the information contained in the section of your retiree ...uawlap.org/dl/tesphe.pdf ·...

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Tax-Efficient Savings Plan For Hourly EmployeesSeptember 01, 2005

The information contained in the section of Your Retiree Benefits handbook entitled “Tax-Efficient Savings Plan For HourlyEmployees” constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

After an overview of the Tax-Efficient Savings Plan forHourly Employees (TESPHE), this section of yourhandbook answers these questions:

Page

What are the investment options? 131

How can I exchange assets? 133

How can I repay my loans from the Plan? 134

How are assets paid from the Plan? 135

When would assets be paid automaticallyfrom the Plan? 136

What are the tax consequences of mywithdrawal or distribution? 138

When do I contact the FidelityService Center for Ford Motor Company? 144

What circumstances might affect Plan benefits? 146

Can TESPHE provisions change? 147

Administration and other information 147

Appendix 154

130 Tax-Efficient Savings Plan for Hourly Employees

Tax-Efficient Savings Plan for Hourly Employees

An overview of the Plan

Before you retired, you may have invested in the Tax-Efficient Savings Plan for Hourly Employees (TESPHE).Now that you’ve retired, you’ll need to know what hap-pens to assets you may have in the plan.

As a retiree, you may elect to withdraw all or part ofyour assets. You may elect to defer distribution of youraccount until age 701/2. If you leave your assets in thePlan, you may elect to have assets transferred to otherinvestment options.

If you took out a loan against your TESPHE accountwhile you were an active employee and you hadn’t re-paid your loan by the time you retired, you may elect torepay your loan during retirement through a coupon bookavailable through the Fidelity Service Center for FordMotor Company, unless you have a history of loan de-fault. As a retiree, you may not make additional contri-butions to the TESPHE. In addition, you may not ini-tiate any new loans after you retire.

Account statementsAs soon as practicable after the end of each quarter, astatement of your account will be provided, unless youelected to receive your statements online. (If you elect toreceive your statement online, you will receive an annualmailed statement). You will also be able to request a state-ment whenever you want one. The statement shows yoursavings and investments, the value of your account, andother information regarding your account.

If you think that there is an error in your statement, youshould notify the Fidelity Servicing Center for Ford Mo-tor Company in writing within 30 days after you receiveit. If you do not notify the Fidelity Service Center forFord Motor Company of errors, we will assume that yourstatement is correct.

Performance History SheetIf you are a participant in the TESPHE, you will be pro-vided with the Performance History Sheet with your Quar-terly Account Statement. (Participants who receive mailedstatements will receive this document with the quarterlystatements. Participants who elect to receive online state-ment can access this document through FidelityNetBenefitssw at netbenefits.fidelity.com).Otherwise, thePerformance History Sheet may be requested by callingthe Fidelity Service Center for Ford Motor Company. Youcan always obtain performance data on all of the avail-able investment options through NetBenefits. Select anyinvestment option to obtain additional information (e.g.,fund overview, quick stats, rankings/ratings, performance,volatility measures, top holdings, fees & expenses, fundfacts and prices and distributions). If you do not have webaccess, call the Fidelity Service Center for Ford MotorCompany and request a mutual fund prospectus.

There are several tax consequences that may affect yourTESPHE decisions. You are encouraged to consult withyour own tax advisor about your personal tax situation.

This section summarizes the TESPHE. It is your re-sponsibility to understand the Plan and make the in-vestment decisions right for you. The Company cannotadvise you.

Tax-Efficient Savings Plan for Hourly Employees 131

What are the investment options?

The Plan offers a diversified line-up of passively managed,actively managed and life stage investment options fromwhich you may choose. These options provide a range ofrisk/return preferences. You can invest in any of the 34available investment options.

A booklet entitled “Your Investment Guide” contains abrief description of the available investment options aswell as some educational material. Please call Fidelityat 1-800-544-3333 to obtain a copy of this booklet. Youmay also print a copy from NetBenefi ts atwww.netbenefits.fidelity.com.

The current investment options and the accompanyingVoice Response System (VRS) codes are listed below.

Available Investment Options (VRS Code)

Life Stage Funds:• Fidelity Freedom Income Fund® (00369)• Fidelity Freedom 2000 Fund® (00370)• Fidelity Freedom 2010 Fund® 00371)• Fidelity Freedom 2020 Fund® 00372)• Fidelity Freedom 2030 Fund® 00373)• Fidelity Freedom 2040 FundSM 00718)

Equity Funds - Passively Managed:• BGI EAFE Equity Index Fund - Class T (44715)• Common Stock Index Fund (99527)• Domini Social Equity Fund (93967)• Ford Stock Fund (20207)• U.S. Extended Market Index Fund (10152)• Vanguard Institutional Index Trust - Institutional Plus

Shares (20745)

Equity Funds - Actively Managed - Domestic:• Fidelity Capital Appreciation Fund (00307)• Fidelity Contrafund® (00022)• Fidelity Dividend Growth Fund (00330)• Fidelity Equity-Income Fund (00023)• Fidelity Growth Company Fund (00025)• Fidelity Magellan® Fund (00021)• Fidelity Real Estate Investment Portfolio (00303)• Janus Aspen Growth Portfolio - Institutional (20569)• Neuberger Berman Genesis Fund - Class I (45418)• Oakman Select I Fund (92778)• Royce Low-Priced Stock Fund (22434)• Vanguard Explorer Fund - Admiral Class (44702)

Equity Funds - Actively Managed - International:• Fidelity Overseas Fund (00094)• Morgan Stanley Institutional Fund, Inc. - Global Value

Equity Portfolio - Class A Fund (93984)• T. Rowe Price International Discovery Fund (99542)• Templeton Foreign A Fund (99500)

Fixed Income:• Bond Index Fund (99529)• Interest Income Fund (97981)• PIMCO Real Return Fund - Institutional Class (96095)• PIMCO Total Return Fund - Institutional Class (99622)• T. Rowe Price High Yield (99544)• PIMCO Total Return Fund III - Institutional Class (91391)

There are no fees for any of the investment options at thetime of purchase, and any normal sales charge or “load”of any fund offered under the Plan is waived. However, allof the investment options have management fees andother operating expenses associated with them. Ford willpay all fees and expenses of the Ford Stock Fund and themanagement fees of the Common Stock Index Fund andthe Bond Index Fund. All other fees and expenses arededucted from the assets of the particular option.


• Plan administrative expenses are the costs ofmaintaining the Plan’s day-to-day operations. Theseexpenses include the cost of all services such asrecordkeeping, loan processing and annual maintenancefees, statements, and education. Generally, Ford MotorCompany pays Plan administrative expenses.

• Expense ratios are the percentage of the fund’s as-sets used to pay for the fund’s operating expenses.Mutual fund expense ratios are reported in “basispoints”. A basis point is 1/100th of one percent.Example: If a fund charges a fee of 55 basis points,the fund’s return is reduced by 55/100ths of one per-cent (0.0055) annually to cover expenses. If you have$10,000 invested in that hypothetical fund, $55.00annually would be deducted from your investment inthat fund. Fees are deducted from the fund’s returnson a daily basis (the fund’s basis points charged di-vided by 365).

In addition, certain funds may charge participants a“redemption” fee (“short-term” trading fee), or impose ashort-term trading restriction at the time the participantsmove money out of the fund.

The management fees, operating expenses, redemptionfees and short-term trading restrictions, if any, and anyother fees associated with the mutual funds are explainedin each fund’s individual prospectus or the “Your InvestmentGuide” brochure. You should request and read the mutualfund’s prospectus prior to making a decision involving thatfund. You may obtain a free mutual fund prospectus bycalling the Fidelity Service Center for Ford Motor Companyat 1-800-544-3333. You may also view fund informationonline, or request a mutual fund prospectus at FidelityNetBenefits by accessing netbenefits.fidelity.com.

Responsibility of MembersUnder the Plan, you are solely responsible for theselection of your investment options. Ford Motor Com-pany, the Trustee, any appointed Fiduciary, the PlanAdministrator, the Fidelity Service Center for FordMotor Company, the Union, and employees and agentsof the Company are not empowered to provide invest-ment advice. The fact that an investment option is avail-able for investment under the Plan should not beconstrued as a recommendation for investment in thatoption. It should be noted that the market price andthe rate of return on each investment option may fluc-tuate over time and in varying degrees. Accordingly,the proceeds realized from such investments, if any,will depend on the prevailing market price of the in-vestments at a particular time, which may be more orless than the amount expended initially. There is noassurance that the investment options will achievetheir objectives.

The Plan is intended to constitute a plan described inSection 404(c) of the Employee Retirement Income Se-curity Act, and Title 29 of the Code of Federal Regula-tions Section 2550.404c-1. The fiduciaries of the Planmay be relieved of liability for any losses which arethe direct and necessary result of investment instruc-tions given by a participant or beneficiary.


How can I exchange assets?

Assets may be exchanged from any one investment op-tion directly to any other single investment option, sub-ject to certain fund restrictions. You may initiate one ormore exchanges daily. For example, on any day, you couldexchange the value of a portion of your Common StockIndex Fund assets and reinvest the value of those assetsin the Bond Index Fund and then request a second ex-change from the Common Stock Index Fund and reinvestthe value of those assets in the Templeton Foreign Fund- Class A.

Assets may be exchanged in dollar amounts, percentageof current balance (in increments of 1%) or a number ofshares or units. The minimum exchange amount is $250,or the entire value of the assets invested in the option if$250 or less.

Making an exchangeYou may request an exchange by calling the Fidelity Ser-vice Center for Ford Motor Company or through FidelityNetBenefits at netbenefits.fidelity.com. Your exchange willbe effective as of the close of business on any businessday if your request is made and confirmed prior to theclose of the New York Stock Exchange (usually 4:00 p.m.Eastern Time) on that day. If your request is made or con-firmed after this time or on non-business days, such asweekends or holidays, your exchange will be effective asof the close of business on the next business day. Be-cause of high call volume near the close of the market attimes, you may wish to call early to be sure your requestis made and confirmed before the deadline. A businessday is any day that the New York Stock Exchange is open.

Short-term redemption feesSeveral mutual funds in the TESPHE impose a short-termredemption fee, which is charged to discourage short-termbuying and selling of fund shares. Short-term redemptionfees are disclosed in each mutual fund’s prospectus. Sincethese fees are subject to changes at any time by the fund,you should always consult the fund’s most recent pro-spectus or contact Fidelity for current short-term redemp-tion fee information.

Trading restrictionsThe investment options in the TESPHE may imposelimits on how frequently you may trade into and/or outof the investment option. For example, a fund may notallow you to exchange back into the fund if you ex-change out of the fund within the previous 90 days. Youmay contact Fidelity for up-to-date information on afund’s trading restrictions.

Exchange privilegesThe investment options available through the TESPHEreserve the right to modify or withdraw the exchange privi-leges at any time, including rejecting any transactionsdeemed to be disruptive to the fund manager’s ability tomanage the fund’s portfolio. This may include, but is notlimited to substantive dollar amounts and/or frequent“round-trip” transactions. (Generally, a “round-trip” is de-fined as an exchange into and out of or out of and into thesame fund). You are able to make exchanges out of a fundat any time.

If your transaction is rejected by the fund, Fidelity, as theprovider of recordkeeping services for the TESPHE, isnot notified until the following business day. At that time,affected participants are notified and the transaction isreversed (monies are reinvested into the fund(s) from whichthe exchange was originally processed). Please note thatneither Ford nor Fidelity has the ability to influence thefund’s decision with respect to modifying or withdrawingexchange privileges.

Exchange privileges regarding the Ford Stock fundEffective December 1, 2004, you may exchange out ofthe Ford Stock Fund at any time. You are limited to five (5)exchanges per month into the Fund. This restriction issubject to change. As with other investment options, besure to confirm trading restrictions on the Ford Stock Fundwith Fidelity prior to investing in this Fund.


Loans taken beginning January 1, 2004: Internal RevenueService (IRS) regulations stipulate that Plan Members who:• have a history of a loan default;• initiate a TESPHE loan beginning January 1, 2004 or

later; and• cannot continue loan repayments via payroll deduc-

tion due to retirement (or otherwise become payrollineligible)

will not be allowed to continue repayment of such loansvia coupon. Loans taken out beginning January 1, 2004must be paid off in full or they will default, and the princi-pal and any accrued interest will be subject to incometaxes and if applicable, the penalty for early withdrawal.

Loans taken prior January 1, 2004 are not subject to thisIRS regulation and you may continue to make repaymentsvia coupon book upon retirement.

Investment of Loan RepaymentsLoan repayments, including interest, will be invested inaccordance with your most recent investment elections,except as noted below.

If you ceased to actively contribute to the TESPHE prior toOctober 1, 1995, and have not made an election since, yourrepayments including interest will be invested in the InterestIncome Fund and can be exchanged to other investmentoptions, subject to the Plan’s exchange rules. See the “Howcan you exchange assets?” section for details.

How can I repay my loans from the Plan?

Loan ProvisionsYou cannot initiate any new loans, but you have severaloptions for payment of loans outstanding at retirement.Generally, if you do not pay off your loans in full at the timeof retirement, you will be sent a coupon book for your use inmaking monthly loan repayments directly to Fidelity.

If you are allowed to make loan payments via coupons,Fidelity will mail the coupon book within 15 days of notifi-cation of your retirement. Ultimately, YOU are respon-sible for loan repayments. If you do not receive the cou-pon book within this timeframe, you must contact the Fi-delity Service Center for Ford Motor Company immedi-ately so that they can take corrective action.

If you do not comply with the Plan’s loan repayment provi-sions, (e.g., failure to make payments on time), the out-standing loan balance (principal and accrued interest) willbe treated as a distribution of assets and will be subjectto federal, state and local income taxes, and possible earlywithdrawal penalties. The Trustee will report the taxableamount of this distribution to the IRS and you will be senta Form 1099R.


How are assets paid from the Plan?

As a retiree, you may withdraw all or a portion of your accountbalance on any business day with some restrictions.

Systematic withdrawal with a series of payments from youraccount• After termination of employment or attainment of

age 591/2. At any time after you terminate employmentor reach age 591/2, you may elect to receive payment ofyour Plan account in monthly, quarterly, semi-annualor annual installments over a period of time you specify.You may choose any period of time in whole years overwhich you would like payments to be made as long asthe period is at least one year, including a number ofyears approximately equal to your life expectancy atthe age at which you make the election or a number ofyears approximately equal to your joint life expectancywith your spouse or other beneficiary. The Fidelity Ser-vice Center for Ford Motor Company will be able to tellyou from IRS tables what the average life expectancyis, based on your age and information on the age ofyour beneficiary that you provide.

Regardless of how you choose the number of yearsover which you want systematic payments to be made,the manner of determining the amount of each pay-ment will be the same and will be based on the value ofyour account at the effective date of payment of eachinstallment and the number of installments remainingto be paid. For example, if you specify a period of tenyears and monthly payments, the number of install-ments would be 120. The amount of the first paymentwill be equal to the value of your account on the effec-tive date of payment divided by the total number ofinstallments; that is, 120. The amount of the next in-stallment would be based on the value of your accountat the time of payment of the next installment dividedby the number of installments remaining; that is, 119.For the last installment, the entire value of your ac-count would be paid to you.

The amount for each installment will be withdrawn pro-portionally from each investment election in which youhave assets on the effective date of each installment.If you make an election for systematic withdrawal withpayments before you reach age 591/2, you may be sub-ject to an early withdrawal tax penalty of 10% of theamount of each installment paid to you before you reachage 591/2 unless you elect payment over a period atleast equal to your life expectancy (based on your age)or to your life expectancy jointly with that of your ben-eficiary under the Plan (based on your age and the ageof your beneficiary).

If you make this election so that you avoid the penaltyand later change your election before you reach age591/2, payments under your changed election must bemade over the longer of a period of at least five yearsor a period extending beyond your attainment of age591/2 if you wish to avoid the tax penalty of 10% thatwould be imposed on payments made before you at-tain age 591/2, including payments already made beforeyou changed your election. You should consult with yourtax advisor.In the event the payments made under the systematicwithdrawal you have elected are less than the amountsrequired to be distributed after you reach age 701/2 andhave terminated employment, an additional amount willbe distributed to you in December of each year in anamount necessary to satisfy the minimum required dis-tribution amounts. See the “When would assets be paidautomatically from the Plan” section for details.

NOTE: The 10% penalty will not apply if you separatefrom service during or after the year you reach age 55.

Making a withdrawalYou may request a withdrawal of all or a portion of youreligible assets by calling the Fidelity Service Center forFord Motor Company or through Fidelity NetBenefits atnetbenefits.fidelity.com.

Your withdrawal will be effective as of the close of busi-ness on any business day if your request is made andconfirmed prior to the close of the New York Stock Ex-change (usually 4:00 p.m. Eastern Time) on that day. Ifyour request is made and confirmed after this time or onnon-business days such as weekends or holidays, yourwithdrawal will be effective as of the close of business onthe next business day.

Because of high call volume near the close of the marketat times, you may wish to call early to be sure your re-quest is made before the deadline. A business day is anyday that the New York Stock Exchange is open.

Withdrawal checks will be mailed to you within three tofive business days after your request has been processed.You may also request that proceeds be paid to you elec-tronically (wired to your bank account).


When would assets be paid automatically from the Plan?

All or a portion of your TESPHE assets will be distributedto you under certain circumstances even if you do notrequest them. You will be notified before a distribution ismade. In this situation, you may wish to consult your taxadvisor regarding alternatives available to you.

Accounts valued at less than $3,500Your assets in the TESPHE will be distributed to you aftertermination of employment if the value of your assets isless than $3,500 on the effective date of any prior with-drawal or distribution from your account. This value is de-termined within 90 days after termination and excludesany rollover amounts. If you were a Plan participant onSeptember 30, 1995, you are not subject to this minimumdistribution requirement.

After termination of employmentIf you elect to have the Plan retain your assets after youattain age 65 and assets remain in the Plan when youattain age 701/2, they will be distributed to you by the re-quired date. These distributions are referred to as mini-mum required distributions, or MRDs. The required begin-ning date is April 1 of the calendar year following the cal-endar year in which you attain age 701/2. Thereafter, theMRDs must be distributed by December of each year.

In general, the applicable period is obtained from the In-ternal Revenue Code Uniform Lifetime Table and is basedsolely on your age as of your birthday in the relevant dis-tribution calendar year. If the sole beneficiary is yourspouse, however, the distribution period is the longer ofthe distribution period from the Uniform Lifetime Table, or,in the case of a spouse beneficiary who is more than 10years younger than you, the joint life expectancy of youand your spouse.

Generally, payout under the distribution schedule for man-datory age 701/2 payments would permit you to leave yourassets in the TESPHE for the longest possible period oftime. The amount of any mandatory 701/2 distribution wouldbe reduced by the amount of payments made earlier inthe year under any other withdrawal election. For example,assume during any given year you requested a $1,000withdrawal from your account. The mandatory 701/2 distri-bution is processed in December and amounts to $4,000.Only $3,000 would be distributed to you in that year tosatisfy the remaining minimum required distribution pay-ment. While MRD rules require that a minimum amount bedistributed to you, you may elect to receive a greateramount under the withdrawal options described in the sec-tion titled “How are assets paid from the Plan?”.

How withdrawals are paidIf you request a withdrawal, the value of your Ford StockFund assets, if any, will be paid in cash, unless yourequest a stock certificate. You may request that anywhole shares of Ford Common Stock represented byyour units in the Ford Stock Fund be issued as a certifi-cate by talking to a representative at the Fidelity Ser-vice Center. In this case, fractional shares will be paidin cash. The certificate representing whole shares willbe in your name or, if you request it, in your name andthe name of another person you designate. If you re-quest a withdrawal from the Ford Stock Fund and yourequest a stock certificate, you will receive a stock cer-tificate for your assets in the fund.

Any assets withdrawn from other investment options willbe paid to you in cash.

Direct rolloverIf you elect to withdraw assets or expect to receive adistribution of assets from TESPHE, you may instruct theTrustee to make a direct rollover of eligible assets to an-other employer’s qualified plan (similar to TESPHE), gov-ernmental plans, plans of tax-exempt organizations, or toa traditional IRA, (if the receiving plan permits and agreesto separately account for the transferred amounts).

In a direct rollover, assets can be transferred withoutpenalty or payment of income tax. Generally, your as-sets attributable to Pre-Tax Contributions (includingCatch-Up Contributions), After-Tax Contributions andall associated earnings are eligible for direct rollover.After-Tax Contributions may be rolled over only to anIRA or annuity described in Sections 408(a) or (b) of theInternal Revenue Code, or to a qualified plan describedin Sections 401(a) or 403(b) of the Internal RevenueCode that agree to account for the amounts transferred.To qualify as a direct rollover, the assets must be trans-ferred by Fidelity to the receiving eligible plan or IRA.You should contact the Fidelity Service Center for FordMotor Company at 1-800-544-3333 for the forms neces-sary to arrange a direct rollover.

If you receive a withdrawal or distribution from TESPHEand you do not elect a direct rollover, the taxable portionof the withdrawal or distribution is subject to a mandatory20% federal income tax withholding from any cash dis-tributed. You may make a rollover of eligible assets afteryou receive a withdrawal or distribution, but the 20% with-holding on the taxable portion of the withdrawal or distri-bution from TESPHE still applies.

See the “Special Tax Notice” regarding TESPHE with-drawals and distributions in the “What are the taxconsequences of my withdrawal or distribution?” sec-tion, which was prepared by the Internal Revenue Serviceand modified for TESPHE. You should consult your per-sonal tax advisor to ensure that any actions you takeare to your best advantage.


Dividends on stock in the Ford Stock FundYou have the option of receiving a distribution in cash orreinvesting the dividends attributable to your equivalentshares of Ford Common Stock based on the units held inthe Ford Stock Fund.

If you enrolled in the TESPHE on or after January 1,2002, your proportionate share of any cash dividendswill be handled in the same manner as they had beenimmediately prior to this date (either distributed to youin cash or reinvested in the Ford Stock Fund dependingon your arrangement).

If you enrolled January 1, 2002 or after, your proportion-ate share of any quarterly cash dividends paid on theFord Stock Fund will be reinvested in your account in theFord Stock Fund in the Plan, unless you elect to havethem distributed to you in cash.

The amount of such cash dividend not distributed gener-ally will be used by the Trustee to acquire additional sharesof Ford Common Stock. To the extent such dividends re-main in the Plan, the number of units in your account willbe increased to reflect the acquisition by the Trustee ofthose additional shares.

You may change your dividend election at any time bycontacting the Fidelity Service Center for Ford Motor Com-pany or through NetBenefits at netbenefits.fidelity.com.

Payments of dividends are not subject to the 10% earlywithdrawal penalty and are generally not subject to in-come tax withholding. They are considered taxable incomesubject to ordinary income tax rates and are not eligiblefor rollover to an IRA or another employer’s qualified plan.

Only shares of Ford stock in the Plan by 4:00 p.m. East-ern Time one day prior to the ex-dividend date are eligiblefor the dividend payment. Payment will be made as soonas practicable, after receipt by Fidelity of the dividend.

If you dieIf you die, the assets in your account will be payable toyour beneficiary. If your beneficiary is not your survivingspouse, the assets will be distributed as soon as practi-cable after your death.

If your beneficiary is your surviving spouse, specialrules apply:• If you elected a distribution schedule which commences

before your death, your account will continue to be paidto your surviving spouse according to your schedule.

• At any time, your surviving spouse can elect a lumpsum distribution.

• If distribution has not commenced at the time of yourdeath, your surviving spouse will be considered a par-ticipant for purposes of distribution under TESPHE. Yoursurviving spouse shall be deemed to attain age 701/2 onthe date you would have attained 701/2.

• While your surviving spouse retains your account inTESPHE, he or she will be able to exchange amongthe investment options as any other participant.

• In the event of the death of your surviving spouse, theaccount will be paid to your surviving spouse’s estate.

NOTE: Beneficiaries may not designate anotherbeneficiary(ies).

It is important that you keep your beneficiary designa-tion up to date with UNICARE and your current addresson file with Comerica Bank. For information on benefi-ciaries, see the “What circumstances might affect Planbenefits?” section.

How distributions are paidDistributions are paid in a similar manner as withdraw-als, as described in the “How are assets paid from thePlan?” section.

Direct rolloverDistributions made after retirement, other than mandatorydistributions, are generally eligible for rollover, as describedin the “How are assets paid from the Plan?” section.


What are the tax consequences of my withdrawal ordistribution?

SPECIAL TAX NOTICE: The tax law contains several com-plex rules regarding the taxation of withdrawals and distri-butions. The Internal Revenue Service has prepared a sum-mary of many of these rules in the following “Special TaxNotice”. The Company has inserted references to TESPHEto assist you. This notice contains important informationyou will need before you decide how to receive withdrawalor distribution payments from TESPHE. Regulatorychanges affecting this notice may not be updated in theTESPHE Summary Plan Description immediately. As aresult, the following notice may not always be current.However, Fidelity will send you the most recent notice priorto processing a distribution or withdrawal.

A rollover is a payment by you or Fidelity of all or part ofyour benefit to another plan or IRA that allows you to con-tinue to postpone taxation of that benefit until it is paid toyou. This notice describes the federal tax rules applicableto “eligible rollover distributions”. Your distribution paymentcannot be rolled over to a Roth IRA, a SIMPLE IRA, or aCoverdell Education Savings Account (formerly known asan education IRA). An “eligible employer plan” includes aplan qualified under section 401(a) of the Internal RevenueCode, including a 401(k) plan, profit-sharing plan, definedbenefit plan, stock bonus plan, and money purchase plan;a section 403(a) annuity plan; a section 403(b) tax-shel-tered annuity; and an eligible section 457(b) plan main-tained by a governmental employer (government 457 plan).

An eligible employer plan is not legally required to accepta rollover. Before you decide to roll over your payment toanother employer plan, you should find out whether theplan accepts rollovers and, if so, the types of distributionsit accepts as a rollover. You should also find out about anydocuments that are required to be completed before thereceiving plan will accept a rollover. Even if a plan acceptsrollovers, it might not accept rollovers of certain types ofdistributions, such as after-tax amounts. If this is the case,and your distribution includes after-tax amounts, you maywish instead to roll your distribution over to a traditionalIRA or split your rollover amount between the employerplan in which you will participate and a traditional IRA. Ifan employer plan accepts your rollover, the plan may re-strict subsequent distributions of the rollover amount ormay require your spouse’s consent for any subsequentdistribution. A subsequent distribution from another em-ployer plan or an IRA that accepts your rollover may alsobe subject to different tax treatment than distributions fromthe TESPHE. Check with the administrator of the otheremployer plan or the trustee of the IRA that is to receiveyour rollover prior to making the rollover.

SUMMARY

A payment from TESPHE that is eligible for “rollover” canbe taken in two ways. You can have all or any portion ofyour payment either 1) paid in a “direct rollover” or 2)paid to you. A rollover is a payment of your TESPHEdistribution that you make to your traditional individualretirement arrangement (IRA) or to another eligibleemployer plan that will accept it. A “direct rollover” is apayment made directly to a traditional IRA or anotherqualified plan that accepts rollover. This choice could affectthe tax you owe.

If you choose a Direct rollover:• Your payment will not be taxed in the current year and

no income tax will be withheld.• Your payment will be made directly to your traditional

IRA or, if you choose, to another eligible employer planthat accepts your rollover. Your TESPHE payment can-not be rolled over to a Roth IRA, a SIMPLE IRA, or aneducation IRA because these are not traditional IRAs.

• The taxable portion of your payment will be taxed laterwhen you take it out of the traditional IRA or the em-ployer plan. Depending on the type of plan, the laterdistribution may be subject to different tax treatmentthan it would be if you received a taxable distributionfrom the TESPHE.


If you choose to have a TESPHE payment that is eligible forrollover paid to you• You will receive only 80% of the taxable amount of the

payment because the TESPHE is required to withhold20% of the taxable amount of the payment and send itto the IRS as income tax withholding to be creditedagainst your taxes.

• The taxable amount of your payment will be taxed inthe current year unless you roll it over. Under limitedcircumstances, you may be able to use special taxrules that could reduce the tax you owe. However, ifyou receive the payment before age 591/2, you also mayhave to pay an additional 10% tax.

• You can roll over the payment by paying it to yourtraditional IRA or to another eligible employer plan(that accepts your rollover) within 60 days of receiv-ing the payment. The amount rolled over will not betaxed until you take it out of the traditional IRA oreligible employer plan.

• If you want to roll over 100% of the payment to a tradi-tional IRA or an eligible employer plan, you must findother money to replace the 20% that was withheld.If you roll over only the 80% that you received, you willbe taxed on the 20% that was withheld and that is notrolled over.

Your right to waive the 30-day notice periodGenerally, neither a direct rollover nor a payment can bemade from the TESPHE until at least 30 days after yourreceipt of this notice. Thus, after receiving this notice,you have at least 30 days to consider whether or not tohave your withdrawal directly rolled over. If you do notwish to wait until this 30-day notice period ends beforeyour election is processed, you may waive the notice pe-riod by making an affirmative election indicating whetheror not you wish to make a direct rollover. Your withdrawalwill then be processed in accordance with your electionas soon as practical after it is received by Fidelity.

Payments that can and cannot be rolled overPayments from the TESPHE may be “eligible rollover dis-tributions.” This means that they can be rolled over to atraditional IRA or to an eligible employer plan that acceptsrollovers. Payments from the TESPHE cannot be rolledover to a Roth IRA, SIMPLE IRA, or a Coverdell Educa-tion Savings Account (formerly an education IRA).

Fidelity will be able to tell you what portion of your pay-ment is an “eligible rollover distribution”.

After-tax Contributions. If you made after-tax contribu-tions to the TESPHE, these contributions may be rolledinto either a traditional IRA or to certain employer plansthat accept rollovers of the after-tax contributions. Thefollowing rules apply:

• Rollover into a traditional IRAYou can roll over your after-tax contributions to a tradi-tional IRA either directly or indirectly. Fidelity will beable to tell you how much of your payment is the tax-able portion and how much is the after-tax portion.If you roll over after-tax contributions to a traditionalIRA, it is your responsibility to keep track of, and re-port to the IRS on the applicable forms, the amount ofthese after-tax contributions. This will enable the non-taxable amount of any future distributions from the tra-ditional IRA to be determined.Once you roll over your after-tax contributions to a tra-ditional IRA, those amounts CANNOT later be rolledover to an employer plan.

• Rollover into an employer planYou can roll over after-tax contributions from an em-ployer plan that is qualified under Internal Revenue Codesection 401(a) or a section 403(a) annuity plan to an-other such plan using a direct rollover if the other planprovides separate accounting for amounts rolled over,including separate accounting for the after-tax employeecontributions and earnings on those contributions.You can also roll over after-tax contributions from asection 403(b) tax-sheltered annuity to another section403(b) tax-sheltered annuity using a direct rollover ifthe other tax-sheltered annuity provides separate ac-counting for amounts rolled over, including separateaccounting for the after-tax employee contributions andearnings on those contributions.You CANNOT roll over after-tax contributions to a gov-ernmental 457 plan.If you want to roll over your after-tax contributions toan employer plan that accepts these rollovers, you can-not have the after-tax contributions paid to you first.You must instruct Fidelity to make a direct rollover onyour behalf. Also, you cannot first roll over after-taxcontributions to a traditional IRA and then roll over thatamount into an employer plan.Fidelity will be able to tell you if your payment includesamounts that cannot be rolled over.


The following types of payments cannot be rolled over:

Payments Spread over Long Periods. You cannot rollover a payment if it is part of a series of equal (or almostequal) payments that are made at least once a year andthat will last• Your lifetime (or your life expectancy),• Your lifetime and your beneficiary’s lifetime

(or a period measured by your joint life expectancies),or

• A period of ten years or more

Required minimum payments. Beginning in the year youreach age 701/2 or retire, whichever is later, a certain por-tion of your payment cannot be rolled over because it is a“required minimum payment” that must be paid to you.

Hardship Distributions. A hardship distribution cannotbe rolled over.

ESOP Dividends. Cash dividends paid directly to you oncompany stock.

Corrective Distributions. A distribution that is made tocorrect a failed nondiscrimination test or because legallimits on certain contributions were exceeded cannot berolled over.

Loans treated as Distributions. The amount of aTESPHE loan that becomes a taxable deemed distribu-tion because of a default cannot be rolled over. How-ever, a loan offset amount is eligible for rollover. Fidel-ity will be able to tell you if distribution of your loanqualifies for rollover treatment.

Direct rolloverYou can choose a direct rollover of all or any portion ofyour payment that is an “eligible rollover distribution”, asdescribed above. In a direct rollover, the eligible rolloverdistribution is paid directly from TESPHE to a traditionalIRA or an eligible employer plan that accepts rollovers. Ifyou choose a direct rollover there is no income tax with-holding on the taxable portion of your payment for whichyou choose a direct rollover until you later take it out ofthe traditional IRA or the employer plan.

Direct rollover to a traditional IRA. You can open atraditional IRA to receive the direct rollover. If you chooseto have your payment made directly to a traditional IRA,contact an IRA sponsor (usually a financial institution) tofind out how to have your payment made in a direct rolloverto a traditional IRA at that institution. If you are unsure ofhow to invest your money, you can temporarily establisha traditional IRA to receive the payment. However, in choos-ing a traditional IRA, you may wish to consider whetherthe traditional IRA you choose will allow you to move allor a part of your payment to another traditional IRA at alater date without penalties or other limitations. See IRSPublication 590, Individual Retirement Arrangements,for more information on traditional IRAs (including limitson how often you can roll over between IRAs).

Direct rollover to a plan. If you are employed by a newemployer that has an eligible employer plan, and you wanta direct rollover to that plan, ask the administrator of thatplan whether it will accept your rollover. An eligible em-ployer plan is not legally required to accept a rollover. Evenif your new employer’s plan does not accept a rollover,you can choose a direct rollover to a traditional IRA. If theemployer plan accepts your rollover, the plan may providerestrictions on the circumstances under which you maylater receive a distribution of the rollover amount or mayrequire spousal consent to any subsequent distribution.Check with the plan administrator of that plan before mak-ing your decision.

Direct rollover of a Series of Payments. If you receive apayment that can be rolled over to a traditional IRA or aneligible employer plan that will accept it, and it is paid in aseries of installments for less than ten years, your choiceto make or not make a direct rollover for a payment willapply to all later payments in the series until you changeyour election. You are free to change your election for anylater payment in the series.

Change in tax treatment resulting from a direct rollover.The tax treatment of any payment from the eligible em-ployer plan or traditional IRA receiving your direct rollovermight be different than if you received your benefit in ataxable distribution directly from the TESPHE. For example,if you were born before January 1, 1936, you might beentitled to ten-year averaging or capital gain treatment, asexplained below. However, if you have your benefit rolledover to a section 403(b) tax-sheltered annuity, a govern-mental 457 plan, or a traditional IRA in a direct rollover,your benefit will no longer be eligible for that special treat-ment. See the sections below entitled “Additional 10% taxif you are under age 591/2” and “Special tax treatment ifyou were born before January 1, 1936”.


Payment paid to youIf your payment can be rolled over and the payment ismade to you, it is subject to 20% income tax withholdingon the taxable portion (state tax withholding may alsoapply). The payment is taxed in the year you receive itunless, within 60 days, you roll it over to an IRA or aneligible employer plan that accepts rollovers. If you do notroll it over, special tax rules may apply.

[Note: Dividend payouts, as described in the “Whenwould assets be paid automatically from the Plan?”section, are not subject to 20% withholding.]

Income tax withholding:Mandatory withholding. If any portion of the paymentcan be rolled over and you do not elect to make a directrollover, TESPHE is required by law to withhold 20% ofthe taxable amount. This amount is sent to the IRS asincome tax withholding. For example, if your “eligiblerollover distribution” is $10,000, only $8,000 will be paid toyou because TESPHE must withhold $2,000 as incometax. However, when you prepare your income tax returnfor the year, unless you make a rollover within 60 days(see “Sixty-day rollover option” below), you must reportthe full $10,000 as a taxable payment from TESPHE. Youmust report the $2,000 as tax withheld, and it will be cred-ited against any income tax you may owe for the year.There will be no income tax withholding if your paymentsfor the year are less than $200.

Voluntary withholding. If any portion of your payment istaxable but cannot be rolled over, the mandatory withhold-ing rules described above do not apply. In this case, youmay elect not to have withholding apply to that portion. Ifyou do nothing, an amount will be taken out of this portionof your payment for federal income tax withholding. Toelect out of withholding, please contact the Fidelity Ser-vice Center for Ford Motor Company for the election formand related information.

Sixty-day rollover option. If you have an “eligible rolloverdistribution” paid to you, you can still decide to roll over allor part of it to a traditional IRA or to an eligible employerplan that accepts rollovers. If you decide to roll over, youmust contribute the amount of the payment you re-ceived to a traditional IRA or eligible employer planwithin 60 days after you receive the payment. The por-tion of your payment that is rolled over will not be taxeduntil you take it out of the traditional IRA or the eligibleemployer plan.

You can roll over up to 100% of the eligible rollover distri-bution, including an amount equal to the 20% that waswithheld. If you choose to rollover 100%, you must findother money within the 60-day period to contribute to thetraditional IRA or the eligible employer plan to replace the20% that was withheld. On the other hand, if you roll overonly the 80% that you received, you will be taxed on the20% that was withheld.

Example. Suppose your payment that can be rolled overis $10,000, and you choose to have it paid to you. You willreceive $8,000, and $2,000 will be sent to the IRS asincome tax withholding. Within 60 days after receiving the$8,000, you may roll over the entire $10,000 to a tradi-tional IRA or qualified employer plan. To do this, you rollover the $8,000 you received from the TESPHE, and youwill have to find $2,000 from other sources (your savings,a loan, etc.). In this case, the entire $10,000 is not taxeduntil you take it out of the traditional IRA or eligible em-ployer plan. If you roll over the entire $10,000, when youfile your income tax return you may get a refund of the$2,000 withheld.

If, on the other hand, you roll over only $8,000, the $2,000you did not roll over is taxed in the year it was withheld.When you file your income tax return, you may get a re-fund of part of the $2,000 withheld, however, any refund islikely to be larger if you roll over the entire $10,000.


Additional 10% tax if you are under age 591/2. If youreceive a payment before you reach age 591/2 and youdo not roll it over, then, in addition to the regular incometax, you may have to pay an extra tax equal to 10% ofthe taxable portion of the payment. The additional 10%tax does not apply to (1) payments that are paid to youbecause you separate from service with your employerduring or after the year you reach age 55, (2) paymentsthat are paid because you retire due to disability, (3)payments that are paid to you as equal (or almost equal)payments over your life or life expectancy (or your andyour beneficiary’s lives or life expectancies), (4) divi-dends paid with respect to stock by an employee stockownership plan (ESOP) as described in Internal Rev-enue Code section 404(k), (5) payments that are paiddirectly to the government to satisfy a federal tax levy,(6) payments that are paid to an alternate payee undera qualified domestic relations order, or (7) paymentsthat do not exceed the amount of your deductible medi-cal expenses. See IRS Form 5329 for more informationon the additional 10% tax.

The additional 10% tax will not apply to distributions froma governmental 457 plan, except to the extent the distri-bution is attributable to an amount you rolled over to thatplan (adjusted for investment returns) from another typeof eligible employer plan or IRA. Any amount rolled overfrom a governmental 457 plan to another type of eligibleemployer plan or to a traditional IRA will become subjectto the additional 10% tax if it is distributed to you beforeyou reach age 591/2, unless one of the exceptions applies.

Special tax treatment if you were born before January1, 1936. If you receive a payment from TESPHE that canbe rolled over and you do not roll it over to a traditionalIRA or an eligible employer plan, the payment will be taxedin the year you receive it. However, if it qualifies as a“lump-sum distribution”, it may be eligible for special taxtreatment. A lump-sum distribution is a payment, withinone year, of your entire balance under TESPHE that ispayable to you because you have reached age 591/2 orhave separated from service with the Company. For a pay-ment to qualify as a lump-sum distribution, you must havebeen a participant in TESPHE for at least five years be-fore the year in which you received the distribution. Thespecial tax treatment for lump-sum distributions is de-scribed below.

Ten-year averaging. If you receive a lump-sum distribu-tion and you were born before January 1, 1936, you canmake a one-time election to figure the tax on the paymentby using “10-year averaging” (using 1986 tax rates). “Ten-year averaging” often reduces the tax you owe.

Capital gain treatment. If you receive a lump-sum distri-bution and you were born before January 1, 1936, youmay elect to have the part of your payment that is attrib-utable to your pre-1974 participation in TESPHE (if any)taxed as long-term capital gain.

There are other limits on the special tax treatment forlump-sum distributions. For example, you can generallyelect this special tax treatment only once in your life-time, and the election applies to all lump-sum distribu-tions that you receive in that same year. If you havepreviously rolled over a payment from TESPHE, youcannot use this special tax treatment for later paymentsfrom TESPHE. If you roll over your payment to a tradi-tional IRA, a governmental 457 plan, or 403(b) tax-shel-tered annuity, you will not be able to use this specialtax treatment for later payments from the traditional IRAplan or annuity. Also, if you roll over only a portion ofyour payment to a traditional IRA, a governmental 457plan, or 403(b) tax-sheltered annuity, this special taxtreatment is not available for the rest of the payment.Additional restrictions are described in IRS Form 4972,which has more information on lump-sum distributionsand how you elect the special tax treatment.

Employer stock or securities. There is a special rule fora payment from TESPHE that includes Ford CommonStock. To use this special rule, (1) the payment must qualifyas a “lump-sum distribution”, as described above (or wouldqualify except that you do not yet have five years of par-ticipation in the TESPHE) or (2) the Ford Common Stockincluded in the payment must be attributable to After-TaxContributions, if any. Under this special rule, you may havethe option of not paying tax on the “net unrealized appre-ciation” of the stock until you sell the stock.

Net unrealized appreciation generally is the increase inthe value of the Ford Common Stock represented byunits of the Ford Stock Fund during the time they werecredited to your TESPHE account. For example, if FordStock Fund units were contributed to your TESPHEaccount when Ford Common Stock was worth $1,000but the stock was worth $1,200 when you received it,you would not have to pay tax on the $200 increase invalue until you later sold the stock.


You may instead elect not to have the special rule applyto the net unrealized appreciation. In this case, your netunrealized appreciation will be taxed in the year you re-ceive the stock, unless you roll over the stock. The stock(including any net unrealized appreciation) can be rolledover to a traditional IRA or an eligible employer plan eitherin a direct rollover or a rollover that you make yourself.Generally, you will no longer be able to use the specialrule for net unrealized appreciation if you roll the stockover to a traditional IRA or another eligible employer plan.

If you receive only Ford Common Stock in a payment thatcan be rolled over, no amount will be withheld. If you re-ceive cash in addition to Ford Common Stock, in a pay-ment that can be rolled over, the 20% withholding amountwill be based on the entire taxable amount paid to you(including the value of the Ford Common Stock) deter-mined by excluding net unrealized appreciation. However,the amount withheld will be limited to the cash (excludingFord Stock) paid to you.

If you receive Ford Common Stock in a payment that quali-fies as a lump-sum distribution, the special tax treatmentfor lump-sum distributions described above (such as 10-year averaging) also may apply. See IRS Form 4972 foradditional information on these rules.

Repayment of TESPHE Loans. If you end your employ-ment and have an outstanding loan from TESPHE,TESPHE may reduce (or “offset”) your balance in theamount of the loan you have not paid. The amount of yourloan offset is treated as a distribution to you at the time ofthe offset and will be taxed unless you roll over an amountequal to the amount of your loan offset to another quali-fied employer plan or a traditional IRA within 60 days ofthe date of the offset. If the amount of your loan offset isthe only amount you receive or are treated as having re-ceived, no amount will be withheld from it. If you receiveother payments of cash or property from TESPHE, the20% withholding amount will be based on the entire amountpaid to you, including the amount of the loan payment.The amount withheld will be limited to the amount of othercash or property paid to you (other than Ford CommonStock). The amount of a defaulted plan loan that is a tax-able deemed distribution cannot be rolled over.

Surviving spouses, alternate payees and other beneficiariesIn general, the rules summarized above that apply topayment to employees also apply to payments to sur-viving spouses of employees and to spouses or formerspouses who are “alternate payees”. You are an alter-nate payee if your interest in the TESPHE results froma “Qualified Domestic Relations Order”, which is an or-der issued by a court, usually in connection with a di-vorce or legal separation.

If you are a surviving spouse or an alternate payee, youmay choose to have a payment that can be rolled overpaid in a direct rollover to a traditional IRA or to an eli-gible employer plan. If you have the payment paid toyou, you can keep it or roll it over yourself to a tradi-tional IRA or to an eligible employer plan. Thus, youhave the same choices as the employee.

If you are a beneficiary other than a surviving spouse oran alternate payee, you cannot choose a direct rollover,and you cannot roll over the payment yourself.

If you are a surviving spouse, an alternate payee oranother beneficiary, your payment is not subject to theadditional 10% tax described above, even if you areyounger than age 591/2.

If you are a surviving spouse, an alternate payee or anotherbeneficiary, you may be able to use the special tax treat-ment for “lump-sum distributions” and the special rule forpayments that include Ford Common Stock, as describedabove. If you receive a payment because of the employee’sdeath, you may be able to treat the payment as a “lump-sumdistribution” if the employee met the appropriate age require-ments, whether or not the employee had five years of par-ticipation in the TESPHE.


How to obtain additional information from the IRSThis notice summarizes only the federal (not state or lo-cal) tax rules that might apply to your payment. The rulesdescribed above are complex and contain many condi-tions and exceptions that are not included in this notice.Therefore, you may want to consult with a professionaltax advisor before you take a payment of your benefitsfrom the TESPHE. Also, you can find more specific infor-mation on the tax treatment of payments from qualifiedretirement plans in IRS Publication 575, Pension andAnnuity Income, and IRS Publication 590, Individual Re-tirement Arrangements. These publications are availablefrom your local IRS office or the IRS Internet web site atwww.irs.gov or by calling 1-800-TAX-FORMS.

The information contained in the Special Tax Notice wasestablished by the IRS in Notice 2002-3. You may wish tocontact the IRS or your personal tax advisor to discusschanges in the tax law since its original publication.

When do I contact the Fidelity Service Center for FordMotor Company?

Convenient account accessThe Fidelity Service Center generally provides 24-houraccess to TESPHE account information and permits avariety of transactions to be initiated, toll free, from anytouch-tone telephone. Fidelity representatives are avail-able 151/2 hours a day from 8:30 a.m. to midnight (EasternTime) on business days.

You can manage your TESPHE account almost entirelyover the phone with the Fidelity Service Center or throughFidelity’s Internet access NetBenefitsSM atwww.netbenefits.fidelity.com. Most transactions, includ-ing exchanges (transfers), loans, and withdrawals may beinitiated online and do not require paper forms.

Establishing your PINTo use the Fidelity Service Center, you will need to estab-lish a PIN (personal identification number). The first timeyou call Fidelity or access your account via NetBenefits,you will be asked to establish your PIN. This is very im-portant because your PIN allows access to confidentialinformation about your TESPHE account. Without yourPIN, you will not be able to access your account. YourPIN is a number you choose, six to twelve digits.


Transaction deadlines• Exchanges and withdrawals. Your transaction will

be effective as of the close of business on any busi-ness day if your request is made and confirmed priorto the close of the New York Stock Exchange (usu-ally 4:00 p.m. Eastern Time) on that day. If your re-quest is made or confirmed after this time or on non-business days such as weekends or holidays, yourtransaction will be effective as of the close of busi-ness on the next business day.

Because of high call volume near the close of the marketat times, you may wish to call early to be sure your re-quest is made by the deadline. A business day is any daythat the New York Stock Exchange is open.

Ensuring accuracyAs you enter information in the Fidelity Service Centersystem to initiate a TESPHE transaction, its voice re-sponse system will:

• Tell you if your entry fails to meet plan guidelines• Repeat your entry so you can verify its accuracy

If you have questionsAll questions and issues regarding TESPHE should bedirected to the Fidelity Service Center for Ford Motor Com-pany representatives. You should call the NESC at 1-800-248-4444 only if the Fidelity Service Center representa-tives are unable to help you.

How to access your accountTo access your TESPHE account, you’ll need to enteryour social security number or Alternate Customer ID andyour PIN when you call or use NetBenefits. To avoid unau-thorized access to your TESPHE account, it’s very im-portant to keep your PIN confidential at all times. Conver-sations initiated through a Fidelity Service Representa-tive will be recorded.

To use the automated telephone system or speak to arepresentative, you should call:

• Fidelity Service Center for Ford Motor Company:

1-800-544-3333

• From Overseas, follow these instructions:

Dial your country’s AT&T access number + 800-544-3333 (do not dial the leading “1”). From the US, accessnumbers are available by calling 1-800-331-1140. Fromanywhere in the world, access numbers are also avail-able on line at www.att.com/traveler or from your localoperator. If you are calling from an area not supportedby AT&T Direct, please use the following internationalcollect phone number: 508-787-9902. Follow the promptsand you will be connected to the Fidelity Service Cen-ter for Ford Motor Company.

• TDD Phone Line for the Hearing Impaired:

1-800-847-0348

To use NetBenefits, use the following URL:netbenefits.fidelity.com.

All conversations initiated through a Fidelity repre-sentative will be recorded.

Refer to the chart in the Appendix at the end of thissection for information on managing your account.


What circumstances might affect Plan benefits?

Naming a beneficiaryIf you die before assets in your account are distributed toyou, your beneficiary will become entitled to your benefitas follows:

• If you’re married at the time of your death, your surviv-ing spouse will become entitled to the assets in youraccount, unless you designate someone else as yourbeneficiary. Your spouse must consent to this alterna-tive beneficiary designation in writing, as required bylaw, and your spouse’s consent must be witnessed bya notary public.

• If you’re not married and you’re covered under the Com-pany-paid life insurance plan at the time of your death,assets in your TESPHE account will be distributed tothe person(s) entitled to receive your benefits undersuch plan, unless you designate someone else. Youmay name a different beneficiary for TESPHE by re-questing an alternative beneficiary designation formfrom the Fidelity Service Center for Ford Motor Com-pany and filing the form with UNICARE.

• If you’re not married and you’re not covered under theCompany-paid life insurance plan at the time of yourdeath, assets in your account will be distributed to yourestate, unless you designate a beneficiary. You mayname a beneficiary for TESPHE by requesting an alter-native beneficiary designation form from the FidelityService Center for Ford Motor Company and filing theform with UNICARE.

You may change or revoke your beneficiary designationat any time. If you terminate employment and decide toleave your TESPHE assets in the Plan, you should besure that your beneficiary elections are in order.

Beneficiaries may not make further beneficiary designations.

If you or your beneficiary is incapacitatedPayment of your account may be withheld until a legalrepresentative is appointed if you or your beneficiary be-comes legally incapacitated or incompetent.

Changes in laws and regulationsThe Plan is subject to approval by the Internal RevenueService and other governmental bodies. As laws and regu-lations change, the Plan may require amendment as well.If changes affect your benefits, you will be notified.

Transfer of benefitsPayments from the Plan are intended to be made to youor your eligible spouse or beneficiary. Payments cannotbe transferred, assigned, pledged or garnisheed. The Planmust honor qualified domestic relations court orders, how-ever, in assigning benefits for a divorce settlement or childsupport payment.

Assignment of benefits; liensBenefits under qualified retirement plans like the TESPHEgenerally may not be assigned or alienated except in ac-cordance with a judgment, decree, or order that is issuedunder state domestic relations law that relates to the pro-vision of child support, alimony, or marital property rightsto a spouse, former spouse, child, or other dependent of aplan participant. Such an order must meet the require-ments of a Qualified Domestic Relations Order (QDRO)as defined in Section 206(d) of the Employee RetirementIncome Security Act of 1974 (ERISA), as amended, asdetermined by the Company. No benefits under TESPHEare subject to legal process or attachment for the pay-ment of any claim except as described above.

In case of divorce or legal separationIf you are involved in a divorce or legal separation andrequire information concerning your qualified plan benefits,you should consult your quarterly statement with respectto the TESPHE or review your account through NetBenefitsat www.netbenefits.fidelity.com. If further information isrequired, you should contact the Fidelity Service Centerfor Ford Motor Company at 1-800-544-3333.

If you would like to receive a QDRO Sample Model Orderthat is acceptable to the Company, please contact theFidelity Service Center for Ford Motor Company, Atten-tion: QDRO Administration Group, P.O. Box 770003, Cin-cinnati, OH 45277-0066. Other forms of QDROs may beacceptable if they comply with the legal requirements setforth in section 206(d) of ERISA and section 414(p) of theInternal Revenue Code of 1986, and can be administeredin accordance with the guidelines of the Plan as deter-mined by the Company.

Upon your divorce or legal separation and entry of theorder, a complete copy of the QDRO must be sent to theFidelity Service Center for Ford Motor Company, Atten-tion: QDRO Administration Group, P.O. Box 770003, Cin-cinnati, OH 45277-0066 for review.

Upon your divorce or legal separation and entry of theorder, a complete copy of the Judgment of Divorce mustbe sent to the NESC, P.O. Box 6214,Dearborn, MI 48121-6214 for review of any additional benefit impact.

In case of a Federal garnishmentA Federal writ of garnishment against your pension ben-efit may be obtained by the US Government pursuant tothe procedures authorized by the Federal DepartmentCollections Procedures Act of 1990 (FDCPA), 28 U.S.C.88 3001-3308, and the Mandatory Victims Restitution Act,18 U.S.C. 83614(c). The Federal Garnishment will attacha lien to your TESPHE account. Recovery of the FederalGarnishment will begin once you begin to receive yourTESPHE distributions.


Can TESPHE provisions change?

The Plan is expected to continue in effect until the end ofthe 2003 Ford-UAW Collective Bargaining Agreement.

At that time, the Plan may be renewed automatically forsuccessive one-year periods, unless Ford or the UAWmakes a written request to modify the Plan at least 60days before September 14, 2007, or any anniversary ofthat date. A request to terminate the Plan must be madewithin the same deadlines.

Subject to the 2003 Agreement, the Company Board ofDirectors may at any time change, suspend or terminatethe Plan partially or completely. No change may reducethe value of your account, however, from what it was onthe day before the change.

Your current account balance also is protected if the Planis merged or consolidated with another plan, or if youraccount is transferred to another plan. Immediately afterthe change, your account balance under the new plan wouldbe at least equal to the balance under this Plan just be-fore the change.

A change or suspension in the Plan may not change yourright for the continued investment of your TESPHE ac-count, your right to make approved withdrawals, or yourright to a final payout.

The Company may change, suspend or end the Plan foremployees if the Tax-Efficient Savings Plan Committeefinds that the laws of a state or country where they livemake the Plan disproportionately expensive and inconve-nient to administer.

A change, suspension or termination will take effect nosooner than the date the Company notifies the Trusteeand participating companies. A retroactive change is al-lowed, however, if it is required to keep the Plan or thetrust fund in compliance with legal requirements.

If the Plan is terminated, the Company may direct theTrustee to pay out the assets in all accounts as of thetermination date. Any profit sharing contribution to the Planfor 2007, however, will be administered as described inthe Plan even if the Plan is terminated that year.

Administration and other information

Administration of the TESPHEThe TESPHE is sponsored by Ford Motor Company, andthe Company is the Plan administrator.

The Company has been designated “named fiduciary” pur-suant to the requirements of the Employee RetirementIncome Security Act of 1974 (ERISA), as amended andhas the power to control and manage the operation andadministration of the TESPHE.

The Company has established a Tax-Efficient Savings PlanCommittee (the Committee), all the members and alter-nate members of which are employees of the Company.The members of the Committee and the alternate mem-bers receive no additional compensation for Committeeservices as members or as alternate members. Exceptfor nondelegable functions of the Trustee, the Committeeadministers the TESPHE, interprets its provisions and pre-scribes regulations and forms in connection therewith. In-terpretations of the provisions of the TESPHE by the Com-mittee are final and conclusive.

The Company and Fidelity Management Trust Company(FMTC) have entered into a Trust Agreement pursuant towhich FMTC acts as Trustee under the TESPHE. The Com-pany may amend the Trust Agreement and change theTrustee. The Trustee has custody of the funds receivedfrom the Company as contributions or received as earn-ings thereon, and makes all purchases, sales and redemp-tions of securities in accordance with the provisions ofthe TESPHE.

The Pension Benefit Guaranty Corporation (PBGC)TESPHE is a defined contribution pension plan. Thismeans that the Plan defines the contribution to be madeto your account, but it does not mean that you’ll receive aspecific amount when your account is paid out. Since nobenefit is guaranteed, TESPHE accounts are not insuredby the PBGC.


Other informationThe following documents filed or to be filed with the Secu-rities and Exchange Commission are incorporated hereinby reference:

• Ford’s, and the Plan’s latest annual reports filed pursu-ant to Section 13(a) or 15(d) of the Securities ExchangeAct of 1934 (the “1934 Act”) which contain, either di-rectly or by incorporation by reference, certified finan-cial statements for Ford’s latest fiscal year for whichsuch statements have been filed

• All other reports filed pursuant to Section 13(a) or 15(d)of the 1934 Act since the end of the fiscal year cov-ered by the annual reports referred to in the precedingparagraph

• The description of Ford’s Common Stock contained inRegistration Statement No. 333-38352 filed by Fordunder the Securities Act of 1933

All documents subsequently filed by Ford pursuant toSections 13(a), 13(c), 14 and 15(d) of the 1934 Act, priorto the filing of a post-effective amendment which indi-cates that all securities offered have been sold or whichderegisters all securities then remaining unsold, shall bedeemed to be incorporated herein by reference and to bea part hereof from the date of filing such documents.

Each person to whom a copy of this material is deliveredwill be provided without charge, upon written or oral re-quest of such person, a copy of any and all of the infor-mation that has been incorporated by reference in thismaterial (not including exhibits to the information that isincorporated by reference unless such exhibits are spe-cifically incorporated by reference into the information thatthis material incorporates) and any other documents re-quired to be delivered to participants. Written or telephonerequests for such information related to Ford should bedirected to Ford at its Shareholder Relations Department,P.O. Box 1899, Dearborn, Michigan 48121-1899, telephone:(800) 555-5259 or (313) 845-8540.

Written or telephone requests for information about theTESPHE that the Fidelity Service Center is unable to an-swer or inquiries directed to the Tax-Efficient Savings PlanCommittee, which administers the TESPHE, should bedirected to the National Employee Services Center, Sav-ings Plans Administration, Ford Motor Company, P.O. Box6214, Dearborn, MI 48121-6214, telephone (313) 248-4444or 1-800-248-4444.

The TESPHE was established pursuant to the CollectiveBargaining Agreement dated October 14, 1984, betweenthe Company and the International Union, United Auto-mobile, Aerospace and Agricultural Implement Workersof America, UAW (the Union), and was approved by theBoard of Directors of the Company on November 8, 1984.The TESPHE was amended and continued pursuant tothe Collective Bargaining Agreement dated October 25,1999, between the Company and the Union. Contributionsto the TESPHE commenced in March 1985.

Investment Process Oversight CommitteeThe Company, by action of the Board of Directors, createdan Investment Process Oversight Committee (IPOC). TheIPOC is responsible for:

• Reviewing the performance of investment options basedon approved investment guidelines; and

• Approving any changes to the investments or investmentguidelines recommended by the Investment ProcessCommittee (IPC)

The IPOC also has the power to suspend the operation ofany provision of TESPHE.

Investment Process CommitteeThe Company, by action of the Chief Financial Officer,the Group Vice President, Corporate Human Resources,and the Senior Vice President and General Counsel createdan Investment Process Committee (IPC). The InvestmentProcess Committee shall:

• Recommend investment process guidelines to theInvestment Process Oversight Committee for approval;

• Review the investment process guidelines for continuingappropriateness;

• Recommend changes to the guidelines for approval bythe Investment Process Oversight Committee;

• Review the performance of investment options pursuantto the investment process guidelines and makerecommendations regarding the addition to, deletionfrom, or replacement of investment options under thePlan; and

• Review the overall line-up of investment options toensure that, in total, the Plan’s objectives are achieved.

The Investment Process Committee shall be responsible formaintaining the investment options under the Plan solely inthe interest of the Plan’s members and their beneficiaries.

Employee Stock Ownership Plan (ESOP)A portion of the TESPHE is designated as an EmployeeStock Ownership Plan (ESOP). The ESOP was estab-lished in the Plan effective January 1, 1989 and consistsof all the shares of Company Stock in the Plan, includingall shares allocated to participants’ accounts, all forfeitedshares and all assets attributable to contributions madeafter December 31, 1988. The Trustee of the ESOP shallhold, invest, transfer and distribute shares of CompanyStock and all other assets in the ESOP in accordancewith the Plan document.


TESPHE is subject to certain provisions of the EmployeeRetirement Income Security Act of 1974, as amended(ERISA), including generally, the reporting and disclosure,participation and vesting, fiduciary responsibility, and ad-ministration and enforcement provisions in Title I of ERISA.TESPHE is also qualified under Sections 401 (a) and 401(k)of the Internal Revenue Code of 1986, as amended.

The TESPHE is intended to constitute a plan described insection 404(c) of ERISA. The fiduciaries of the TESPHEare relieved of liability for any losses which are the directand necessary result of investment instructions given bymembers of the TESPHE.

The detailed provisions of the Plan, not the summary,govern the actual rights and benefits to which you may beentitled. If there is a conflict between this summary andthe Plan document, the Plan document will control.

Address changesIt is your responsibility to keep your address current inthe Company’s records. Notices about the Plan will besent to your most recent address.

Appeal procedureIf you have a Claim for Benefits under the TESPHE orif you think there is an error in the administration ofyour TESPHE account, you should contact the FidelityService Center for Ford Motor Company at 1-800-544-3333. The Fidelity Service Center for Ford Motor Com-pany will attempt to resolve your concerns informally. Ifthat does not prove possible, you should submit yourclaim to the Fidelity Service Center for Ford Motor Com-pany in writing.

If a claim is deniedIf Fidelity denies a claim for benefits or participation inwhole or in part, you will receive written notification within90 days from the date the claim for benefits or participa-tion is received. The notice will be deemed given uponmailing, full postage prepaid in the United States mail oron date sent electronically to you. The decision will be inwriting and it will include:

• The specific reason or reasons for the denial;

• Reference to the specific plan provision(s) on whichthe denial is based; along with a copy of the Planprovision(s) or a statement that one will be furnished atno charge per your request;

• A description of any additional material or informationnecessary for you to perfect the claim and an explana-tion of why such material or information is necessary;and

• A description of the Plan’s review procedures and thetime limits applicable to such procedures, along with astatement of your right to bring a civil action under sec-tion 502(a) of the Employee Retirement Income Secu-rity Act (ERISA) of 1974, as amended, following a claimdenial for benefits on review.

If Fidelity determines that an extension of time for pro-cessing is required, written notice of the extension will befurnished to you prior to the termination of the initial 90-day period. In no event will such extension exceed a pe-riod of ninety (90) days from the end of the initial period.The extension notice will indicate the special circumstancesrequiring an extension of time and the date by which thePlan expects to render the determination.

Review of denial of the claim by the CommitteeIn the event that Fidelity denies a claim for benefits orparticipation, you may:

• Request a review by filing a written appeal to the Committee;

• Review pertinent documents; and

• Submit written comments, documents, records andother information relating to the claim for benefits.

The Committee must take into account all comments,documents, records and other information submitted byyou relating to the claim, without regard to whether theinformation was submitted or considered in the initial ben-efit determination.

You may send your written appeal to:

National Employee Services Center (NESC)Savings Plan AdministratorP.O. Box 6214Dearborn, MI 48121-6214


Decision of the CommitteeDecisions of the Committee are final and conclusive andare only subject to the arbitrary and capricious standardof judicial review.

Effective April 8, 2005, the following procedure should befollowed if you have a Claim for Breach of FiduciaryDuty under the TESPHE.

A Member alleging breach of fiduciary duty must file awritten claim directed to the National Employee ServicesCenter, Savings Plan Administration, Ford Motor Com-pany, P.O. Box 6214, Dearborn, MI 48121-6214.

The claim must:

• Specifically set forth the facts concerning the allegedbreach;

• Clearly identify the Plan fiduciary who claimant allegeshas committed a fiduciary breach;

• Cite the legal basis for the allegation of fiduciary breach;and

• Specifically set forth the remedy that the claimant re-quests on behalf of the Plan.

Savings Plan Administration will review the claim andmake a determination within ninety (90) days from thedate the claim is received. The notice will be deemedgiven upon mailing, full postage prepaid in the UnitedStates mail, or on the date provided electronically tothe claimant.

Any actual denial of a claim will be in writing and it willinclude:


• Reference to the specific plan provision(s) on whichthe denial is based along with a copy of the Planprovision(s) or a statement that one will be furnished atno charge, per the claimant’s request;

• A description of any additional material or informationnecessary for the claimant to perfect the claim and anexplanation of why such material or information is nec-essary; and

• A description of the Plan’s review procedures and thetime limits applicable to such procedures, along with astatement of the claimant’s right to bring a civil actionunder Section 502(a) of the Employee Retirement In-come Security Act (ERISA) of 1974, as amended, fol-lowing a denial for benefits on review.

You must request a review upon an appeal of the denial ofthe claim within sixty (60) days after you receive the writ-ten notification of denial of the claim. The appeal will beconsidered at the Committee’s next regularly scheduledmeeting. If it is filed within thirty (30) days of the nextmeeting, a decision by the Committee shall be made bythe date of the second meeting after receipt of your re-quest for review. Under special circumstances, an exten-sion of time for processing may be required, in which casea decision shall be rendered by the date of the third meet-ing. If an extension is required because information is in-complete, the review period will be tolled from date thenotice was sent to the date information is received. In theevent such an extension is needed, written notice of theextension will be provided to you prior to the commence-ment of the extension.

Written notice of a decision will be made not any laterthan five (5) days after the Committee has made a de-cision. The decision will be in writing in a mannerdetermined to be understood by you, and will include:


• Specific reference to pertinent Plan provision(s) onwhich the denial is based, along with a copy of suchPlan provision(s) or a statement that one will be fur-nished at no charge, upon your request;

• A statement that you are entitled to receive, upon re-quest and free of charge, reasonable access to, andcopies of, all documents, records and other informa-tion relevant to your calim; and

• A statement of your right to bring an action under Sec-tion 502(a) of the Employee Retirement Income Secu-rity Act (ERISA) of 1974, as amended.

This notice will be deemed given upon mailing, full post-age pre-paid in the United States mail, or on the date sentelectronically to you.


If Savings Plan Administration determines that an exten-sion of time for processing is required, written notice ofthe extension will be furnished to the claimant prior to thetermination of the initial ninety (90) day period. The exten-sion notice will indicate the special circumstances requir-ing an extension of time and the date by which SavingsPlan Administration expects to render the determination.

At the discretion of Savings Plans Administration, theclaim may be referred to the Committee or to the SeniorVice President - General Counsel for review.

In the event that Savings Plans Administration denies aclaim, a claimant may:

• Request a review upon appeal by written applicationthe the Committee;

• Review pertinent Plan documents; and

• Submit issues and comments in writing.

You must request a review upon appeal of the denial ofthe claim by Savings Plans Administration under this Planwithin sixty (60) days after receiving written notification ofdenial of the claim. The appeal will be considered at theCommittee’s next regularly scheduled meeting. If the ap-peal if filed within thirty (30) days of the next meeting, adecision by the Committee, as appropriate, shall be madeby the second meeting after receipt of the claimant’s re-quest for review.

Under special circumstances, an extension of time forprocessing may be required, in which case a decision willbe made by the date of the third meeting. If an extensionis required because information is incomplete, the reviewperiod will be tolled from the date the notice was sent tothe date the information is received. In the event such anextension is needed, written notice of the extension willbe provided to the claimant prior to the commencement ofthe extension. In reviewing the claim, the Committee mayretain experts or other independent advisors. In such event,an extension of time for processing may be required but adecision on the appeal will be made as soon as is reason-ably practicable under the circumstances.

Written notice of the decision will be made to the claim-ant not any later than five (5) days after the decisionhas been made by the Committee. At the Committee’sdiscretion, an appeal from a denial of the claim by Sav-ings Plan Administration, or a referral of a claim directlyto the Committee by the Savings Plan Administration,may be referred to the Senior Vice President - GeneralCounsel for review.

When a claim for breach of fiduciary duty, or an appealfrom a denial of a fiduciary duty claim, is referred to theSenior Vice President General Counsel, he/she will havefull authority and sole discretion to determine the mannerin which to discharge his/her responsibility with respect tothe review of the claim or the appeal. This includes, but isnot limited to, retaining the responsibility to review theclaim or appeal, appointing an independent fiduciary, seek-ing a declaratory judgment in federal court or seeking re-view of the claim or appeal by an existing or speciallyappointed committee of the Board. The Senior Vice Presi-dent- General Counsel, or any person who is responsiblefor making the decision with respect to the claim or ap-peal as determined by the Senior Vice President-GeneralCounsel as described above (“Appointee”), also may re-tain experts or other independent advisors in his/her solediscretion with respect to review of the claim or appeal.The claim or appeal will be reviewed on the basis of thewritten record submitted by the claimant and the recorddeveloped by Savings Plans Administration, if any.

A decision will be made as soon as reasonably practi-cable under the circumstances. Written notice on re-view of the decision will be made to you not any laterthan five (5) days after the decision has been made.The notice will be deemed given upon mailing, full post-age pre-paid in the United States mail, or on the datesent electronically to you.


Trustee and RecordkeeperThe Plan Trustee is Fidelity Management Trust Company.Fidelity Investments Institutional Operations Company, Inc.will provide the recordkeeping and administrative services.Their address is:

82 Devonshire StreetBoston, MA 02109

Your rights under The Employee Retirement Income SecurityAct of 1974 (ERISA), as amendedThe TESPHE is designed to meet the requirements es-tablished by ERISA. The Plan will be amended to conformwith any changes in the law or government regulations.

As a participant in the TESPHE, you’re entitled to certainrights and protections under ERISA. Included are the rightto receive certain Plan information and the right to file alawsuit if you believe your rights have been violated.

Here is a listing of your rights under ERISA:

• You may visit the National Employee Services Center(NESC) and in some cases Ford World Headquarters,and examine all Plan documents without charge. Con-tact the NESC on where you must visit. These includethe Plan itself, the trust agreement for the Plan, theannual financial reports, the Plan description, and allother official Plan documents.

• With reasonable written notice, copies of Plan documentswill be made available for review at other locations.

• You may obtain copies of Plan documents by writingthe Plan Administrator at:

NESCP.O. Box 6214Dearborn, MI 48126-6214

• The Company may make a reasonable charge for copies.

• You will receive a written summary of the Plan’s an-nual financial report. The Plan administrator is requiredby law to furnish you with a copy if this summaryannual report.

• You also may obtain a copy of the annual reports andother Plan documents at the U.S. Department of Labor’sPublic Disclosure Room at the Pension and WelfareBenefit Administration in Washington, D.C.

• You may not be discharged or discriminated against toprevent you from obtaining a benefit or for exercisingyour ERISA rights.

The decision on review will include:


• Specific reference to pertinent Plan provisions on whichthe denial is based, along with a copy of such Planprovisions or a statement that one will be furnished atno charge, upon the claimant’s request;

• A statement that you are entitled to receive, upon re-quest and free of charge, reasonable access to, copiesof, all documents, records and other information rel-evant to the claimant’s claim; and

• A statement of your right to bring a civil action undersection 502(a) of ERISA following an adverse determi-nation on review.

Savings Plans Administration, the Committee, the SeniorVice President-General Counsel or the Appointees eachseverally will have full power and discretion under the Planto consider Member appeals with respect to fiduciaryclaims. Decisions of the Committee, the Senior Vice Presi-dent-General Counsel or the Appointees, as the case maybe, are final and conclusive and are only subject to thearbitrary and capricious standard of judicial review andshall bind and may be relied upon by the Members, ben-eficiaries or the estate or legal representative thereof, theTrustee and all other parties in interest.

Exhaustion requirement and limitation on claimsNo legal action may be brought by a Member, dependent,beneficiary or the estate or legal representative for entitle-ment to benefits under the Plan or breach of fiduciary dutyuntil after the claims and appeal procedures of the Planhave been exhausted. Unless a different period of limita-tion is specifically provided under the Employee Retire-ment Income Security Act (ERISA) of 1974, as amended,any claim under the Plan must be brought no later thantwo (2) years after the claim arises in order for the reviewauthorities to conduct a timely and effective investigationof the claim. For matters not specifically addressed, noother actions may be brought against the Plan more thansix (6) months after the claims arises.

Tax Reduction Act Stock Ownership PlanThe Tax Reduction Act Stock Ownership Plan (TRASOP)was terminated on May 31, 1989, and assets in partici-pants’ accounts were distributed from the trust to partici-pants or beneficiaries, or transferred to participants’ ac-counts in Company savings plans like the TESPHE inaccordance with their elections and provisions establishedto terminate the plan.


If your claim for a benefit is denied in whole or part:

• You will receive a written explanation from the PlanAdministrator.

• You have the right to have your claim reviewed andreconsidered.

Besides creating rights for plan participants, ERISA alsospells out certain duties for people who are responsiblefor operating the plan. These peope are called “fiducia-ries”. The fiduciaries of a plan have a duty to operatethe plan prudently and in the interest of plan partici-pants and beneficiaries.

There are steps you can take to enforce your ERISA rights.For example:

• If you request materials from the Plan and don’t re-ceive them within 30 days, you may file suit in a fed-eral court. In such a case, the court may require theplan administrator to provide the materials and pay youup to $110 a day until you receive the materials - un-less the materials were not sent because of reasonsbeyond the control of the administrator.

• If your claim for benefits is denied in whole or in partafter a final review, you may file suit in a state orfederal court.

• If the fiduciaries misuse the plan’s money or if you arediscriminated against for asserting your ERISA rights,you may seek help from the U.S. Department of Laboror file suit in a federal court. If you file a suit, the courtwill decide who should pay costs and legal fees. If youwin your suit, the court may order the person you havesued to pay the costs and fees. If you lose your suit, orif the court decides your suit was frivolous, the courtmay order you to pay the costs and fees.

If you have any questions about the TESPHE, you shouldcontact the National Employee Services Center (NESC).If you have any questions about this statement or yourrights under ERISA, you should contact the nearest of-fice of the Employee Benefits Security Administration,U.S. Department of Labor. The address is U.S. Depart-ment of Labor, 200 Constitution Avenue N.W., Washing-ton D.C. 20210. You may also obtain certain publicationsabout your rights and responsibilities under ERISA bycalling the Publications hotline of the Employee BenefitsSecurities Administration at 1-866-EBSA (3272).

Basic TESPHE InformationPlan Name: Tax Efficient Plan for Hourly

Employees

Plan Sponsor: Ford Motor CompanyHenry Ford II World CenterRoom 1037One American RoadDearborn, MI 48126-2748

Employer 38-0549190IdentificationNumber:

Plan Number: 025

Type of Plan: Defined ContributionPension Plan(401(k), ESOP)

Plan Administrator: Ford Motor Company(313) 248-4444(800) 248-4444

Type of Administrative services for theAdministration: Plan are provided by:

Ford Motor CompanyNational Employee ServicesCenter, UNICARE (undercontract), and FidelityManagement Trust Company(under a trust agreement andsupplemental contracts).

Trustee: Fidelity Management Trust Co.82 Devonshire StreetBoston, MA 02109

Agent for Service Ford Motor Companyof Legal Process: One American Road

1037Dearborn, MI 48126-2748

* Alternatively, legal process may be served on the plantrustee

Plan Funding: Company & employee fundedassets of the TESPHE areheld in trust

Plan Year: January 1 to December 31


Appendix

Accessing and managing your account is easy. Through Fidelity’s online account management service, automatedphone service, or phone service representatives, you can easily get the information you need whenever you want it.Note that the automated phone service has a speech recognition feature that lets you request most transactions with asimple word or phrase.

NOTE: Fidelity may change the organization of its NetBenefits Website from time to time. As a result, the naviga-tional steps detailed in this document may change. If you have questions regarding how to use NetBenefits,contact the Fidelity Service Center for Ford Motor Company at 1-800-544-3333 for assistance.

HOW TO: USE THIS CHANNEL:Online 24-hour access Voice Response System Fidelity ServiceLog on at netbenefits.com 800-544-3333 Virtually Representativesclick on the “Access My any time, day or night 800-544-3333Account” icon. You can also Mon.-Fri. 8:30 a.m.access Fidelity NetBenefitssm to midnight, E.T.through HR ONLINE from the“Pay” category.

ENROLL IN THE PLAN • Select the “Access My Account” X X icon.• Select the New User Registration link and follow the prompts to establish PIN#.• Click on Ford SSIP on the Home Page Select the “Begin Enrolling” link on the Welcome page, and complete all of items under the “Steps to Enroll” until you receive an Enrollment Summary. To help you determine your contribution amount, there is a link to a “Take Home Pay Calculator” that shows how various contribution levels could affect your take-home pay and savings over time. (NOTE: If you do not select a specific investment option(s), for your contributions, they will be invested in the Interest Income Fund as the default investment option).



ACCOUNTINFORMATION

Obtain plan Click on Savings and Retirement X Xinformation tab from the Home Page; using

the “Select Action” menu, scrolldown to Plan Information andDocuments.

Review investment Click on the Savings and X Xinformation (investment Retirement tab from the Homeoption descriptions, Page; using the “Select Action”mutual fund menu, scroll down to Performanceprospectuses and Research; select any of theand performance) investment options to secure

additional details.

Obtain quotes for all Click on the Savings and Retirement X Xinvestment options tab from the Home Page; using the

“Select Action” menu, scroll downto Performance and Research;select any View Quotes link.

Check your current Available on the NetBenefitssm Home X Xaccount balances Page. For more detail, click on the

Portfolio Investments, PortfolioResearch or Portfolio Analysis tabs.

Review account Click on the Savings and Retirement X Xhistory tab from the Home Page; using the

“Select Action” menu, scroll downto History.



INVESTMENTCHANGES

Change your Click on the Savings and Retirement X Xcontribution (Pre-Tax, tab from the Home Page; using theAfter-Tax or age 50+ “Select Action” menu, scroll down tocatch-up) Payroll Deductions.

Change how future Click on the Savings and Retirement X Xcontributions are tab from theHome Page, then usinginvested or the “Select Action” menu, scroll downexchange between to Change Investments.investment options

ADMINISTRATIVECHANGES

Change address Not Available Not Available Not AvailableSend letter to:NESC-RSUP.O. Box 6214Dearborn, MI 48212or call: 1-800-248-4444

Set up or change a Go to NetBenefitssm at X XPIN netbenefits.fidelity.com and select the

“Access My Account” icon. Select theappropriate link and follow the prompts.

Order plan literature Click on the Savings and Retirement X Xtab from the Home Page; using the“Select Action” menu, scroll down toPlan Information and Documents;then select the Forms and Notices link.

LOANS ANDWITHDRAWALS

Review amount Click on the Savings and Retirement X Xavailable for loan tab from the Home Page; using the

“Select Action” menu, scroll down toLoans or Withdrawals; select Loans.

Model a loan and Click on the Savings and Retirement X Xrequest a general tab from the Home Page; using theloan “Select Action” menu, scroll down to

Loans or Withdrawals; select Loansthen click on the Model/Take a loan icon.



LOANS ANDWITHDRAWALS(continued)

Request a home loan Click on the Savings and Retirement X X(a loan application will tab from the Home Page; using thebe mailed to your home “Select Action” menu, scroll down toaddress) Loans or Withdrawals; select Loans

then click on the Model/Take a loan icon.

Review outstanding Click on the Savings and Retirement X Xloan information tab from the Home Page; using the

“Select Action” menu, scroll down toLoans or Withdrawals; select Loansthen click on the Existing Loans icon.

Establish Electronic Click on the Savings and Retirement X XLoan Payment (Do tab from the Home Page; using thenot select electronic “Select Action” menu, scroll down toloan payments while Loans or Withdrawals; click on Loans,you are receiving a click on Existing Loans, then clickpaycheck. Loan on the “Make a Single Payment”repayments are icon.deducted automaticallyfrom your paycheck.

Review amount Click on the Savings and Retirement X Xavailable to withdraw tab from the Home Page; using theand request a “Select Action” menu, scroll down towithdrawal Loans or Withdrawals; select

Withdrawals.

Request a full payout Not Available X X(age 591/2 andterminated/retiredparticipants)

Request a hardship Not Available Not Available Xwithdrawal

Request a rollover Not Available Not Available Xdistribution



ROLLOVERDISTRIBUTIONS

Inquire about rolling Not Available Not Available Xmoney into the plan

Request a rollover Click on the Savings and Retirement X Xform (form has tab from the Home Page, using theinstructions on “Select Action” menu, scroll down tohow to process a Plan Information and Documents, thenrollover into plan) select Forms and Notices

Roll over money into Not Available Not Available Xthe plan