Shareholder Investment Plan

Transcription

1 Cincinnati Financial Corporation Shareholder Investment Plan This program is sponsored and administered by Computershare Trust Company, Inc., not by Cincinnati Financial Corporation. Automatic Dividend Reinvestment Plus...

2 Shareholder Investment Plan As a registered shareholder, you qualify for special purchases of additional Cincinnati Financial Corporation (CFC) stock through our Shareholder Investment Plan managed by Computershare. The plan consists of three parts: Automatic Dividend Reinvestment Automatic Dividend Reinvestment is a convenient way for you to have your quarterly cash dividends automatically reinvested to purchase additional shares of the Company s stock PLUS... Voluntary Cash Investment Voluntary Cash Investment is an opportunity for you to make cash investments to purchase additional shares at any time. Purchases of $25 up to $10,000 may be made in any one month. PLUS... Automatic Account Deductions Automatic monthly deductions from your checking or savings account gives you a timesaving way to purchase additional CFC shares. 1

3 You may elect to participate in one or all of these three options. No matter which you choose, the plan provides you with convenient ways to invest in CFC stock. The Shareholder Investment Plan lets you: put dividend income to work quickly put every dollar and penny to work in full and fractional shares make inexpensive regular investments of modest sums of money save on brokerage commissions invest simply and safely through Computershare by mail or automatic monthly debits to your checking or savings account Frequently asked questions How do I participate? Request the authorization form by calling (513) or by ing shareholder_inquiries@cinfin.com. How does it work? Computershare acts as manager of the plan. They accumulate all money invested in the plan until the next purchase date, when they make an aggregate purchase of CFC stock. After each purchase, Computershare credits your account with your proportionate number of full and fractional shares. What is an aggregate purchase and how does it benefit me? An aggregate purchase is when Computershare purchases stock for all participants in one transaction. 2

4 By purchasing for all of the plan participants at one time, brokerage costs are usually lower than if you made your own individual purchases. What else does Computershare do for the plan? Computershare sends you a confirmation of each transaction with a detailed statement of your account, including the number of full and fractional shares that you own. And Computershare also holds your stock until you terminate your participation in the plan. This protects you against loss, theft or accidental destruction of your certificates. Do I still have all shareholder rights on shares purchased for me in the plan? Yes. You receive stock splits and stock dividends. For Proxy purposes, full shares acquired under this plan may be voted by you. When does Computershare deduct my Automatic Account Deductions from my checking or savings account? Funds are withdrawn from your Computershare account on the 20 th of each month (or on the next business day if the 20 th is not a business day) and invested on the 1 st of the next month (or on the next business day if the 1 st is not a business day). Is there a fee for the service? Yes. You pay a service fee for Computershare s costs related to record-keeping, handling and custody. See the Shareholder Investment Plan Fees on Page 5. What does Computershare do with cash dividends paid on shares purchased for my account? Cash dividends on shares acquired through the 3

5 plan are automatically reinvested in your account, subject to the Shareholder Investment Plan Fees on the following page. Can I discontinue the plan at any time? Yes. Simply write to Computershare requesting that your account be closed. You will receive a certificate for your full shares and a check for the net proceeds of the sale of your fractional share, and there is no service charge except for brokerage costs. Or if you choose, Computershare will sell both your full and fractional shares. The fee for sale of stock is $10 plus 8 cents commission per share. For details, please see the Terms and Conditions beginning on Page 6. Will I receive a statement of my account? The statements you receive report the number of shares you hold in the account, the shares for which dividends are reinvested, dividends paid to you, a history of the transactions during the period and fees paid. These statements are your record of the cost basis of your transactions and should be kept for tax purposes. If you request copies of statements from a tax year earlier than the current one, a fee is charged for that service. 4

6 Shareholder Investment Plan Fees Automatic Dividend Reinvestment... Minimum purchase amount... $25 Maximum monthly purchase amount... $10,000 Optional Cash Investment by check or money order... Automatic Account Deduction by monthly automatic withdrawal... 5 percent of the amount reinvested, maximum of $3, plus 8 cents commission per share $3 per purchase plus 8 cents commission per share $2 per purchase plus 8 cents commission per share Sale of stock... Custody/deposit of certificates... Certificate issuance... Gifting shares... $10 plus 8 cents commission per share No charge No charge No charge (certificate will be issued.) Returned check/insufficient funds* and ACH reject fee... $25 per check or automatic monthly withdrawal returned Duplicate statement... $10 per year requested * If a check or automatic monthly withdrawal is returned for insufficient funds, Computershare reserves the right to sell all or a portion of your plan shares to cover the returned check fee. 5

7 Terms and conditions The Dividend Reinvestment and Stock Purchase Plan ( DRP ) for shareholders of Cincinnati Financial Corporation sponsored by Computershare Trust Company, Inc. DRP is designed for long-term share ownership by current investors who want to build share holdings over time. DRP provides shareholders of record a simple and convenient method to invest cash dividends and optional cash contributions in shares of Company stock. If you currently own one or more shares of Company stock registered in your own name (i.e., you are a shareholder of record ), you are eligible to participate in DRP. DRP investments, as with all investments, can go down as well as up; and no guarantee of performance is given. The past performance of Cincinnati Financial Corporation stock is not necessarily an indicator of future performance. Enrolling in DRP Complete and submit an enrollment form, which you can find with the printed brochure about DRP. After Computershare receives your completed form, your DRP account is established to hold the shares you purchase through DRP. All cash dividends are invested in Company stock, unless you have directed on the enrollment form that less than all dividends on shares held by you are to be reinvested. Shares purchased through DRP are held in DRP registration, not in your individual name. Certificates are not issued for shares held in your DRP account. 6

8 Investing in shares Computershare purchases in the market the number of shares equal to the dollar amount of your cash dividends being reinvested. If you make optional cash contributions to your DRP account, Computershare purchases the number of shares in the market equal to the dollar amount of your contributions. Funds from your cash dividends or from your optional cash contributions may be combined with those of some or all individuals in DRP ( Participants ) for the purpose of making market* purchases on behalf of Participants (an aggregate order ). Computershare deposits funds received from cash dividends or from optional cash contributions into an account for the benefit of Participants and holds them until investment. No interest is paid to Participants pending purchase of shares. Investments are made promptly, not later than five business days after receipt; assuming, however, that the relevant markets are open, sufficient market liquidity exists and no deferral under applicable federal or state laws or regulation is required. Your DRP account is not a retail brokerage account. Investing through optional cash contributions You may decide to invest in shares more frequently than through cash dividends. To make more frequent * Certain countries may prohibit their residents or citizens from participation in a DRP type investment program. If you reside outside the United States, please contact your financial or legal advisor to determine if limitations or prohibitions on your participation apply.) 7

9 investments, you may send a check in U.S. dollars made payable to Computershare; or you may authorize automatic deductions by Computershare from your bank account. Each contribution by check must accompany a completed contribution form to instruct Computershare to invest for your DRP account. In the event that your check for an optional cash contribution or a debit to your bank account is returned unpaid or the electronic funds transfer not effected, Computershare considers your instructions to invest in shares null and void. If shares were purchased for your DRP account before Computershare determined that your funds were insufficient or otherwise not available, Computershare reverses the shares allocated to your account based on its prior credit of those funds. In addition, you agree that Computershare is entitled to sell shares necessary to satisfy any uncollected amount, plus applicable fees. If the proceeds of the sale of the allocated shares do not equal the amount due, Computershare sells additional shares from your DRP account that are necessary to satisfy the uncollected balance. Selling DRP shares You may instruct Computershare to sell all or a portion of your DRP shares. Sale instructions are processed promptly, but not later than five business days after receipt; assuming, however, that the relevant markets are open, sufficient market liquidity exists and no deferral under applicable federal or state laws or regulation is required. All sale instructions are final and cannot be 8

10 modified, stopped or cancelled after Computershare has received the request. Transactions Computershare does not purchase DRP shares from Cincinnati Financial Corporation itself or from selling Participants in a netting arrangement. Computershare sells DRP shares in the market through a broker. Only Computershare selects the broker and effects all transactions through the broker, which may be affiliated or unaffiliated with Computershare. The transaction price to Participants for purchases or sales of shares is the weighted average price of all shares purchased or sold for each aggregate order placed by Computershare through its broker on behalf of Participants less transaction fees. Computershare shall receive compensation for processing transactions for a Participant according to the fee schedule included in this brochure, on the enrollment/ contribution form or in subsequent notices of fee changes. Terminations You can terminate your participation in DRP at any time by written instruction to Computershare. The form that is a part of your statement may be used for this. This notice should be sent to Computershare at P.O. Box 3309, Chicago, Illinois

11 If you terminate, you may direct that all your DRP shares be sold by Computershare. The sale is made as described under Selling DRP shares. If your termination notice is sent and received near a dividend record date, Computershare has the right to decide whether to reinvest the cash dividend in shares for you or to distribute the cash dividend to you as a check. An alternative to selling your DRP shares is to request that your DRP whole shares be issued to you in certificate form. Fractional shares cannot be issued as certificates and therefore are sold. There is no fee for issuing a paper certificate(s). Taxes The U.S. Internal Revenue Service requires Computershare to have a valid and effective tax certification form on file beforehand in order to avoid Computershare from deducting U.S. withholding tax on your income. Form W-9 is required for U.S. persons; Form W-8BEN is required for non-u.s. persons. Cash dividends paid on shares held in DRP are paid on your behalf; therefore, you are solely responsible for income taxes payable on dividends. Computershare reports to the U.S. Internal Revenue Service on Form 1099 DIV, the dividend income (including any dividends and transaction fees paid for you by Cincinnati Financial Corporation, if any), with a copy to you. If you are a non-u.s. person, Computershare sends a Form 1042-S to you and to the U.S. Internal Revenue Service to report dividend income. If you sell shares 10

12 through DRP, a different form, the 1099-B, is sent to you and the U.S. Internal Revenue Service reporting the proceeds from the sale of your DRP shares. The statements you receive report the number of DRP shares you hold, the shares for which dividends are reinvested, dividends paid to you, a history of the transactions during the period and fees paid. These statements are your record of the cost basis of your transactions and therefore should be kept for tax purposes. If you request copies of statements from a tax year earlier than the current one, a fee will be charged for that service. Share ownership in DRP Although DRP shares are not registered in your name, you have the right to vote proxies for your DRP shares. You receive the same communications sent to all registered shareholders, including quarterly and annual reports as well as proxy voting materials. Stock dividend or shares of Company stock distributed as a result of a stock split are credited to your DRP account if the shares distributed are of the same type, class and series as the stock held in DRP. If rights to subscribe to additional shares, debentures or other securities are made available to shareholders, whole shares in the DRP may be combined with other shares of the same class of stock registered in your name for the purpose of calculating the total number of rights to be issued to you. 11

13 Your paper certificates can be deposited in your name into your DRP account. Send them unsigned via overnight delivery to the address shown for overnight delivery in this brochure. No fee is charged for this service. Other Information Computershare may for any reason and in its judgment decide not to execute your transaction request submitted by telephone or facsimile and may require an original written transaction request. In addition, Computershare may terminate your participation in DRP at any time. Termination is effective upon mailing by the U.S. Post Office or courier service our notice of termination to the address you have provided to us and kept on file. If funds were contributed and pending investment, those funds are promptly be refunded to you. Computershare is not liable for action taken or omitted to be taken in connection with this agreement or the services it provides except that Computershare is liable for losses that are a direct result of Computershare s willful misconduct. Computershare is not responsible for losses that either arise because of a failure to terminate your participation at your death if Computershare has not received a written notice of death from an authorized representative or with respect to prices or times at which shares are purchased or sold for your DRP account. Computershare is not liable for special, indirect, incidental, punitive or consequential losses or damages of any kind whatsoever, (including but not limited to lost profits) even if Computershare has been advised of the 12

14 possibility of such loss or damage. The timing and execution of the services performed are not guaranteed and Computershare shall not be liable for changes in the market value of any shares at any time. The terms and conditions of this agreement, including fees, can be changed at any time by Computershare by sending written notice of such change or termination. The written notice states the effective time for any change or termination. Computershare provides no advice or recommendation with respect to any stock purchased through DRP. The DRP is governed by the laws of the State of Illinois without regard to the conflict of law principles. Your completion and submission of an enrollment form or the direction for transactions is your agreement to establish a principal/agent relationship with Computershare. 13

15 Contact Computershare with questions regarding your existing Shareholder Investment Plan account, such as address changes, voluntary cash purchases, enrollment in Automatic Account Deduction or your Plan Statement. Telephone: (888) Write: Computershare DRP c/o Computershare Trust Company, Inc. P.O. Box 3309 Chicago, IL Program questions Enrollment Dividend reinvestment changes Optional cash purchases Changes to monthly electronic purchases Sale instructions Certificate requests Termination of participation Write: Computershare DRP Computershare Trust Company, Inc. 2 North LaSalle Street Chicago, IL For overnight delivery services Fax: (312) Certificate requests Sale instructions Termination of participation 14

16 AC-1088-A (6/04)