FILE NO. 2-63910
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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POST-EFFECTIVE AMENDMENT
NUMBER 17
To
FORM S-1
Registration Statement
Under
The Securities Act of 1933
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ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
(Exact name of Registrant as specified in charter)
9 Old Kings Highway South, Darien, Connecticut 06820
(Address of principal executive office)
-----------------
CHESTER T. SMITH, JR. CHESTER T. SMITH, JR.
Association for Investment Huntoon Hastings Capital Corp.
in United States Guaranteed P.O. Box 1601
Assets, Inc. Darien, CT 06820
P.O. Box 1601
Darien, CT 06820
(Names and Addresses of agents for service)
FILING: POST-EFFECTIVE AMENDMENT
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CALCULATION OF ADDITIONAL REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of Each Class Additional Amount Proposed Maximum Amount of
of Securities Being Being Registered Aggregate Offering Additional
Registered Price Registration Fee
- --------------------------------------------------------------------------------
Series 28 Face
Amount
Certificates $1,406,745 $29,813,112 $ 485.32
================================================================================
================================================================================
<PAGE>
REQUEST FOR ACCELERATION
The undersigned issuer hereby requests that the effect date of this post-
effective amendment to the registration statement be accelerated so that it may
be made effective July 1, 1996.
UNDERTAKINGS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in this section.
The registrant and each person whose signature appears below hereby authorizes
any agent for service named in the registration statement to file one or more
amendments (including post-effective amendments) to the registration statement
which amendments may make such changes in the registration statement as such
agent for service deem appropriate and the registrant and each such person
hereby appoints any such agent for service as attorney-in-fact to execute in the
name and on behalf of the registrant and each such person, individually and in
each capacity stated below, any such amendments to the registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this post-effective amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Darien in the State of Connecticut, on this 18th day of June, 1996.
Association for Investment in
United States Guaranteed Assets, Inc.
By: Chester T. Smith, Jr.--President
--------------------------------
Pursuant to the requirements of the Securities Act of 1933, this post-
effective amendment has been signed below by the following persons in the
capacities and on the date indicated.
- --------------------------------------------------------------------------------
Signature Title Date
- ----------------- ------------------------ -------------
William C. Gow Chairman--Board of Directors June 18, 1996
Chester T. Smith, Jr. President June 18, 1996
Glenn J. Reinardy Secretary June 18, 1996
Joseph B. Breen Director June 18, 1996
Philip J. Brown Director June 18, 1996
Edward J. Martin Director June 18, 1996
<PAGE>
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC.
Prospectus/July 1, 1996
This prospectus describes the secondary offering of Series 28 face amount
certificates issued by the Association for Investment in United States
Guaranteed Assets (the Company). The certificates offered for sale are owned by
Huntoon Hastings Capital Corp. The aggregate face amount of the offering is
$29,813,112 payable in single payments for an aggregate purchase price of
$22,068,147 plus accrued interest. The certificates mature in 2004 with an
option at maturity to extend the investment for an additional period of up to
twenty (20) years. The value at maturity will be equal to the purchase price
(less the mark-up), plus interest and additional earnings applied to the
certificate. (See page 7 for more details.)
The name Association for Investment in United States Guaranteed Assets, is not
intended to, and should not imply that the face amount certificates are
guaranteed by the United States Government or any other agency or
instrumentality thereof. However, the Company will invest in, or make loans
secured by, assets which are either guaranteed or insured by, or the direct
obligation of, the United States Government, its agencies, or instrumentalities.
(See page 8.)
You may purchase the certificate with a single investment of any amount from
$5,000 (face amount: $12,500) plus accrued interest and additional credits. The
total mark up is 8.5% of the purchase price net of accrued interest and
additional credits. (See page 2.)
TAX ADVICE
Counsel have advised that purchasers of these certificates should benefit from a
deferral of income taxes but cautions that the Internal Revenue Service has not
interpreted its regulations with respect to these certificates. Prospective
purchasers should consult their own tax advisers. (See page 4.)
BREAKEVEN POINT:
Investors in these certificates who surrender their certificates at any time
before the end of the second year after purchase may suffer a maximum loss of 5%
------
of the total certificate cost.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE'S SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE'S SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
This prospectus gives you facts about the certificate and describes its terms
and conditions. You should read it to decide if this certificate is the right
investment for you, and keep it for future reference.
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FIRST SENTINEL SECURITIES LTD.
<PAGE>
TABLE OF CONTENTS Page No.
- --------------------------------------------------------------------------------
CERTIFICATES OFFERED FOR SALE BY THE PROSPECTUS 1
- -----------------------------------------------
ABOUT THE CERTIFICATE 1
- ---------------------
Description of the Series 28 Certificate 1
Purchase Amounts 2
Buying Certificates 2
Certificate Earnings 3
- guaranteed minimum 3
- additional earnings 3
Tax Treatment of the Certificate 4
USING THE CERTIFICATE 5
- ---------------------
Borrowing 5
Receiving Cash Before Maturity 6
At Maturity 7
HOW YOUR INVESTMENT IS PROTECTED 7
- --------------------------------
Issuer of the Certificate 7
Government Regulation 7
Investments on Deposit 8
Investment Policies 8
ADDITIONAL INFORMATION ABOUT THE COMPANY 10
- ----------------------------------------
Directors, Management Staff and Affiliates 10
The Company's Auditors 12
The Company's Offices 12
FINANCIAL INFORMATION 12
- ---------------------
Summary of Selected Financial Information 12
Management's Discussion of Operations 13
<PAGE>
CERTIFICATES OFFERED FOR SALE BY THIS PROSPECTUS
Association for Investment in United States Guaranteed Assets, Inc. (the
Company) was incorporated under the laws of the State of Maryland on March 11,
1975. At that time, the Company was a wholly owned subsidiary of 44 Holding
Corporation, New York, New York and it began business as an issuer of face
amount certificates on June 3, 1975.
On March 29, 1979 USGI Holdings, Inc. purchased the Company from 44 Holding
Corporation, formerly known as Huntoon, Paige Holding Corporation. At the same
time, it purchased the certificates owned by 44 Holding Corporation. On June
30, 1995 Huntoon Hastings Capital Corp. purchased the certificates owned by USGI
Holdings, Inc.
Some of the certificates purchased by Huntoon Hastings Capital Corp. from USGI
Holdings Inc. are among those being offered by this prospectus. Also offered by
this prospectus are certificates which were purchased by Huntoon Hastings
Capital Corp. from investors who tendered them for cash surrender. The fact
that Huntoon Hastings Capital Corp. has in the past purchased certificates
tendered for cash is no assurance that it will continue such purchases in the
future, although it is its present intention to do so. These purchases will be
made at the cash surrender value as determined by the Company. In the event
that Huntoon Hastings Capital Corp. does not continue to effect such purchases,
the Company will redeem the certificates. (See page 6.)
ABOUT THE CERTIFICATE
Description of the Series 28 Face Amount Certificate
- ----------------------------------------------------
The Series 28 face amount certificate is a contractual obligation of the issuer,
the Company. The Company agrees to pay the investor at a fixed future maturity
date, a definite sum of money which is referred to as the "face amount". The
face amount is determined by deducting the commission from the initial purchase
price which is net of accumulations and compounding the balance at the
guaranteed annual rate of 3-1/2% from date of issue to maturity.
Certificates may receive additional earnings which will be calculated at the end
of each calendar year. (See page 4.)
The Series 28 certificates were issued on December 12, 1975 and mature on
February 16, 2004. Certificates purchased under this offering while issued and
outstanding in 1975, are purchased plus accrued interest from December 12, 1975
and have, in 1996, approximately eight (8) years to maturity in 2004. At
maturity they may be extended for an additional period of up to twenty (20)
years.
1
<PAGE>
Purchase Amounts
- ----------------
Certificates are purchased with a single investment in any amount from $5,000 to
$1 million.
An investment of approximately $40,000 would appear as follows:
Initial Purchase Price $ 22,508
(including markup of 8.5%
in the amount of $1,763)
Accrued Interest from
December 12, 1975 to May 8, 1996: $ 17,486
Total Certificate Value at Purchase $ 38,232
Total Certificate cost is $ 39,995
Guaranteed Face Amount at Maturity: $ 49,958
Buying Certificates
- -------------------
Applications for investment in these certificates are available through selected
broker-dealers who are members of the National Association of Security Dealers.
This selling group of firms will be managed by First Sentinel Securities, Ltd.
who will act as the Dealer-Manager in this offering. All applications and
investor funds will be delivered by the selected firms to First Fidelity Bank,
Stamford, Connecticut who acts as agent for Huntoon Hastings Capital Corp. Once
received and accepted by Huntoon Hastings Capital Corp. applications are not
subject to cancellation by the investor.
The initial purchase price includes a markup of 8.5% which is the commission
paid by the investor. Total certificate cost, however, includes initial
purchase price plus accrued interest and additional credits. The 8.5% markup is
not applied to the accrued interest and additional credit amounts. When the
markup of 8.5% is applied as a percentage of the total monies invested (i.e.,
initial purchase price plus accrued interest and additional credits), the markup
translates to between 4.4% and 5.0% of total monies invested.
For example, using the illustration from the previous section "Purchase Amounts"
the markup on the Initial Purchase Price of $22,508 amounts to $1,763. When
applied as a percentage of the Total Certificate Cost, $39,995, this translates
to 4.4% of total monies invested.
2
<PAGE>
The total markup provided in this offering is payable to First Sentinel
Securities, Ltd. from which 80% to 100% will be paid to the selected dealers
dependent upon their volume.
There will be no markup on purchases for their own accounts by employees,
officers and directors of Huntoon Hastings Captial Corp. and its affiliates or
members of their families.
Certificate Earnings
- --------------------
You are always guaranteed a minimum of 3-1/2% on your investment. To accumulate
the amount of the payment promised, the Company invests the purchase price, net
of the markup, and promises that the income from such investments will be a
minimum of 3-1/2% per year. This 3-1/2% is accumulated annually and reinvested
at the same 3-1/2% minimum rate. Amounts that you borrow from your certificate
reserves will continue to earn the 3-1/2% minimum rate.
In addition to the guaranteed rate, you may receive additional earnings which
are distributed to certificate holders of record on December 31st. These
additional earnings will only be applied to the unborrowed amounts on your
certificate. The Company will maintain a reserve to assure payment of any
additional earnings granted plus accumulations at the guaranteed minimum rate of
3-1/2% compounded annually. The amount of such reserves shall be paid upon
surrender or at maturity unless a different settlement option has been elected.
It should be noted that the additional earnings are not based upon the total
amount paid in on a certificate, but upon the reserve value of the certificate
during the year for which the additional earnings are granted.
When added to the guaranteed minimum rate of 3-1/2%, additional earnings have
resulted in gross annual yields on the unborrowed portion of the certificate as
follows:
1986 - 5.93% 1991 - 6.27%
1987 - 5.21% 1992 - 4.56%
1988 - 6.57% 1993 - 4.24%
1989 - 8.08% 1994 - 3.96%
1990 - 7.89% 1995 - 6.12%
Past yields are no guarantee of future performance.
3
<PAGE>
The total annual income earned on the investment portfolio will determine the
amount of additional earnings in the following manner:
o After the guaranteed 3-1/2% earnings are applied to the reserves for each
certificate, the next 1% of the portfolio's earnings are allocated to the
Company to cover operating expenses.
o The next 4% of investment portfolio earnings, over the aforesaid 4-1/2%
earnings, will be applied as additional earnings to the reserves for each
certificate.
o On income earned over the first 8-1/2% of portfolio earnings, one half is
credited to the reserves for each certificate as additional earnings and
one half is credited to the Company.
Additional earnings for any certificate will be reduced proportionately for any
period of the fiscal year during which the reserves behind such certificate were
unfunded or ineligible for any reason.
Tax Treatment of the Certificate
- --------------------------------
Under Federal income tax laws and regulations in effect prior to January 1,
1976, the yield on certificates was treated as ordinary income upon maturity or
surrender. The increase in value, including additional credits, is accumulated
over the years on a tax-deferred basis until surrender or maturity. Thus, under
the tax treatment in effect for certificates issued prior to January 1, 1976 you
could arrange to take your certificate proceeds at a time most favorable to you
from a tax standpoint. Often this is at retirement or semi-retirement when
income is reduced and the individual's tax bracket is lower.
Regulations adopted by the U.S. Treasury Department changed this treatment for
certificates issued after December 31, 1975. Under the new regulations, holders
of certificates issued after December 31, 1975 would include as ordinary income,
-----
under the definition of original issue discount, in each year during the life of
the certificate a ratable portion of the difference between the face amount and
the purchase price and also an amount to be computed as assumed additional
earnings. However, certificates issued prior to December 31, 1975 would not be
-----
affected by the new regulations.
4
<PAGE>
Counsel to the Company have advised that the certificates offered by this
Prospectus should be considered to be certificates issued prior to January 1,
1976 and that there should be no income tax payable on such certificates until
maturity or surrender. Such counsel have further advised that the purchase of
such certificates from Huntoon Hastings Capital Corp. by a third party would be
a purchase of certificates issued prior to January 1, 1976 and that no income
tax should be payable by such purchasers until the maturity or surrender of such
certificates. However, such counsel has also further advised that no revenue
ruling has been sought to ascertain the position of the Internal Revenue Service
on the matter.
Prospective purchasers should consult with an independent tax adviser with
respect to the tax consequences of this investment.
USING THE CERTIFICATE
Borrowing
- ---------
At any time after the date of purchase of your certificate, the Company will
loan to you up to 98% of the value of your certificate.
Loans bear interest, payable in advance, at a maximum rate of 5% per year on the
unpaid balance.
While the loan is for one year, it will be renewed each additional year if the
value of your certificate is sufficient to pay the required interest, or if you
pay the interest due on the loan. If interest is not paid when due, it will be
added to the existing balance of your loan.
Whenever the loan balance equals or exceeds the maximum allowable, the Company
may apply the surrender value in payment of the loan and forward the remaining
certificate balance, if any, to you. At this point your certificate shall
become void.
Upon a final settlement with you as the result of redemption or maturity, the
amount of the loan shall be deducted from the amount otherwise due you.
As security for the loans, a loan agreement is to be executed specifying the
assignment of your certificate to the Company.
During any period when there is a loan outstanding, all the certificate reserves
attributable to your certificate will continue to earn the guaranteed minimum
rate of 3-1/2%. However, only the unborrowed reserves will be entitled to the
additional earnings.
5
<PAGE>
Receiving Cash Before Maturity
- ------------------------------
If you find that you need your money prior to maturity, you may surrender all or
part of your certificate by giving us instructions in writing. Certificates
will be redeemed by the Company upon demand for their cash surrender values.
There are no penalties or charges for redemptions. All certificates issued by
the Company provide guaranteed minimum cash surrender values before maturity.
The following examples illustrate various surrender values. (These numbers are
approximate, actual calculations would be determined on a per diem basis so
values may be slightly lower or higher.)
Certificate's Features:
Purchase Date: May 8, 1996
Total Certificate Cost
(including markup of $1,763) is: $39,995
You surrendered the certificate
on July 1st in the following
year(s) after purchase as follows:
<TABLE><CAPTION>
Surrender Value
---------------
Case A Case B
------ ------
With annual earnings With annual earnings
limited to 3-1/2% of 5.75% which includes
guaranteed rate the 3-1/2% guaranteed rate.
<S> <C> <C>
Year 1 $ 39,100 $ 39,659
Year 4 $ 44,869 $ 49,598
Maturity $ 49,971 $ 59,089
(February 16, 2004)
</TABLE>
In cases A and B Total Certificate Cost (less the markup) plus earnings are
compounded annually up to, and including, the day of surrender.
In cases A and B it is assumed there are no outstanding loans on the
certificate.
In case B, while the 5.75% annual earnings used for illustrative purposes is
below the Company's average annual portfolio yield for the past ten year period,
this is no guarantee of future performance.
6
<PAGE>
At Maturity
- -----------
You may surrender your certificate at maturity and receive its full cash
surrender value.
At maturity you may also elect to receive the total value of your certificate
under various settlement options which include:
1. Withdrawing the total value in not less than quarterly installments of at
least $500.00 per installment.
2. Leaving all, or any part of, the total value with the Company to accrue
interest for an additional period of up to 20 years as may be designated by
you.
Certificates left with the Company under the above options will earn interest at
the guaranteed annual rate of 3-1/2%. These certificates may also receive
additional earnings which will be calculated upon the reserves for each
certificate at December 31st.
You may elect at any time after the effective date of a settlement option to
terminate your settlement option and receive the entire reserve then maintained
under the above option 1 and 2.
HOW YOUR INVESTMENT IS PROTECTED
Issuer of the Certificate
- -------------------------
The Association for Investment in United States Guaranteed Assets, Inc. is a
wholly owned subsidiary of USGI Holdings, Inc.
Gross income of the Company is derived from interest on investments and
certificate loans. The Company's net income is determined by deducting the
following expenses from gross income:
- - provision for certificate reserves (interest accrued on certificate holder
accounts) and
- - other expenses, including taxes
For a more detailed financial accounting see the audited financial statements
(See page 16.)
Government Regulations
- ----------------------
The face amount certificate is a security regulated under the Investment Company
Act of 1940. Its offer and sale are subject to regulations under federal and
state securities laws. It is not a bank product, an equity investment, a form
of life insurance or an investment trust.
7
<PAGE>
Investments on Deposit
- ----------------------
The Federal Investment Company Act of 1940 requires the Company to keep cash or
qualified investments on deposit in a segregated account to protect the value of
all of our outstanding certificates. These investments back the entire value of
your certificate reserves.
Certificate reserve requirements on December 31, 1995 were $32,036,857. The
value of our investments on deposit determined in accordance with generally
accepted accounting principles were $32,302,940.
Our investments are on deposit with First Fidelity Bank, Stamford, Connecticut.
For comments regarding the valuation of investments see note one to the
financial statements.
Investment Policies
- -------------------
The Company is restricted by its Articles of Incorporation to the following
investments:
- - U.S. Government securities which include Treasury Bonds, Notes and Bills
and securities issued by instrumentalities of the United States Government.
- - The insured portion of loans guaranteed by the Small Business
Administration and The Farmers Home Administration.
- - Mortgage loans guaranteed by the Veterans Administration or insured by the
Federal Housing Administration (FHA and VA Mortgages).
- - Certificates guaranteed as to the payment of principal and interest by the
Government National Mortgage Association (GNMA certificates).
- - Short-term loans under the Order of Exemption from certain provisions of
the Investment Company Act of 1940 which was granted to the Company by the
Securities and Exchange Commission. These loans may be made to affiliated
and nonaffiliated mortgage bankers, are callable on demand, and bear
interest to the Company at the prime rate or more. Security for these
loans shall be FHA/VA mortgages, GNMA certificates or other U.S. Government
guaranteed securities.
8
<PAGE>
Portfolio Turnover - There are no restrictions on rates of portfolio turnover.
Purchasing Securities on Margin - We will not purchase any securities on margin
or participate on a joint basis or a joint and several basis in any trading
account in securities.
Short Sales - We will not effect the short sale of any security.
Borrowing Money - The Company has not borrowed money and has no present
intention of doing so. It may borrow in the future only when necessary for the
clearance or delivery of purchases and sales of investments.
Underwriting - We do not intend to engage in the public distribution of
securities issued by others.
9
<PAGE>
ADDITIONAL INFORMATION ABOUT THE COMPANY
- ----------------------------------------
Our Directors, Management Staff and Affiliates
NAME OFFICE PRINCIPAL OCCUPATION & AFFILIATES
- ---- ------ ---------------------------------
William C. Gow Chairman of the Chairman of the Board of Directors
Board of Directors Huntoon Hastings Capital Corp. since
August, 1992. Chairman of the Board of
Directors of USGI of Holdings, Inc.
since July 1980. Prior to July 1980,
Mr. Gow was Chairman of the Board of
Directors of Merrill Lynch Huntoon,
Paige Inc. from December 1978 to June
1980. He was Chairman of the Board of
Directors of Huntoon, Paige & Co., Inc.;
Huntoon Paige Associates Ltd; and
Huntoon Paige Securities Corporation
from 1967 to December 1978.
Chester T. Smith, Jr. President Vice Chairman of the Board of Directors
of Huntoon Hastings Capital Corp. since
August, 1992. Vice Chairman of USGI
Holdings, Inc. from January 1995 to
present. President of USGI Holdings,
Inc. from March 1979 to January 1995.
Prior to March 1979, Mr. Smith was
Vice-President of E.F. Hutton &
Co.,Incorporated; General Partner and
First Vice-President of Kuhn Loeb & Co.,
Incorporated; Director and Senior Vice-
President of G.H. Walker, Laird
Incorporated; and Director and Senior
Vice- President of Laird & Co.
Marcie Gow Pajolek Vice-President Vice President of The Association for
Investment in United States Guaranteed
Assets, Inc. since 1990.
10
<PAGE>
Glenn J. Reinardy Secretary Secretary of the Company since June
1982; President of Huntoon Hastings
Capital Corp. since August, 1992.
President of USGI Holdings, Inc. from
January 1995 to present; Executive Vice-
President of USGI Holdings, Inc. from
June 1982 to January 1995; President of
Merrill Lynch Huntoon, Paige &. Co. from
June 1980 to June 1982. Executive Vice-
President of Merrill Lynch Huntoon,
Paige & Co. from April 1977 to June
1980.
Joseph B. Breen Director Practicing Attorney and Partner of the
law firm of Emmet, Marvin & Martin since
March, 1996. Previously Partner of the
law firm Breen & Bartlett from March
1990 to March, 1996. Previously Counsel
and Senior Vice- President of Merrill
Lynch Realty from June 1985 to December
1989. President of the Company from
December 1977 to March 1979.
Philip J. Brown, Jr. Director Consultant to Marsh & McLennan, Inc. and
Marsh & McLennan Risk Capital Corp since
January, 1996. Director of Hiscox, PLC.
since January, 1996. Chairman, Marsh &
McLennan Europe from March 1994 to
December, 1995. Deputy Chairman, Marsh &
McLennan Bowring, Ltd. November 1988 to
March 1994. Executive Vice-President of
Marsh & McLennan, Inc. from 1975 to
November 1988; Senior Vice-President of
Marsh & McLennan from 1971 to 1975;
formerly President of Marsh & McLennan
International, Inc.; Managing Director
of Marsh & McLennan, Inc. since 1971.
Edward J. Martin Director Practicing Attorney and Partner of the
law firm of Reid & Priest from June 1994
to present.Previously Partner of Shea &
Gould; for more than two years prior to
January 1978 a partner in Bartel,
Engelman & Fishman; for more than five
years prior to November 1975 he was
associated with the law firm of Dewey,
Ballantine, Bushby, Palmer & Wood.
11
<PAGE>
The Company's Auditors
- ----------------------
A firm of independent accountants audits the Company's financial statements at
the close of each fiscal year (December 31st). Copies of our annual financial
statements are available to any certificate holder upon request.
Dworken, Hillman, La Morte & Sterzcala, P.C. has audited the financial
statements for the year ended December 31, 1995. McGladrey & Pullen, LLP has
audited the financial statement for the two-year period ended December 31,
1994. These statements are included in this prospectus.
The Company's Offices
- ---------------------
Our offices are located at:
9 Old Kings Highway South
Darien, CT 06820
Our Mailing Address is:
P.O. Box 1601
Darien, CT 06820
Our Phone: (203) 662-7600
FINANCIAL INFORMATION
- ---------------------
Summary of Selected Financial Information
- -----------------------------------------
The following selected financial information has been derived from the audited
financial statements and should be read in conjunction with those statements
and the related notes to those financial statements. Also see Management's
Discussion of Operations.
<TABLE><CAPTION>
1995 1994 1993 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment Income $ 1,681,622 $ 1,483,314 $ 1,448,175 $ 1,414,839 $ 1,458,116
Investment Expense 158,877 157,415 156,477 161,685 165,791
Provisions for
Certificate Reserves 1,251,309 1,070,114 1,049,987 1,030,392 1,088,881
Net Income 158,994 149,404 159,529 128,425 115,744
Total Assets $32,412,633 $31,336,938 $30,126,901 $29,155,539 $28,036,311
</TABLE>
12
<PAGE>
Management's Discussion of Operations
- -------------------------------------
The Company's investment income is derived from interest income on investments
and loans to certificate holders. The Company's portfolio investments consist
of U.S. Government Treasury Bills and loans at the commercial bank prime rate
under the Order of Exemption.
While rates and yields on Treasury Bills during 1995 tended to be lower than
those prevailing in 1994, the Association availed itself of the provisions of
its Order of Exemption and made short-term secured loans at the prime rate to
affiliated companies. The income from the two sources resulted in a yield on
unborrowed reserves for 1995 of 6.12% versus 3.96% in 1994. Reflecting this
increase in yield, the provision for certificate reserves in 1995 was
proportionally higher than in 1994.
Interest income from investments received in 1995 was approximately 47% above
1994's figures. The other component of investment income, loans to certificate
holders, showed a modest increase over 1994's figures. This is the result of a
slightly higher usage of this borrowing provision by certificate holders.
The higher investment income earned in 1995 led to a increase in the provision
for certificate reserves of approximately 17% from 1994's figure. Investment
expenses for the Company in 1995 were virtually unchanged from 1994.
The Company's investment objectives are to assure the maximum safety and
liquidity of the investment portfolio. To that end investments have been
limited to U.S. Government or Government guaranteed securities and short-term
loans under the Order of Exemption which are secured by Government guaranteed
securities. The average maturity of the investments in U.S. Government
securities is 4 to 6 months. Loans under the Order of Exemption are of less
than thirty days duration.
There is no expected change in the asset mix of the portfolio in the foreseeable
future.
13
<PAGE>
Independent Auditors' Report
Board of Directors and Security Holders
Association for Investment in United States
Guaranteed Assets, Inc.
We have audited the accompanying balance sheet of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1995 and the related
statements of income, retained earnings and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1995 and the results of
its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
Bridgeport, Connecticut
March 8, 1996
Dworken, Hillman, LaMorte & Sterczala, P.C.
14
<PAGE>
Independent Auditor's Report
To the Board of Directors and Security Holders
Association for Investment in United States
Guaranteed Assets, Inc.
We have audited the accompanying balance sheet of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1994 and the related
statements of income, retained earnings, and cash flows for each of the two
years in the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1994, and the results
of its operations and its cash flows for each of the two years in the period
ended December 31, 1994 in conformity with generally accepted accounting
principles.
New York, New York
March 6, 1995
McGladry & Pullen, L.L.P.
15
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
BALANCE SHEETS
December 31, 1995 and 1994
Assets
1995 1994
----------------------------
Qualified assets (Note 2):
Cash $ 42,721 $ 53,210
Investments in U.S. Treasury Bills,
at cost which approximates market 5,135,326 6,905,493
Certificates loans, secured by
applicable certificate reserves (Note 3) 25,103,696 23,852,877
Loans to affiliates under Order of
Exemption (Note 5) 2,021,197 508,471
Receivable for accrued interest (Note 5) 109,693 16,887
----------- -----------
$32,412,633 $31,336,938
=========== ===========
Liabilities and Shareholder's Equity
Certificate reserves (Note 3):
Reserves to mature:
Series 28, fully paid certificates (Note 5) $27,839,169 $26,764,961
Series 28I, installment certificates 6,889 6,532
Reserve for additional credits 4,190,800 4,014,056
----------- -----------
32,036,858 30,785,549
Current liabilities, exclusive of certificate reserve liabilities:
Unearned interest on certificate
holders' loans 58,966 49,849
Accrued expenses, taxes and other 24,839 199,341
Short-term loan from affiliate 25,777 45,000
----------- -----------
32,146,440 31,079,739
----------- -----------
Shareholder's equity:
Common stock, par value $1 per share,
authorized, issued and
outstanding 250,000 shares 250,000 250,000
Capital in excess of par value 1,000 1,000
Retained earnings 15,193 6,199
----------- -----------
266,193 257,199
------- -------
$32,412,633 $31,336,938
=========== ===========
See notes to financial statements.
16
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF INCOME
Years Ended December 31, 1995, 1994 and 1993
<TABLE><CAPTION>
1995 1994 1993
------------ -------------- -----------
<S> <C> <C> <C>
Investment income:
Interest income: (Note 5)
Investments $ 473,888 $ 322,624 327,096
Certificate loans 1,207,734 1,160,690 1,121,079
----------- ----------- ----------
1,681,622 1,483,314 1,448,175
----------- ----------- ----------
Investment expenses:
Officer's salary 104,000 104,000 104,000
Professional fees 10,750 14,155 16,500
Custodial fees 16,000 16,000 16,000
Printing, promotion and telephone 8,553 6,853 4,210
Directors' fees 10,000 10,000 10,000
Payroll taxes 5,575 5,457 5,242
Miscellaneous 3,999 950 525
----------------------------------------
158,877 157,415 156,477
----------- ------------ -----------
Net investment income 1,522,745 1,325,899 1,291,698
Provision for certificate reserves
(Notes 3 and 5) 1,251,309 1,070,114 1,049,987
----------- ----------- ----------
Income before income taxes 271,436 255,785 241,711
Income taxes (Note 4) 112,442 106,381 82,182
----------- ------------ ------------
Net income $ 158,994 $ 149,404 $ 159,529
=========== =========== ===========
STATEMENTS OF RETAINED EARNINGS
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
Balance, beginning $ 6,199 $ 21,795 $ 17,266
Add net income 158,994 149,404 159,529
Deduct cash dividends on common stock ( 150,000) ( 165,000) (155,000)
-------- -------- ----------
Balance, ending $ 15,193 $ 6,199 $ 21,795
========= ========= ========
</TABLE>
See notes to financial statements.
17
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995, 1994 and 1993
<TABLE><CAPTION>
1995 1994 1993
---------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 158,994 $ 149,404 $ 159,529
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for certificate reserves 1,251,309 1,070,114 1,049,987
Change in assets and liabilities:
(Increase) decrease in accrued
interest ( 92,806) 394,358 ( 60,492)
Increase (decrease) in unearned
interest 9,117 ( 1,692) ( 12,511)
Increase (decrease) in accrued
expenses ( 174,502) 112,211 ( 70,643)
----------------------------------------
Net cash provided by
operating activities 1,152,112 1,724,395 1,065,870
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale and maturity of
investments 13,325,270 32,417,945 13,007,102
Purchase of investments (11,555,103) (33,429,130) (18,019,196)
(Increase) decrease in loans to
affiliates ( 1,512,726) 269,338 4,850,684
Disbursements for certificate loans ( 1,250,819) ( 825,928) ( 776,621)
----------- ---------- ---------
Net cash used in investing activities ( 993,378) ( 1,567,775) ( 938,031)
----------- ---------- ---------
Cash flows from financing activities:
Cash dividends paid ( 150,000) ( 165,000) ( 155,000)
Proceeds (repayment) of loan by parent ( 19,223) 45,000
---------- ----------- ---------
Net cash used in financing activities ( 169,223) ( 120,000) ( 155,000)
---------- ---------- --------
Net increase (decrease) in cash ( 10,489) 36,620 ( 27,161)
Cash, beginning 53,210 16,590 43,751
----------- ---------- ----------
Cash, ending $ 42,721 $ 53,210 $ 16,590
=========== ========== ==========
Supplemental disclosures of cash flows
information
Cash payment for income taxes $ 105,000 $ 80,000 $ 80,000
=========== ========== ==========
</TABLE>
See notes to financial statements.
18
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
1. Nature of business and significant accounting policies:
Nature of business:
The Company is an issuer of Series 28 Face amount certificates. The Company
is a wholly-owned subsidiary of USGI Holdings, Inc. ("Parent").
The Company's financial statements are prepared in accordance with generally
accepted accounting principles and comply with Section 28 of the
Investment Company Act of 1940.
Use of estimates:
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amount of assets and
liabilities, the disclosure of contingent assets and liabilities, and
reported revenue and expenses. Actual results could vary from the
estimates that were used.
Valuation of qualified assets:
Qualified assets are stated at cost, except for United States Treasury Bills
which are stated at amortized cost. An allowance for loss will be
provided if evidence indicates a permanent decline in the underlying value
and earning power of individual securities.
Income recognition:
Security transactions are recorded on the trade date. Interest income is
recorded when earned. Discounts on United States Treasury Bills are
amortized over the terms of the securities to which they apply. Unearned
interest on certificate loans is amortized on a straight-line basis over
the life of the loan.
Provision for certificate reserves:
Certificate reserves accrue at the rate of 3 1/2% compounded annually. In
addition, at the end of each fiscal year of the Company, each certificate
upon which all payments including all installments, have been made will
receive "additional credits" calculated on the earnings attributable to
the invested reserves. Borrowed reserves are not eligible for additional
credits.
19
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
1. Nature of business and significant accounting policies (continued):
Cash:
For the purposes of the Statement of Cash Flows, the Company considers
investments with original maturities of three months or less to be a cash
equivalent.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company believes it is not exposed
to any significant credit risk on cash and cash equivalents.
Fair value of financial instruments:
The carrying amount of cash, investments in U.S. Treasury Bills, accounts,
loans and other receivables, loans payable and trade payables approximates
fair value because of the short maturity of those instruments.
The carrying amount of Certificate Loans approximates fair value because
these loans are secured by related Certificate Reserves. The carrying
amount of Certificate Reserves approximates fair value because under the
terms of the Certificates, a holder can sell their certificates at any
time for its carrying amount.
2. Qualified assets:
Under the provisions of its certificates and the Investment Company Act of
1940, at December 31, 1995, the Company was required to have qualified
assets (as that term is defined in Section 28 (b) of the Act), of
$32,286,858. As shown in the accompanying balance sheet, the Company had
qualified assets of $32,348,471.
Pursuant to the requirements of the Investment Company Act of 1940,
"Qualified Assets" are to be maintained on deposit with First Fidelity
Bank under a "Depository Agreement" to meet certificate reserve
requirements of $32,036,857, at December 31, 1995. Assets on deposit as
of December 31, 1995 are as follows:
20
<PAGE>
<TABLE><CAPTION>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended Decemeber 31, 1995, 1994 and 1993
<S> <C>
Cash $ 42,721
United States Treasury Bills 5,135,326
Certificate loans, secured by certificate reserves 25,103,696
Loans to affiliates under Order of Exemption secured by
United States guaranteed financial instruments 2,021,197
-----------
$32,302,940
============
</TABLE>
3. Certificates reserves:
Reserves maintained on outstanding certificates have been computed in
accordance with the provisions of the certificates and Section 28 of the
Investment Company Act of 1940. The total gross rate of accumulation on
Series 28 and 28I certificates for 1995 was 6.12%. Gross rates of
accumulation on certificate reserves were as follows:
<TABLE><CAPTION>
1995 1994 1993
-------------------------------------------------------------------------------------------
Annual Gross Annual Gross Annual Gross
Total Rates of Total Rates of Total Rates of
Reserves Accumulation Reserves Accumulation Reserves Accumulation
-------------- ------------ ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Reserves to mature:
Series 28 $27,839,168 3.50% $26,764,961 3.50% $25,725,354 3.50%
Series 28I 6,889 3.50% 6,532 3.50% 6,182 3.50%
Additional credits on Series 28
and 28I certificates
4,190,800 2.62% 4,014,056 0.46% 3,983,899 0.74%
------------ ----------- -----------
$32,036,857 $30,785,549 $29,715,435
=========== =========== ===========
</TABLE>
21
<PAGE>
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended Decemnber 31, 1995, 1994, 1993
4. Income taxes:
The Company files a consolidated federal income tax return with its parent
and affiliates. The tax liability is allocated to the Company on a
separate-return basis.
The provision for income taxes is composed of the following for the years
ended December 31, 1995 and 1994:
1995 1994 1993
-------- -------- --------
Federal $ 81,906 $ 76,966 $ 82,182
State 30,536 29,415
------- -------- --------
$112,442 $106,381 $ 82,182
1995 1994 1993
------- -------- ----------
Computed "expected" federal tax expense $ 92,288 $ 86,967 $82,182
Increase in taxes resulting from state
income taxes, net of federal benefit 20,154 19,414
--------- -------- ----------
Actual tax expense $ 112,442 $106,381 $82,182
========= ======== =======
5. Related party transactions:
At December 31, 1995, an affiliate of the Parent owned certificates with an
aggregate cost of $23,476,000 ($22,188,000 in 1994) and had a related loan
balance of $22,980,000 ($21,732,000 for 1994) with accrued interest of
$99,100 ($3,000 for 1994).
During 1995, the Company made certificate reserve provisions of
approximately $854,000 ($750,000 and $717,000 for 1994 and 1993,
respectively) and recorded earned interest of $897,000 ($1,054,000 and
$1,008,000 for 1994 and 1993, respectively), both pertaining to the
affiliate's certificates and loans.
Under the Order of Exemption granted by the Securities and Exchange
Commission, during 1995, 1994 and 1993 the Association made short-term
loans to affiliates of the Company, secured by FHA mortgages. Interest
earned on these loans, charged at a rate equal to the prime rate, amounted
to $162,600, $48,000 and $261,000 during 1995, 1994 and 1993,
respectively.
The affiliate has borne all operational expenses of the Company, other than
those set forth in the statements of income.
22
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Marketing Arrangements.
See "Buying Certificates: p.2 of the Propectus.
Other Expenses of Issuance and Distribution.
The estimated expenses payable in connection with the distribution of
securities being registered by the Registration statement are as follows:
Securities and Exchange Commission registration fee........... $ 485
Accounting fees...............................................
Printing and engraving........................................ 8,553
Legal fees.................................................... 500
Blue Sky fees and expenses....................................
Miscellaneous.................................................
Total...................................................... $9,538
____________
All of the foregoing expenses will be borne by USGI Holdings, Inc. parent of
the Registrant.
Relationship with Registrant of Experts Named in Registration Statement.
None.
Sales to Special Parties.
None.
Recent Sales of Unregistered Securities.
None.
Subsidiaries of Registrant.
None.
Franchises and Concessions.
None.
23
<PAGE>
Indemnification of Directors and Officers.
Section 5 of Article 23 of the Annotated Code of Maryland provides in part:
"(a) Any corporation of this State may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or otherenterprise.
The indemnification may be against expenses (Including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit, or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and , with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding,
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
"(b) Any corporation of this State may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise.
The indemnification may be against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner
he reasonably believed to be or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue, or matter as to which the person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation, unless and only to the extent that the court in which the
action or suit was brought, or a court of equity in the county in which the
corporation has its principal office, determines upon application that,
despite the adjudication of liability but in view of all circumstances of
the case, the person is fairly and reasonably entitled to indemnify for the
expenses which the court shall deem proper.:
The Board of Directors of Registrant has resolved to indemnify all
directors, officers and employees in accordance with the terms of the above
Section. The Board of Directors of Registrant intends to obtain liability
insurance covering officers, directors and key staff personnel. The insurance
terms provide, with certain exceptions and exclusions, for protection of the
insured personnel against unindemnified losses from claims and expenses
resulting from any negligent act, any error, any omission or any breach of duty
while acting in their respective capacities.
24
<PAGE>
Insofar as indemnification or liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Treatment of Proceeds from Stock being Registered.
Not applicable.
Financial Statements and Exhibits.
(a) 1. Included in the Prospectus:
Independent Auditor's Report
Balance Sheets, December 31, 1995 and 1994
Statements of Income, Years Ended December 31, 1995, 1994 and 1993
Statements of Retained Earnings, Years Ended December 31, 1995, 1994 and
1993
Statements of Cash Flows, Years Ended December 31, 1995, 1994 and 1993
Notes to Financial Statements.
(2) Included elsewhere in the Registration Statement:
Schedule I as of December 31, 1976 and Schedule VI as of December 31 1976
thru 1995 are incorporated by reference to the Company's Annual Reports
(Form 10-K) filed with the Securities and Exchange Commission in March 1976
thru 1995. All other schedules have been omitted becuase they are not
applicable, not required or the information is included in the financial
statements or notes thereto.
25
<PAGE>
(3) Reports and Consent of Certified Public Accountants.:
(b) Exhibits:
1 Form of Dealer Agreement, filed as exhibit 1 to Registration Statement
No. 2-55358,
3.1 Articles of Incorporation, filed as exhibit 1 to Registration
Statement No. 811-2563 and incorporated herein by reference and made
a part hereof.
3.2 Amendment to Articles of Incorporation, filed as exhibit 3.2 to
Registraton Statement No. 2-53024 and incorporated herein by
reference and made a part hereof,
3.3 By-Laws, filed as exhibit 2 to Registraton Statement No. 81102563 and
incorporated herein by reference and made a part hereof,
4.1 Form of Series 28 Face Amount Certificate, filed as exhibit 4 to
Registraton Statement No. 811-2563 and incorporated herein by
reference and made a part hereof,
6 Opinion and consent of Messrs, Emmet, Marvin & Martin, filed as
exhibit 6 to Registration Statement No. 2-55358.
7 Opinion and consent of Messrs. Koster & Zeller, filed as exhibit 7 to
Registration Statement No. 2-63910.
(c) Reports on Form 8-K
One report on Form 8-K was filed for the year ended December 31, 1995
related to the resignation of the Company's prior independent auditors
McGladrey & Pullen, LLP and the appointment of new auditors, Dworken,
Hillman, LaMorte & Sterczala, P.C.
26
<PAGE>
REPORT AND CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Security Holders
Association for Investment in United States
Guaranteed Assets, Inc.
We consent to the use in this Post-Effective Amendment No. 17 to Registration
Statement of Association For Investment In United States Guaranteed Assets, Inc.
of our report dated March 8, 1996 appearing in the prospectus, which is part of
the Registration Statement, and to the reference to us under the heading
"Selected Financial Data" and "Experts" in such prospectus.
Bridgeport, Connecticut
June 4, 1996DWORKEN, HILLMAN, LAMORTE & STERCZALA, P.C.
27
<PAGE>
The Board of Directors and Security Holders
Association for Investment in United States
Guaranteed Assets, Inc.
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use of our Report dated March 6, 1995 on the
financial statements enumerated therein in this Registration Statement and to
the reference to our Firm under the Caption "The Company's Auditors" in the
Prospectus.
McGladrey & Pullen, LLP
New York, New York
June 12, 1996
28
<PAGE>
ASSOCIATION FOR INVESTMENT IN UNITED STATES
GUARANTEED ASSETS, INC.
SCHEDULE VI - CERTIFICATE RESERVES
January 1, 1996
Description Balance January 1, 1996
- --------------------------------------------- -------------------------
Yield to Maturity
an Annual Payment Amount of
Basis Reserves
----------------- ------------
Series
- ------
Paid-up certificates -
Series 28....................... 3.50% $27,839,168
Installment basis -
Series 28I....................... 3.50% 6,889
Additional credits:
Series 28........................ 2.62% 4,190,800
-----------
$32,036,857
29
<PAGE>
APPLICATION FORM
I am of legal age in the State of my residence and I hereby purchase Series 28
face amount certificates in the face amounts indicated below which are as
described in the Prospectus dated July 1, 1996 of Association for Investment in
United States Guaranteed Assets, Inc. and acknowledge receipt of a copy of such
Prospectus, I understand that this purchase is irrevocable.
NO APPLICATION FORM WILL BE PROCESSED
UNLESS ACCOMPANIED BY PAYMENT IN FULL
(EXCEPT THAT ACCRUED INTEREST WILL BE BILLED ON TRANSFER)
Face Amount Payment Enclosed
- ----------- ----------------
- ----------------------- -------------------------
($12,500 minimum) ($5,000 minimum)
REGISTRATION the Certificates should be Registered as follows:
MR. MRS. MISS. MS.
- -------------------------------------------------------------------------------
Print Applicant's Name. For clarity, please skip a space where appropriate.
MR. MRS. MISS. MS.
- -------------------------------------------------------------------------------
Print Joint Registrant's Name, if any. In case of joint registration, a joint
tenancy with right of survivorship will be presumed, unless a tenancy in common
is indicated. For clarity, please skip a space where appropriate.
________________________________________________________________________________
Print Street Address City State Zip Code
________________________________________________________________________________
Signature of Applicant Date Signature of Joint Registrant Date
(if any)
________________________________________________________________________________
Taxpayer's Account Number -or- Name of Taxpayer whose
Social Security Number Account Number appears at left.
Accrued interest will be billed to above address.
PLEASE MAKE CHECKS PAYABLE TO
"FIRST FIDELITY c/o USGA ACCOUNT"
Please mail this signed Application Form and your check for the total price
shown above to:
USGA, P.O. Box 1601, Darien, CT 06820-1601
- --------------------------------------------------------------------------------
TO BE COMPLETED BY YOUR INVESTMENT DEALER
________________________________________________________________________________
Dealer Code # Investment Firm Name Authorized Signature Date
________________________________________________________________________________
Print Street Address City State Zip Code
________________________________________________________________________________
Branch Code # Salesperson's Code # Salesperson's Last Name
30
