Year will be limited in accordance
with the provisions of Section 5.02, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.05 Definitions. For purposes of this Section 5, the following terms shall
be defined as follows:
(a) Annual Addition. With respect to any Participant, the "Annual
Addition" shall be the sum of the following amounts credited to a Participant's
Account for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) the lesser of
(A) one-half (1/2) the allocated Nondeductible Voluntary
Contributions or
(B) the amount of allocated Nondeductible Voluntary
Contributions in excess of 6% of the Participant's Compensation for the
Limitation Year.
Any Excess Amount applied under Section 5.01(c)(ii) or (iii) or Section
5.02(e) in a Limitation Year to reduce Employer Contributions will be considered
part of the Annual Addition for such Limitation Year. Amounts allocated, after
March 31, 1984, to an individual medical account (as defined in Code Section
415(l)(1)) which is part of a defined benefit plan maintained by the Employer,
are treated as part of the Annual Addition. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a Key Employee (as defined in Section
21.02(a) hereof) under a welfare benefit fund (as defined in Code Section
419(e)) maintained by the Employer, are treated as part of the Annual Addition.
(b) Compensation. For the purposes of this Section 5, a Participant's
"Compensation" shall include any earned income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred compensation
which are not includible in the Participant's gross income for the taxable year
in which contributed, or Employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the Participant,
or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock
option, or when restricted property held by the Participant either becomes
freely transferable or is no longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(iv) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary-reduction
agreement) towards the purchase of an annuity described in Code Section 403(b)
(whether or not the amounts are actually excludable from the gross income of the
Participant).
For purposes of applying the limitations of this Section 5, Compensation
for a Limitation Year is the Compensation actually paid or includible in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
profit sharing plan who is permanently and totally disabled (as defined in Code
Section 22(e)(3)) is the Compensation such Participant would have received for
the Limitation Year if the Participant was paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; such imputed
compensation for the disabled Participant may be taken into account only if the
Participant is not an officer, an owner, or highly compensated, and
contributions made on behalf of such a Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit Fraction" shall be
a fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125%
of the dollar limitation in effect for the Limitation Year under Code Section
415(b)(1)(A) or 140% of the Participant's Highest Average Compensation.
Notwithstanding the above, if the Participant was a participant in one or
more defined benefit plans maintained by the Employer which were in existence on
July 11, 1982, the denominator of this fraction will not be less than 125% of
the sum of the annual benefits under such plans which the Participant had
accrued as of the later of the end of the last Limitation Year beginning before
January 1, 1983. The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the requirements of Code
Section 415 as in effect at the end of the 1982 Limitation Year. For purposes of
this paragraph, a Master or Prototype plan with an opinion letter issued before
January 1, 1983, which was adopted by the Employer on or before June 30, 1983,
is treated as a plan in existence on July 1, 1982.
(d) Defined Contribution Fraction. The "Defined Contribution Fraction"
shall be a fraction, the numerator of which is the sum of the Annual Additions
to the Participant's account under all the defined contribution plans (whether
or not terminated) maintained by the Employer for the current and all prior
Limitation Years, (including the Annual Additions attributable to the
Participant's nondeductible employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer, and the Annual Additions
attributable to all welfare benefit funds (as defined in Code Section 419(e))),
and the denominator of which is the sum of the Maximum Aggregate Amounts for the
current and all prior Limitation Years of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
Maximum Aggregate Amount in any Limitation Year is the lesser of 125% of the
dollar limitation in effect under Code Section 415(c)(1)(A) or 35% of the
Participant's Compensation for such year.
If a Participant was a participant in one or more defined contribution
plans maintained by the Employer which were in existence on July 1, 1982, the
numerator of this fraction will be adjusted if the sum of this Defined
Contribution Fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to the
product of
(i) The excess of the sum of the fractions over 1.0, multiplied
by
(ii) the denominator of this Defined Contribution Fraction.
will be permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as
of the later of the end of the last Limitation Year beginning before
January 1, 1983 or September 30, 1983. This adjustment also will be made
if at the end of the last Limitation Year beginning before January 1, 1984,
the sum of the fractions exceeds 1.0 because of the accruals or additions
that were made before the limitations of this Section 5 became effective to
any plans of the Employer in existence on July 1, 1982. For purposes of
this paragraph, a Master or Prototype plan with an opinion letter issued
before January 1, 1983, which is adopted by the Employer on or before
September 30, 1983, is treated as a plan in existence on July 1, 1982.
(e) Employer. "Employer" means the Employer that adopts this Plan and
all members of (i) a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)), (ii) commonly controlled
trades or businesses (whether or not incorporated) (as defined in Code Section
414(c) as modified by Code Section 415(h)), or (iii) affiliated service groups
(as defined in Code Section 414(m)) or which the Employer is a part.
(f) Excess Amount. The "Excess Amount" is the excess of what would
otherwise by a Participant's Annual Addition for the Limitation Year over the
Maximum Permissible Amount. If at the end of a Limitation Year when the Maximum
Permissible Amount is determined on the basis of the Participant's actual
Compensation for the year, an Excess Amount results, the Excess Amount will be
deemed to consist of the portion of the Annual Addition last allocated, except
that the portion of the Annual Addition attributable to a welfare benefit fund
will be deemed to have been allocated first regardless of the actual allocation
date.
(g) Highest Average Compensation. A Participant's "Highest Average
Compensation" is his or her average Compensation for the three consecutive Years
of Service with the Employer that produces the highest average. A Year of
Service with the Employer is the 12-consecutive-month period defined in Section
2.52 of the Plan.
(h) Limitation Year. A "Limitation Year" is the Plan Year or any other
12-consecutive-month period specified by the Employer in the Adoption Agreement.
All qualified plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different 12-consecutive-month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(i) Master or Prototype Plan. A "Master or Prototype" plan is a plan
the form of which is the subject of a favorable opinion letter from the Internal
Revenue Service.
(j) Maximum Permissible Amount. For a Limitation Year, the "Maximum
Permissible Amount" with respect to any Participant shall be the lesser of
(i) $30,000 (or beginning January 1, 1988, such larger amount
determined by the Commissioner of Internal Revenue for the Limitation Year) or
(ii) 25% of the Participant's Compensation for the Limitation
Year.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive-month period, the Maximum
Permissible Amount will not exceed the quotient determined by first multiplying
$30,000 by the number of months in the short Limitation Year and then dividing
the product by 12.
(k) Projected Annual Benefit. The "Project Annual Benefit" is the
annual retirement benefit (adjusted to an actuarilly equivalent straight life
annuity if such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the Participant would
be entitled under the terms of the plan assuming:
(i) the Participant will continue employment until normal
retirement date under the plan (or current age, if later), and
(ii) the Participant's compensation for the current Limitation
Year and all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
SECTION 6.
TIME AND MANNER OF MAKING
CONTRIBUTIONS
6.01 Manner. Unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one or
more installments.
6.02 Time. Employer Contributions and Participant Contributions with
respect to a Plan Year shall be made before the time limit, including extensions
thereof, for filing the Employer's federal income tax returns for the Year with
or within which the particular Plan Year ends (or such later time as is
permitted by regulations authorized by the Secretary of the Treasury or
delegate). Rollover Contributions may be made at any time acceptable to the
Administrator in accordance with Section 4.0 hereof. All contributions shall be
paid to the Administrator for transfer to the Trustee, as soon as possible, or,
if acceptable to the Administrator and the Trustee, such contributions may be
paid directly to the Trustee. The Administrator shall transfer such
contributions to the Trustee as soon as possible. The
<PAGE>
Administrator may establish a payroll deduction system or other procedure to
assist the making of Participant Contributions to the Trust, and the
Administrator may from time to time adopt rules or policies governing the manner
in which such contributions may be made so that the Plan may be conveniently
administered.
6.03. Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a) Employer Contributions;
(b) Nondeductible Voluntary Contributions, if selected in the Adoption
Agreement;
(c) Deductible Voluntary Contributions, if selected in the Adoption
Agreement;
(d) Rollover Contributions, if, pursuant to Section 4.03 hereof, the
Administrator directs the Trustee to accept such contributions; and
(e) funds directly or indirectly transferred from another qualified
retirement plan pursuant to Section 4.04 hereof, if the Administrator directs
the Trustee to accept such transfers.
In addition, pursuant to Section 7.02(d) and (f) hereof, separate accounts
will be maintained for the pre-break and postbreak Employer Contributions made
on behalf of a Participant who has Service excluded from the calculations of
Vesting Years pursuant to Section 2.50(b) or (c). Notwithstanding the above, if
a Participant's rights to Employer Contributions are immediately and fully
nonforfeitable, Employer Contributions allocated on behalf of such Participant
and his or her Nondeductible Voluntary Contributions may be maintained in a
single account.
SECTION 7.
VESTING
7.01 When Vested. A Participant shall always have a fully vested and
nonforfeitable interest in his or her Nondeductible Voluntary Contribution
Account, Deductible Voluntary Contribution Account and Rollover Account, and any
transfer account established pursuant to Section 4.04 hereof on his or her
behalf. A Participant's interest in his or her Employer Contribution Account
shall be vested and nonforfeitable at Normal Retirement Date, death, Disability,
upon termination (including a complete discontinuance of Employer Contributions)
or partial termination of the Plan and otherwise only to the extent specified in
the Adoption Agreement.
7.02 Forfeitures. If a Participant's employment with the Employer is
terminated before his or her Employer Contribution Account is fully vested in
accordance with Section 7.01 hereof, this Section 7.02 shall apply.
(a) If the Participant completes a period of five consecutive One-Year
Breaks in Service before returning to employment with the Employer, dying or
becoming disabled, the portion of the Participant's Employer Contribution
Account which was not vested at the time of his or her termination shall be
forfeited and
(i) if this Plan is adopted as a profit sharing plan, allocated
exclusively as of the next Valuation Date in the same manner, and to the same
Participants' Employer Contribution Accounts as the Employer Contribution for
that Plan Year is allocated pursuant to Section 4.01 hereof, or
(ii) if this Plan is adopted as a money purchase pension plan,
applied exclusively to reduce the Employer Contributions for the next Plan Year.
(b) No forfeitures shall occur solely as a result of withdrawal of
Deductible Voluntary Contributions, Nondeductible Voluntary Contributions,
Rollover Contributions or amounts held in a transfer account.
(c) Following a forfeiture, the Participant shall be fully vested in
all funds which remain in his or her Employer Contribution Account immediately
after the forfeiture and in all Trust earnings subsequently attributed to such
funds.
(d) If the Participant is reemployed by the Employer after he or she
completes five consecutive One-Year Breaks in Service, an additional Employer
Contribution Account shall be maintained on the Participant's behalf; provided
that, at a subsequent time, the Trustee shall have the discretionary authority
to combine any number of Employer Contribution Accounts maintained for a
Participant, so long as the Participant is 100% vested in each combined account.
All subsequent Employer Contributions made on the Participant's behalf shall be
credited to the Employer Contribution Account which was established at the time
of his or her return to employment with the Employer. The extent to which the
Participant is vested in any additional Employer Contribution Accounts
established on his or her behalf shall be determined independently of any
determination of the extent to which the Participant is vested in any previously
established Employer Contribution Account(s); all such determinations shall be
made in accordance with the provisions in Section 2.50 above.
(e) If the Participant has received a distribution from his or her
Employer Contribution Account pursuant to Section 9 hereof and if the
Participant is reemployed by the Employer before he or she completes five
consecutive One-Year Breaks in Service, the portion of the Employer Contribution
Account which is then vested shall be determined by adding to the then value of
the Employer Contribution Account, the amount, if any, previously distributed
and not repaid to the Trust, applying the vesting percentage then applicable,
and then subtracting the amount previously distributed and not repaid to the
Trust.
(f) Each Employer Contribution Account established pursuant to
subsection (d) hereof (or such Employer Contribution Account into which the
Trustee has combined the accounts pursuant to all powers granted to it in
subsection (d) hereof) shall be credited with its proportionate share of Trust
earnings and losses. For the purposes of the remaining Sections of this Plan,
all Employer Contribution Accounts established in the name of a Participant
shall be treated as a single account.
SECTION 8.
DISTRIBUTION UPON DEATH
8.01 Qualified Preretirement Survivor Annuity. If this Plan is adopted as a
money purchase pension plan, unless an optional form of distribution has been
selected within the Election Period pursuant to a Qualified Election, if a
Participant's Service terminates because of death before distributions have
commenced, then the Trustee shall, upon the direction of the Administrator,
apply 50% of the Participant's vested Account balance toward the purchase of an
annuity contract for the life of the Spouse.
8.02 Other Distributions at Death. If the Participant dies after he or she
has begun to receive distributions pursuant to Section 9.01 or 9.03(b), this
Section 8.02 shall apply with respect to the Participant's entire Account. With
respect to any Account, or portion thereof, to which Section 8.01 did not apply,
if the Participant dies before he or she has begun to receive distributions
pursuant to Sections 9.01 and 9.03(b), this Section 8.02 shall apply with
respect to such Account, or portion thereof. With respect to a portion of the
Participant's Account to which Section 8.01 did apply, if the Participant made a
Qualified Election within the Election Period not to receive a Qualified
Preretirement Survivor Annuity at his or her death and the Participant's Service
terminates because of death before distributions have commenced, this Section
8.02 shall apply with respect to such portion of the Participant's Account.
(a) With respect to any Account of portion thereof to which this
Section 8.02 applies the Trustee shall, at the direction of the Administrator,
distribute the Participant's Account in accordance with the provisions of this
Section 8.02. The Administrator's direction shall include notification of the
Participant's or Beneficiary's death and the existence or non-existence of a
surviving spouse.
(b) If the Participant has validly named a Beneficiary or
Beneficiaries in the most recent Designation of Beneficiary form filed with
Trustee before the Participant's death in compliance with Section 15, his or her
Account shall be distributed to the Beneficiary or Beneficiaries so named. To
the extent that any portion of an Account of a deceased Participant is not
governed by an effective Designation of Beneficiary form which names at least
one living Beneficiary, that portion of the Account shall be distributed to the
deceased Participant's Spouse or if that is not possible, to the estate of the
deceased Participant.
(c) If the Participant has validly elected a manner of distribution
with respect to his or her Account, his or her Account shall be distributed in
accordance with such election. With respect to any portion of a deceased
Participant's Account for which the Participant has not validly elected a manner
of distribution, distribution shall be made in such manner as the Participant's
Beneficiary (or Beneficiaries) may elect, or in the absence of such an election,
in a lump sum.
(d) Distribution to the Participant's Beneficiary shall be made
according to the following provisions:
(i) If the Participant dies before benefits commence and during a
Plan Year which began after December 31, 1984, and if the Spouse is not the
Beneficiary, the Participant's entire Account balance must be distributed to the
Participant's Beneficiary either (A) within five years after the Participant's
death, or (B) in substantially equal annual or more frequent installments over a
period not exceeding the life expectancy of the Beneficiary (as determined as of
the date of the Participant's death by using the return multiples contained in
section 1.72-9 of the Treasury Regulations) provided that such distributions
commence within one year after the Participant's death.
(ii) If the Participant dies before benefits commence and during
a Plan Year which begins after December 31, 1984, and if the Spouse is the
Beneficiary, the Participant's entire Account balance must be distributed to the
Participant's Spouse either (A) within five years after the Participant's death,
or (B) in substantially annual or more frequent installments over a period not
longer than the Spouse's life expectancy (as determined as of the time
distribution is commenced and recalculated annually, by using the return
multiples contained in section 1.72-9 of the Treasury Regulations) provided that
such distribution is commenced on or before the later of the date on which the
Participant would have attained age 70-1/2 or one year after the Participant's
death.
(iii) If distributions have commenced to the Participant before
the Participant's death, distributions to the Participant's Spouse, Beneficiary
or estate shall continue over a period at least as rapid as the period selected
by the Participant.
(e) If a Participant's Beneficiary dies after the Participant and
before he or she receives full payment of the portion of the Participant's
Account balance to which he or she is entitled, the Trustee shall, upon
direction of the Administrator, distribute the funds to which the deceased
Beneficiary is entitled to the beneficiary or beneficiaries validly named on the
most recent designation of beneficiary form filed by the Beneficiary with the
Trustee before the Beneficiary's death. To the extent that any portion of the
funds to which the deceased Beneficiary was entitled are not governed by an
effective designation of beneficiary, the funds shall be distributed to the
deceased Beneficiary's surviving spouse, or if that is not possible, to the
estate of the deceased Beneficiary. The Administrator's direction shall include
notification of the Beneficiary's death and the existence or non-existence of a
surviving spouse.
(i) If distributions had commenced before the Participant's
death, distribution to the beneficiary of a deceased Beneficiary shall continue
over a period at least as rapid as the period selected by the Participant.
(ii) If the deceased Beneficiary was the surviving Spouse of the
Participant and the deceased Beneficiary had not begun to receive distributions
from the Participant's Account at the time of his or her death, the
Participant's Account shall be distributed to the deceased Beneficiary's
beneficiary according to the provisions of this Section 8.02 applied as if the
Beneficiary were the Participant. In addition, the surviving spouse's
beneficiaries shall be treated as Beneficiaries during any future application
of this Section 8.02.
(iii) If neither subparagraph (i) nor (ii) above apply, the
Participant's Account shall be distributed to the deceased Beneficiary's
beneficiary either (A) within five years after the Participant's death, or (B)
in substantially equal annual or more frequent installments over the remainder
of the life expectancy of the Beneficiary as that life expectancy was determined
at the Participant's death (by using the return multiples contained in section
1.72-9 of the Treasury Regulations) provided that distributions commence (or
commenced) within one year of the Participant's death.
(f) If a beneficiary of a Beneficiary (or a beneficiary) dies before
he or she has received full payment of the portion of the Participant's Account
balance to which he or she is entitled, the Trustee shall, after notification by
the Administrator of the beneficiary's death, distribute the funds to which the
deceased beneficiary is entitled to the beneficiary or beneficiaries validly
<PAGE>
named on the most recent designation of beneficiary form filed by the deceased
beneficiary with the Trustee before the beneficiary's death. To the extent that
any portion of the funds to which the deceased beneficiary was entitled are not
governed by an effective designation of beneficiary, the funds shall be
distributed to the deceased beneficiary's surviving spouse, or if that is not
possible, to the estate of the deceased beneficiary.
(i) If distributions had commenced before the Participant's
Death, distribution to the beneficiary of a deceased Beneficiary shall continue
over a period at least as rapid as that selected by the Participant.
(ii) In all other cases, the Participant's Account shall be
distributed to the deceased beneficiary's beneficiary either (A) within five
years after the Participant's death, or (B) in substantially equal annual or
more frequent installments over the remainder of the life expectancy of the
Beneficiary as that life expectancy was determined at the Participant's death
(by using the return multiples contained in section 1.72-9 of the Treasury
Regulations) provided that distributions commence (or commenced) within one year
of the Participant's death.
8.03 Children as Beneficiaries. For the purposes of Section 8.02, any
distribution paid to a Participant's child shall be treated as paid to the
Participant's surviving Spouse if such amount becomes payable to the surviving
Spouse when the child reaches the age of maturity.
SECTION 9
OTHER DISTRIBUTIONS
9.01 Distribution in Plan Years Beginning Before January 1, 1985. During
any Plan Year which begins before January 1, 1985, the Account of any
Participant to which Section 8 does not apply, to the extent it is vested
pursuant to Section 7.01 hereof, will be distributed in accordance with the
terms of this Section 9.01.
(a) A Participant's Account will normally be distributed in monthly
installments which must commence at or within 60 days after the end of the Plan
Year in which occurs his or her Normal Retirement Date or in which his or her
Service ceases, whichever is later, to continue over a period of 120 months;
provided, however, that in the case of a Participant who is an Owner-Employee,
monthly installments to such a Participant must commence no later than the last
day of the Participant's taxable year in which such Participant attains age 70-
1/2. The monthly amount shall normally be the vested balance of the
Participant's Account divided by the remaining number of months in such 120
months, all rounded to the nearest cent. However, the amount of each monthly
installment may be recomputed and adjusted from time to time no more frequently
than monthly as the Trustee may reasonably determine.
(b) All Participants may request and the Administrator shall have the
discretionary power to approve, subject to the requirements stated in this Plan,
any of the following variations from the normal pattern of distribution:
(i) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's attainment of age 59-1/2,
Disability, or separation from Service, if this Plan is adopted as a profit
sharing plan.
(ii) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's Disability or separation
from Service, if this Plan is adopted as a money purchase pension plan.
(iii) Distributions made or commencing after the normal time of
distribution described in Section 9.01(a); provided, however, that any such
deferred distribution must commence no later than the last day of the
Participant's taxable year in which the Participant attains age 70-1/2.
(iv) Distribution of the Participant's entire Account at one
time.
(v) Installment payments of a fixed amount, such payments to be
made until exhaustion of the Participant's Account.
(vi) Distribution in kind.
(vii) Any reasonable combination of the foregoing or any
reasonable time or manner of distribution within the above-stated limitations.
9.02 Timing of Annuity Payments and Normal Distributions in Plan Years
Beginning After December 31, 1984. Payment of benefits under the Qualified
Joint and Survivor Annuity or distributions pursuant to the normal form of
distribution discussed in Section 9.03(b), shall commence after the Participant
attains his or her Normal Retirement Date and on or before the earlier of 60
days after the close of the Plan Year, or the first April 1 after the calendar
year, in which occurs the Participant's Normal Retirement Date or in which his
or her employment ceases, whichever is later; provided, however, that in the
case of a Participant who is a 5-percent owner of the Employer (as defined in
Code Section 416(i)(1)(B)(i)), payment of benefits or monthly installments to
such a Participant must commence on or before the first April 1 after the
calendar year in which such Participant attains age 70-1/2. In the case of a
Participant who becomes a 5-percent owner of the Employer (as defined in Code
Section 416(i)(1)(B)(i)) after attaining age 70-1/2 but before termination of
employment, and during a Plan Year which began after December 31, 1984, payment
of benefits or monthly installments to such Participant must begin on or before
the first April 1 after the calendar year in which Participant becomes a 5-
percent owner.
9.03 Form of Distribution in Plan Years Beginning after December 31, 1984.
During any Plan Year which begins after December 31, 1984, the Account of a
Participant to which Section 8 does not apply, shall be distributed in a form
according to this Section 9.03.
(a) If this Plan is adopted as a money purchase pension plan, unless
the Participant elects an optional form of distribution pursuant to a Qualified
Election within 90 days before the date on which distributions under this
Section 9 would commence, a Participant's Account shall be paid in the form of a
Qualified Joint and Survivor Annuity.
(b) If the Participant was eligible to receive a Qualified Joint and
Survivor Annuity and he or she elects an optional form of distribution pursuant
to a Qualified Election within 90 days before the date on which distributions
under this Section 9 would commence or if this Plan is adopted as a profit
sharing plan and Section 9.03(a) does not apply to the Participant, a
Participant's Account will normally be distributed in monthly installments over
a period equal to the shorter of 120 months or the joint life and last survivor
expectancy of the Participant and his or her spouse (as calculated by using the
return multiples specified in Section 1.72-9 of the Treasury Regulations at the
time of the first distribution). The monthly account shall normally be the
balance of the Participant's Account divided by the remaining number of months
in such period, all rounded to the nearest cent. However, the amount of each
monthly installment may be recomputed and adjusted from time to time no more
frequently than monthly as the Trustee may reasonably determine.
(c) If this Plan is adopted as a money purchase pension plan and the
Participant elects an optional form of distribution pursuant to Qualified
Election within 90 days before the date on which distributions under this
Section 9 will commence and such optional form of distribution is not the normal
form of distribution discussed in subsection (b) or if this Plan is adopted as a
profit sharing plan and the Participant makes a written election to receive an
optional form of distribution, the Administrator shall have the discretion to
approve or disapprove such form of distribution. Pursuant to this Section
9.03(c), the Administrator shall have the discretion to approve of the following
variation from the normal pattern of distribution, provided that the
distribution shall otherwise comply with the requirements of this Plan:
(i) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's attainment of age 59-1/2,
Disability, or separation from Service, if this Plan is adopted as a profit
sharing plan.
(ii) Distributions made or commencing before the Participant's
Normal Retirement Date and following the Participant's Disability or separation
from Service, if this Plan is adopted as a money purchase pension plan.
(iii) Distributions made or commencing after the normal time of
distribution described in Section 9.02; provided, however, that any such
deferred distribution must commence no later than the first April 1 after the
calendar year in which the Participant attains age 70-1/2.
(iv) Distribution of the Participant's entire vested Account
balance at one time, provided that the Participant requests such distribution in
writing.
(v) Installment payments of a fixed amount, such payments to be
made until exhaustion of the Participant's Account.
(vi) Distribution in kind.
(vii) Any reasonable combination of the foregoing or any
reasonable time or manner of distribution within the above-stated limitations.
Notwithstanding the above, if this Plan is adopted as a money purchase
pension plan and a married Participant's vested Account Balance (exclusive of
the Participant's Rollover Account and Deductible Voluntary Contribution
Account) exceeds $3,500, no amount may be distributed to a participant unless
the Participant's Spouse consents in writing to such distribution.
9.04 Required Minimum Distributions. In the case of any Participant to
whom Section 9.01 applies, to whom Section 9.03(a) does not apply, or to whom
Section 9.03(a) applies and who elects an option form of distribution, the
annual distribution from his or her Account must equal or exceed the applicable
required minimum distribution. The minimum distribution to be made for each
calendar year beginning with the calendar year during which distribution is
required to commence pursuant to Section 9.01 or 9.03(b) or (c) shall be the
amount equal to the quotient obtained by dividing the Participant's Account
balance at the beginning of the year by the greater of the life expectancy of
the Participant or the joint life and last survivor expectancy of the
Participant and Beneficiary. For purposes of this minimum distribution rule,
life expectancy and joint life and last survivor expectancy shall be calculated
by using the return multiples specified in section 1.72-9 of the Treasury
Regulations either once, at the time of the first distribution, or in the case
of an expectancy involving only a spousal Beneficiary, annually in a consistent
manner. If the Participant's Spouse is not the Beneficiary, the method of
distribution used must ensure that at least 50% of Present Value (as defined in
Section 21.02(h) hereof) of the Participant's Account balance at the time
distributions commence is paid within the life expectancy of the Participant.
9.05 Nonconsensual Distributions. Notwithstanding any provision of this
Section 9 to the contrary, if a former Participant's vested Account balance
(exclusive of his or her Rollover Account and Deductible Voluntary Contribution
Account) equals $3,500 or less, the Administrator may direct that the entire
vested Account balance be distributed to the former Participant regardless or
whether the former Participant (or his or her Spouse, if applicable) requests or
otherwise consents to such distribution.
9.06 Special One-Time Distribution Election. Notwithstanding any Plan
provision to the contrary and subject to the requirements of Section 9.03(a)
above, distribution on behalf of any Employee, including a 5-percent owner (as
defined in Code Section 416(i)(1)(B)(i)), may be made in accordance with the
following requirements (regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the
Plan under Code Section 401(a)(9) as it was in effect prior to its amendment by
the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being distributed
or, if the Participant has died, by a beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or
the beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of
December 31, 1983.
(e) The method of distribution designated by the Participant or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant are listed in
order of priority.
(f) If the distribution is one to which the provisions of Section
9.03(a) hereof would otherwise have applied and the Participant is married, the
Participant's spouse consents to the election in a writing filed with the
Administrator.
A distribution upon death will not be covered by this section 9.06 unless
the information in the designation contains the required information
<PAGE>
described above with respect to the distributions to be made upon the death of
the Participant.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, or the Beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirement in subsections (a) and (e) above.
If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) as amended. Any changes in the
designation will be considered to be a revocation of the designation. However,
the mere substitution or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life).
SECTION 10.
LOANS
10.01 Availability of Loans. If, in the Adoption Agreement, the Employer
has specified that loans to Participants are permitted, the Loan Trustee shall,
upon the direction of the Administrator, make one or more loans, including any
renewal thereof, to a Participant (other than a Participant who is an Owner-
Employee). Any such loan shall be subject to such terms and conditions as the
Administrator shall determine pursuant to a uniform policy adopted by the
Administrator for this purpose, which policy shall be at least as restrictive as
required by this Section 10.
10.02 Spousal Consent Required. To obtain a loan, a Participant must
obtain the consent of his or her Spouse, if any, within the 90-day period before
the time his or her Account balance is used as security for the loan.
Furthermore, a new consent is required if an increase in the amount of the
security is necessary and any of the remaining balance of the Account is used.
A spousal consent to a loan must be in writing, witnessed by a Plan
representative or notary public, and acknowledge that as a result of a default
repayment of the loan the Spouse may be entitled to a lesser death benefit than
he or she would otherwise receive under the Plan. A Spouse shall be deemed to
consent to any loan which is outstanding at the time or his or her marriage to
the Participant.
10.03 Equivalent Basis. No such loan may be made to a disqualified person
within the meaning of Code Section 4975(e), unless such loans are available to
all Participants on a reasonably equivalent basis and are not made available to
officers, shareholders or highly paid Participants in an amount which, when
stated as a percentage of any such Participant's Account, is greater than is
available to any other Participants.
10.04 Limitation on Amount. The amount of any such loan, when added to
the outstanding balance of all other loans from the Plan (and any other
qualified retirement plans of the Employer's) to the Participant, shall not
exceed the following:
Participant's Vested Maximum Amount
Account Balance of Loan
$0 - $10,000 100% of vested Account balance
$10,000 - $20,000 $10,000
$20,000 - $100,000 50% of vested Account balance
over $100,000 $50,000
The value of the Participant's Account balance shall be as determined by
the Administrator; provided, however, that such determination shall in no event
take into account the portion of the Participant's Account attributable to the
Participant's Deductible Voluntary Contribution Account.
10.05 Maximum Term. The term of the any such loan shall not exceed 5
years; provided, however, that such limitation shall not apply to any loan used
to acquire, construct, reconstruct, or substantially rehabilitate any dwelling
unit which within a reasonable time is to be sued (determined at the time the
loan is made) as a principal residence of the Participant or a member of the
Participant's family (within the meaning of Code Section 267(c)(4)).
10.06 Promissory Note. Any such loan shall be evidenced by a promissory
note executed by the Participant and payable to the Loan Trustee, on the
earliest of (i) a fixed maturity date meeting the requirements of Section 10.05
above, but in no event later than the Participant's Normal Retirement Date, (ii)
the Participant's death, or (iii) when distribution hereunder is to be made to
the Participant (other than a withdrawal which will not reduce the value of his
or her Account to the extent that the aggregate amount owing could not be made
as a new loan within the limitation set forth in Section 10.04 above). Such
promissory note shall be secured by an assignment of the Participant's Account
to the Loan Trustee. Such promissory note shall evidence such terms as are
required by this Section 10.
10.07 Interest. Any such loan shall be subject to a reasonable rate of
interest.
10.08 Repayment. If a note is not paid when the Participant's benefits
hereunder are to be distributed, then any unpaid portion of such loan and unpaid
interest thereon shall be deducted by the Loan Trustee from the Participant's
Account before benefits are paid from or purchased out of the Account. Such
deduction shall, to the extent thereof, cancel the indebtedness of the
Participant. If a note is not paid when it otherwise becomes payable under
Section 10.05 hereof, or if at any time the Administrator determines that the
aggregate amounts owing by a Participant upon such notes exceed the vested value
of the Participant's Account, the Participant shall be promptly notified in
writing that unless such loan or excess is repaid within 30 days, action will be
taken to collect the same plus any cost of collections. Notwithstanding any
implication of the preceding sentence to the contrary, no attachment of the
Participant's Account shall occur until a distributable event occurs under
Sections 8 or 9 (or if it is otherwise applicable, Section 22) hereof.
10.09 Accounting. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the account attributable to the
Participant's Deductible Voluntary Contribution Account) requesting the loan,
and shall be treated as an investment of such Account. All interest payments
made with respect to such loan shall be credited to the Participant's Account.
10.10 Precedence. This Section 10 overrides Section 16.01 below.
SECTION 11.
TRUST PROVISIONS
11.01 Manner of Investment. All contributions to the Account of a
Participant shall be held in trust by the Trustee designated in the Adoption
Agreement. Except to the extent that a Participant's Account is invested in a
loan pursuant to Section 10 hereof, the Account of a Participant may only be
invested and reinvested in shares of Designated Investment Companies, unless the
Distributor permits less than 100% of the Trust assets to be so invested. If
the Administrator or the Participant, as the case may be, has elected to have a
portion of an Account invested in other than shares of Designated Investment
Companies and the Distributor has authorized the investment of less than 100% of
Trust assets in such shares, the Trustee shall invest such amount in such
investments as it is empowered to invest in under Section 11.03 hereof. The
Designated Investment Companies available for investment may be limited by the
Employer. Investment in the shares of more than one Designated Investment
Company is not permitted unless the value of the Participant's Account and the
value of the investment in each additional Designated Investment Company exceed
amounts from time to time determined by the Distributor.
11.02 Investment Decision.
(a) The decision as to the investment of an Account shall be made by
the person designated in the Adoption Agreement, and the Trustee shall have no
responsibility for determining how an Account is to be invested or to see that
investment directions communicated to it comply with the terms of the Plan. If
the decision is made by the Participant, the Participant shall convey investment
instructions to the Administrator and the Administrator shall promptly transmit
those instructions to the Trustee. Further, if the decision is to be made by
the Participant, the right to make such a decision shall remain with the
Participant upon retirement and shall pass to the Distributee upon death.
(b) The person designated to make the decision as to the investment
of an Account may direct that the investment medium of an Account be changed
provided that no such change may be made from or to an investment other than a
Designated Investment Company except to the extent permitted under Section 11.10
above and by the terms of that other investment vehicle. If the Distributor
determines in its own judgment that there has been trading of shares of
Designated Investment Companies in the Accounts of the Participants, any
Designated Investment Company may refuse to sell its shares to such Accounts.
When an investment is being made or changed, the person designated to do so
shall specify the type of account to which the change refers.
(c) If any decision as to investments is to be made by the
Administrator, it shall be made on a uniform basis with respect to all
Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the Trustee or
to the transfer agent for the Designated Investment Company or Companies or for
any other investment permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the
decision as to the investment of an Account, the Administrator shall ascertain
that the Participant has received a copy of the current prospectus relating to
the shares of any Designated Investment Company in which such Account is to be
invested plus, where required by any state or federal law, the current
prospectus relating to any other investment in which the Account is to be
invested. With respect to contributions designated for investment by a
Participant, by remitting such a contribution to the Trustee, the Administrator
shall be deemed to warrant to the Trustee fro the benefit of the appropriate
Designated Investment Company or Companies and its or their principal
underwriter that the Participant has received all such prospectuses. By
remitting any other contribution to the Trustee, the Administrator shall be
deemed to warrant to the Trustee for the benefit of the appropriate Designated
Investment Company or Companies and its or their principal underwriter that the
Administrator has received a current prospectus of any Designated Investment
Company in which the contribution is to be invested, plus, where required by any
state or federal law, the current prospectus relating to any other investment in
which contributions are to be invested.
11.03 Investment Powers. To the extent that a portion of the Trust assets
are invested other than in shares of Designated Investment Companies pursuant to
Section 11.01 above, the Trustee is hereby granted full power and authority to
invest and reinvest the Trust assets in any property of any kind or nature
whatsoever (speculative or otherwise) or in any rights or interests therein, or
in any evidences or indicia thereof and whether real, personal or mixed or
whether tangible or intangible (including for illustration but not to be limited
to the following, or anything of a similar kind, character or class: common or
preferred stocks, evidences or ownership in so-called Massachusetts business
trusts, fees, beneficial interests, leaseholds, bonds, mortgages, leases, notes
or obligations, oil and gas payments, oil and gas contracts, other securities,
instruments or commodities, investments in property yielding little or no income
and shares of regulated investment companies) without regard to any rule of law
or statute of the state of the Trustee designation investments eligible for
trust funds, and without respect to any custom or practice either as to types of
investments or diversification of investments, and to hold cash uninvested at
any time and from time to time in such amounts and to such extent as the Trustee
in its own uncontrolled discretion and judgment deems advisable; provided,
however, that the Trustee is to act with the care, skill and diligence, under
the circumstances then prevailing, which would characterize the actions of a
prudent man who is acting as such a Trustee and who is familiar with the duties
of such a Trustee; further provided that the Trustee shall diversify the
investments of the Trust Fund so as to minimize the risk of large losses unless,
under the circumstances, such diversification would not be prudent; further
provided that the Trustee is not empowered to enter into any investment which
would be prohibited under the Act or otherwise by the provisions of this Plan.
Notwithstanding the above, the following restrictions on the investment of
a Participant's Account shall apply:
<PAGE>
(a) No part of a Participant's Deductible Voluntary Contribution
Account may be used to purchase life insurance.
(b) At most, less than one-half of the aggregate Employer
Contributions allocated to a Participant's Employer Contribution Account may be
used to pay premiums attributable to the purchase of ordinary life insurance
contracts (life insurance contracts with both nondecreasing death benefits and
nonincreasing premiums).
(c) No more than one-quarter of aggregate Employer Contributions
allocated to a Participant's Employer Contribution Account may be used to pay
premiums on term life insurance contracts, universal life insurance contracts,
and all other life insurance contracts which are not ordinary life insurance
contracts.
(d) One-half of the amount used to pay premiums on ordinary life
insurance contracts plus the amount used to pay premiums on all other life
insurance contracts may not exceed an amount equal to one-quarter of the
aggregate Employer Contributions allocated to a Participant's Employer
Contribution Account.
(e) No part of a Participant's Account shall be applied towards the
purchase of any insurance contract unless (i) the Trustee applies for and is the
owner of such contract, (ii) the contract provides that all contract proceeds
shall be paid to the Trustee, and (iii) the contract provides for distributions
to the Participant's Spouse, as necessary to ensure compliance with the
applicable requirements of Sections 8, 9, and 22.
If a Participant's Account is invested in one or more insurance contracts,
the Trustee is required to pay over all proceeds of the contract(s) to the
Participant's Beneficiary or Beneficiaries in accordance with the terms of this
Plan and under no circumstances shall the Trust retain any contract proceeds.
11.04 Appointment of Investment Manager. Subject to Sections 11.01 and
11.03 above, the Administrator may designate, and the Employer may contract
with, Scudder, Stevens & Clark, or its successor or any affiliate, to act as
investment manager (within the meaning of the Act), and may at any time revoke
such designation. If an investment manager is so designated, the Trustee shall
follow all investment directions given by the investment manager with respect to
the retention, investment and reinvestment of the Plan assets to the extent they
are under the control of such investment manager. If permitted by the Trustee,
the investment manager may issue orders for the purchase and sale of securities,
including orders through any affiliate of such investment manager. Such an
investment manager is specifically allowed to direct or make investments in
shares of any Designated Investment Company. The Trustee shall not be liable
for following any direction given by, or any actions of, an investment manager
so appointed.
11.05 Trustee: Number, Qualifications and Majority Action.
(a) The number of Trustees shall be one, two or three. Any natural
person and any corporation having the power under applicable law to act as a
trustee of a pension or profit sharing plan may be a Trustee. No person shall
be disqualified from being a Trustee by being employed by the Employer, by being
the Administrator, by being a trustee under any other qualified retirement plan
of the Employer or by being a Participant in this Plan or such other qualified
plan.
(b) A Trustee holding office as sole Trustee hereunder shall have all
the powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. There are two or three Trustees hereunder,
they may, by written instrument communicated to the Employer and the
Administrator, allocate among themselves the powers and duties herein given to
the Trustee hereunder. If such an allocation is made, to the extent permitted
by applicable law, no Trustee shall be liable either individually or as a
trustee for loss to the Plan from the acts or omissions of another Trustee with
respect to duties allocated to such other Trustee.
11.06 Change of Trustee
(a) Any Trustee may resign as Trustee upon notice in writing to the
Employer, and the Employer may remove any Trustee upon notice in writing to each
Trustee. The removal of a Trustee shall be effective immediately, except that a
corporation serving as a Trustee shall be entitled to 60 days' notice which it
may waive, and the resignation of a Trustee shall be effective immediately,
provided that, if the Trustee is the sole Trustee, neither a removal nor a
resignation of a Trustee shall be effective until a successor Trustee has been
appointed and has accepted the appointment. If within 60 days of the delivery
of the written resignation or removal of a sole Trustee another Trustee shall
not have been appointed and have accepted, the resigning or removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or may terminate the Plan pursuant to Section 18 of the Prototype Plan.
The Trustee shall not be liable for the acts and omissions of any successor
trustee.
(b) At any time when the number of Trustees is one or two the
Employer may but need not appoint one or two additional Trustees, provided that
the number of Trustees shall not be more than three. Such an appointment and
the acceptance thereof shall be in writing, and shall take effect upon the
delivery of written notice thereof to all the Trustees and the Administrator and
such acceptance by the appointed Trustee, provided that if a corporation is a
Trustee then in the absence of its consent, such an appointment of an additional
or successor Trustee shall not become effective until 60 days after its receipt
of notice.
(c) Although any Employer adopting the Plan may choose any Trustee
who is willing to accept the Trust, the Distributor or its successor may make or
may have made tentative standard arrangements with any bank or trust company
with the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be obtained
with a substantial volume of business, and that it may become advisable to
remove such bank or trust company as the Trustee and substitute another Trustee.
Therefore, anything in the prior to subsections of this Section 11.06
notwithstanding, each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice of at least 30 days to the
affect Employer and in the absence of written objection by the Employer received
by the Distributor before such date (i) remove any such Trustee and in that
case, or if such a Trustee has resigned as to a group of Employers, (ii) appoint
such a successor Trustee, provided such action is taken with respect to all
Employers similarly circumstanced of which the Distributor has knowledge, and
provided such notice is given in writing mailed postage prepaid to the Employer
at the latest address furnished to the Distributor directly or supplied to it by
such Trustee which is to be succeeded. If within 60 days after such Trustee's
resignation or removal, the Employer has not appointed a successor which has
accepted such appointment (unless the appointment of a successor Trustee is
waiting for action by the Distributor pursuant to the next preceding sentence
according to notice which has been given), the Trustee may petition an
appropriate court for the appointment of its successor. The Trustee shall not
be liable for the acts and omissions of such successor.
(d) Successor Trustees qualifying under this Section 11.06 shall have
all rights and powers and all the duties and obligations of original Trustees.
11.07 Valuation. Annually, on the Valuation Date, or more frequently in
the discretion of the Trustee, the assets of the Trust shall be revalued at fair
market value and the accounts of the Trust shall be proportionately adjusted to
reflect income, gains, losses or expenses, if the system of accounting does not
directly accomplish all such adjustments. Each account shall share in income
gains, loses, or expenses connected with an asset in which it is invested
according to the proportion which the account's investment in the asset bears to
the total amount of the Trust Fund invested in the asset. Any dividends or
credits earned on insurance contracts shall be allocated to the specific account
of the Participant from which the funds originated for investment in the
contract.
The Trust Fund shall be administered separately from, and shall not include
any assets being administered under, any other plan of an Employer. Interim
valuations, if any, shall be applied uniformly and in a non-discriminatory
manner for all Employees.
11.08 Registration. Any assets in the Trust Fund may be registered in the
name of the Trustee or any nominee designated by the Trustee.
11.09 Certifications and Instructions.
(a) Any pertinent vote or resolution of the Board of Directors of the
Employer (if it is a corporation) shall be certified to the Trustee over the
signature of the Secretary or an Assistant Secretary of the Employer and under
its corporate seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and termination of the
individual or individuals serving as Administrator under Section 12.01 of the
Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures. All
requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
11.10 Accounts and Approval
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all books and records relating thereto shall be open at all reasonable times to
inspection and audit by any person or persons designated by the Administrator or
by the Employer.
(b) Within 90 days following the close of each Plan Year the Trustee
may, and upon the request of the Employer or the Administrator shall, file with
the Administrator and the Employer a written report setting forth all securities
or other investments (including insurance contracts) purchased and sold, all
receipts, disbursements and other transactions effected by it during the period
since the date covered by the next proper report, and showing the securities and
other property held at the end of such period, and such other information about
the Trust Fund as the Administrator shall request. Unless the Employer or
Administrator, within 90 days from the date of mailing of such report, objects
to the contents of such report, the report shall be deemed approved. Any such
objections shall set forth the specific grounds on which they are based.
11.11 Taxes. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator shall
in writing advise the Trustee that in the opinion of counsel fro the Employer
such taxes are not lawfully assessed. In the event that the Administrator shall
so advise the Trustee, the Trustee, if so requested by the Administrator and
suitable provision for their indemnity having made, shall contest the validity
of such taxes in any manner deemed appropriate by the Administrator or counsel
for the Employer. The word "taxes" in this Section 11 shall be deemed to
include any interest or penalties that may be levied or imposed in respect to
any taxes assessed. Any taxes, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the Trust Fund that may be
levied or assessed in respect to such assets shall, if allocable to the Accounts
of specific Participants, be charged to such Accounts, and if not so allocable,
they shall be equitably apportioned among all such Participant's Accounts.
11.12 Employment of Counsel. The Trustee may employ legal counsel (who
may be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
11.13 Compensation of Trustee. An individual Trustee who is an Employee
of the Employer shall not be compensated for services as Trustee. A
corporation, or an individual who is not an Employee of the Employer, serving as
a Trustee shall be entitled to reasonable compensation for services; such
compensation shall be paid in accordance with Section 13.
11.14 Limitation of Trustee's Liability.
(a) The Trustee shall have no duty to take any action other than as
herein specified, unless the Administrator shall furnish it with instructions in
proper form and such instructions shall have been specifically agreed to by it,
or to defend or engage in any suit unless it shall have first agreed in writing
to do so and shall have been fully indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected in
acting in good faith upon any written representation or order from the
Administrator or any other notice, request, consent, certifi-
<PAGE>
cate or other instrument or paper believed by the Trustee to be genuine and
properly executed, or any instrument or paper if the Trustee believes the
signature thereon to be genuine.
(c) The Trustee shall not be liable for interest on any reasonable
cash balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its
discretion, receive a contribution directly from a participant.
11.15 Successor Trustee. Any corporation into which a corporation acting
as a Trustee hereunder may be merged or with which it may be consolidated, or
any corporation resulting from any merger, reorganization or consolidation to
which such Trustee may be a party, shall be the successor of the Trustee
hereunder, without the necessity of any appointment or other action, provided
the Trustee does not resign and is not removed.
11.16 Enforcement of Provisions. To the extent permitted by applicable
law, the Employer and the Administrator shall have the exclusive right to
enforce any and all provisions of this Agreement on behalf of all Employees and
former Employees of the Employer or their Beneficiaries or other persons having
or claiming to have an interest in the Trust Fund or under the Plan. In any
action or proceeding affecting the Trust Fund or any property constituting a
part or all thereof, or the administration thereof or for instructions to the
Trustee, the Employer, the Administrator and the Trustee shall be the only
necessary parties and shall be solely entitled to any notice of process in
connection therewith; any judgment that may be entered in such action or
proceeding shall be binding and conclusive on all persons having or claiming to
have any interest in the Trust Fund or under the Plan.
11.17 Voting. The Trustee shall deliver, or cause to be executed and
delivered, to the Administrator all notices, prospectuses, financial statements,
proxies and proxy soliciting materials received by the Trustee relating to
securities held by the Trust. The Administrator shall deliver these to the
appropriate Participant or Beneficiary of a deceased Participant, but only if
the Employer has specified in the Adoption Agreement that investment decisions
shall be made by Participants pursuant to Section 11.02 hereof. The Trustee
shall vote securities held by the Trust in accordance with the written
instructions of the person or persons entitled to make investment decisions
pursuant to Section 11.02. If, however, the Trustee is not State Street Bank
and Trust Company and has not received instructions with respect to how to vote
given securities before five full business days prior to the meeting at which
such securities are to be voted, the Trustee may vote such securities. If the
Trustee is State Street Bank and Trust Company and it has not received
instructions with respect to how to vote given securities before two full
business days prior to the meeting at which such securities are to be voted, it
shall not vote such securities except to the extent they are shares of a
Designated Investment Company, in which case it shall vote such securities for
or against each proposal, or abstain from voting on each proposal, in the same
proportion as all other shares of such Designated Investment Company vote or
abstain from voting at the shareholder meeting either in person or by proxy. In
applying the foregoing, the Trustee is not required to vote particular shares of
a Designated Investment Company in the manner specified in the preceding
sentence, so long as all of the shares of the Designated Investment Company as
to which the Trustee has not received instructions are voted in the aggregate in
accordance with the preceding sentence. Notwithstanding the foregoing, the
Trustee shall not have the authority to vote shares of a Designated Investment
Company without instructions from the person or persons entitled to make
investment decisions unless either (a) the Securities and Exchange Commission
shall have issued an exemptive order pursuant to Section 6(c) of the Investment
Company Act of 1940, as amended, the application for which order describes the
Trustee's authorization to so vote without instructions, or (b) the Trustee has
received an opinion of its counsel that the exercise of the authority to vote
shares of a Designated Investment Company without instructions will not render
the Trustee an "affiliated person" as defined in the Investment Company Act of
1940, as amended.
11.18 Applicability to Loan Trustee. Where appropriate, the foregoing
provisions of this Section 11 shall apply to the Loan Trustee on the same basis
as if the Loan Trustee were the Trustee.
SECTION 12.
ADMINISTRATION
12.01 Appointment of Administrator. From time to time, the Employer may,
by identifying such person(s) in writing to both the Trustee and the
Participants, appoint one or more persons as Administrator (hereinafter referred
to in the singular). Such Administrator shall have all power and authority
necessary to carry out the terms of the Plan. A person appointed as
Administrator may also serve in any other fiduciary capacity, including that of
Trustee, with respect to the Plan. The Administrator may resign upon 15 days'
advance written notice to the Employer, and the Employer may at any time revoke
the appointment of the Administrator with or without cause. The Employer shall
exercise the power and fulfill the duties of the Administrator if at any time,
an Administrator has not been properly appointed in accordance with this Section
12.01 or the position is otherwise vacant.
12.02 Named Fiduciaries. The "Named Fiduciaries" within the meaning of
the Act shall be the Administrator and the Trustee.
12.03 Allocation of Responsibilities. Responsibilities under the Plan
shall be allocated among the Trustee, the Administrator, and the Employer as
follows:
(a) Trustee: The Trustee shall have exclusive responsibility to
hold, manage and invest, pursuant to instructions communicated to it in
accordance with Section 11.02 above, the funds received by it subject to the
powers granted to it under Section 11 hereof. To the extent that loans are made
to Participants in accordance with Section 10 hereof, these responsibilities
shall fall to the Loan Trustee.
(b) The Administrator: The Administrator shall have the
responsibility and authority to control the operation and administration of the
Plan in accordance with its terms including, without limiting the generality of
the foregoing, (i) any investment decisions assigned to it under the Adoption
Agreement or transmission to the Trustee of any participant investment decision
under Section 11.02; (ii) interpretation of the Plan, conclusive determination
of all questions of eligibility, status, benefits and rights under the Plan and
certification to the Trustee of all benefits payments under the Plan; (iii)
hiring of persons to provide necessary services to the Plan not provided by
Employees; (iv) preparation and filing of all statements, returns and reports
required to be filed by the Plan with any agency of Government; (v) compliance
with all disclosure requirements of all state or federal law; (vi) maintenance
and retention of all Plan records as required by law, except those required to
be maintained by the Trustee; and (vii) all functions otherwise assigned to it
under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of
the Plan, as adopted or amended, the designation of the Administrator and
Trustee (and, if appropriate, the Loan Trustee) as provided in the Plan, the
delivery to the Administrator and the Trustee of Employee information necessary
for operation of the Plan, the timely making of the Employer Contributions
pursuant to Section 4.01 hereof, and the exercise of all functions provided in
or necessary to the Plan except those assigned in the Plan to other persons.
(d) This Section 12.03 is intended to allocate individual
responsibility for the prudent execution of the functions assigned to each of
the Trustees, the Loan Trustee, the Administrator and the Employer and none of
such responsibilities or any other responsibility shall be shared among them
unless specifically provided in the Plan. Whenever one such person is required
by the Plan to follow the directions of another, the two shall not be deemed to
share responsibility, but the person who gives the direction shall be
responsible for giving it and the responsibility of the person receiving the
direction shall be to follow it insofar as it is on its face proper under
applicable law.
12.04 More Than One Administrator. If more than one individual is
appointed as Administrator under Section 12.01, such individuals shall either
exercise the duties of the Administrator in concert, acting by a majority vote
or allocate such duties among themselves by written agreement delivered to the
Employer and the Trustee. In such a case, the Trustee may rely upon the
instruction of any one of the individuals appointed as Administrator regardless
of the allocation of duties among them.
12.05 No Compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
12.06 Record of Acts. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the Employer
at any time. The Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to administer the
Plan.
12.07 Bond. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
12.08 Agent for Service of Legal Process. The Administrator shall be
agent for service of legal process on the Plan.
12.09 Rules. The Administrator may adopt or amend and shall publish to
the Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
12.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
12.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the original
claim was filed. This notice of denial shall set forth in a manner calculated
to be understood by the claimant (i) the reason or reasons for denial, (ii)
specific reference to pertinent plan provisions on which the denial is based,
(iii) a description of any additional information needed to perfect the claim
and an explanation of why such information is necessary, and (iv) an explanation
of the Plan's claims procedure.
(c) The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review by the
Administrator. The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall have the rights
(i) to have representation, (ii) to review pertinent documents, and (iii) to
submit comments in writing.
(d) The Administrator shall issue a decision on such review within 60
days after receipt of an application fro review, except that such period may be
extended for a period of time not to exceed an additional 60 days if the
Administrator determines that special circumstances (such as the need to hold a
hearing) requires such extension. The decision on review shall be in writing
and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific references to the
pertinent Plan provisions on which the decision is based.
SECTION 13.
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust shall be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and the Trustee is
authorized to charge the same to the Accounts of the
<PAGE>
Participants, and unless allocable to the Accounts of specific Participants,
they shall be charged against the respective accounts of all or a reasonable
group of Participants in such reasonable manner as the Trustee shall determine.
SECTION 14.
BENEFIT RECIPIENT INCOMPETENT OR
DIFFICULT TO ASCERTAIN OR LOCATE
14.01 Incompetency. If any portion of the Trust Fund becomes
distributable to a minor or to a Participant or Beneficiary who, as determined
by the sole discretion of the Administrator, is physically or mentally incapable
of handling his or her financial affairs, the Administrator may direct the
Trustee to make such distribution either to the legal representative or
custodian of, or any of the relatives and friends of, the incompetent or to
apply such distribution directly for the incompetent's support and maintenance.
Payments which are made in good faith shall completely discharge the Employer,
Administrator and Trustee from liability therefor.
14.02 Difficulty to Ascertain or Locate. If it is impossible or difficult
to ascertain the person who is entitled to receive any benefit under the Plan,
the Administrator in its discretion may direct that such benefit be (a) paid to
another person in order to carry out the Plan's purposes; or (b) retained in the
Trust; or (c) paid to a court pending judicial determination of the right
thereto.
SECTION 15.
DESIGNATION OF BENEFICIARY
Each participant and beneficiary may submit to the Trustee a properly
executed Designation of Beneficiary form. In order to be effective, such
designation (a) must have been properly executed and submitted to the Trustee
before the death of the Participant or beneficiary, as the case may be, and (b)
except in the case of the portion of a Participant's vested Account balance in a
money purchase pension plan which is not available for distribution in the form
of a Qualified Preretirement Survivor Annuity pursuant to Section 8.01 above,
fro Participants who die after August 22, 1984 leaving a surviving Spouse, must
be accompanied, or preceded, by a consent of the Participant's Spouse (unless
said Spouse is designated as the sole, primary Beneficiary). Such consent of
the Spouse must be in writing, acknowledge that the effect of such consent is
that the Spouse may receive no benefits under the Plan, be witnessed by a Plan
representative or a notary public, and be a limited consent to the payment of
death benefits to a specific person or persons. The last effective Designation
accepted by the Trustee shall be controlling, and whether or not fully
dispositive of the Participant's Account, thereupon shall revoke all
Designations (and related spousal consents) previously submitted by the
Participant or beneficiary, as the case may be. Each such executed Designation
(and related spousal consent) is hereby specifically incorporated herein by
reference and shall be construed and enforced in accordance with the laws of the
state in which the Trustee has its principal place of business.
SECTION 16.
SPENDTHRIFT PROVISION AND
DISTRIBUTIONS PURSUANT TO QUALIFIED
DOMESTIC RELATIONS ORDERS
16.01 General Spendthrift Rule. No interest of any Participant or
Beneficiary shall be assigned, anticipated or alienated in any manner nor shall
it be subject to attachment, to bankruptcy proceedings or to any other legal
process or to the interference or control of creditors or others, except (a) to
the extent that Participants may secure loans from the Trust with their Accounts
pursuant to Section 10 hereof and (b) pursuant to Section 16.02 hereof.
16.02 Account Division and Distribution Pursuant to Qualified Domestic
Relations Orders. The interest of a Participant may be assigned pursuant to a
"Qualified Domestic Relations Order" (as defined below). The Trustee shall make
distributions of such Participant's interest as are required by the order and
this Section 16.02.
(a) A "Qualified Domestic Relations Order" is any judgment, decree or
order, including the approval of a property settlement agreement (collectively
hereinafter referred to as an "order"), provided that:
(i) The order related to the provision of child support, alimony
or marital property rights and is made pursuant to state domestic relations or
community property laws;
(ii) The order creates or recognizes the existence of an
alternate payee's right to or assigns to an alternative payee rights to, receive
all or a portion of the benefits payable with respect to the Participant under
this Plan;
(iii) The order specifies the name and last known mailing
address of the Participant and each alternative payee covered by the order;
(iv) The order precisely specifies the amount or percentage of
the Participant's benefits to be paid to each alternate payee or the manner in
which the amount of percentage is to be determined;
(v) The order specifies the number of payments or the period to
which the order applies;
(vi) The order specifically names this Plan as a plan to which
the order applies;
(vii) The order does not require the Trustee to provide any form
of distribution other than those contained in Sections 8 and 9 hereof (or
Section 22 hereof, if that Section applies in the Participant's case) other than
in the form of a Qualified Joint and Survivor Annuity with respect to the
alternative payee and his or her subsequent spouse;
(viii) The order does not require the Trustee to provide
benefits at any time in excess of the Account balance;
(ix) If the order requires that distribution to the alternative
payee commence before distribution to the Participant commences, the order:
(A) specifies that, unless the Administrator otherwise
consents, distribution to the alternative payee will not commence prior to ten
years before the Participant's Normal Retirement Date; and
(B) specifies that the amount distributed is to be
calculated as if the Participant had retired on the date on which distributions
are required to commence; and
(x) The order does not require the payment of benefits to an
alternative payee which are required to be paid to another alternative payee
under a previously entered Qualified Domestic Relations Order.
(b) At the request of an alternative payee and pursuant to a
Qualified Domestic Relations Order, the Administrator may, in its discretion,
direct the Trustee to make a lump-sum distribution from a Participant's Account
to an alternative payee at any time prior to time when distribution of such
Account would otherwise occur pursuant to Section 8, 9 or 22 hereof.
(c) The Administrator may, in its discretion, provide a standard form
Qualified Domestic Relations Order to a Participant or any other person, on
request. If this form is properly completed, used without substantial
modification, and incorporated into an order which on its face appears to be
valid, the Administrator shall treat it as a Qualified Domestic Relations Order
and shall distribute named Participant's Account according to its terms. Any
manner of distribution authorized by the Administrator in such a standard form,
other than a manner of distribution specified in Section 8 and 9 hereof, shall
be authorized only as to the alternate payees by whom the standard form has been
used.
(d) The Administrator shall not treat any order entered after January
1, 1985 as a Qualified Domestic Relations Order unless it meets all of the
requirements of subsection (a). For the purposes of this subsection (d), the
Administrator shall treat a domestic relations order entered before January 1985
as a Qualified Domestic Relations Order regardless of whether it meets the
requirements of subsection (a). The Administrator and Trustee shall follow the
terms of a Qualified Domestic Relations Order regardless of whether the Plan has
been joined as a party to the litigation out of which the order arises.
Upon receipt of a domestic relations order entered after January 1, 1985,
the Administrator shall notify the Participant and alternate payee of (i) its
receipt of the order and (ii) its procedures to determine the qualified status
of the order in accordance with subsection (a). Within a reasonable period
after receipt of such order, the Administrator shall determine whether such
order is a Qualified Domestic Relations Order and notify the Participant and
each alternative payee of such determination. The alternate payee may designate
a representative to receive copies of future notices with respect to the
qualified status of the order.
(e) To the extent an order entered after January 1, 1985 calls for
the benefits to be paid to an alternate payee before the qualified nature of the
order is determined, a separate account shall be established to hold the benefit
payments affected by the order. If within 18 months, the Administrator
determines that the order (or a modification thereof) is a Qualified Domestic
Relations Order, the Administrator shall deal with the funds in the separate
account (increased by any earning and decreased by any losses thereon) in
accordance with the instructions of the Qualified Domestic Relations Order. If
within 18 months, the Administrator either (i) determines that the order is not
a Qualified Domestic Relations Order or (ii) is unable to determine whether the
order is a Qualified Domestic Relations Order, the Administrator shall return
the funds in the separate account (increased by any earnings and decreased by
any losses thereon) to the account(s) from which the funds were originally
removed. Any determination by the Administrator that an order is a Qualified
Domestic Relations Order after the expiration of the above discussed 18-month
period shall be applied on a prospective-only basis.
(f) The "alternate payee" referred to in this Section 16.02 shall be
any spouse, former spouse, child or other dependent of the Participant who is
recognized by a domestic relations order as being entitled to receive benefits
payable under the Plan with respect to the Participant. Such alternate payee
shall be considered a "beneficiary" for purposes of the reporting and disclosure
requirements of the Act.
SECTION 17.
NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401(a) as that Section exists at the time the Plan is established. If
the Plan as adopted by the Employer fails to attain such qualification, the Plan
will no longer participate in this Prototype Plan and will be considered an
individually designed plan. If the Plan as adopted by the Employer fails to
attain or retain such qualification, the Employer shall promptly either amend
the Plan under Code Section 401(b) so that it does qualify, or direct the
Trustee to terminate the Trust, and distribute all the assets of the Trust
equitably among the contributors thereto in proportion to their contributions,
and the Plan and the Trust shall be considered to be rescinded and of no force
and effect.
SECTION 18.
AMENDMENT AND TERMINATION
18.01 Amendment or Termination by the Employer. The Employer may at any
time, and from time to time amend this Prototype Plan and the Adoption Agreement
(including a change in any election it has made in the Adoption Agreement), or
suspend or terminate this Plan by giving written notice to the Trustee, but the
Trust may not thereby be diverted from the exclusive benefit of the
Participants, their Beneficiaries, survivors or estates, or the administrative
expenses of the Plan, nor revert to the Employer, nor may an allocation or
contribution theretofore made be changed thereby, nor may any amendment directly
or indirectly deprive a Participant of such Participant's nonforfeitable rights
to benefits accrued to the date of the amendment.
No amendment to the Plan shall be effective to the extent that it would
have the effect of decreasing a Participant's Account balance or eliminating an
optional form of distribution. Notwithstanding the preceding sentence, a
Participant's Account balance may be reduced to the extent permitted under Code
Section 412(c)(8). Furthermore, no amendment to the Plan shall have the effect
of decreasing a Participant's vested interest determined without regard to such
amendment as of the later of the date such amendment is adopted or the date on
which it becomes effective.
The Employer may amend the Plan by adding overriding Plan language to the
Adoption Agreement where such language is necessary to satisfy Code Sections 415
or 416 because of the required aggregation of multiple plans under these Code
Sections. The Employer may also amend the Plan by adding language to allow the
Plan to operate under a waiver of the minimum funding requirement.
Any amendment by the Employer which is other than (a) a change in the
Employer's prior designation of an option in the Adoption Agreement (b) an
amendment referred in the Adoption Agreement which will allow the Plan to
satisfy the requirements of Code Section 415 or to avoid duplication of minimum
benefits or accruals under Code Section 416 because of the required aggregation
of multiple
<PAGE>
plans, or (c) an amendment which allows the Plan to operate under a waiver of
the minimum funding requirement, will constitute a substitution by the Employer
of an individually designed plan for this Prototype Plan; thereafter, the Plan
shall no longer participate in the Prototype Plan and the general amendment
procedure of the Internal Revenue Service governing individually designed plans
will be applicable.
If an amendment changing the vesting schedule is executed (including
execution of this Adoption Agreement as an amendment to an existing plan),
Participants with five or more Vesting Years before the expiration of the
election period described in the next sentence shall have the right to elect the
vesting schedule in effect on the day before the election period. The election
period shall commence on the date the amendment is adopted and end on the latest
of (a) 60 days after the amendment is adopted, (b) 60 days after the Effective
Date, or (c) 60 days after the Participant is issued written notice of the
amendment by the Administrator. Failure to so elect shall be treated as a
rejection and such election or rejection shall be final.
Nothing contained herein shall constitute an agreement or representation by
any Sponsor or the Distributor that it will continue to maintain its sponsorship
of the Plan indefinitely.
18.02 Delegation. The Employer hereby delegates to the Sponsor the
authority to amend so much of the Adoption Agreement and this Prototype Plan as
in prototype form and, to the extent to which the Employer could effect such
amendment, the Employer shall be deemed to have consented to any amendment so
made. When an election within the prototype form has been made by the Employer,
it shall be deemed to continue after amendment of the prototype form unless and
until the Employer expressly further amends the election, notwithstanding that
the provision for the election in the amended prototype form is in a different
form or place; provided, however, that if the amended from inadvertently fails
to provide means to duplicate exactly the earlier election, such earlier
election shall continue until such further amendment. The immediately preceding
sentence is subject to the qualification that each Employer hereby delegates to
the Sponsor, in the event of such an amendment of the prototype form, authority
to determine conclusively that such a continuation of an earlier election by the
Employer is not advisable and to make the election for the Employer in the
amended prototype form which in the judgment of the Sponsor most nearly
corresponds with the election made by the Employer before the amendment of the
prototype form, provided the following procedure is followed: the election for
the Employer may be made with respect to any specified Employers as to whom it
may be made applicable singly, or such election may be made with respect to all
Employers as to whom it may be made applicable as a group; and the election
shall be made as of an effective date which has been specified on a notice
mailed or delivered, at the last address(es) of the Employer(s) on the records
of the Distributor, to the Employer(s) at least 20 days before the end of the
remedial amendment period. Such notice may be mailed to Employers to whom it
cannot be applicable by reason of a previous election made by the Employer or
otherwise, but it shall be effective only as to those Employers who have
received the notice and have not themselves made a new election with respect to
that item since the amendment of the prototype form and previous to the
effective date of such election by the Sponsor. The foregoing delegations of
authority to make elections, or to make amendments, shall not impose any duty on
the Sponsor to make a given election or amendment and shall not affect the
interpretation of the Plan if any so delegated authority is not used.
18.03 Distribution of Accounts Upon Termination. Upon termination or
partial termination of the Plan or, if this Plan is adopted as a profit sharing
plan, complete discontinuance of Employer Contributions under it, the
Administrator shall determine whether to pay the interests of Participants,
former Participants and Beneficiaries immediately, to retain such interest in
the Trust and pay them in the future according to Section 8, 9 and/or 22 as
applicable, or to use what other methods the Administrator deems advisable in
order to furnish whatever benefits the Trust will provide; provided any such
distributions pursuant to this Section 18.03 shall comply with the requirements
of Section 8, 9, and/or 22 hereof.
SECTION 19.
TRANSFERS
Nothing contained herein shall prevent the merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to, another plan
meeting the requirements of Code Section 401(a) or the transfer to the Plan of
assets or liabilities of another such plan so qualified under the Code. Any
such merger, consolidation or transfer shall be accompanied by the transfer of
such existing records and information as may be necessary to properly allocate
such assets among Participants, including any tax or other information necessary
for the Participants or persons administering the plan which is receiving the
assets. The terms of such merger, consolidation or transfer must be such that
if this Plan is then terminated, the requirements of Section 18.01 hereof would
be satisfied and each Participant would receive a benefit immediately after the
merger, consolidation or transfer equal to or greater than the benefit he or she
would have received if the Plan had terminated immediately before the merger,
consolidation or transfer.
SECTION 20.
OWNER-EMPLOYEE PROVISIONS
20.01 Purpose of Section. This Section is intended to insure that the
Plan complies with Code Section 401(d). Any ambiguity herein will be construed
to that end, and this Section 20 will override any other provision of the Plan
with which it may be inconsistent.
20.02 Control. For purposes of this Section 20, "Control" means the
ownership directly or indirectly of more than 50% of either the capital interest
or the profits interest in a partnership or an unincorporated trade or business.
For the purposes of applying the preceding sentence, an Owner-Employee, or 2 or
more Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such Owner-
Employee, or such 2 or more Owner-Employees, are considered to Control.
20.03 Limitations. No benefits shall be provided to an Owner-Employee
under this Plan unless:
(a) if an Owner-Employee or group of Owner-Employees Controls the
trade or business covered by this Plan and also Control as an Owner-Employee or
Owner-Employees one or more other trades or businesses, this Plan and the plans
established for such other trades or businesses, when taken together, form a
single plan which satisfies the requirements of Sections 401(a) and (d) of the
Code with respect to the Employees of all the controlled trades or businesses;
and
(b) if an Owner-Employee or group of Owner-Employees controls another
trade or business but does not control the trade or business covered by this
Plan, the employees of such other trades or business are included in a Plan
which satisfies the requirements of Sections 401(a) and (d) of the Code and
which provides contributions and benefits for such employees which are not less
favorable than those provided for Owner-Employees under this Plan; and
(c) if an Owner-Employee is covered under the qualified retirement
plans of two or more trades or businesses which he or she does not Control but
the Owner-Employee Controls a trade or business, contributions or benefits for
the employers under the plan of the trade or business which the Owner-Employee
Controls are not less favorable than those provided for the Owner-Employee in
the most favorable qualified retirement plan of the trade(s) or business(es)
which the Owner-Employee does not Control.
SECTION 21.
TOP-HEAVY PROVISIONS
21.01 Purpose of Section. This Section is intended to insure that the
Plan complies with Code Section 416. If the Plan is or becomes Top-Heavy in any
Plan Year beginning after December 31, 1983, the provisions of this Section will
supersede any conflicting provision in the Plan.
21.02 Definitions. The terms used in this Section shall have the
following meanings:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was (i) an officer of the Employer having an annual compensation greater than
1.5 multiplied by the amount in effect under Code Section 415(c)(1)(A) for the
Plan Year (subject to the limitation that no more than the lesser of (A) 50
Employees or (B) the greater of 3 Employees or 10% of the Employees shall be
deemed to be officers), (ii) an owner (or considered an owner under Code Section
318) or 1 of the 10 largest interest in the Employer if both such individual was
an owner of more than 5% interest in the Employer (aggregated with the Employer
for this purpose are all members of (i) a controlled group of corporations (as
defined in Code Section 414(c) as modified by Code Section 415(h)), or (iii)
affiliated service groups (as defined in Code Section 414(m)) of which the
Employer is a part) and such individual's compensation exceeds the dollar
limitation under Code Section 415(c)(1)(A), (iii) a five-percent owner of the
Employer, or (iv) a one-percent owner of the Employer who has an annual
compensation of more than $150,000. The determination period is the Plan Year
containing the Determination Date and the 4 preceding Plan Years. The
determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder.
(b) Top-Heavy Plan. For any Plan Year beginning after December 31,
1983, this Plan is Top-Heavy if any of the following conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and this
Plan is not part of any Required Aggregation Group or Permissive Aggregation
Group of plans.
(ii) If this Plan is part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the Required Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(c) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer has not maintained any defined benefit plan
which during the five-year period ending on the Determination Date(s) has or has
had accrued benefits. Top-Heavy Ratio for this Plan alone or for the Required
Aggregation Group or Permissive Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of the account balances under all of
the plans as of the Determination Date(s) (including any part of any account
balance distributed in the five-year period ending on the Determination Date(s))
of all Key Employees who have received compensation from the Employer (other
than benefits under a qualified retirement plan) at any time during the five-
year period ending on the Determination Date(s), and the denominator of which is
the sum of all account balances as of the Determination Date(s) (including any
part of any account balance distributed in the five-year period ending on the
Determination Date(s)), of all Participants who have received compensation from
the Employer (other than benefits under a qualified retirement plan) at any time
during the five-year period ending on the Determination Date(s). Both the
numerator and denominator of the fraction shall be computed in accordance with
Code Section 416 and the Treasury Regulations promulgated thereunder. In
addition, both the numerator and denominator of the Top-Heavy Ratio shall be
adjusted to reflect any contribution which is not actually made as of the
Determination Date(s), but which is required to be taken into account on that
date under Code Section 416 and the Treasury Regulations promulgated thereunder.
(ii) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer maintains or has maintained one or more defined
benefit plans which during the five-year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy Ratio for any Required
Aggregation Group or Permissive Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of (A) account balances under the
defined contribution plans as of the Determination Date(s) (including any part
of any account balance distributed in the five-year period ending on
<PAGE>
the Determination Date(s)) of all Key Employees who have received compensation
from the Employer (other than benefits under a qualified retirement plan) at any
time during the five-year period ending on the Determination Date(s) and (B) the
present value of accrued benefits under the defined benefit plans for all Key
Employees, who have received compensation from the Employer (other than benefits
under a qualified retirement plan) at any time during the five-year period
ending on the Determination Date(s) and the denominator of which is the sum of
(A) the account balances under the defined contribution plans as of the
Determination Date(s) (including any part of any account balance distributed in
the five-year period ending on the Determination Date(s)) of all participants
who have received compensation from the Employer (other than benefits under this
Plan) at any time during the five-year period ending on the Determination
Date(s) and (B) the present value of accrued benefits under the defined benefit
plans for all participants who have received compensation from the Employer
(other than benefits under this Plan) at any time during the five-year period
ending on the Determination Date(s). Both the numerator and denominator of the
fraction shall be computed in accordance with Code Section 416 and the Treasury
Regulations promulgated thereunder. In addition, both the numerator and
denominator of the Top-Heavy Ratio shall include aggregate distribution(s) of an
account balance or an accrued benefit made during the five-year period ending on
the Determination Date(s) and any contribution which is not actually made as of
the Determination Date(s), but which is required to be taken into account on
that date under Code Section 416 and the Treasury Regulations promulgated
thereunder.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of the
most recent Valuation Date that falls within, or ends with, the 12-month period
ending on the Determination Date, except as provided in Code Section 416 and the
Treasury Regulations promulgated thereunder for the first and second plan years
of a defined benefit plan. The account balances and accrued benefits of a
Participant (A) who is not a Key Employee but who was a Key Employee in a prior
Plan Year or (B) who has not been credited with at least one Hour of Service at
any time during the five-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account will be made in
accordance with Code Section 416 and the Treasury Regulations promulgated
thereunder. Deductible Voluntary Contributions and any deductible employee
contributions under any other qualified plan maintained by the Employer will not
be taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year.
(d) Permissive Aggregation Group. The Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group. (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Employer which enables a
plan described in (i) to meet the requirements of Code Sections 401(a)(4) or
410.
(f) Determination Date. For any Plan Year subsequent to the first
Plan Year, the Determination Date shall be the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the Determination Date shall be the
last day of that year.
(g) Valuation Date. See Section 2.49.
(h) Present Value. Present value shall be based only on the interest
rate employed as of the date in question by the Pension Benefit Guaranty
Corporation to value immediate annuities and the mortality rate specified in
Table LN at Treas. Reg. 20.2031-10, unless otherwise specified in the most
recently adopted or amended defined benefit plan maintained by the Employer.
21.03 Minimum Allocation.
(a) In any Plan Year in which this Plan is Top-Heavy, except as
otherwise provided in (d), (e) and (f) below, the Employer Contributions and
forfeitures allocated on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of 3% of such Participant's Compensation or,
in the case where the Employer has no defined benefit plan which designates this
Plan to satisfy Code Section 401, the largest percentage of Employer
Contributions and forfeitures stated as a percentage of the first $200,000 of a
Key Employee's Compensation, allocated on behalf of any Key Employee for that
Plan Year. The minimum allocation is determined without regard to any Social
Security contribution by the Employer. This minimum allocation shall be made
even though, under other provisions of this Plan, the Participant would not
otherwise be entitled to receive an allocation, or would have received a lesser
allocation for the year because (i) the Participant failed to complete the
minimum number of Hours of Service specified in the Adoption Agreement for
receiving an allocation, (ii) the Participant's Compensation was less than a
stated amount, or (iii) the Participant made insufficient mandatory
contributions to receive an Employer Contribution (allocated on a thrift
matching basis) sufficient to alleviate the need a minimum allocation under this
Section 21.03.
(b) For purposes of computing the minimum allocation, "Compensation"
will have the same meaning as in Section 2.07, disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement.
(c) During any Plan Year for which a minimum allocation is required
under subsections (a) or (f) to a plan under which allocations shall be made on
an integrated basis pursuant to Section 4.01(a)(iii) or 4.01(b) or a matching
basis pursuant to Section 4.01(a)(ii)(B), Employer Contributions and forfeitures
will be allocated to each Participant's Employer Contribution Account in the
ratio that the Participant's Compensation for the Plan Year bears to all
Participants' Compensation for the Plan Year but not in excess of 3% of such
Compensation. The provisions of this Section 21.03(c) shall take precedence
over any conflicting provisions of Section 4.01. To the extent any amount of
Employer Contributions and forfeitures remains unallocated after the application
of this subsection (c), such amount shall be allocated in accordance with the
provisions of Section 4.01 hereof.
(d) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(e) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan (other
than a plan which incorporates the Prototype Plan) or plans of the Employer, and
the Employer has provided in the Adoption Agreement that the minimum allocation
or benefit requirement applicable to Top-Heavy Plans will be met in such other
plan or plans.
(f) The provision in subsection (a) above shall not apply in the
case of a Participant who is an Employee of an Employer who has adopted both a
profit sharing plan and a money purchase pension plan which incorporate this
Prototype Plan. In such case, the aggregate total of the Employer Contributions
and forfeitures under both plans allocated to the Employer Contribution Account
of a Participant who is not a Key Employee shall not be less than 3% of such
Participant's Compensation. Unless the Employer has specified otherwise in the
Adoption Agreement and such specification is sufficient to satisfy the minimum
allocation requirement referred to in the preceding sentence, subsection (c)
above shall apply to the allocation of Employer Contributions and forfeitures
under the profit sharing plan and, only to the extent that such allocation is
insufficient to satisfy the minimum allocation requirement referred to in the
preceding sentence, the money purchase pension plan.
21.04 Nonforfeitability of Minimum Allocation. The minimum allocation
required (to the extent required to be nonforfeitable under Code Section 416(b))
may not be forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
21.05 Limitation on Compensation. For any Plan Year in which the Plan is
Top-Heavy, only the first $200,000 (or such larger amount as may be prescribed
by the Secretary of the Treasury or his or her delegate) of a Participant's
Compensation for the Plan Year shall be taken into account for purposes of
allocating Employer Contributions under the Plan.
21.06 Minimum Vesting Schedule. Unless the Employer has specified a more
rapid vesting schedule in the Adoption Agreement, for any Plan Year in which
this Plan is Top-Heavy, the following minimum vesting schedule shall apply:
Nonforfeitable Percentage of
Vesting Years Employer Contribution Account
1 0%
2 20
3 40
4 60
5 80
6 or more 100
The minimum vesting schedule applies to all benefits within the meaning of
Code Section 411(a)(7) attributable to Employer Contributions and forfeitures,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. Further, no reduction in
vested benefits may occur in the event the Plan's status as Top-Heavy changes
for any Plan Year. IF conversion of the Plan into a Top-Heavy Plan has resulted
in a change of the Plan's vesting schedule to the minimum vesting schedule
discussed above, the change shall be treated as an amendment to the Plan and the
election referred to in Section 18.01 hereof shall apply. This Section 21.06
does not apply to the Employer Contribution Account balances of any former
Participant who does not have an Hour of Service after the Plan has initially
become Top-Heavy and such former Participant's vested Employer Contribution
Account balance will be determined without regard to this Section.
21.07 Effect on Code Section 415 Limitations. Notwithstanding anything to
the contrary in Section 5 above, the following provisions apply if the Plan is
Top-Heavy.
(a) In any Plan Year in which the Top-Heavy ratio exceeds 90% (and
the Plan therefore becomes super Top-Heavy) the denominators of the Defined
Benefit Fraction (as defined in Section 5.05(c) above) and the Defined
Contribution Fraction (as defined in Section 5.05(d) above) shall be computed
using 100% of the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%, but is
less than 90%, the denominators of the Defined Benefit Fraction (as defined in
Section 5.05(c) above) and the Defined Contribution Fraction (as defined in
Section 5.05(d) above) shall be computed using 100% of the dollar limitation
described therein instead of 125%, unless the Employer has specified in the
Adoption Agreement that the minimum allocation provisions of Section 21.03 above
shall be computed using 4% of a Participant's Compensation, in which case the
dollar limitations of the Defined Benefit Fraction (as defined in Section
5.05(c) above) and the Defined Contribution Fraction (as defined in Section
5.05(d) above) shall continue to be computed using 125% of the dollar
limitations.
21.08 Termination of Top-Heavy Status. If the Plan ceases to be Top-Heavy
for any Plan Year and if the Employer has not specified otherwise in the
Adoption Agreement, the minimum vesting schedule described in Section 21.06
shall continue to apply. If the Employer has specified in the Adoption
Agreement that, upon conversion of the Plan to non-Top-Heavy status,
Participants' vested benefits are to be determined according to a schedule other
than the minimum vesting schedule described in Section 21.06, such change in
vesting schedules shall be treated as an amendment, and the election referred to
in Section 18.01 hereof shall apply.
SECTION 22.
SPECIAL DISTRIBUTION RULES
22.01 Special Rule for Profit Sharing Plan Participants. If this Plan is
adopted as a profit sharing plan and (a) it is determined that this Plan is a
direct or indirect transferee (including a plan which is amended into this Plan)
of a defined benefit plan, money purchase pension plan (including a target
benefit plan), stock bonus or profit sharing plan which would otherwise provide
a life annuity form of payment with respect to such Participant, (b) the Plan is
amended so as to allow a Participant to elect to receive his or her benefits in
the form of a life annuity and Participant elects to receive his or her
<PAGE>
benefits in such form, (c) the Plan is amended to provide that absent a
Qualified Election of a Participant's surviving spouse, someone other than the
Participant's surviving spouse becomes entitled to the Participant's vested
Account balance, or (d) if someone other than the Participant's surviving spouse
is the beneficiary of any insurance purchased with funds from the Participant's
Account, the provisions of Sections 8, 9, and 15 shall apply as if this Plan
were adopted as a money purchase pension plan.
22.02 Elections for Former Participants. An opportunity to make the
applicable distribution elections discussed below in this Section 22.02 must be
given to any living former Participant who had not begun receiving benefits from
this Plan on August 23, 1984 and who would not otherwise receive the benefit
forms prescribed by Sections 8 and 9 above.
(a) In the case of a former Participant who:
(i) would have been entitled to receive his or her benefits in
the form of a life annuity had he or she completed an Hour of Service during a
Plan Year commencing after December 31, 1984,
(ii) was credited with Service under this Plan or a predecessor
plan in a plan year beginning after December 31, 1975, and
(iii) had at least ten years of vesting Service when he or she
separated from Service,
the former Participant must be given an opportunity to elect to receive his or
her benefits in accordance with the provisions of Sections 8 and 9 applied as if
this Plan were adopted as a money purchase pension plan.
(b) In the case of a former Participant:
(i) who was credited with service under this Plan or a
predecessor plan after September 1, 1974;
(ii) who was not credited with service under this plan or a
predecessor plan in a plan year beginning after December 31, 1975; and
(iii) whose benefits would have been payable in the form of a
life annuity
the Participant must be given an opportunity to elect to receive his or her
benefits in accordance with the provisions of Section 22.04.
(c) In the case of a former Participant who:
(i) satisfies the requirements of subsection (a) but does not
exercise the election made available to him or her in subsection (a), or
(ii) satisfies the requirements of subsection (a) other than the
requirement of paragraph (iii),
the former participant shall have his or her benefits distributed in accordance
with the provisions of Section 22.04.
22.03 Election Period for Certain Elections by Separated Participants.
The period during which a former Participant entitled to make an election
pursuant to Section 22.02 shall commence on August 23, 1984 and end on the
earlier of the former Participant's death or the date benefits would otherwise
commence to said former Participant.
22.04 Benefit Form for Certain Former Participants. The benefits of a
former Participant who is entitled to elect, and has elected to have his or her
benefits distributed pursuant to this Section 22.04 or a former Participant
whose benefits are required to be distributed in accordance with the provisions
of this Section 22.04 shall be distributed in accordance with the following
provisions:
(a) If benefits in the form of a life annuity become payable to a
married former Participant who:
(i) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(ii) dies on or after Normal Retirement Age while still working
for the Employer; or
(iii) begins to receive payments prior to Normal Retirement Age;
or
(iv) separates from Service on or after attaining Normal
Retirement Age (or the qualified early retirement age) after satisfying the
eligibility requirement for the payment of benefits under the Plan and
thereafter dies before beginning to receive such benefits;
then such benefits will be received under this plan in the form of a Qualified
Joint and Survivor Annuity, unless the former Participant has elected otherwise
during the election period. For this purpose, the election period must begin at
least six months before the participant attains qualified early retirement age
and end not more than 90 days before the commencement of benefit distributions.
Any election hereunder must be in writing and delivered to the Administrator;
such election may be changed by the former Participant at any time by delivery
of written notification of such change and/or a separate written election to the
Administrator.
(b) A former Participant who is employed at the start of the election
period defined below will be given the opportunity to elect, during such
election period, to have a survivor annuity payable on death. If the former
Participant elects the survivor annuity, payments under such annuity must not be
less than the payments which would have been made to the Spouse under the
Qualified Joint and Survivor Annuity if the former Participant had retired on
the day before his or her death. Any election under this provision must be in
writing and delivered to the Administrator; such election may be changed by the
former Participant at any time by delivery of written notification of such
change and/or a separate written election to the Administrator. The election
period begins on the later of (i) the 90th day before the former Participant
attains the qualified early retirement age or (ii) the date the former
Participant terminates employment with the Employer.
(c) The qualified early retirement age referred to in this Section
22.04 shall mean the latest of:
(i) the earliest date, under the plan, on which the former
Participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before the
former Participant reaches Normal Retirement Age, or
(iii) the date the former Participant began participation.
SECTION 23.
DISTRIBUTION OPTION
NOTICE REQUIREMENTS
23.01 Notice of Waivability of Qualified Preretirement Survivor Annuity.
In the case of a Participant who is scheduled to receive Qualified Preretirement
Survivor Annuity pursuant to section 8.01 hereof, the Administrator shall
provide the Participant within the period beginning on the first day of the Plan
Year in which the Participant attains age 32 and ending with the close of the
Plan Year in which the Participant attains age 35, a written explanation of: (a)
the terms and conditions of a Qualified Preretirement Survivor Annuity; (b) the
Participant's right to make, and the effect of, an election to waive Qualified
Preretirement Survivor Annuity coverage; (c) the rights of a Participant's
Spouse; and (d) the Participant's right to make, and the effect of, a revocation
of a previous election to waive Qualified Preretirement Survivor Annuity
coverage. In the case of a Participant who becomes a Participant after the
first day of the Plan Year in which the Participant attained age 32 and who is
scheduled to receive a Qualified Preretirement Survivor Annuity pursuant to
Section 8.01 hereof, the Administrator shall provide the notice required by this
Section 23.01 no later than the close of the third Plan Year subsequent to the
Participant's commencement of participation in the Plan.
23.02 Notice of Waivability of Qualified Joint and Survivor Annuity. In
the case of a Participant who is scheduled to receive a Qualified Joint and
Survivor Annuity pursuant to the provisions of Section 9.03 hereof, the
Administrator shall provide to the Participant, within a reasonable period prior
to the commencement of distributions, a written explanation of: (a) the terms
and conditions of a Qualified Joint and Survivor Annuity; (b) the Participant's
right to make, and the effect of, an election to waive distribution in the form
of a Qualified and Joint Survivor Annuity coverage; (c) the rights of the
Participant's Spouse; and (d) the Participant's right to make, and the effect
of, a revocation of a previous election to waive distribution in the form of the
Qualified and Joint Survivor Annuity.
SECTION 24.
WAIVER OF MINIMUM FUNDING STANDARD
If an Employer who has adopted this Prototype Plan as a money purchase
pension plan is unable to satisfy the minimum funding standard (as described in
Code Section 412) for a given Plan Year, it may apply to the Internal Revenue
Service for a waiver of such minimum funding standard. If the waiver is
granted, the following provisions apply:
(a) An adjusted Account balance shall be maintained for each
Participant whose actual Account balance is less than or equal to his or her
adjusted Account balance.
(i) For the Plan Year for which the first waiver is granted, the
adjusted Account balance as of the Valuation Date for each affected Participant
equals:
(A) the Participant's actual Account balance, plus
(B) the amount that such Participant would have received if
the amount waived had been contributed.
(ii) For each Plan Year following the Plan Year for which a
waiver is granted, the adjusted Account balance for each Participant affected by
such waiver (calculated as of the Valuation Date for that Plan Year) equals:
(A) the adjusted Account balance as of the Valuation Date
in the prior Plan Year, plus
(B) the amount equal to the actual investment return
credited or charged to the Participant's actual Account balance, plus
(C) the amount equal to 5% of the excess of the amount in
(A) over the Participant's actual Account balance calculated as of the same
date, plus
(D) the amount equal to such Participant's allocated share
of the required Employer Contribution (whether or not waived) for the Plan Year
(determined without regard to adjusted waiver payments and discretionary
Employer Contributions), minus
(E) the amount of the Participant's adjusted Account
balance forfeited during the Plan Year under the Plan's provisions.
(b) For a given Plan Year, the Employer is required to contribute a
certain amount in order to satisfy the minimum funding standard for such Plan
Year. For each Plan Year which follows a Plan Year for which a waiver of the
minimum funding standard was granted the amount equals:
(i) the amount due as determined under Section 4.01(b) above
without regard to this Section), plus
(ii) the adjusted waiver amount.
(c) The adjusted waiver amount for a given Plan Year equals:
(i) the sum of the amounts necessary to amortize each waived
funding deficiency over a period of fifteen Plan Years (measured from the
Valuation Date of the Plan Year for which the corresponding waiver was granted)
at 5% interest, compounded annually, minus
(ii) the sum of the amounts necessary to amortize the total of
each Plan Year's forfeitures (which have arisen since the first waiver was
granted) over a period of fifteen Plan Years (measured from the Valuation Date
of the Plan Year in which the corresponding forfeitures arose) at 5% interest,
compounded annually.
(d) An amount equal to the adjusted waiver amount must be contributed
only until each Participant's actual Account balance equals the Participant's
adjusted Account balance.
(e) Any Plan provision which provides that Employer Contributions
shall be reduced immediately by forfeitures is revoked until each Participant's
actual Account balance equals that Participant's adjusted Account balance.
(f) Discretionary Employer Contributions, which are in addition to
the amounts contributed to satisfy the minimum funding standard, can be made in
any given Plan Year. However, the total Employer Contribution for the Plan Year
cannot exceed the then remaining underfunded amount (the sum of Participants'
adjusted Account balances minus total Plan assets).
(g) The adjusted waiver payments, discretionary Employer
contributions and the forfeitures of actual Account balances for the current
Plan Year shall be allocated as of that Plan Year's Valuation Date to the actual
Account balances of the affected Participants.
(h) Each time a waiver is granted, an original waiver amount ("OWA")
will be determined for each affected Participant. The OWA equals the
Participant's portion of the amount which was waived.
(i) Commencing with the Valuation Date of the Plan Year for which a
waiver is granted, a remaining original waiver amount ("ROWA") must be
calculated for each affected Participant. As of such Valuation Date the OWA
equals the ROWA. On the Valuation Date of a succeeding Plan Year the ROWA
equals the prior Plan Year's ROWA multiplied by
<PAGE>
1.05, minus the forfeiture of amounts in the prior Plan year's ROWA incurred in
the current Plan Year. For each waiver that is granted one OWA and a
corresponding ROWA will be established for each affected Participant.
(j) The sum of the adjusted waiver payments, discretionary Employer
Contributions and forfeitures of actual Account balances for a given Plan Year
are allocated to those Participants who have ROWAs by multiplying the sum of
these three amounts by the fraction:
(i) the numerator of which equals the sum of OWAs for a
particular Participant, and
(ii) the denominator of which equals the sum of the OWAs for all
Participants.
To determine the portion of this allocation which is to be assigned to a
given ROWA, multiply the allocation by the corresponding OWA, then divide by the
sum of the OWAs for the particular Participant.
(k) If the calculation of a ROWA results in a value which is less
than zero, then
(i) the ROWA is set equal to zero,
(ii) the corresponding OWA is set equal to zero, and
(iii) the excess payments will be reallocated to the remaining
ROWAs.
(l) A distribution is determined by multiplying a Participant's
vested percentage by his or her adjusted Account balance. However,
distributions from the Plan may not exceed a Participant's actual Account
balance. If so limited, plan Participants shall receive subsequent
distributions derived from future adjusted waiver payments.
SECTION 25.
MISCELLANEOUS
25.01 Misrepresentation. Notwithstanding any other provision herein, if
an Employee misrepresents his or her age or any other fact, any benefit payable
hereunder shall be the smaller of: (a) the amount that would be payable if
no facts had been misrepresented, or (b) the amount that would be payable if the
facts were as misrepresented.
25.02 Legal or Equitable Action. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs to the Employer, the Administrator or the Trust of defending or bringing
such action shall be charged against the interest, if any, of such person under
the Plan.
25.03 No Enlargement of Plan Rights. It is a condition of the Plan, and
each Participant by participating herein expressly agrees, that he or she shall
look solely to the assets of the Trust for the payment of any benefit under the
Plan.
25.04 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed (a) to give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provide herein or (b)
to create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee.
25.05 Written Orders. In taking or omitting to take any action under this
Plan, the Trustee may conclusively rely upon and shall be protected in acting
upon any written orders from or determinations by the Employer or the
Administrator as appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be genuine and to
have been properly executed, and so long as it acts in good faith, in taking or
omitting to take any other action.
25.06 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act.
Subject thereto, neither Trustee, Loan Trustee, Administrator nor Distributor
nor any other person shall have any liability under the Plan, except as a result
of negligence or wilful misconduct, and in any event the Employer shall fully
indemnify and save harmless all persons from any liability except that resulting
from their negligence or wilful misconduct.
25.07 Discretionary Actions. Any discretionary action, including the
granting of a loan pursuant to Section 10 hereof, to be taken by the Employer or
the Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
25.08 Headings. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
25.09 Applicable law. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the state in which (a) if the Trustee
is a corporation, the Trustee has its principal place of business; (b) if the
Trustee is an individual, the Trustee resides; or (c) if the Trustee is
individuals, where a majority of the individuals serving as Trustee reside. The
Employer's execution of the Adoption Agreement may be acknowledged where
required by applicable law.
25.10 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Sections 5 and 16, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
However, the Employer may request a return, and this Section 25.10 shall not
prohibit return, of an amount to the Employer under any of the following
circumstances:
(a) if the amount was all or part of an Employer contribution which
was made as a result of a mistake of fact and the amount contributed is returned
to the Employer within one year after the date on which the mistaken payment of
the contribution was made, or
(b) if the amount was all or part of an Employer contribution which
was conditioned on deductibility under Code Section 404 and this condition is
not satisfied, and the amount is returned to the Employer within one after the
date on which the deduction is disallowed, or
(c) if the amount was all or part of an Employer contribution which
was conditioned on the initial qualification of the Plan under Code Section
401(a), this condition is not satisfied, and the amount is returned to the
Employer within one year after the date on which initial qualification is
denied, or
(d) if the amount was all or part of an Employer contribution which
was conditioned on the qualification of the Plan as amended under Code Section
401(a), this condition is not satisfied, the Plan amendment was submitted to the
Internal Revenue Service for qualification within one year after it was adopted,
and the amount is returned to the Employer within one year after the date on
which requalification is denied.
For the purposes of this Section 25.10, all Employer contributions are
conditioned on initial qualification of the Plan under Code Section 401(a),
qualification of the Plan as amended under Code Section 401(a), and
deductibility under Code Section 404.
25.11 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his or her delegate with respect to the
qualification of the Plan.
25.12 Conflict. In the event of any conflict between the provisions of
this Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control. In particular, the
proceeds of any life insurance contract purchased by the Trustee and not
governed by an effective Designation of Beneficiary form shall be paid to the
Participant's Spouse regardless of who is named as the beneficiary or
beneficiaries in the contract.
MODEL AMENDMENT II
FOR DEFINED
CONTRIBUTION PLANS
SECTION I:
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The purpose of this amendment is to amend the plan to comply
with those provisions of the Tax Reform Act of 1986 that are effective prior to
the first year beginning after December 31, 1988. Nothing contained in this
amendment shall permit or require Matching Employer Contributions or Employee
Contributions under the plan unless such Matching Employer Contributions or
Employee Contributions have been authorized by the employer under other
provisions of the plan or under other amendments thereto.
1.2 Effective Date. Except as otherwise provided, this amendment shall be
effective as of the first day of the first Plan Year beginning after December
31, 1986.
SECTION II:
DEFINITIONS
For the purposes of this amendment only, the following definitions shall
apply:
2.1. "Adoption Agreement Amendment" shall mean that portion of this
amendment in which the Employer makes any elections permitted under the
amendment.
2.2. "Affiliated Employer" shall mean any corporation which is a member of
a controlled group of corporations (as defined in section 414(b) of the Code)
which includes the Employer, any trade or business (whether or not incorporated)
which are under common control (as defined in section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated) which is a member
of an affiliated service group (as defined in section 414(m) of the Code) which
includes the Employer; and any other entity required to aggregated with the
Employer pursuant to regulations under section 414(o) of the Code.
2.3. "Code" shall mean the Internal Revenue Code of 1986 and amendments
thereto.
2.4. "Compensation" shall mean, for purposes of section V of this
amendment, compensation paid by the Employer to the Participant during the Plan
Year which is required to be reported as wages on the Participant's Form W-2 of
which, in the case of a self-employed individual, constitutes payment for
services rendered includible in the self-employed individual's gross income and,
if the provisions of the plan other than this amendment so provide, shall also
include compensation which is not currently includible in the Participant's
gross income by reason of the application of sections 125, 402(a)(8),
402(h)(1)(B), or 403(b) of the Code.
2.5. "Employee" shall mean employees of the Employer and shall include
leased employees within the meaning of section 414(n)(2) of the Code.
Notwithstanding the foregoing, if such leased employees constitute less than
twenty percent of the Employer's nonhighly compensated workforce within the
meaning of Section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall not
include those leased employees covered by a plan described in section 414(n)(5)
of the Code unless otherwise provided by the terms of this plan other than this
amendment.
2.6. "Employee Contributions" shall mean contributions made to the plan by
a Participant during the Plan Year.
2.7. "Employer" shall mean the entity that establishes or maintains the
plan, any "Affiliated Employer" and any successor of such establishing employer.
2.8. "Family Member" shall mean an individual described in section
414(q)(6)(B) of the Code.
2.9. "Highly Compensated Employee" shall mean an employee described in
section 414(q) of the Code.
2.10. "Matching Contribution" shall mean any contribution to the plan made
by the Employer for the Plan Year and allocated to a Participant's account by
reason of the Participant's Employee Contributions or elective deferrals.
<PAGE>
2.11. "Nonhighly Compensated Employee" shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family member.
2.12. "Participant" shall mean any Employee of the Employer who has met
the eligibility and participation requirements of the plan.
2.13. "Plan Year" shall mean the plan year otherwise specified in the
plan.
SECTION III:
PROVISIONS RELATING TO
LEASED EMPLOYEES
3.1. Safe-Harbor. Notwithstanding any other provisions of the plan, for
purposes of determining the number or identity of Highly Compensated Employees
or for the purposes of the pension requirements of section 414(n)(3) of the
Code, the employees of the Employer shall include individuals defined as
Employees in section 2.5 of the amendment.
3.2. Participation and Accrual. A leased employee within the meaning of
section 414(n)(2) of the Code shall become a Participant in, and accrue benefits
under, the plan based on service as a leased employee only as provided in
provisions of the plan other than this section III.
3.3. Effective Date. This section III shall be effective for services
performed after December 31, 1986.
SECTION IV:
LIMITATIONS ON CONTRIBUTIONS
AND BENEFITS
4.1. Revised Contribution Limitations under Defined Contribution Plan.
4.1(a). Definition of Annual Additions. For purposes of the plan, "Annual
Addition" shall mean the amount allocated to a Participant's account during the
Limitation Year that constitutes:
(i) Employer Contributions or Employee Contributions, including
Excess Contributions as defined in section 401(k)(8)(B) of the Code, Excess
Aggregate Contributions as defined in section 401(m)(6)(B), and Excess Deferrals
as described in section 402(g), regardless of whether such amounts are
distributed or forfeited;
(ii) Forfeitures; and
(iii) Amounts described in sections 415(l)(1) and 419A(d)(2) of the
Code.
4.1(b). Maximum Annual Addition. The maximum Annual Addition that may be
contributed or allocated to a Participant's account under the plan for any
Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent of the Participant's compensation, within the meaning
of section 415(c)(3) of the Code for the Limitation Year.
4.1(c). Special Rules. The compensation limitation referred to in section
4.1(b)(ii) shall not apply to:
(i) Any contribution for medical benefits (within the meaning of
section 419A(f)(2) of the Code) after separation from service which is otherwise
treated as an Annual Addition, or
(ii) Any amount otherwise treated as an Annual Addition under section
415(l)(1) of the Code.
4.1(d). Definitions. For purposes of section 4.1, "Defined Contribution
Dollar Limitation" shall mean $30,000 or, if greater, one-fourth of the defined
benefit dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
4.2. Special Rules for Plans Subject to Overall Limitations Under Code
Section 415(e).
4.2(a). Recomputation Not Required. The Annual Addition for any
Limitation Year beginning before January 1, 1987 shall not be recomputed to
treat all Employee Contributions as an Annual Addition.
4.2(b). Adjustment of Defined Contribution Plan Fraction. If the plan
satisfied the applicable requirements of section 415 of the Code as in effect
fro all Limitation Years beginning before January 1, 1987, an amount shall be
subtracted from the numerator of the defined contribution plan fraction (not
exceed such numerator) as prescribed by the Secretary of the Treasury so that
the sum of the defined benefit plan fraction and defined contribution plan
fraction computed under section 415(e)(1) of the Code (as revised by this
section IV) does not exceed 1.0 for such Limitation Year.
4.3. Limitation Year. For purposes of this section IV, "Limitation Year"
shall mean the limitation year specified in the plan, or if none is specified,
the calendar year.
4.4. Effective Date of Section IV Provisions. The provisions of this
section IV shall be effective for Limitation Years beginning after December 31,
1986.
4.5. For purposes of this section IV, Affiliated Employer shall also
include those employers described in section 415(h) of the Code.
SECTION V:
LIMITATIONS ON EMPLOYEE
CONTRIBUTIONS
5.1. Applicability of this Section. This section V shall apply to the
plan only if such plan permits Employee Contributions or allocates Matching
Contributions to Participants' accounts in Plan Years beginning after December
31, 1986.
5.2. Contribution Percentage.
5.2(a). The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who are Nonhighly Compensated
Employees for the Plan Year multiplied by 1.25; or
5.2(b). The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who are Nonhighly Compensated
Employees for the Plan Year multiplied by 2, provided that the Average
Contribution Percentage for Highly Compensated Employees does not exceed the
Average Contribution Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the Plan Year by more than two (2) percentage points
or such lesser amount as the Secretary of the Treasury shall prescribe to
prevent the multiple use of this alternative limitation with respect to any
Highly Compensated Employee.
5.3. Definitions. For purposes of this section V, the following
definitions shall apply:
5.3(a). "Average Contribution Percentage" shall mean the average
(expressed as a percentage) of the Contribution Percentages of the Eligible
Participants in a group.
5.3(b). "Contribution percentage" shall mean the ratio (expressed as a
percentage) if the sum of the Employee Contributions and Matching Contributions
under the plan on behalf of the Eligible Participant for the Plan Year to the
Eligible Participant's Compensation for the Plan Year.
5.3(c). "Eligible Participant" shall mean any employee who is authorized
under the terms of the plan to have Employee Contributions or Matching
Contributions allocated to his account for the Plan Year.
5.4. Special Rules.
5.4(a). For purposes of this section V, the Contribution Percentage for
any Eligible Participant who is a Highly Compensated Employee for the Plan Year
and who is eligible to make Employee Contributions, or to have Matching
Contributions within the meaning of section 401(m)(4)(A) of the Code allocated
to his account under two or more plans described in section 401(a) of the Code
or arrangements described in section 401(k) of the Code that are maintained by
the Employer shall be determined as if the total of such Employee Contributions
and Matching Contributions was made under each plan.
5.4(b). In the event that this plan satisfies the requirements of section
410(b) of the Code only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of section 410(b) of the Code only if
aggregated with this plan, then this section V shall be applied by determining
the Contribution Percentages of Eligible Participants as if all such plans were
a single plan.
5.4(c). For purposes of determining the Contribution Percentage of an
Eligible Participant who is a Highly Compensated Employee, the Employee
Contributions, Matching Contributions and Compensation of such Eligible
Participant shall include the Employee Contributions, Matching Contributions and
Compensation of Family Members. Family Members with respect to Highly
Compensated Employees shall be disregarded as separate employees in determining
the Contribution Percentage both for Eligible Participants who are Nonhighly
Compensated Employees and for Eligible Participants who are Highly Compensated
Employees.
5.4(d). The determination and treatment of the Contribution Percentage of
any Eligible Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
5.5. Distribution of Excess Aggregate Contributions.
5.5(a). In General. Excess Aggregate Contributions plus any income and
minus any loss allocable thereto shall be forfeited, if otherwise forfeitable
under the terms of this plan, or if not forfeitable, distributed no later than
the last day of each Plan Year beginning after December 31, 1987, to
Participants to whose accounts Employee Contributions or Matching Contributions
were allocated for the preceding Plan Year.(1) Excess Aggregate Contributions
shall be treated as Annual Additions under section 4.1(a) of this amendment.
5.5(b). Excess Aggregate Contribution. For purposes of this amendment,
"Excess Aggregate Contribution" shall mean the amount described in section
401(m)(6)(B) of the Code.
5.5(c). Determination of Income or Loss. The Excess Aggregate
Contributions to be forfeited, if otherwise forfeitable under the terms of the
plan, or if not forfeitable, distributed to the Participant shall be adjusted
for income or loss. The income or loss allocable to Excess Aggregate
Contributions shall be determined by multiplying the income or loss allocable to
the Participant's Employee Contributions and Matching Contributions for the Plan
Year by a fraction, the numerator of which is the Excess Aggregate Contributions
on behalf of the Participant for the preceding Plan Year and the denominator of
which is the sum of the Participant's account balances attributable to Employee
Contributions and Matching Contributions on the last day of the preceding Plan
Year.
5.5(d). Accounting for Excess Aggregate Contributions. Excess Aggregate
Contributions shall be distributed from the Participant's Employee Contribution
account, and forfeited if otherwise forfeitable under the terms of the plan (or,
if not forfeitable, distributed) from the Participant's Matching Contribution
account in proportion to the Participant's Employee Contributions and Matching
Contributions for the Plan Year.
5.5(e). Allocation of Forfeitures. Amounts forfeited by Highly
Compensated Employees under this section V shall be:
(i) Treated as Annual Additions under section 4.1(a) of this
amendment and either;
(ii) Applied to reduce Employer contributions if forfeitures of
matching Contributions under the plan are applied to reduce Employer
contributions; or
(iii) Allocated, after all other forfeitures under the plan, and
subject to section 5.4(f) of this amendment, to the same Participants and in the
same manner as such other forfeitures of Matching Contributions are allocated to
other Participants under the plan.
5.5(f). Notwithstanding the foregoing, no forfeitures arising under this
section V shall be allocated to the account of any Highly Compensated Employee.
- ------------------
(1) If Excess Aggregate Contributions plus any income and minus any loss
allocable thereto are forfeited (if forfeitable) or distributed more than 2-1/2
months after the last day of the Plan Year in which such Excess Aggregate
Contributions arose, then section 4979 of the Code imposes a ten (10) percent
excise tax on the employer maintaining the plan with respect to such amounts.
<PAGE>
SECTION VI:
QUALIFIED VOLUNTARY EMPLOYEE
CONTRIBUTIONS NOT PERMITTED
6.1. The plan shall accept no Employee Contributions designated by the
Participant as deductible employee contributions (within the meaning of section
72(o)(5)(A) of the Code) for a taxable year of the Participant beginning after
December 31, 1986.
SECTION VII:
DETERMINATION OF TOP HEAVY STATUS
7.1. Solely for the purpose of determining if the plan or any other plan
included in a required aggregation group of which this plan is a part, is top-
heavy (within the meaning of section 416(g) of the Code) the accrued benefit in
a defined benefit plan of an Employee other than a Key Employee (within the
meaning of section 416(i)(1) of the Code) shall be determined under (a) the
method, of any, that uniformly applies for accrual purposes under all plans
maintained by the Employer, or (b) if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted under
the fractional accrual rate of section 411(b)(1)(C) of the Code.
SECTION VIII:
RESERVED
SECTION IX:
BENEFIT FORFEITURES
9.1. Applicability of this Section. This section IX shall apply to the
plan only if such plan is a money purchase pension plan, other than a target
benefit plan, and the Employer elects in the Adoption Agreement Amendment to
have this section apply.
9.2. Allocation of Forfeitures. Notwithstanding any other provision of
the plan, forfeitures occurring in Plan Years specified in the Adoption
Agreement Amendment shall be allocated to Participants entitled to an allocation
of Employer contributions for the Plan Year in which the forfeiture occurs in
proportion to their compensation. The plan shall continue to be designed to
qualify as a money purchase pension plan for purposes of section 401(a), 402,
412 and 417 of the Code.
9.3. Forfeitures. For purposes of this section IX, "forfeitures" shall
mean those nonvested amounts allocated to Participants' accounts that, under the
terms of the plan immediately prior to the adoption of this amendment, would
have been applied, if forfeited to reduce employer contributions under the plan.
SECTION X:
PROFITS NOT REQUIRED
10.1. Applicability of this Section. This section X shall apply to the
plan only if such plan is a profit-sharing plan and the Employer elects in the
Adoption Agreement to have this section apply.
10.2. Employer Contributions. Notwithstanding any other provision of the
plan, Employer Contributions for Plan Years specified in the Adoption Agreement
Amendment shall be made to the plan without regard to current or accumulated
earnings and profits for the taxable year or years ending with or within such
Plan Year. The plan shall continue to be designed to qualify as a profit-
sharing plan for purposes of sections 401(a), 402, 412 and 417 of the Code.
MODEL CASH OR
DEFERRED
ARRANGEMENT
AMENDMENT
SECTION I:
PURPOSE AND EFFECTIVE DATE
1.1. Purpose. If so elected in the cash or deferred arrangement (CODA)
adoption agreement, it is the intention of the Employer to incorporate a CODA,
which satisfies the requirements of section 401(k) of the Code, as part of its
profit-sharing plan.
1.2. Effective Date. The CODA is effective upon adoption by the adopting
employer subject to the limitations specified in section XI of the CODA adoption
agreement.
SECTION II:
DEFINITIONS
The following definitions shall apply for purposes of this amendment only:
2.1. "Actual Deferral Percentage" shall mean the ratio (expressed as a
percentage) of Elective Deferrals, Qualified Matching Contributions (to the
extent taken into account in section 3.6 of the CODA, pursuant to section 3.4(A)
of the CODA adoption agreement) and Qualified Non-elective Contributions on
behalf of a Participant for the Plan Year to the Participant's Compensation for
the Plan Year. The Actual Deferral Percentage of an Employee who is eligible to,
but does not make an Elective Deferral and who does not receive an allocation of
a Qualified Matching Contribution or a Qualified Non-elective Contribution, is
zero.
2.1(a). Qualified Matching Contributions (to the extent taken into account
in section 3.6 of the CODA) shall be treated as Qualified Non-elective
Contributions for the purposes of this section, as well as sections 2.11,
3.7(a), 3.7(b), 3.7(c), 3.8, 3.8(a), 3.8(b), 3.10, 3.11, 5.1 and 5.2 of the CODA
and section 7.1 of the CODA adoption agreement. Also, to the extent that
Qualified Matching Contributions are taken into account in section 3.6 of the
CODA, then any earnings that are attributable to such Qualified Matching
Contributions must be allocated to a Participant's Qualified Non-elective
Contribution accounts under section 3.10 of the CODA.
2.2. "Adjustment Factor" shall mean the cost of living factor prescribed
by the Secretary of the Treasury under section 415(d) of the Code for years
beginning after December 31, 1987, as applied to such items and in such manner
as the Secretary shall provide.
2.3. "Affiliated Employer" shall mean any corporation which is a member of
a controlled group of corporations (as defined in section 414(b) of the Code)
which includes the Employer; any trade or business (whether or not incorporated)
which is under common control (as defined in section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated) which is a member
of an affiliated service group (as defined in section 414(m) of the Code) which
includes the Employer; and any other entity required to aggregated with the
Employer pursuant to regulations under section 414(o) of the Code.
2.4. "Average Actual Deferral Percentage" shall mean the average
(expressed as a percentage) of the Actual Deferral Percentages of the
Participants in a group.
2.5. "Code" shall mean the Internal Revenue Code of 1986.
2.6. "Compensation" shall mean, unless otherwise elected in the CODA
adoption agreement, compensation paid by the Employer to the Participant during
the Plan Year which is required to be reported as wages on the Participant's
Form W-2, or which, in the case of a self-employed individual, constitutes
payment for services includible in the self-employed individual's gross income.
This definition shall apply solely for purposes of determining the Actual
Deferral Percentage under section 3.6 and the Contribution Percentage under
section 7.1.
2.7. "Elective Deferrals" shall mean contributions made to the plan during
the Plan Year by the Employer, at the election of the Participant, in lieu of
cash compensation and shall include contributions that are made pursuant to a
salary reduction agreement. Such contributions must be nonforfeitable when made
and distributable only as specified in section 5.1 below.
2.8. "Employee" shall mean employees of the Employer and shall include
leased employees within the meaning of section 414(n)(2) of the Code.
Notwithstanding the foregoing, if such leased employees constitute less than
twenty (20) percent of the Employer's Non-highly Compensated work force within
the meaning of section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall
not include those leased employees covered by a plan described in section
414(n)(5)(B) of the Code unless otherwise provided by the terms of this plan
other than this amendment.
2.9. "Employee Contributions" shall mean contributions made to the plan by
a Participant during the Plan Year.
2.10. "Employer" shall mean the entity that establishes or maintains the
plan, any successor to such entity, and any Affiliated Employer.
2.11. "Excess Contributions" shall mean, with respect to any Plan Year,
the aggregate amount of Elective Deferrals and Qualified Non-elective
Contributions actually paid over to the trust on behalf of Highly Compensated
Employees for such Plan Year over the maximum amount of such contributions
permitted under section 3.6 below.
2.12. "Excess Elective Deferrals" shall mean the amount of Elective
Deferrals for a calendar year that the Participant allocates to this plan
pursuant to the claim procedure set froth in section 3.5(a)(1).
2.13. "Family Member" shall mean an individual described in section
414(q)(6)(B) of the Code.
2.14. "Highly Compensated Employee" shall mean an Employee described in
section 414(q) of the Code.
2.15. "Matching Contribution" shall mean any contribution to the plan made
by the Employer for the Plan Year and allocated to a Participant's account by
reason of the Participant's Employee Contributions or Elective Deferrals.
Matching Contributions are subject to the distribution provisions applicable to
Employer contributions in the underlying plan document.
2.16. "Non-highly Compensated Employee" shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family Member.
2.17. "Participant" shall mean any Employee of the Employer who has met
the eligibility and participation requirements of the Plan.
2.18. "Plan Year" shall mean the plan year otherwise specified in the
plan.
2.19. "Qualified Non-elective Contributions" shall mean contributions
(other than Matching Contributions) made by the Employer and allocated to
Participants' accounts that the Participants may not elect to receive in cash
until distributed from the plan; that are nonforfeitable when made; and that are
distributable only as specified in section 5.1.
2.20. "Qualified Matching Contributions" shall mean any contributions to
the plan made by the Employer for the Plan Year and allocated to a Participant's
account by reason of Elective Deferrals, that are non-forfeitable when made, and
that are distributable only as specified in section 5.1.
SECTION III:
ELECTIVE DEFERRALS
3.1. Allocation of Deferrals. The Employer shall contribute and allocate
to each Participant's Elective Deferral account an amount equal to the amount of
a Participant's Elective Deferrals.
3.2. Elective Deferrals Pursuant to a Salary Reduction Agreement. To the
extent provided in the CODA adoption agreement, a Participant may elect to have
Elective Deferrals made under this plan. Elective Deferrals shall include
single-sum and continuing contributions made pursuant to a salary reduction
agreement.
3.2(a). Commencement of Elective Deferrals. A Participant shall be
afforded a reasonable period at least once each calendar year, as specified in
section 2.1(a) of the CODA adoption agreement, to elect to commence Elective
Deferrals. Such election shall not become effective before the time specified
in section 2.1(a) of the CODA adoption agreement.
3.2(b). Modification and Termination of Elective Deferrals. A
Participant's election to commence Elective Deferrals shall remain in effect
until modified or terminated. A Participant shall be afforded a reasonable
period at least once each calendar year, as specified in section 2.1(b) of the
CODA adoption agreement, to modify the amount or frequency of his or her
Elective Deferrals. A Participant may terminate his or her election to make
Elective Deferrals at any time.
3.3. Cash bonuses. To the extent provided in section 2.2 of the CODA
adoption agreement, a Participant may also base Elective Deferrals on cash
bonuses that, at the Participant's election, may be contributed to the CODA or
received by the Participant in cash.
<PAGE>
3.3(a). Time and Manner of Election. A Participant shall be afforded a
reasonable period, as provided in section 2.2 of the CODA adoption agreement, to
elect to defer amounts described in section 3.3 above to the CODA. Such
election shall not become effective before the time specified in section 2.2(a)
of the CODA adoption agreement.
3.4. Maximum Amount of Elective Deferrals. A Participant's Elective
Deferrals are subject to any limitations imposed in Section 2.1 of the CODA
adoption agreement and any further limitations under the plan. No Participant
shall be permitted to have Elective Deferrals made under this plan during any
calendar year in excess of $7,000, multiplied by the Adjustment Factor.
3.5. Distribution of Excess Elective Deferrals. Notwithstanding any other
provision of the plan, Excess Elective Deferrals, plus any income and minus any
loss allocable thereto, shall be distributed no later than April 15, 1988, and
each April 15 thereafter, to Participants to whose accounts Excess Elective
Deferrals were allocated for the preceding calendar year and who claim Excess
Elective Deferrals for such calendar year. Excess Elective Deferrals shall be
treated as Annual Additions under the plan.
3.5(a)(1). The Participant's claim shall be in writing; shall be submitted
to the plan administrator not later than the date elected in section 8.1 of the
CODA adoption agreement; shall specify the amount of the Participant's Excess
Elective Deferral for the preceding calendar year; and shall be accompanied by
the Participant's written statement that if such amounts are not distributed,
such Excess Elective Deferrals, when added to amounts deferred under other plans
or arrangements described in sections 401(k), 408(k), or 403(b) of the Code,
will exceed the limit imposed on the Participant by section 402(g) of the Code
for the year in which the deferral occurred.
3.5(a)(2). Determinations of Income or Loss. The Excess Elective Deferral
shall be adjusted for income or loss. The income or loss allocable to Excess
Elective Deferrals shall be determined by multiplying the income or loss
allocable to Participant's Elective Deferrals for the Plan Year by a fraction,
the numerator of which is the Excess Elective Deferral on behalf of the
Participant for the preceding Plan Year and the denominator of which is the
Participant's account balance attributable to Elective Deferrals on the last
date of the preceding Plan Year.
3.6. Average Actual Deferral Percentage. The Average Actual Deferral
Percentage for Highly Compensated Employees for each Plan Year and the Average
Actual Deferral Percentage for Non-highly Compensated Employees for the same
Plan Year must satisfy one of the following tests: (a) The Average Actual
Deferral Percentage for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Actual Deferral Percentage for
Participants who are Non-highly Compensated Employees for the Plan Year
multiplied by 1.25; or (b) The Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Actual Deferral Percentage for Participants who are Non-
highly Compensated Employees for the Plan Year multiplied by 2.0, provided that
the Average Actual Deferral Percentage for Participants who are Highly
Compensated Employees does not exceed the Average Actual Deferral Percentage for
Participants who are Non-highly Compensated Employees by more than two (2)
percentage points or such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative limitation with
respect to any Highly Compensated Employee.
3.7. Special Rules.
3.7(a). The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan year and who is eligible to have Elective
Deferrals or Qualified Non-elective Contributions allocated to his or her
account under two or more arrangements described in section 401(k) of the Code
that are maintained by the Employer shall be determined as if such Elective
Deferrals and Qualified Non-elective Contributions were made under a single
arrangement.
3.7(b). For purposes of determining the Actual Deferral Percentage of a
Participant who is a Highly Compensated Employee, the Elective Deferrals,
Qualified Non-elective Contributions and Compensation of such Participant shall
include the Elective Deferrals, Qualified Non-elective Contributions, and
Compensation of Family Members. Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in determining
the Actual Deferral Percentage both for Participants who are Non-highly
Compensated Employees and for Participants who are Highly Compensated Employees.
3.7(c). The determination and treatment of the Elective Deferrals,
Qualified Non-elective Contributions, and Actual Deferral Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
3.8. Distribution of Excess Contributions. Notwithstanding any other
provision of the plan, except section 3.9(b) herein, Excess Contributions plus
any income and minus any loss allocable thereto, shall be distributed no later
than the last day of each Plan Year beginning after December 31, 1987, to
Participants to whose accounts Elective Deferrals and Qualified Non-elective
Contributions were allocated for the preceding Plan Year. Excess Contributions
shall be treated as Annual Additions under the plan.
3.8(a). Determination of Income or Loss. The Excess Contributions shall
be adjusted for income or loss. The income or loss allocable to Excess
Contributions shall be determined by multiplying the income or loss allocable to
a Participant's Elective Deferrals and Qualified Non-elective Contributions for
the Plan Year by a fraction, the numerator of which is the Excess Contribution
on behalf of the Participant for the preceding Plan Year and the denominator of
which is the sum of the Participant's account balances attributable Elective
Deferrals and Qualified Non-elective Contributions on the last day of the
preceding Plan Year.
3.8(b). Accounting for Excess Contributions. Amounts distributed under
this section shall be made from the Participant's Elective Deferral account and
Qualified Non-elective Contribution account in proportion to the Participant's
Elective Deferrals and Qualified Non-elective Contributions for the Plan Year.
3.9. Qualified Non-elective Contributions.
3.9(a). The Employer may elect to make Qualified Non-elective
Contributions under the plan on behalf of Employees as provided in sections 3.1
and 4.1 of the CODA adoption agreement.
3.9(b). Special Qualified Non-elective Contributions. In lieu of
distributing Excess Contributions as provided in sections 3.8(a)-(b) above, and
to the extent provided in sections 3.1 and 4.2 of the CODA adoption agreement,
the Employer may make special Qualified Non-elective Contributions on behalf of
Non-highly Compensated Employees that are sufficient to satisfy either of the
Average Actual Deferral Percentage tests. Allocations of Qualified Non-elective
Contributions to each Non-highly Compensated Employee's account shall be made in
accordance with section 4.2 of the CODA adoption agreement.
3.10. Separate Accounts. A separate account shall be maintained for that
portion of a Participant's accrued benefit that is attributable to Elective
Deferrals and a separate account shall be maintained for that portion of a
Participant's accrued benefit that is attributable to Qualified Non-elective
Contributions. Each separate account shall be credited with the applicable
contributions, earnings and losses, distributions, and other adjustments.
3.11. Under no circumstances may Elective Deferrals and Qualified Non-
elective Contributions be contributed and allocated to the trust under the plan
later than thirty (30) days after the close of the Plan Year for which the
contributions are deemed to be made, or such other time as provided in
applicable regulations under the Code.
SECTION IV:
TOP-HEAVY REQUIREMENTS
4.1. If the underlying plan document does not designate another plan to
satisfy the top-heavy requirements of section 416 of the Code, or if the
underlying plan document allocates less than three (3) percent of each Non-key
Employee's top-heavy compensation under the plan to such Participant's account
for a Plan Year, then the minimum top-heavy allocation under the plan shall be
allocated on behalf of Non-key Employees in accordance with section 416 of the
Code. Such allocation shall not be less than the lesser of three (3) percent of
such Participant's compensation or, in the case where the Employer has no
defined benefit plan which designates this plan to satisfy section 401 of the
Code, the largest percentage of Employer contributions and forfeitures, as a
percentage of the first $200,000 of the Key Employee's compensation, allocated
on behalf of any Key Employee for that year.
4.2. For purposes of determining whether a plan is top-heavy under section
416 of the Code, Elective Deferrals are considered Employer contributions.
SECTION V:
SPECIAL DISTRIBUTION RULES
5.1. Except as provided in section 7.1 of the CODA adoption agreement,
Elective Deferrals, Qualified Non-elective Contributions and income allocable
thereto are not distributable to the Participant, or the Participant's
beneficiary or beneficiaries, in accordance with the Participant's or
beneficiary's election, earlier than upon separation from service, death, or
disability, as defined in the underlying plan document.
5.2. Distribution on Account of Financial Hardship.
5.2(a). If elected by the Employer in section 7.1(e) of the CODA adoption
agreement, distributions of Elective Deferrals and Qualified Non-elective
Contributions under the CODA may be made on account of financial hardship if the
distribution is necessary in light of the immediate and heavy financial needs of
the Participant. Such a distribution shall not exceed the amount required to
meet the immediate financial need created by the hardship and may not be made to
the extent that other financial resources of the Participant are reasonably
available.
5.2(b). The determination of the existence of financial hardship, and the
amount required to be distributed to meet the need created by the hardship,
shall be made by a person or persons designated by the Employer (unless a
different person or persons are given authority elsewhere in the plan to approve
hardship distributions).
5.2(c). All determinations regarding financial hardship shall be made in
accordance with written procedures that are established by the person or persons
described in section 5.2(b) above, and applied in a uniform and
nondiscriminatory manner. Such written procedures shall specify the
requirements for requesting and receiving distributions on account of hardship,
including what forms must be submitted and to whom. All determinations
regarding financial hardship must be made in accordance with objective criteria
set forth in section 7.2(a) through (c) of the CODA adoption agreement. Such
determinations must also comply with applicable regulations under the Code.
5.2(d). Processing of applications and distributions of amounts under this
section, on account of a bona fide financial hardship, must be made as soon as
administratively feasible.
SECTION VI:
MATCHING CONTRIBUTIONS
6.1. If elected by the Employer in the CODA adoption agreement, the
Employer will made Matching Contributions to the plan. The amount of such
Matching Contributions shall be calculated by reference to the Participant's
Elective Deferrals as specified by the Employer in the adoption agreement.
6.2. Separate Account. A separate account shall be maintained for that
portion of a Participant's accrued benefit that is attributable to Matching
Contributions. Such separate account shall be credited with the applicable
contributions, earnings and losses, distributions, and other adjustments.
6.3. Vesting. Matching Contributions will be vested in accordance with
the Employer's election in section 6.3 of the CODA adoption agreement.
6.4. Forfeitures. Forfeitures of Matching Contributions other than Excess
Aggregate Contributions shall be made in accordance with the forfeiture
provisions otherwise applicable to Employer contributions in the underlying plan
document.
<PAGE>
6.5. Qualified Matching Contributions.
6.5(a). If elected by the Employer in section 3.1(A) of the CODA adoption
agreement, the Employer will make Qualified Matching Contributions to the plan.
The amount of such Qualified Matching Contributions shall be calculated by
reference to the Participant's Elective Deferrals as specified in the CODA
adoption agreement.
SECTION VII:
LIMITATIONS ON EMPLOYEE
CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS
7.1. Contribution Percentage.
7.1(a). The Average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are Non-highly Compensated
Employees for the Plan Year multiplied by 1.25; or
7.1(b). The Average Contribution Percentage for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are Non-highly Compensated
Employees for the Plan Year multiplied by two (2), provided that the Average
Contribution Percentage for Participants who are Highly Compensated Employees
does not exceed the Average Contribution Percentage for Participants who are
Non- highly Compensated Employees by more than two (2) percentage points or such
lesser amount as the Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.
7.2. Definitions. For purposes of this section, the following definitions
shall apply:
7.2(a). "Average Contribution Percentage" shall mean the average
(expressed as a percentage) of the Contribution Percentages of the Participants
in a group.
7.2(b). "Contribution Percentage" shall mean the ratio (expressed as a
percentage) if the sum of the Employee Contributions, Matching Contributions and
Qualified Matching Contributions (to the extent not taken into account in
Section 3.6 of the CODA) under the plan on behalf of the Participant for the
Plan Year to the Participant's Compensation for the Plan Year.
7.2(b)(1). Qualified Matching Contributions (to the extent not taken into
account in Section 3.6 of the CODA) shall be treated as Matching Contributions
for the purposes of this section and sections 7.3(a), 7.3(b), 7.4(a), 7.4(b),
and 7.4(d) of the CODA.
7.2(c). "Excess Aggregate Contributions" shall mean the amount described
in 401(m)(6)(B) of the Code.
7.3. Special Rules.
7.3(a). For purposes of this section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to make
Employee Contributions, or to have Matching Contributions allocated to his or
her account under two or more plans described in section 401(a) of the Code, or
arrangements described in section 401(k) of the Code, that are maintained by
the Employer, shall be determined as if the total of such Employee Contributions
and Matching Contributions was made under each plan.
7.3(b). In the event that this plan satisfies the requirements of section
410(b) of the Code only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of section 410(b) of the Code only if
aggregated with this plan, then this section shall be applied by determining the
Contribution Percentages of Participants as if all such plans were a single
plan.
7.3(c). For purposes of determining the Contribution Percentage of a
Participant who is a Highly Compensated Employee, the Employee Contributions,
Matching Contributions and Compensation of such Participant shall include the
Employee Contributions, Matching Contributions and Compensation of Family
Members. Family Members with respect to Highly Compensated Employees shall be
disregarded as separate employees in determining the Actual Deferral Percentage
both for Participants who are Non-highly Compensated Employees and for
Participants who are Highly Compensated Employees.
7.3(d). The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
7.4. Distribution of Excess Aggregate Contributions.
7.4(a). General Rule. Notwithstanding any other provision of this plan,
Excess Aggregate Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed
no later than the last day of each Plan Year beginning after December 31, 1987,
to Participants to whose accounts Employee Contributions or Matching
Contributions were allocated for the preceding Plan Year. Excess Aggregate
Contributions shall be treated as Annual Additions under the plan.
7.4(b). Determination of Income or Loss. The Excess Aggregate
Contributions shall be adjusted for income or loss. The income or loss
allocable to Excess Aggregate Contributions shall be determined by multiplying
the income or loss allocable to the Participant's Employee Contributions and
Matching Contributions for the Plan Year by a fraction, the numerator of which
is the Excess Aggregate Contributions on behalf of the Participant for the
preceding Plan Year and the denominator of which is the sum of the Participant's
account balances attributable to Employee Contributions and Matching
Contributions on the last day of the preceding Plan Year.
7.4(c). Treatment of Forfeitures. Forfeitures of Excess Aggregate
Contributions may either serve to reduce Employer contributions or may be
reallocated to the accounts of Non-highly Compensated Employees, as elected by
the Employer in section 9.1 of the CODA adoption agreement. Amounts forfeited
by Highly Compensated Employees under this section shall be treated as Annual
Additions under the plan. The allocation of such forfeitures shall be made
pursuant to section 9.1 of the Adoption Agreement. However, no forfeitures
arising under this section shall be allocated to the account of any Highly
Compensated Employee.
7.4(d). Accounting for Excess Aggregate Contributions. Excess Aggregate
Contributions shall be distributed from the Participant's Employee Contribution
account, and forfeited if otherwise forfeitable under the terms of the plan (or,
if not forfeitable, distributed) from the Participant's Matching Contribution
account in proportion to the Participant's Employee Contributions and Matching
Contributions for the Plan Year.
7.4(e). The determination of the Excess Aggregate Contributions shall be
made after first determining the Excess Elective Deferrals, and then determining
the Excess Contributions.
FOOTNOTES: The following provisions of the model CODA warrant additional
explanation:
1. 2.8 and 2.13. Leased employees that are defined as Employees in
section 2.8 of the amendment to the basic plan document must be considered for
purposes of determining the identity and number of Highly Compensated Employees.
2. 3.5. Excess Elective Deferrals that are distributed after April 15
are not only includible in the Participant's gross income in the taxable year
when made, but are also includible in the Participant's gross income again in
the year when distributed.
3. 3.8 and 7.4(a). The model CODA permits a plan to distribute Excess
Contributions and Excess Aggregate Contributions on or before the last day of
the Plan Year after the Plan Year in which such excess amounts arose.
Distribution of such amounts or other corrective action, is required under
sections 401(k)(8) and 401(m)(6) of the Code if the plan is to maintain its tax-
qualified status. However, if such excess amounts, plus any income and minus
any loss allocable thereto, are distributed more than 2-1/2 months after the
last day of the Plan Year in which such excess amounts arose, then section 4979
of the Code imposes a ten (10) percent excise tax on the Employer maintaining
the plan with respect to such amounts.
4. 3.9. Any additional contributions that are allocated pursuant to this
section shall be subject to the limitations under section 415(c) of the Code.
5. 8.1. If section 8 is not adopted, Employer contributions, including
Elective Deferrals, are limited to accumulated earnings or profits for the
taxable year or years ending within the Plan Year.
Exhibit 16
GROWTH & INCOME
SERIES FOR TEN YEARS ONLY
DECEMBER YEARS
<TABLE>
<CAPTION>
DISTRIBUTIONS REINV CAP TOTAL CAPITAL TOTAL DECEMBER DATE ADJUSTED
DATE CAP GAIN INCOME PRICE SHARE AMT SHARE AMT SERIES SERIES PRICES NAV PRICE
26.4513 70.1972
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/15/79 0.1700 10.17 0.00000 0.01672 26.4513 71.3706 10.07 12/78 706.8856
11/15/79 0.2200 11.35 0.00000 0.01930 26.4513 72.7540 11.99 12/79 872.3202
5/15/80 0.2000 11.79 0.00000 0.01696 26.4513 73.9881 15.56 12/80 1171.4403
11/15/80 0.2000 15.97 0.00000 0.01753 26.4513 75.2854 13.25 12/81 1101.0361
2/2/81 0.9000 13.97 0.06442 0.06442 28.1554 80.1355 13.89 12/82 1346.1943
2/15/81 0.1000 13.83 0.00000 0.00723 28.1554 80.7150 14.79 12/83 1528.8867
5/15/81 0.1200 14.36 0.00000 0.00836 28.1554 81.3895 11.90 12/84 1461.1673
8/15/81 0.1200 13.87 0.00000 0.00865 28.1554 82.0936 15.35 12/85 1965.9529
11/15/81 0.1600 13.09 0.00000 0.01222 28.1554 83.0971 15.02 12/86 2327.7059
2/3/82 1.3600 11.44 0.11888 0.11888 31.5025 92.9757 12.31 12/87 2409.1725
2/10/82 0.1000 11.18 0.00000 0.00894 31.5025 93.8074 13.18 12/88 2698.5150
5/10/82 0.1200 11.32 0.00000 0.01060 31.5025 94.8018
8/4/82 0.1200 10.46 0.00000 0.01147 31.5025 95.8894
11/9/82 0.1500 13.98 0.00000 0.01073 31.5025 96.9182
2/3/83 0.4850 13.60 0.03566 0.03566 32.6259 100.3745
2/9/83 0.1000 13.55 0.00000 0.00738 32.6259 101.1153
5/11/83 0.1100 15.55 0.00000 0.00707 32.6259 101.8306
8/3/83 0.1100 14.70 0.00000 0.00748 32.6259 102.5926
11/9/83 0.1100 14.46 0.00000 0.00761 32.6259 103.3730
2/3/84 1.7000 -- 12.12 0.14686 0.14686 37.4175 110.5548
2/14/84 0.0900 11.55 0.00000 0.00779 37.4175 119.4787
5/9/84 0.1100 11.40 0.00000 0.00965 37.4175 120.6315
8/15/84 0.1100 10.92 0.00000 0.01007 37.4175 121.8467
11/14/84 0.0900 11.66 0.00000 0.00772 37.4175 122.7872
2/13/85 0.1100 13.05 0.00000 0.00843 37.4175 123.8222
5/15/85 0.1400 13.37 0.00000 0.01047 37.4175 125.1187
8/14/85 0.1600 13.79 0.00000 0.01160 37.4175 126.5704
11/13/85 0.1700 14.30 0.00000 0.01189 37.4175 128.0751
2/13/86 0.1800 14.56 0.00000 0.01236 37.4175 129.6585
2/13/86 1.4260 14.56 0.09794 0.09794 41.0822 142.3571
5/13/86 0.1700 15.97 0.00000 0.01064 41.0822 143.8725
8/13/86 0.1600 16.22 0.00000 0.00986 41.0822 145.2917
11/11/86 0.1700 15.98 0.00000 0.01064 41.0822 146.8374
12/16/86 0.0500 15.34 0.05541 0.05541 43.3586 154.9738
2/11/87 0.2775 0.1670 16.50 0.01682 0.02694 44.0878 159.1487
5/87 0.1600 16.47 0.00000 0.00971 44.0878 160.6947
8/87 0.1800 18.05 0.00000 0.00997 44.0878 162.2972
12/87 2.3642 0.1700 12.31 0.19206 0.20587 52.5551 195.7086
2/88 0.1500 12.88 0.00000 0.01165 52.5551 197.9878
7/88 0.1400 12.96 0.00000 0.01080 52.5551 200.1265
10/88 0.1400 13.01 0.00000 0.01076 52.5551 202.2801
12/88 0.1600 13.14 0.00000 0.01218 52.5551 204.7432
<CAPTION>
CUM. ANN. CUM. ANN.
1 YEAR 5 YEAR 5 YEAR 10 YEAR 10 YEAR 10 YRS 5 YRS 1 YRS
DATE TOTAL TOTAL TOTAL TOTAL TOTAL BEGIN BEGIN BEGIN
RETURN RETURN RETURN RETURN RETURN $1000 $1000 $1000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5/15/79 $1,000
11/15/79 23.4 $1,234
5/15/80 34.3 $1,657
11/15/80 -6.0 $1,558
2/2/81 22.3 $1,904
2/15/81 13.6 $2,163 $1,000
5/15/81 -4.4 $2,067 $956
8/15/81 34.5 $2,781 $1,286
11/15/81 18.4 $3,293 $1,522
2/3/82 3.5 $3,400 $1,576 $1,000
2/10/82 12.0 76.5 12.0 281.7 14.3 $3,817 $1,765 $1,120
5/10/82
8/4/82
11/9/82
2/3/83
2/9/83
5/11/83
8/3/83
11/9/83
2/3/84
2/14/84
5/9/84
8/15/84
11/14/84
2/13/85
5/15/85
8/14/85
11/13/85
2/13/86
2/13/86
5/13/86
8/13/86
11/11/86
12/16/86
2/11/87
5/87
8/87
12/87
2/88
7/88
10/88
12/88
</TABLE>
<PAGE>
SCUDDER GROWTH & INCOME ASSUMED INCEP 11/13/84
REINVESTMENT SERIES, ADJUSTED NAV AND PERFORMANCE 1431.6883
FOR CAPITAL CHANGE AND TOTAL RETURN AS OF 4/86
<TABLE>
<CAPTION>
CAPITAL CAPITAL CAPITAL CAPITAL INCOME
REINVESTMENT CAPITAL ADJUSTED MONTHLY QTRLY YEAR TO ANNUAL & CAPGAINS
DATE NAV PRICE AMOUNT SHARES # SERIES CAP NAV RETURN RETURN DATE RETURN AMOUNT
- ------------------------------------------------- -------- ----------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
486 15.73 41.08220 646.22301
INC 5/86 15.57 15.57 0 0.0000000 41.08220 677.03466 4.7680 0.17
586 16.33 41.08220 670.87233 -0.9102
686 16.60 41.08220 681.96452 1.6534 5.5308
786 15.90 41.08220 653.20698 -4.2169 -3.5194
INC 8/86 16.22 16.22 0 0.0000000 41.08220 661.01260 1.1950 -1.4697 0.16
886 16.48 41.08220 677.03466 3.6478 -0.7229
986 15.31 41.08220 628.96848 -7.0995 -3.7107
1086 16.02 41.08220 658.13684 4.6375 -0.4351
INC 11/86 15.98 15.98 0 0.0000000 41.08220 656.49356 -0.2497 -3.0340 0.17
1186 16.09 41.08220 661.01260 0.4370 5.0947
CAP 12/86 15.34 15.34 0.85 0.0554107 43.35859 665.12082 1.0612 0.85
1286 15.02 43.35859 651.24607 -10.4753 -0.7993
187 16.73 43.35859 725.38926 11.3848 9.7391 11.3848
CAP 2/87 16.50 16.5 0.2775 0.0168182 44.08781 727.44880 10.0507 9.3709 11.7011 0.4475
287 16.76 44.08781 738.91163 1.8642 11.7848 13.4612
387 16.81 44.08781 741.11602 0.2983 13.7997 13.7997
487 16.50 44.08781 727.44880 -1.8441 0.2839 11.7011 12.56931
587 16.43 16.47 0.00 0.0000000 44.08781 724.36265 -0.4242 -1.9690 11.2272 7.97325 0.16
687 17.01 44.08781 749.93358 3.5301 1.1898 15.1536 9.96666
787 17.67 44.08781 779.03153 3.8801 7.0909 19.6217 19.26258
8/12 INC 18.05 18.05 0.00 0.0000000 44.08781 795.78489 2.1505 9.8608 22.1942 20.38876 0.18
887 18.10 44.08781 797.98928 2.4335 10.1643 22.5327 17.86535
987 17.93 44.08781 790.49436 -0.9392 5.4086 21.3818 25.68108
1087 14.49 44.08781 638.83231 -19.1857 -17.9966 -1.9062 -2.93321
1187 13.81 44.08781 608.85260 -4.6929 -23.7017 -6.5096 -7.89092
CAP 12/87 12.31 12.31 2.3642 0.1920552 52.55510 646.95328 6.2578 -18.1504 -0.6592 -2.73146 2.5312
188 12.68 52.55510 666.39867 3.0057 4.3151 3.0057 -8.13227
INC 288 12.89 12.88 0.00 0.0000000 52.55510 677.43524 1.6562 11.2642 4.7116 -8.31986 0.15
388 12.76 52.55510 670.60307 -1.0085 3.6556 3.6556 -9.51443
488 12.87 52.55510 676.38414 0.8621 1.4984 4.5491 -7.01969
588 12.78 52.55510 671.65418 -0.6993 -0.8534 3.8180 -7.27653
688 13.11 52.55510 688.99736 2.5822 2.7429 6.4988 -8.12555
INC 788 12.93 12.96 0.00 0.0000000 52.55510 679.53744 -1.3730 0.4662 5.0366 -12.77151 0.14
888 12.61 52.55510 662.71981 -2.4749 -1.3302 2.4370 -16.95129
988 12.96 52.55510 681.11409 2.7756 -1.1442 5.2803 -13.83694
INC 1088 13.29 13.01 0.00 0.0000000 52.55510 698.45728 2.5463 2.7842 7.9610 9.33343 0.14
1188 13.22 52.55510 694.77842 -0.5267 4.8374 7.3392 14.11275
INC 1288 13.18 13.14 0.00 0.0000000 52.55510 692.67622 -0.3026 1.6975 7.0674 7.06742 0.16
<CAPTION>
TOTAL TOTAL TOTAL TOTAL AGGREG ANNUALZ YEARS
SHARES TOTAL ADJUSTED MONTHLY QTRLY YEAR TO ANNUAL INCEP INCEP
DATE # SERIES TOTAL NAV RETURN RETURN DATE RETURN
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
486 142.32220 2238.72821
INC 5/86 0.010918 143.87614 2240.15143 0.0636
586 143.87614 2349.49729 4.8812
686 143.87614 2388.34385 1.6534 6.6831
786 143.87614 2287.63055 -4.2169 2.1195
INC 8/86 0.009864 145.29538 2356.69110 3.0189
886 145.29538 2394.46790 4.6702 1.9141
986 145.29538 2224.47230 -7.0995 -6.8613
1086 145.29538 2327.63202 4.6375 1.7486
INC 11/86 0.010638 146.84108 2346.52042 0.8115 -0.4316
1186 146.84108 2362.67294 0.6884 -1.3279
CAP 12/86 0.055410 154.97764 2377.35705 0.6215 6.8729
1286 154.97764 2327.76420 -2.0860 0.0057
187 154.97764 2592.77597 11.3848 10.4945 11.3848
CAP 2/87 0.027121 159.18082 2626.48361 1.3001 11.1658 12.8329
287 159.18082 2667.87062 1.5758 12.2200 14.6109
387 159.18082 2675.82966 0.2983 14.9528 14.9528
487 159.18082 2626.48341 -1.8441 1.3001 12.8329 17.3203
587 0.009714 160.72721 2640.74803 0.5431 -1.0166 13.4457 12.3963
687 160.72721 2733.96981 3.5301 2.1728 17.4505 14.4714
787 160.72721 2940.04977 3.8901 8.1313 22.0076 24.1481
8/12 INC 0.009972 162.33003 2930.05700 3.1692 10.9556 25.8743 24.3293
887 162.33003 2938.17350 3.4550 11.2629 26.2230 22.7067
987 162.33003 2910.57740 -0.9392 6.4597 25.0375 30.8435
1087 162.33003 2352.16210 -19.1857 -17.1788 1.0481 1.0539
1187 162.33003 2241.77768 -4.6929 -23.7017 -3.6940 -5.1169
CAP 12/87 0.205621 195.70856 2409.17241 7.4671 -17.2270 3.4973 3.4973 68.274 18.364 3.0868
188 195.70856 2481.58450 3.0057 5.5023 3.0057 -4.2885 73.332 18.946 3.1701
INC 288 0.011645 197.98778 2552.06245 2.8400 13.8410 5.9311 -4.3408 78.255 19.443 3.2534
388 197.98778 2526.32404 -1.0085 4.8627 4.8627 -5.5873 76.457 18.553 3.3367
488 197.98778 2548.10270 0.8621 2.6805 5.7667 -2.9843 77.978 18.359 3.4201
588 197.98778 2530.28300 -0.6993 -0.8534 5.0271 -4.1831 76.734 17.650 3.5034
688 197.98778 2595.61976 2.5822 2.7429 7.7391 -5.0604 81.297 18.042 3.5867
INC 788 0.010802 200.12653 2587.63609 -0.3076 1.5515 7.4077 -8.8876 80.740 17.500 3.6701
888 200.12653 2523.59560 -2.4749 -0.2643 4.7495 -14.1101 76.267 16.301 3.7534
988 200.12653 2593.63989 2.7756 -0.0763 7.6569 -10.8892 81.159 16.750 3.8367
INC 1088 0.010760 202.28009 2688.30235 3.6498 3.8903 11.5861 14.2907 87.771 17.436 3.9201
1188 202.28009 2674.14274 -0.5267 5.9656 10.9984 19.2867 86.782 16.889 4.0034
INC 1288 0.012176 204.74316 2698.51488 0.9114 4.0435 12.0100 12.0100 88.484 16.777 4.0867
</TABLE>
