<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 30-(a)
AND (c) OF THE INVESTMENT COMPANY ACT OF
1940 AND SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 (FEE
REQUIRED)
For fiscal year ended December 31, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 811-2563
ASSOCIATION FOR INVESTMENT IN UNITED STATES GUARANTEED ASSETS, INC.
(Exact name of registrant as specified in its charter)
Maryland 13-2812598
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Old Kings Highway South 06820
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 662-7600
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. {X}
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. None
As of March 26, 1997 the registrant has authorized and issued 250,000 shares of
common stock, $1.00 par value, which is owned entirely by Huntoon Hastings
Capital Corp. its parent.
Documents Incorporated By Reference
Portion of Series 28 Prospectus dated July 11, 1997 are incorporated by
reference into Part I.
Index to Exhibits, Financial Statements and Schedules appear on page 17.
<PAGE>
PART I
Item 1. Business
The business of the registrant is the investment of net proceeds derived from
the original sale of face-amount certificates to the public, and includes
maintenance of reserves and deposits of assets to cover certificate liabilities,
and selection and management of its investments.
Further particulars of the business carried on by the registrant are contained
on pages 1 through 9 of the Prospectus herein incorporated by reference.
The Company employs 4 officers, 4 directors. Of the directors, 2 were officers
of the Company.
For related party information, refer to Note 5 of the Notes to Financial
Statements.
Item 2. Properties
None
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
2
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
a) Common stock: refer to Item 12
b)Face amount certificates:
<TABLE>
<CAPTION>
Number of Holders
at December 31, 1997
<S> <C>
Series 28 257
Series 28I 1
</TABLE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income $ 1,695,277 $ 1,638,569 $ 1,681,622 $ 1,483,314 $ 1,448,175
Investment expenses 109,449 169,922 158,877 157,415 156,477
Provision for
certificate reserves 1,231,261 1,189,455 1,251,309 1,070,114 1,049,987
Net income 208,858 164,458 158,994 149,404 159,529
Total assets $35,037,649 $33,798,197 $32,412,633 $31,336,938 $30,126,901
</TABLE>
Item 7. Management's Discussion and Analysis of the Results of
Operations and Financial Condition
1997 versus 1996
The Company's primary portfolio investment policy was one of investing in U.S.
Government or Government guaranteed short-term securities. Rates and yields on
these securities were approximately the same as those prevailing in 1996. The
income from this source resulted in a yield on unborrowed reserves for 1997 of
4.61% versus 4.50% in 1996. Reflecting an increase in the rates of return, the
provision for certificate reserves in 1997 was higher then 1996.
1996 versus 1995
The Company's primary portfolio investment policy was one of investing in U.S.
Government or Government guaranteed short-term securities. Rates and yields on
these securities were approximately the same as those prevailing in 1995. 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, however,
these loans were significantly lower than in 1995, resulting in an overall
decrease in earnings on investments. The income from these two sources resulted
in a yield on unborrowed reserves for 1996 of 4.50% versus 6.12% in 1995.
Reflecting a decrease in the rates of return, the provision for certificate
reserves in 1996 was proportionately lower than 1995.
3
<PAGE>
Liquidity
The liquidity of the investment portfolio is an important concern of the fund's
management. Loans under the Order of Exemption are of short-term duration, and
the average maturity of the investments in U.S. Government Treasury Bills is
three (3) months.
Capital Resources
The Association continues to meet the minimum capital requirements for a
face-amount certificate company as specified by law. Additional capital is not
required for the current or future operations of the company.
4
<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 sheets of Association for Investment in
United States Guaranteed Assets, Inc. as of December 31, 1997 and 1996 and the
related statements of income, retained earnings and cash flows for each of the
years in the three year period ended December 31, 1997. 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, 1997 and 1996 and the
results of its operations and its cash flows for each of the years in the three
year period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Bridgeport, Connecticut Dworken, Hillman, LaMorte & Sterczala, P.C.
February 11, 1998
5
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
BALANCE SHEETS
December 31, 1997 and 1996
Assets
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Qualified assets (Note 2):
Cash $ 18,184 $ 13,195
Investments in U.S. Treasury Bills, at cost which approximates market 6,944,367 7,068,716
Certificates loans, secured by applicable certificate reserves (Note 3) 27,639,163 26,359,464
Loans to affiliates under Order of Exemption (Note 5) 14,173 1,801
Receivable for accrued interest (Note 5) 421,762 355,021
---------- ----------
$35,037,649 $33,798,197
---------- ----------
---------- ----------
Liabilities and Shareholder's Equity
Certificate reserves (Note 3):
Reserves to mature:
Series 28, fully paid certificates (Note 5) $30,122,784 $28,960,222
Series 28I, installment certificates 7,579 7,241
Reserve for additional credits 4,327,211 4,258,850
---------- ----------
34,457,574 33,226,313
Current liabilities, exclusive of certificate reserve liabilities:
Unearned interest on certificate holders' loans 76,685 67,559
Accrued expenses, taxes and other 73,881 93,674
---------- ----------
34,608,140 33,387,546
---------- ----------
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 178,509 159,651
------------ -----------
429,509 410,651
------------ -----------
$35,037,649 $33,798,197
------------ -----------
------------ -----------
</TABLE>
See notes to financial statements.
6
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF INCOME
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Interest income: (Note 5)
Investments $ 367,483 $ 370,457 $ 473,888
Certificate loans 1,327,277 1,268,112 1,207,734
--------- --------- ---------
1,695,277 1,638,569 1,681,622
--------- --------- ---------
Investment expenses:
Officer's salary 49,269 69,333 104,000
Consulting 31,500
Professional fees 17,694 26,977 10,750
Custodial fees 19,058 16,000 16,000
Printing, promotion and telephone 8,156 8,286 8,553
Directors' fees 8,000 8,000 10,000
Payroll taxes 4,065 3,778 5,575
Miscellaneous 3,207 6,048 3,999
------------ ------------ ------------
109,449 169,922 158,877
------------ ------------ ------------
Net investment income 1,585,828 1,468,647 1,522,745
Provision for certificate reserves
(Notes 3 and 5) 1,231,261 1,189,455 1,251,309
----------- ----------- -----------
Income before income taxes 354,567 279,192 271,436
Income taxes (Note 4) 145,709 114,734 112,442
------------ ------------ ------------
Net income $ 208,858 $ 164,458 $ 158,994
=========== =========== ============
</TABLE>
See notes to financial statements.
7
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF RETAINED EARNINGS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Balance, beginning $159,651 $ 15,193 $ 6,199
Add net income 208,828 164,458 158,994
Deduct cash dividends on common stock ( 190,000) ( 20,000) ( 150,000)
--------- ---------- ----------
Balance, ending $178,509 $159,651 $ 15,193
======== ======== ==========
</TABLE>
See notes to financial statements.
8
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 208,858 $ 164,458 $ 158,994
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for certificate reserves 1,231,261 1,189,455 1,251,309
Change in assets and liabilities:
(Increase) in accrued interest ( 66,741) ( 245,328) ( 92,806)
Increase in unearned interest 9,126 8,593 9,117
Increase (decrease) in accrued expenses ( 19,793) 43,058 ( 193,725)
------------- ------------ -------------
Net cash provided by operating activities 1,362,711 1,160,236 1,132,889
------------- ------------ -------------
Cash flows from investing activities:
Proceeds from sale and maturity of investments 13,193,368 14,327,107 13,325,270
Purchase of investments ( 13,069,019) ( 16,260,497) ( 11,555,103)
(Increase) decrease in loans to affiliates ( 12,372) 2,019,396 ( 1,512,726)
Disbursements for certificate loans ( 1,279,699) ( 1,255,768) ( 1,250,819)
------------- ------------ -------------
Net cash used in investing activities ( 1,167,722) ( 1,169,762) ( 993,378)
------------- ------------ -------------
Cash flows from financing activities:
Cash dividends paid ( 190,000) ( 20,000) ( 150,000)
------------- ------------ --------------
Net cash used in financing activities ( 190,000) ( 20,000) ( 150,000)
------------- ------------ --------------
Net increase (decrease) in cash 4,989 ( 29,526) ( 10,489)
Cash, beginning 13,195 42,721 53,210
------------- ------------ --------------
Cash, ending $ 18,184 $ 13,195 $ 42,721
============= ============ ==============
Supplemental disclosures of cash flows
information:
Cash payment for income taxes $ 98,266 $ 80,000 $ 105,000
============== ============= =============
</TABLE>
See notes to financial statements.
9
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1997, 1996 and 1995
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 Huntoon Hastings Capital Corp.
("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 which approximates market
value. 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.
10
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1997, 1996 and 1995
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, 1997, the Company was required to have
qualified assets (as that term is defined in Section 28 (b) of the
Act), of $34,707,574. As shown in the accompanying balance sheet, the
Company had qualified assets of $35,037,649.
Pursuant to the requirements of the Investment Company Act of 1940,
"Qualified Assets" are to be maintained on deposit with First Union
Bank under a "Depository Agreement" to meet certificate reserve
requirements of $34,457,574, at December 31, 1997. Assets on deposit as
of December 31, 1997 are as follows:
<TABLE>
<S> <C>
Cash $ 18,184
United States Treasury Bills 6,944,367
Certificate loans, secured by certificate reserves 27,639,163
Loans to affiliates under Order of Exemption secured by United States
guaranteed financial instruments 14,173
-------
$34,615,887
-----------
-----------
</TABLE>
11
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1997, 1996 and 1995
3. Certificate 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 1997 was 4.61%.
Gross rates of accumulation on certificate reserves were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------- ---------------------------- --------------------------
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 $30,122,784 3.50% $28,960,222 3.50% $27,839,168 3.50%
Series 28I 7,579 3.50% 7,241 3.50% 6,889 3.50%
Additional credits
on Series 28 and
28I certificates 4,327,211 1.11% 4,258,850 1.00% 4,190,800 2.62%
------------- ------------- -------------
$34,457,574 $33,226,313 $32,036,857
=========== =========== ===========
</TABLE>
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, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Federal $107,593 $ 84,721 $ 81,906
State 38,116 30,013 30,536
---------- ---------- ----------
$145,709 $114,734 $112,442
======== ======== ========
</TABLE>
12
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1997, 1996 and 1995
4. Income taxes (continued):
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Computed "expected" federal tax expense $120,553 $ 94,925 $ 92,288
Increase in taxes resulting from state income
taxes, net of federal benefit 25,156 19,809 20,154
---------- ---------- ----------
Actual tax expense $145,709 $114,734 $112,442
======== ======== ========
</TABLE>
5. Related party transactions:
AtDecember 31, 1997, the Parent owned certificates with an aggregate
cost of $26,109,000 ($23,762,000 in 1996) and had a related loan
balance of $25,574,000 ($23,276,000 for 1996) with accrued interest of
$398,000 ($343,800 for 1996).
During 1997, the Company made certificate reserve provisions of
approximately $879,000 ($827,500 and $854,000 for 1996 and 1995,
respectively) and recorded earned interest of $1,226,200 ($1,158,500
and $897,000 for 1996 and 1995, respectively), both, pertaining to the
affiliate's certificates and loans.
Under the Order of Exemption granted by the Securities and Exchange
Commission, during 1997, 1996 and 1995 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 $0, $4,400 and $162,000 during 1997, 1996 and 1995,
respectively.
The affiliate has borne all operational expenses of the Company, other
than those set forth in the statements of income.
6. Year 2000 compliance:
The Company is evaluating its computer software systems for compliance
with issues related to the year 2000. Management anticipates that the
Company's systems will be fully compliant by the end of 1998. The costs
associated with this are not expected to have a material impact on the
Company's financial position or results of operations.
7. Subsequent event:
Subsequent to year end, the Parent entered into an agreement to sell 100%
of the Company's stock to an affiliated company, USGI Holdings, Inc.
13
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures
NONE
14
<PAGE>
PART III
Item 10. Directors and Executive officers of the Registrant
<TABLE>
<CAPTION>
Name
----
Directors Age Position with registrant
--------- --- ------------------------
<S> <C> <C>
William C. Gow 67 Chairman of Board of Directors from July 14, 1980
to present
Chester T. Smith, Jr. 66 Chairman of Board of Directors from March 20,
1979 to July 14, 1980 and President and Director
since March 20, 1979
Joseph B. Breen 67 President to March 19, 1979, Director since March
12, 1975
Edward J. Martin 60 Director since February 6, 1976
Each director's present term of office expires March 1, 1998.
Executive Officers
- ------------------
Chester T. Smith, Jr. 66 President since March 20, 1979 and Chairman of
Board of Directors from March 20, 1979 to July
14, 1980
William C. Gow 67 Chairman of Board of Directors from July 14, 1980
to present
Glenn J. Reinardy 53 Secretary since June 1, 1982
Marcie Gow Pajolek 40 Vice President since August 8, 1991
</TABLE>
Business Experience
- -------------------
Chester T. Smith, Jr.
Vice-Chairman Huntoon Hastings Capital Corp. April 1995 to present.
President of First Sentinel Securities Ltd. from April 1979 to present.
William C. Gow
Chairman of Huntoon Hastings Capital Corp. from August 1992 to July 1997
and First Sentine Securities, Ltd. From July 1980 to present.
15
<PAGE>
PART III (CONTINUED)
Business Experience (Continued)
- -------------------------------
Glenn J. Reinardy
President of Huntoon Hastings Capital Corp. from July 1992 to present.
Marcie Gow Pajolek
Vice President of Association for Investment in United States Guaranteed
Assets, Inc. from June 1990
to present.
Joseph B. Breen
Practicing attorney and partner of the law firm of Emmet, Marvin & Martin,
former counsel and Senior Vice President of Merrill Lynch Commercial Real
Estate, Inc.
Edward J. Martin
Practicing attorney and partner of the law firm of Reid & Priest from June
1994 to present.
Item 11. Executive Compensation
(a) Executive Compensation
The following table lists all compensation paid or accrued by the Company to its
chief executive officer and vice president for each of the three years in the
period ended December 31, 1997. No other executive officers of the Company
received annual salary or bonus during this period.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------
Salary/ Other Annual
Name and Principal Position Year Consulting Compensation
--------------------------- ---- ------------- ------------
<S> <C> <C> <C>
Chester T. Smith, Jr. President 1996 $ 69,333 $2,000
1995 104,000 2,000
Marcie Gow Pajolek 1997 $49,269 None
1996 31,500 None
</TABLE>
Other annual compensation is directors' fees
(b) Compensation of Directors
All directors of the Company are paid an annual fee, which for 1997 was $2,000
per director.
16
<PAGE>
PART III (CONTINUED)
(a) Current Remuneration. (Continued)
(2) All Officers and Directors. All officers and directors of the
registrant as a group, stating the number of persons in the group
without naming them.
<TABLE>
<CAPTION>
Salaries, Fees
Number Capacities Directors' Fees,
of Persons in Which Commissions
in Group Served and Bonuses
--------- ---------- ----------------
<S> <C> <C>
4 Director $ 8,000
1 Officer 49,269
</TABLE>
(b) Incentive and compensation plans and arrangements.
None
(c) Stock purchase plans, profit-sharing and thrift plans.
None
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The registrant has authorized and issued 250,000 shares of common stock, 1.00
par value, which are owned entirely by its parent, Huntoon Hastings Capital
Corp., 9 Old Kings Highway South, Darien Connecticut 06820.
<TABLE>
<CAPTION>
(1) (2) (3)
Title of Beneficially Percent
Class Owned of Class
-------- ------------ --------
<S> <C> <C>
Common Stock, no par value 250,000 100%
</TABLE>
Item 13. Certain Relationships and Related Transactions.
For related party information, refer to Note 5 of the Notes to Financial
Statements.
17
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements included in Part II, Item 8, of this report:
Independent Auditor's Report
Balance Sheets, December 31, 1997 and 1996
Statements of Income, Years Ended December 31, 1997, 1996 and 1995
Statements of Retained Earnings, Years Ended December 31, 1997, 1996
and 1995
Statements of Cash Flows, Years Ended December 31, 1997, 1996 and 1995
(a) 2. Financial Statements Schedules:
Independent Auditor's Report on Financial Statement Schedule
Schedule VI - Certificate Reserves
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or the notes thereto.
(a) 3. Exhibits
3 - Articles of Incorporation of By-Laws.
The articles of incorporation and by-laws, incorporated by
reference, were previously filed as an exhibit to Form N-8B-4
filed on March 13, 1975, as amended on May 29, 1975.
- Series 28 Prospectus dated July 11, 1997
(b) Reports on Form 8-K
NONE
18
<PAGE>
Independent Auditors' Report on Financial Statement Schedule
Board of Directors and Security Holders
Association for Investment in United States
Guaranteed Assets, Inc.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule VI is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not a part of the basic financial statements. This schedule has been subjected
to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Bridgeport, Connecticut Dworken, Hillman, LaMorte & Sterczala, P.C.
February 11, 1998
19
<PAGE>
ASSOCIATION FOR INVESTMENT
IN UNITED STATES GUARANTEED ASSETS, INC.
SCHEDULE VI - CERTIFICATE RESERVES
December 31, 1997
<TABLE>
<CAPTION>
Description Balance, January 1, 1997 Additions Deductions Balance, December 31, 1997
- -------------------- -------------------------------- ------------------------ ---------- ---------------------------------
Yield to Number of Number of
Maturity on Accounts Reserve Cash Accounts
an annual With Amount of Charge to payments by Surrender With Amount of
Payment Certificate Maturity Amount of Profit and Certificate Prior to Certificate Maturity Amount of
Series Basis Holders Value Reserves Loss Holders Maturity Holders Value Reserves
------ ----------- ----------- -------- -------- ---------- ----------- --------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Paid up
certificate -
Series 28 283 $34,399,980 $28,960,222 $1,162,562 $ $ 257 $34,399,980 $30,122,784
Installment
basis -
Series 28I 1 9,480 7,241 338 1 9,480 7,579
Additional
credits:
Series 28 N/A 4,255,780 68,165 N/A N/A 4,323,945
Series 28I N/A 3,070 196 N/A N/A 3,266
----- ----------- ----------- --------- -------- -------- ----- ---------- ---------
284 $34,409,460 $33,226,313 $1,231,261 $ $ 258 $34,409,460 $34,457,574
----- ----------- ----------- --------- -------- -------- ----- ---------- ---------
----- ----------- ----------- --------- -------- -------- ----- ---------- ---------
</TABLE>
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 30(a) and (c) of the Investment Company
Act of 1940 and pursuant to Section 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date:
------------
ASSOCIATION FOR INVESTMENT IN
UNITED STATES GUARANTEED
ASSETS, INC.
-----------------------------
Registrant
-----------------------------
Chester T. Smith, Jr.
President
Pursuant to the requirements of the Investment Company Act of 1940 and pursuant
to the Securities and Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<S> <C> <C>
By: Director Date: March 1998
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By: Director Date: March 1998
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By: Director Date: March 1998
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</TABLE>
