As filed with the Securities and Exchange Commission on April 16, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __ [ ] Post-Effective Amendment No.___
UNITED ASSET STRATEGY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
6300 Lamar Avenue
Overland Park, Kansas 66202
(Address of Principal Executive Offices)
P.O. Box 29217, Shawnee Mission, Kansas 66201-9217
(Mailing Address)
(913) 236-2000
(800) 366-5465
(Registrant's Area Code and Telephone Number)
Helge K. Lee, Esq.
Kristen A. Richards, Esq.
6300 Lamar Avenue
Overland Park, Kansas 66202
(Name and Address of Agent for Service)
Copies to:
Clifford J. Alexander, Esq.
Catherine S. Bardsley, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9068
Approximate Date of Proposed Public Offering: as soon as practicable
after this Registration Statement becomes effective under the Securities Act of
1933.
<PAGE>
It is proposed that this filing will become effective on May 16, 1999,
pursuant to Rule 488.
Title of securities being registered: Common stock, par value $0.01 per
share.
No filing fee is required because of reliance on Section 24(f) under
the Investment Company Act of 1940, as amended.
2
<PAGE>
UNITED ASSET STRATEGY FUND, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
3
<PAGE>
UNITED ASSET STRATEGY FUND, INC.
Form N-14 Cross Reference Sheet
Part A Item No. Prospectus/Proxy
and Caption Statement Caption
- ----------- -----------------
1. Beginning of Registration Statement and Cover Page
Outside Front Cover Page of Prospectus
2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
3. Synopsis Information and Risk Factors Synopsis; Comparison of
Principal Risk Factors
4. Information About the Transaction Synopsis; The Proposed
Transaction
5. Information About the Registrant Synopsis; Comparison of
Principal Risk Factors;
Additional Information About
Asset Strategy Fund;
Miscellaneous; See also the
Prospectus for United Asset
Strategy Fund, Inc., dated
January 31, 1999, previously
filed on EDGAR, Accession
Number 0000950146-98-002045
6. Information About the Company Being Synopsis; Comparison of
Acquired Principal Risk Factors;
Miscellaneous; See also the
Prospectus for United Gold &
Government Fund, Inc., dated
April 15, 1999, previously
filed on EDGAR, Accession
Number 0000950146-99-000711
7. Voting Information Voting Information
8. Interest of Certain Persons and Experts Not Applicable
9. Additional Information Required for Re- Not Applicable
offering by Persons Deemed to be
Underwriters
4
<PAGE>
<TABLE>
<CAPTION>
Part B Item No. Statement of Additional
and Caption Information Caption
- ----------- -------------------
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Not Applicable
12. Additional Information About the Registrant Statement of Additional Information of
United Asset Strategy Fund, Inc., dated
January 31, 1999, previously filed on
EDGAR, Accession Number
0000950146-98-002045
13. Additional Information About the Company Statement of Additional Information of
Being Acquired United Gold & Government Fund, Inc.,
dated April 15, 1999, previously filed on
EDGAR, Accession Number
0000950146-99-000711
14. Financial Statements Annual Report of United Asset Strategy
Fund for Fiscal Year Ended September 30,
1998, previously filed on EDGAR, Accession
Number 0000929922-98-000005; Annual Report
of United Gold & Government Fund, Inc. for
Fiscal Year Ended December 31, 1998,
previously filed on EDGAR, Accession Number
0000217420-99-000005; Pro Forma Financial
Statements for Fiscal Year Ended September
30, 1998.
</TABLE>
Part C
------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
5
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
May __, 1999
Dear United Gold & Government Fund Shareholder:
The attached proxy materials describe a proposal that United Gold &
Government Fund, Inc. ("Gold & Government Fund") reorganize and become part of
United Asset Strategy Fund, Inc. ("Asset Strategy Fund"). If the proposal is
approved and implemented, each shareholder of Gold & Government Fund will
automatically become a shareholder of Asset Strategy Fund.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. The Board
believes that combining the two Funds will benefit Gold & Government Fund's
shareholders by providing them with a larger, growing investment vehicle that
has an investment goal similar to that of Gold & Government Fund, but which is
subject to investment policies that permit broader asset allocation than those
of Gold & Government Fund.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will permit Gold & Government Fund to avoid costly follow-up mail
and telephone solicitation. After reviewing the attached materials, please
complete, date, and sign the enclosed proxy card and mail it in the enclosed
return envelope today. As an alternative to using the paper proxy card to vote,
you may vote by telephone, through the Internet, or in person.
Very truly yours,
Robert L. Hechler
President
United Gold & Government Fund, Inc.
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
June 22, 1999
To The Shareholders:
Notice is hereby given that a special meeting of the shareholders of
United Gold & Government Fund, Inc. ("Gold & Government Fund"), will be held on
June 22, 1999, at 11:00 a.m., local time, at 6300 Lamar Avenue, Overland Park,
Kansas 66202, or any adjournment thereof ("Special Meeting"), for the following
purposes:
(1) To approve an Agreement and Plan of Reorganization and Termination
under which United Asset Strategy Fund, Inc. ("Asset Strategy Fund") would
acquire all of the assets of Gold & Government Fund in exchange solely for
shares of Asset Strategy Fund and the assumption by Asset Strategy Fund of all
of Gold & Government Fund's liabilities, followed by the distribution of those
shares to the shareholders of Gold & Government Fund, all as described in the
accompanying Prospectus/Proxy Statement ("Proxy Statement"); and
(2) To transact such other business as may properly come before the
Special Meeting.
The Board of Directors of Gold & Government Fund has fixed the close of
business on April 12, 1999, as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting ("Record Date").
You are entitled to vote at the Special Meeting if you owned shares of Gold &
Government Fund at the close of business on the Record Date.
Retain this Notice and Proxy Statement.
By order of the Board of Directors,
Kristen A. Richards
Assistant Secretary
May __, 1999
Overland Park, Kansas
<PAGE>
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, sign and
date the card, and return it in the envelope provided. IF YOU SIGN, DATE, AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSAL DESCRIBED ABOVE. To avoid the additional expense of further
solicitation, we ask your cooperation in mailing your proxy card promptly.
As an alternative to using the paper proxy card to vote, you may vote by
telephone, through the Internet, or in person. Shares that are registered in
your name, as well as shares held in "street name" through a broker, may be
voted via the Internet or by telephone. To vote in this manner, you will need
the "control" number that appears on your proxy card. To vote via the Internet,
please access http://www.proxyweb.com on the World Wide Web. You may also call
1-888-221-0697 and vote by telephone. If we do not receive your completed proxy
card after several weeks, you may be contacted by our proxy solicitor,
Management Information Services. Our proxy solicitor will remind you to vote
your shares or will record your vote over the telephone if you choose to vote in
that manner.
Unless the proxy card submitted by a corporation or partnership is signed by the
appropriate persons as indicated in the voting instructions on the proxy card,
it will not be voted.
- --------------------------------------------------------------------------------
2
<PAGE>
UNITED ASSET STRATEGY FUND, INC.
UNITED GOLD & GOVERNMENT FUND, INC.
6300 Lamar Avenue
Overland Park, Kansas 66202
(Toll Free) 1-800-366-5465
PROSPECTUS/PROXY STATEMENT
May __, 1999
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished
to shareholders of United Gold & Government Fund, Inc. ("Gold & Government
Fund") in connection with the solicitation of proxies by its Board of Directors
for use at a special meeting of its shareholders to be held on June 22, 1999, at
11:00 a.m., local time, at 6300 Lamar Avenue, Overland Park, Kansas 66202, or
any adjournment thereof, if the meeting is adjourned for any reason ("Special
Meeting").
As more fully described in this Proxy Statement, the main purpose of
the Special Meeting is to vote on a proposed reorganization. In the
reorganization, United Asset Strategy Fund, Inc. ("Asset Strategy Fund") would
acquire all of the assets of Gold & Government Fund, in exchange solely for
shares of Asset Strategy Fund and the assumption by Asset Strategy Fund of all
of the liabilities of Gold & Government Fund. Those shares of Asset Strategy
Fund would then be distributed to the shareholders of Gold & Government Fund, so
that each shareholder would receive a number of full and fractional shares of
Asset Strategy Fund having an aggregate value that, on the effective date of the
reorganization, is equal to the aggregate net asset value of the shareholder's
shares of Gold & Government Fund. As soon as practicable following the
distribution of those shares, Gold & Government Fund would be terminated.
Asset Strategy Fund is a diversified open-end management investment
company. Its investment goal is high total return over the long term. Asset
Strategy Fund seeks to achieve its goal by allocating its assets among stocks,
bonds of any quality including junk bonds (rated BB and below by Standard and
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), and Ba and below
by Moody's Investors Service, Inc.("Moody's")), and short-term instruments, both
in the United States and abroad.
This Proxy Statement, which should be retained for future reference,
sets forth concisely the information about the reorganization and Asset Strategy
Fund that a shareholder should know before voting on the reorganization. A
Statement of Additional Information, dated May __, 1999, relating to the
reorganization and including historical financial statements, has been filed
with the Securities and Exchange Commission ("SEC") and is incorporated herein
by this reference (that is, the Statement of Additional Information is legally a
part of this Proxy Statement). A Prospectus and a Statement of Additional
Information for Asset Strategy Fund, each dated January 31, 1999, and Asset
Strategy Fund's Annual Report to Shareholders for the fiscal year ended
September 30, 1998, have been filed with the SEC and are incorporated herein by
this reference. A Prospectus and a Statement of Additional Information for Gold
& Government Fund, each dated April 15, 1999, and Gold & Government Fund's
Annual Report to Shareholders for the fiscal year ended December 31, 1998, have
been filed with the SEC and also are incorporated herein by this reference. A
copy of Asset Strategy Fund's Prospectus and Annual Report accompany this Proxy
Statement. Copies of the other referenced documents may be obtained without
charge, and further inquiries may be made, by writing to Gold & Government Fund
or Asset Strategy Fund, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217, or
by calling toll-free 1-800-366-5465.
i
<PAGE>
The SEC maintains a website (http://www.sec.gov) that contains the
Statement of Additional Information and other material incorporated by
reference, together with other information regarding Asset Strategy Fund and
Gold & Government Fund.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE SHARES OF ASSET STRATEGY
FUND OR DETERMINED WHETHER THIS PROXY STATEMENT IS ACCURATE OR COMPLETE. IT IS A
CRIMINAL OFFENSE TO STATE OTHERWISE.
ii
<PAGE>
TABLE OF CONTENTS
VOTING INFORMATION.............................................................4
SYNOPSIS.......................................................................6
COMPARISON OF PRINCIPAL RISK FACTORS..........................................12
THE PROPOSED TRANSACTION......................................................15
OTHER BUSINESS................................................................22
MISCELLANEOUS.................................................................22
APPENDIX A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION
AND TERMINATION..............................................................A-1
iii
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
-----------
PROSPECTUS/PROXY STATEMENT
Special Meeting of Shareholders
June 22, 1999
-----------
VOTING INFORMATION
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished
to shareholders of United Gold & Government Fund, Inc. ("Gold & Government
Fund") in connection with the solicitation of proxies from those shareholders by
the Board of Directors ("Board") of Gold & Government Fund for use at a special
meeting of shareholders to be held on June 22, 1999 ("Special Meeting"), and at
any adjournment thereof. This Proxy Statement will first be mailed to
shareholders on or about May __, 1999.
One-third of Gold & Government Fund's shares outstanding on April 12,
1999 ("Record Date"), represented in person or by proxy, constitutes a quorum
and must be present for the transaction of business at the Special Meeting. If a
quorum is not present at the Special Meeting or a quorum is present but
sufficient votes to approve the reorganization proposal described below
("Proposal") are not received, the persons named as proxies may propose one or
more adjournments of the Special Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the Special Meeting in person or by proxy. The
persons named as proxies will vote those proxies that they are entitled to vote
FOR the Proposal in favor of such an adjournment and will vote those proxies
required to be voted AGAINST the Proposal against such adjournment.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or the Proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against the Proposal where the required vote is a percentage of the shares
outstanding. Abstentions and broker non-votes will not be counted, however, as
votes cast for purposes of determining whether sufficient votes have been
received to approve the Proposal.
The individuals named as proxies on the enclosed proxy card will vote
in accordance with your directions as indicated on the card, if it is received
properly executed by you or by your duly appointed agent or attorney-in-fact. If
you sign, date, and return the proxy card, but give no voting instructions, your
shares will be voted in favor of approval of the Proposal. In addition, if you
4
<PAGE>
sign, date, and return the proxy card, but give no voting instructions, the duly
appointed proxies may, in their discretion, vote on other matters that may come
before the Special Meeting. The proxy card may be revoked by giving another
proxy or by letter or telegram revoking the initial proxy. To be effective,
revocation must be received by Gold & Government Fund prior to the Special
Meeting and must indicate your name and account number. If you attend the
Special Meeting in person you may, if you wish, vote by ballot at the Special
Meeting, thereby canceling any proxy previously given.
To reduce costs, notices to a shareholder having more than one account
in Gold & Government Fund listed under the same Social Security number at a
single address have been combined. The proxy cards have been coded so that a
shareholder's votes will be counted for each such account.
As of the Record Date, Gold & Government Fund had 2,007,227.515 shares
of common stock outstanding. The solicitation of proxies, the cost of which will
be divided equally between Gold & Government Fund and United Asset Strategy
Fund, Inc. ("Asset Strategy Fund"), will be made primarily by mail, but also may
be made by telephone or oral communications by representatives of Waddell & Reed
Investment Management Company ("WRIMCO"), who will not receive any compensation
for these activities from either Gold & Government Fund or Asset Strategy Fund
(each a "Fund"), or by Management Information Services, professional proxy
solicitors, who will be paid fees and expenses of up to approximately $1500.00
for soliciting services. If votes are recorded by telephone, Management
Information Services will use procedures designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares in
accordance with their instructions, and to confirm that a shareholder's
instructions have been properly recorded. You may also vote by mail or through
an Internet site. Proxies voted by telephone or Internet may be revoked at any
time before they are voted in the same manner that proxies voted by mail may be
revoked.
WRIMCO does not know of any person who owns beneficially 5% or more of
the shares of either Fund. Directors and officers of Gold & Government Fund own
in the aggregate less than 1% of the shares of Gold & Government Fund.
VOTE REQUIRED. Approval of the Proposal requires the affirmative vote
of a majority of the outstanding voting securities of Gold & Government Fund,
with both classes voting together. Each outstanding full share of Gold &
Government Fund is entitled to one vote, and each outstanding fractional share
thereof is entitled to a proportionate fractional share of one vote. If the
Proposal is not approved by the requisite vote of shareholders of Gold &
Government Fund, the persons named as proxies may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
5
<PAGE>
REORGANIZATION PROPOSAL. TO APPROVE AN AGREEMENT AND PLAN OF
REORGANIZATION AND TERMINATION ("REORGANIZATION PLAN") UNDER WHICH
ASSET STRATEGY FUND WOULD ACQUIRE ALL OF THE ASSETS OF GOLD &
GOVERNMENT FUND IN EXCHANGE SOLELY FOR SHARES OF ASSET STRATEGY
FUND AND THE ASSUMPTION BY ASSET STRATEGY FUND OF ALL OF GOLD &
GOVERNMENT FUND'S LIABILITIES, FOLLOWED BY THE DISTRIBUTION OF
THOSE SHARES TO THE SHAREHOLDERS OF GOLD & GOVERNMENT FUND
("REORGANIZATION")
SYNOPSIS
The following is a summary of certain information contained elsewhere
in this Proxy Statement, the Prospectus and Statement of Additional Information
of Asset Strategy Fund (which are incorporated herein by reference), the
Prospectus and Statement of Additional Information of Gold & Government Fund
(which are incorporated herein by reference), and the Reorganization Plan (a
form of which is attached as Appendix A to this Proxy Statement). As discussed
more fully below, Gold & Government Fund's Board believes that the
Reorganization will benefit Gold & Government Fund's shareholders by providing
them with a larger, growing investment vehicle that has an investment goal
similar to that of Gold & Government Fund, but which is subject to investment
policies that permit broader asset allocation than those of Gold & Government
Fund.
THE PROPOSED REORGANIZATION
Gold & Government Fund's Board considered and approved the
Reorganization Plan at a meeting held on April 6, 1999. The Reorganization Plan
provides for the acquisition of the assets of Gold & Government Fund by Asset
Strategy Fund, in exchange solely for shares of common stock of Asset Strategy
Fund and the assumption by Asset Strategy Fund of the liabilities of Gold &
Government Fund. Gold & Government Fund then will distribute those shares of
Asset Strategy Fund to its shareholders, by class, so that each Gold &
Government Fund shareholder will receive the number of full and fractional
shares of the corresponding class of Asset Strategy Fund in terms of fees and
other characteristics, including nomenclature ("corresponding class"), that is
equal in aggregate value to the value of the shareholder's holdings in Gold &
Government Fund as of the day the Reorganization is completed. Gold & Government
Fund will be terminated as soon as practicable thereafter.
The Reorganization is anticipated to occur as of the close of business
on June 30, 1999, or at a later date when the Reorganization is approved and all
contingencies have been met ("Closing Date").
For the reasons set forth below under "The Proposed Transaction --
Reasons for the Reorganization," Gold & Government Fund's Board, including its
directors who are not "interested persons," as that term is defined in the
Investment Company Act of 1940, as amended ("1940 Act"), of either Fund, WRIMCO,
<PAGE>
or Waddell & Reed, Inc. ("Independent Directors"), has determined that the
Reorganization is in the best interests of Gold & Government Fund, that the
terms of the Reorganization are fair and reasonable, and that the interests of
Gold & Government Fund's shareholders will not be diluted as a result of the
Reorganization. Accordingly, Gold & Government Fund's Board recommends approval
of the transaction. In addition, the Board of Asset Strategy Fund, including its
Independent Directors, has determined that the Reorganization is in the best
interests of Asset Strategy Fund, that the terms of the Reorganization are fair
and reasonable, and that the interests of Asset Strategy Fund's shareholders
will not be diluted as a result of the Reorganization.
COMPARATIVE FEE TABLE
The following tables show (1) fees currently incurred by shareholders
of each Fund and fees that each shareholder will incur after giving effect to
the Reorganization and (2) the current annual fund operating expenses incurred
for the fiscal year ended September 30, 1998, by Asset Strategy Fund and the
fiscal year ended December 31, 1998, by Gold & Government Fund, and pro forma
fees for Asset Strategy Fund after the Reorganization.
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Asset Strategy Fund Gold & Government Combined Fund
------------------- ----------------- -------------
Fund
----
Class A Class Y Class A Class Y Class A Class Y
<S> <C> <C> <C> <C> <C> <C>
Sales charge (load) on 5.75% None 5.75% None 5.75% None
purchases of shares
Sales charge (load) on None None None None None None
reinvested dividends
Redemption fee or deferred None None None None None None
sales charge (load)
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Asset Strategy Fund Gold & Government Combined Fund
------------------- ----------------- -------------
Fund
----
Class A Class Y Class A Class Y Class A Class Y
Management Fees 0.69% 0.69% 0.69% 0.69% 0.69% 0.69%
Distribution (12b-1) Fees* 0.24% None 0.25% None 0.25% None
Other Expenses (including 0.69% 0.49% 1.52% 1.16% 0.78% 0.48%
transfer agency, registration ----- ----- ----- ----- ----- -----
fees, accounting services fees,
and other expenses)
Total Fund Operating 1.62% 1.18% 2.46% 1.85% 1.72% 1.17%
Expenses
</TABLE>
<PAGE>
* Because each Fund pays distribution fees with respect to Class A shares,
long-term Class A shareholders could pay more than the economic equivalent
of the maximum front-end sales charge permitted by the National Association
of Securities Dealers, Inc.
EXAMPLE OF EFFECT ON FUND EXPENSES
This Example is intended to help you compare the cost of investing in
Gold & Government Fund with the cost of investing in Asset Strategy Fund and the
cost of investing in Asset Strategy Fund assuming the Reorganization has been
completed.
The Example assumes that you invest $10,000 in the specified Fund for
the time periods indicated. The Example also assumes that your investment has a
5% return each year, that all dividends and other distributions are reinvested,
and that the Fund's operating expenses remain the same. Although your actual
costs or returns may be higher or lower, based on these assumptions, your costs
would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Class A Shares:
Asset Strategy Fund $730 $1,057 $1,406 $2,386
Gold & Government Fund $810 $1,297 $1,810 $3,210
Combined Fund $739 $1,083 $1,450 $2,478
Class Y Shares:
Asset Strategy Fund $120 $375 $648 $1,432
Gold & Government Fund $188 $582 $1,001 $2,169
Combined Fund $119 $372 $644 $1,420
FORM OF ORGANIZATION
Asset Strategy Fund is an open-end, diversified management investment
company that was organized as a Maryland corporation on August 25, 1994. Gold &
Government Fund is an open-end, diversified management investment company that
was organized as a Maryland corporation on February 28, 1985. Neither Fund is
required to (nor do they) hold annual shareholder meetings.
INVESTMENT MANAGER
WRIMCO is the investment manager of each Fund. In this capacity, WRIMCO
supervises all aspects of each Fund's operations and makes and implements all
investment decisions for each Fund.
8
<PAGE>
Each Fund currently pays WRIMCO a management fee that combines a
specific fee and a group fee. For each Fund, the specific fee is 0.30% of the
Fund's average daily net assets. The group fee is calculated on the basis of the
combined average daily net assets of all the funds in the United Group of Mutual
Funds based on the following schedule:
GROUP NET ASSET LEVEL (IN MILLIONS) ANNUAL GROUP FEE RATE
From $0 to $750 0.51%
From $750 to $1,500 0.49%
From $1,500 to $2,250 0.47%
From $2,250 to $3,000 0.45%
From $3,000 to $3,750 0.43%
From $3,750 to $7,500 0.40%
From $7,500 to $12,000 0.38%
Over $12,000 0.36%
For the fiscal year ended September 30, 1998, Asset Strategy Fund paid WRIMCO an
investment management fee of 0.69% of its average daily net assets. For the
fiscal year ended December 31, 1998, Gold & Government Fund paid WRIMCO an
investment management fee of 0.69% of its average daily net assets.
Following the Reorganization, the initial management fee for the
combined Fund is expected to be 0.69% of average daily net assets. However, this
fee may change if proposals currently under separate consideration by
shareholders of both Funds are approved. Those proposals would change the
management fee schedule to eliminate the group fee component and to modify the
fee based on each Fund's average daily net assets. If Asset Strategy Fund's
shareholders approve the proposed fee schedule, its management fee would be
calculated at the annual rate of: 0.70% of average daily net assets up to $1
billion; 0.65% of such assets from $1 billion to $2 billion; 0.60% of such
assets from $2 billion to $3 billion; and 0.55% of such assets thereafter. If
Gold & Government Fund's shareholders approve the proposed fee schedule, its
management fee would be calculated at the annual rate of: 0.85% of average daily
net assets up to $1 billion; 0.83% of such assets from $1 billion to $2 billion;
0.80% of such assets from $2 billion to $3 billion; and 0.76% of such assets
thereafter. WRIMCO intends, however, to waive Gold & Government Fund's
management fee if that Fund's net assets are less than $25 million, but this
waiver may be terminated by WRIMCO at any time. WRIMCO will consider termination
of this waiver if Gold & Government Fund's shareholders fail to approve the
Reorganization. If the Reorganization is approved by Gold & Government Fund's
shareholders, the proposed change in its fee schedule will not become effective.
INVESTMENT GOALS AND POLICIES
The investment goal and policies of each Fund are set forth below.
There can be no assurance that either Fund will achieve its investment goal.
ASSET STRATEGY FUND. Asset Strategy Fund's investment goal is high
total return over the long term. The Fund seeks to achieve its goal by
allocating its assets among stocks, bonds of any quality including junk bonds
(rated BB and below by S&P, and Ba and below by Moody's), and short-term
9
<PAGE>
instruments, both in the United States and abroad. The Fund generally allocates
70% of its assets to stocks, 25% to bonds, and 5% to short-term instruments, but
this mix will vary based on WRIMCO's outlook for the different markets. Changes
in this mix may be based on such factors as interest rate changes, security
valuation levels, and a rise in the potential for growth stocks
Asset Strategy Fund may also invest in and use other types of
instruments in seeking to achieve its goals. For example, the Fund may invest in
options, futures contracts, asset-backed securities, and other derivative
instruments if it is permitted to invest in the type of asset by which the
return on, or the value of, the derivative is measured. The Fund can invest in
securities of companies of any size. See its Statement of Additional Information
for more information about permitted investments and strategies, as well as the
restrictions that apply to them.
As a defensive measure, Asset Strategy Fund may increase its holdings
in the bond or short-term classes when WRIMCO believes that there is a potential
bear market, prolonged downturn in stock prices, or significant loss in stock
value. The Fund may also, as a temporary defensive measure, invest up to 100% of
its assets in high-quality money market instruments or precious metals.
GOLD & GOVERNMENT FUND. Gold & Government Fund's investment goal is
high total return. The Fund seeks to achieve its goal by investing primarily in
gold-related and other minerals-related securities and gold, silver, and
platinum during periods of actual or expected inflation or when the environment
for investing in precious metals otherwise appears to WRIMCO to be favorable and
by investing in U.S. Government securities during periods of actual or expected
disinflation or low inflation.
Gold & Government Fund may invest in different kinds of securities,
such as debt securities, preferred stock, common stock, and convertible
securities. It may also invest in and use other types of instruments in seeking
to achieve its goals. For example, the Fund is permitted to invest in options,
futures contracts, asset-backed securities, and other derivative instruments if
it is permitted to invest in the type of asset by which the return on, or value
of, the derivative is measured.
BOTH FUNDS. Each Fund's investment portfolio is actively traded --
securities may be bought and sold relatively quickly during certain market or
economic conditions. At times, each Fund's portfolio turnover rate may exceed
200%, resulting in greater brokerage commissions and acceleration of capital
gains, which are taxable when distributed to shareholders.
OPERATIONS OF ASSET STRATEGY FUND FOLLOWING THE REORGANIZATION
As indicated above, the investment goal of Asset Strategy Fund is
similar to that of Gold & Government Fund, and Asset Strategy Fund's investment
policies are broader than those of Gold & Government Fund. Based on its review
of the Funds' investment portfolios, WRIMCO believes that a substantial portion
of the assets held by Gold & Government Fund will be consistent with the
investment policies of Asset Strategy Fund and thus can be transferred to and
held by Asset Strategy Fund if the Reorganization Plan is approved. If, however,
Gold & Government Fund has any assets that may not be held by Asset Strategy
Fund, those assets will be sold prior to the Reorganization. The proceeds of
10
<PAGE>
such sales will be held in temporary investments or reinvested in assets that
qualify to be held by Asset Strategy Fund. The possible need for Gold &
Government Fund to dispose of assets prior to the Reorganization could result in
selling securities at a disadvantageous time and could result in its realizing
losses that might not otherwise be realized until a later date. Alternatively,
these sales could result in Gold & Government Fund's realizing gains that might
not otherwise be realized until a later date, the net proceeds of which would be
included in a distribution to its shareholders prior to the Reorganization.
As discussed above, WRIMCO serves as investment manager of both Funds.
After the Reorganization, WRIMCO, in its capacity as investment manager of Asset
Strategy Fund, will have sole responsibility for managing the Funds' combined
assets. In addition, Asset Strategy Fund's Directors and officers, distributor,
and other outside agents will continue to serve the Fund in their current
capacities.
PURCHASES AND REDEMPTIONS
PURCHASES. Class A shares of each Fund may be purchased by mail or
automatic investment transactions, and Class Y shares thereof may also be
purchased by wire or through certain third parties. The shares of each Fund are
sold on a continuous basis at the net asset value per share ("NAV") next
calculated after receipt of a purchase order in good form, plus, for Class A
shares, any applicable sales charge. The NAV for each Fund is computed
separately and is determined once each day that the New York Stock Exchange is
open ("Business Day") as of the close of regular trading on the Exchange, but
may also be computed at other times. For a more complete discussion of share
purchases, see "Your Account -- Buying Shares" in either Fund's Prospectus.
REDEMPTIONS. Class A shares of each Fund may be redeemed by mail, and
Class Y shares may also be redeemed by telephone or fax or through certain third
parties. Redemptions are made at the NAV next determined after a request in
proper form is received at the Fund's office. Normally, payments for shares
redeemed will be mailed within seven days following receipt of the required
documents. For a more complete discussion of share redemption procedures, see
"Your Account -- Selling Shares" in either Fund's Prospectus.
Gold & Government Fund's shares will no longer be available for
purchase on the Business Day following the Closing Date. Redemptions of Gold &
Government Fund's shares may be effected through the Closing Date.
EXCHANGES
Shares of each Fund may be exchanged for shares of the corresponding
class of another fund in the United Group of Mutual Funds on the basis of their
respective NAVs at the time of the exchange. After the Reorganization, shares of
Asset Strategy Fund will continue to be exchangeable for shares of the
corresponding class of another fund in the United Group of Mutual Funds. For a
more complete discussion of the Funds' exchange policies, see "Your Account --
Shareholder Services: Exchanges" in either Fund's Prospectus.
11
<PAGE>
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund earns investment income in the form of interest and dividends
on investments. Dividends paid by each Fund are based solely on its investment
income. Each Fund's policy is to distribute substantially all of its investment
income, less expenses, to shareholders on a quarterly basis (March, June,
September, and December), at the discretion of its Board. Dividends are
automatically reinvested in additional shares of the class of the Fund at the
NAV on the payable date unless otherwise requested.
Each Fund also realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on these
sales exceed total losses (including losses carried forward from previous
years), the Fund has capital gain net income. Net realized capital gains, if
any, together with net gains realized on foreign currency transactions, if any,
are distributed to each Fund's shareholders at least annually, usually in
December. Capital gains distributions are automatically reinvested in additional
shares of the distributing class of the Fund at the NAV on the payable date
unless otherwise requested.
On or before the Closing Date, Gold & Government Fund will declare a
distribution of substantially all of its net investment income and realized net
capital gain, if any, and distribute that amount plus any previously declared
but unpaid distributions, in order to continue to maintain its tax status as a
regulated investment company.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
The Funds will receive an opinion of their counsel, Kirkpatrick &
Lockhart LLP, to the effect that the Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended ("Code"). Accordingly, neither Fund nor, except
as noted below, any of their shareholders will recognize any gain or loss as a
result of the Reorganization. See "The Proposed Transaction -- Federal Income
Tax Considerations," below. If Gold & Government Fund sells securities prior to
the Closing Date, it may realize gains or losses that might not otherwise be
realized until a later date. Any such net gains would increase the amount of any
distribution made to shareholders of Gold & Government Fund prior to the Closing
Date.
COMPARISON OF PRINCIPAL RISK FACTORS
An investment in each Fund is subject to market risk, financial risk,
and, in some cases, prepayment risk.
o Market risk is the possibility of a change in the price of a security or
other asset because of market factors. Bonds with longer maturities are
more interest-rate sensitive. For example, if interest rates increase, the
value of a bond with a longer maturity is more likely to decrease. Because
of market risk, the share price of a Fund will likely change as well.
o Financial risk is based on the financial situation of the issuer of the
security. For an equity investment, a Fund's financial risk may depend, for
example, on the earnings performance of the company issuing the stock. To
12
<PAGE>
the extent that a Fund invests in debt securities, its financial risk
depends on the credit quality of the securities in which it invests.
o Prepayment risk is the possibility that, during periods of falling interest
rates, a debt security with a high stated interest rate will be prepaid
prior to its expected maturity date.
Because each Fund owns different types of investments, its performance
will be affected by a variety of factors. The value of each Fund's investments
and the income it generates will vary from day to day, generally due to changes
in interest rates, market conditions, and other company and economic news.
Performance will also depend on WRIMCO's skill in allocating each Fund's assets.
Asset Strategy Fund diversifies across investment types more than most mutual
funds; Gold & Government Fund allocates its assets in a narrow range. Neither
Fund can provide an appropriate balanced investment plan for all investors.
Market risk for small- or medium-sized companies may be greater than
that for large companies. Smaller companies are more likely to have limited
financial resources and inexperienced management. Stock of smaller companies may
also experience more volatile trading and greater price fluctuations.
Certain types of each Fund's authorized investments and strategies
(such as foreign securities, "junk bonds," and derivative instruments) involve
special risks. Depending on how much each Fund invests or uses these strategies,
these special risks may become significant. Foreign securities and foreign
currencies may involve risks relating to currency fluctuations, political or
economic conditions in the foreign country, and the potentially less stringent
investor protection and disclosure standards of foreign markets. These factors
could make foreign investments, especially those in developing countries, more
volatile. "Junk bonds" are more susceptible to the risk of non-payment or
default, and their prices may be more volatile, than higher-rated bonds.
As with any mutual fund, the value of each Fund's shares will change
and you could lose money on your investment. An investment in each Fund is not a
bank deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Because Gold & Government Fund, like Asset Strategy Fund, invests in
equity and debt securities, including foreign securities, junk bonds, and
derivatives, an investment in Gold & Government Fund is subject to the same
general risks as an investment in Asset Strategy Fund. However, because Gold &
Government Fund generally invests heavily in precious metals and in
minerals-related securities, it is particularly subject to the risks of such
investments, and the price of its shares may vary more widely than the price of
shares of Asset Strategy Fund, which invests more broadly.
Minerals-related securities are securities that offer an investment
participation in the mining, processing, production, exploration, refining, or
sales of gold, platinum, silver, or hydrocarbons. Investments in
minerals-related securities and precious metals can fluctuate sharply and are
considered speculative. A substantial portion of Gold & Government Fund's
minerals-related securities may be invested in foreign securities, which present
additional risks such as those relating to currency fluctuations and political
or economic conditions affecting the foreign country. Depending on international
13
<PAGE>
monetary or political conditions or short-term supplies of precious metals, Gold
& Government Fund's assets may be more volatile than other types of investments.
Gold & Government Fund's investment success depends to a high degree on
the validity of the premise that the values of minerals-related securities will
move in different directions than the values of U.S. Government securities
during periods of inflation or disinflation. If the values of both types of
securities move down during the same period of time, the value of a
shareholder's investment will decline rather than stabilize or increase as
anticipated, regardless of whether Gold & Government Fund is invested in
minerals-related securities or U.S. Government securities.
The concentration of the supply of gold and the control of gold sales
present additional risks to Gold & Government Fund. The six largest producers of
gold are the Republic of South Africa, the United States, Australia, the New
Independent States of the former Soviet Union, Canada, and China. Economic,
social, and political conditions and goals prevailing in these countries may
have a direct effect on the production and marketing of newly produced gold and
sales of central bank holdings.
There is also the possibility that, under unusual international
monetary or political conditions, Gold & Government Fund's assets may be less
liquid, or the change in value of its assets might be more volatile, than would
be the case with other investments. In particular, the price of gold is affected
by direct and indirect use of it to settle net deficits between nations.
YEAR 2000 AND EURO ISSUES
Like other mutual funds, financial institutions, business
organizations, and individuals around the world, each Fund could be adversely
affected if the computer systems used by WRIMCO and the Fund's other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. WRIMCO is taking steps that it believes are
reasonably designed to address year 2000 computer-related problems with respect
to the computer systems that it uses and to obtain assurances that comparable
steps are being taken by each Fund's other, major service providers. Although
there can be no assurances, WRIMCO believes that these steps will be sufficient
to avoid any adverse impact on each Fund. Similarly, the companies and other
issuers in which each Fund invests could be adversely affected by year 2000
computer-related problems, and there can be no assurance that the steps taken,
if any, by these issuers will be sufficient to avoid any adverse impact on the
Fund.
Each Fund may also be adversely affected by the conversion of certain
European currencies to the Euro. This conversion, which is under way, is
scheduled to be completed in 2002. However, problems with the conversion process
and delays could increase volatility in world capital markets and affect
European capital markets in particular.
14
<PAGE>
THE PROPOSED TRANSACTION
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction will be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, a form of which is
attached as Appendix A to this Proxy Statement.
The Reorganization Plan provides for (a) the acquisition by Asset
Strategy Fund on the Closing Date of the assets of Gold & Government Fund in
exchange solely for Asset Strategy Fund shares and the assumption by Asset
Strategy Fund of Gold & Government Fund's liabilities and (b) the distribution
of those Asset Strategy Fund shares to the shareholders of Gold & Government
Fund.
The assets of Gold & Government Fund to be acquired by Asset Strategy
Fund include all cash, cash equivalents, securities, receivables, claims and
rights of action, rights to register shares under applicable securities laws,
books and records, deferred and prepaid expenses shown as assets on Gold &
Government Fund's books, and all other property owned by Gold & Government Fund.
Asset Strategy Fund will assume from Gold & Government Fund all liabilities,
debts, obligations, and duties of Gold & Government Fund of whatever kind or
nature; provided, however, that Gold & Government Fund will use its best efforts
to discharge all of its known liabilities before the Closing Date. Asset
Strategy Fund will deliver its shares to Gold & Government Fund, which will
distribute the shares to Gold & Government Fund's shareholders.
The value of Gold & Government Fund's assets to be acquired by Asset
Strategy Fund and the NAV per Class A and Class Y share of the Asset Strategy
Fund shares to be exchanged for those assets will be determined as of the close
of regular trading on the New York Stock Exchange on the Closing Date
("Valuation Time"), using the valuation procedures described in each Fund's
then-current Prospectus and Statement of Additional Information. Gold &
Government Fund's net value shall be the value of its assets to be acquired by
Asset Strategy Fund, less the amount of Gold & Government Fund's liabilities, as
of the Valuation Time.
On, or as soon as practicable after, the Closing Date, Gold &
Government Fund will distribute PRO RATA to its shareholders of record the Asset
Strategy Fund shares it receives, by class, as of the effective time of the
Reorganization, so that each Gold & Government Fund shareholder will receive a
number of full and fractional Asset Strategy Fund shares of the corresponding
class or classes equal in aggregate value to the shareholder's holdings in Gold
& Government Fund. Gold & Government Fund will be terminated as soon as
practicable after the share distribution. The shares will be distributed by
opening accounts on the books of Asset Strategy Fund in the names of Gold &
Government Fund shareholders and by transferring to those accounts the shares of
each class previously credited to the account of Gold & Government Fund on those
books. Fractional shares in each class of Asset Strategy Fund will be rounded to
the third decimal place.
Because Asset Strategy Fund shares will be issued at NAV in exchange
for the net assets of Gold & Government Fund, the aggregate value of shares of
each class of Asset Strategy Fund issued to each Gold & Government Fund
15
<PAGE>
shareholder will equal the aggregate value of the shareholder's shares of the
corresponding class of Gold & Government Fund immediately prior to the
Reorganization. The NAV of Asset Strategy Fund will be unchanged by the
transaction. Thus, the Reorganization will not result in a dilution of any
shareholder's interest.
Any transfer taxes payable on the issuance of Asset Strategy Fund
shares in a name other than that of the registered Gold & Government Fund
shareholder will be paid by the person to whom those shares are to be issued as
a condition of the transfer. Any reporting responsibility of Gold & Government
Fund to a public authority will continue to be its responsibility until it is
dissolved.
The cost of the Reorganization, including professional fees and the
cost of soliciting proxies for the Special Meeting, consisting principally of
printing and mailing expenses, together with the cost of any supplementary
solicitation, will be divided equally between the Funds. The Board of each Fund
considered these expenses in approving the Reorganization and finding that the
Reorganization is in the best interests of its Fund.
The consummation of the Reorganization is subject to a number of
conditions set forth in the Reorganization Plan, some of which may be waived by
either Fund. In addition, the Reorganization Plan may be amended in any mutually
agreeable manner, except that no amendment may be made subsequent to the Special
Meeting that has a material adverse effect on the interests of Gold & Government
Fund's shareholders.
REASONS FOR THE REORGANIZATION
The Board of each Fund, including a majority of its Independent
Directors, has determined that the Reorganization is in the best interests of
its Fund, that the terms of the Reorganization are fair and reasonable, and that
the interests of its Fund's shareholders will not be diluted as a result of the
Reorganization.
In approving the Reorganization, each Board, including a majority of
its Independent Directors, considered a number of factors, including the
following:
(1) the compatibility of the Funds' investment goals, policies, and
restrictions;
(2) the effect of the Reorganization on the Funds' expected investment
performance;
(3) the effect of the Reorganization on the expense ratio of each Fund
relative to its current expense ratio;
(4) the costs to be incurred by each Fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) possible alternatives to the Reorganization, including whether
Gold & Government Fund could continue to operate on a stand-alone
basis or should be liquidated; and
(7) the potential benefits of the Reorganization to WRIMCO and to other
persons.
16
<PAGE>
The Reorganization was recommended to the Board of each Fund by WRIMCO.
In recommending the Reorganization, WRIMCO advised the Boards that the overall
fees of Asset Strategy Fund are lower than those of Gold & Government Fund. The
Boards considered the fact that Asset Strategy Fund has a better performance
record and that Gold & Government Fund has had more difficulty in attracting
assets than Asset Strategy Fund. The Boards also considered that Asset Strategy
Fund has broader investment strategies than Gold & Government Fund.
The Board of Gold & Government Fund considered that the Reorganization
would permit Gold & Government Fund shareholders to move into a new, broader
investment without undergoing a taxable transaction. Even though Asset Strategy
Fund can invest in bullion and gold-related stocks, the Board recognized,
however, that those Gold & Government Fund shareholders who wished to remain
invested in a narrowly-focused gold fund would be required to invest elsewhere,
which would be a taxable transaction.
The Board of Gold & Government Fund also considered that the
Reorganization would place the Gold & Government Fund shareholders in a fund
with a considerably lower expense ratio than Gold & Government Fund. WRIMCO
noted that Class A of the combined Fund would have a slightly higher expense
ratio than Class A of Asset Strategy Fund due to increases in transfer agency
costs, but stated its belief that Asset Strategy Fund as a whole would likely
benefit from having a larger, more stable asset base. The Board of each Fund
also consider that management proposed, in view of the greater benefit to Gold &
Government Fund shareholders, to divide the costs of the Reorganization equally
between the Funds, rather than to allocate those costs between the Funds on a
PRO RATA basis, which would impose a greater burden on Asset Strategy Fund
shareholders.
[Each Board also considered that, prior to the consummation of the
Reorganization, Gold & Government Fund would have losses, either from prior
periods or as a result of selling off all or a portion of its bullion positions,
that Asset Strategy Fund could use following the Reorganization to offset future
gains.]
The Gold & Government Fund Board also considered whether there were
other alternatives to the Reorganization. In particular, the Board considered
whether to liquidate the Fund. The Board determined to revisit that option if
Gold & Government Fund's shareholders reject the proposed Reorganization.
DESCRIPTION OF SECURITIES TO BE ISSUED
Asset Strategy Fund is registered with the SEC as an open-end
management investment company. Shares of Asset Strategy Fund entitle their
holders to one vote per full share and fractional votes for fractional shares
held.
Asset Strategy Fund does not hold annual meetings of shareholders.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless fewer than a majority of the Directors holding office have been
elected by shareholders, at which time the Directors then in office will call a
shareholders' meeting for the election of Directors. The Directors will call
annual or special meetings of shareholders for action by shareholder vote as may
be required by the 1940 Act or the Fund's Articles of Incorporation, or at their
discretion.
17
<PAGE>
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of Gold & Government Fund
might be construed as restricting its ability to carry out the Reorganization.
By approving the Reorganization Plan, Gold & Government Fund's shareholders will
be agreeing to waive, for the purpose of the Reorganization only, those
fundamental investment restrictions that could prohibit or otherwise impede the
transaction.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Gold & Government Fund's assets for Asset Strategy Fund
shares and Asset Strategy Fund's assumption of Gold & Government Fund's
liabilities is intended to qualify for federal income tax purposes as a tax-free
reorganization under Section 368(a)(1)(C) of the Code. The Funds will receive an
opinion of their counsel, Kirkpatrick & Lockhart LLP, substantially to the
effect that --
(1) Asset Strategy Fund's acquisition of Gold & Government
Fund's assets in exchange solely for Asset Strategy Fund shares and
Asset Strategy Fund's assumption of Gold & Government Fund's
liabilities, followed by Gold & Government Fund's distribution of those
shares PRO RATA to its shareholders constructively in exchange for
their Gold & Government Fund shares, will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Code, and each Fund
will be "a party to a reorganization" within the meaning of Section
368(b) of the Code;
(2) Gold & Government Fund will recognize no gain or loss on
the transfer to Asset Strategy Fund of its assets in exchange solely
for Asset Strategy Fund shares and Asset Strategy Fund's assumption of
Gold & Government Fund's liabilities or on the subsequent distribution
of those shares to Gold & Government Fund's shareholders in
constructive exchange for their Gold & Government Fund shares:
(3) Asset Strategy Fund will recognize no gain or loss on its
receipt of the transferred assets in exchange solely for Asset Strategy
Fund shares and its assumption of Gold & Government Fund's liabilities;
(4) Asset Strategy Fund's basis for the transferred assets
will be the same as the basis thereof in Gold & Government Fund's hands
immediately before the Reorganization, and Asset Strategy Fund's
holding period for those assets will include Gold & Government Fund's
holding period therefor;
(5) A Gold & Government Fund shareholder will recognize no
gain or loss on the constructive exchange of all its Gold & Government
Fund shares solely for Asset Strategy Fund shares pursuant to the
Reorganization; and
(6) A Gold & Government Fund shareholder's aggregate basis for
the Asset Strategy Fund shares to be received by it in the
Reorganization will be the same as the aggregate basis for its Gold &
Government Fund shares to be constructively surrendered in exchange for
those Asset Strategy Fund shares, and its holding period for those
Asset Strategy Fund shares will include its holding period for those
18
<PAGE>
Gold & Government Fund shares, provided they are held as capital assets
by the shareholder on the Closing Date.
The tax opinion may state that no opinion is expressed as to the effect
of the Reorganization on the Funds or any shareholder with respect to any asset
as to which any unrealized gain or loss is required to be recognized for federal
income tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting.
Shareholders of Gold & Government Fund should consult their tax
advisors regarding the effect, if any, of the Reorganization in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Reorganization, those shareholders also
should consult their tax advisors about state and local tax consequences, if
any, of the Reorganization.
CAPITALIZATION
The following table shows the capitalizations of Asset Strategy Fund
and Gold & Government Fund as of September 30, 1998 (unaudited) and on a PRO
FORMA combined basis (unaudited) as of September 30, 1998, giving effect to the
Reorganization as of that date, without reflecting any expenses of the
Reorganization:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ASSET STRATEGY FUND GOLD & GOVERNMENT FUND COMBINED FUND
(PRO FORMA)
Net Assets............................... $33,110,651 $ 14,144,419 $ 47,255,070
Net Asset Value Per Share................ $ 5.78 $6.65 $ 5.78
Shares Outstanding....................... 5,723,568 2,126,553 8,170,669
</TABLE>
ADDITIONAL INFORMATION ABOUT ASSET STRATEGY FUND
FINANCIAL HIGHLIGHTS
The table below provides selected per share data and ratios for one
Class A share and one Class Y share of Asset Strategy Fund for each of the
periods shown. This information is supplemented by the financial statements and
accompanying notes in Asset Strategy Fund's Annual Report to Shareholders for
the fiscal year ended September 30, 1998, which is incorporated by reference
into the Statement of Additional Information. This information has been audited
by Deloitte & Touche LLP, whose independent auditors' report is included in the
Annual Report to Shareholders, for the fiscal year ended September 30, 1998.
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CLASS A SHARE
For the Fiscal Year Ended For the Period
September 30, from 3/9/95*
through 9/30/95
---------------------------------------------------------
1998 1997 1996
PER SHARE DATA
Net Asset Value -
Beginning of Period $5.99 $5.24 $5.42 $5.00
----------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.15 0.16 0.15 0.07
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.28 0.74 (0.17) 0.40
----------------------------------------------------------
Total from Investment
Operations 0.43 0.90 (0.02) 0.47
----------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income (0.17) (0.15) (0.15) (0.05)
Distribution from Capital
Gains (0.47) (0.00) (0.00) (0.00)
In Excess of Capital Gains (0.00) (0.00) (0.01) (0.00)
----------------------------------------------------------
Total Distributions (0.64) (0.15) (0.16) (0.05)
----------------------------------------------------------
Net Asset Value - End of Period $5.78 $5.99 $5.24 $5.42
----------------------------------------------------------
Total Return** 7.89% 17.46% -0.49% 9.42%
===== ======
RATIOS
Net Assets - End of Period
($000 Omitted) $32,868 $28,221 $31,828 $22,248
Ratio of Expenses to Average
Net Assets (b) 1.62% 1.70% 1.68% 1.64%***
Ratio of Net Investment
Income (Loss) to Average
Net Assets (b) 2.45% 2.87% 2.93% 3.71%***
Portfolio Turnover Rate 230.09% 173.88% 91.06% 9.32%
* Commencement of operations
** Total return calculated without taking into account the sales load deducted on an initial purchase
*** Annualized
20
<PAGE>
CLASS Y SHARE
<S> <C> <C> <C> <C>
For the Fiscal Year Ended For the Period from
September 30, 9/27/95* through
9/30/95
--------------------------------------------------------
1998 1997 1996
PER SHARE DATA
Net Asset Value -
Beginning of Period $5.99 $5.24 $5.42 $5.41
--------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.16 0.17 0.16 0.00
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.29 0.75 (0.17) 0.01
--------------------------------------------------------
Total from Investment
Operations 0.45 0.92 (0.01) 0.01
--------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income (0.19) (0.17) (0.16) (0.00)
Distribution from Capital
Gains (0.47) (0.00) (0.00) (0.00)
In Excess of Capital Gains (0.00) (0.00) (0.01) (0.00)
-------------------------------------------------------
Total Distributions (0.66) (0.17) (0.17) (0.00)
-------------------------------------------------------
Net Asset Value - End of Period $5.78 $5.99 $5.24 $5.42
-------------------------------------------------------
Total Return 8.26% 17.93% -0.21% 0.18%
===== ======
RATIOS
Net Assets - End of Period
($000 Omitted) $243 $322 $330 $3
Ratio of Expenses to Average
Net Assets (b) 1.37% 1.28% 1.29% 0.00%
Ratio of Net Investment
Income (Loss) to Average 2.79% 3.29% 3.43% 0.00%
Net Assets (b)
Portfolio Turnover Rate 230.09% 173.88% 91.06% 9.32%**
* Commencement of operations
** Annualized
</TABLE>
21
<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE REORGANIZATION PROPOSAL
-----------------------------------------------------
OTHER BUSINESS
The Board knows of no other business to be brought before the Special
Meeting. If, however, any other matters properly come before the Special
Meeting, it is the intention that proxies that do not contain specific
instructions to the contrary will be voted on such matters in accordance with
the judgment of the persons designated in the proxies.
MISCELLANEOUS
AVAILABLE INFORMATION
Each Fund is subject to the information requirements of the Securities
Exchange Act of 1934 and the 1940 Act and, in accordance with those
requirements, files reports, proxy material, and other information with the SEC.
These reports, proxy material, and other information can be inspected and copied
at the Public Reference Room maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, the Midwest Regional office of the SEC, Northwest Atrium
Center, 500 West Madison Street, Suite 400, Chicago, Illinois 60611, and the
Northeast Regional Office of the SEC, Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20459 at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of Asset Strategy
Fund shares as part of the Reorganization have been passed upon by Asset
Strategy Fund's counsel, Kirkpatrick & Lockhart LLP.
EXPERTS
The audited financial statements of each Fund, incorporated herein by
reference and incorporated by reference or included in their respective
Statements of Additional Information, have been audited by Deloitte & Touche
LLP, independent auditors for the Funds, whose reports thereon are included in
the Funds' respective Annual Report to Shareholders for the fiscal year periods
ended September 30, 1998 with respect to Asset Strategy Fund and December 31,
1998 with respect to Gold & Government Fund. The financial statements audited by
Deloitte & Touche LLP have been incorporated herein by reference in reliance on
their reports given on their authority as experts in auditing and accounting
matters.
22
<PAGE>
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION
------------------------------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION AND TERMINATION ("Agreement") is
made as of April __, 1999, between United Gold & Government Fund, Inc., a
Maryland corporation ("Target"), and United Asset Strategy Fund, Inc., a
Maryland corporation ("Acquiring Fund"). (Acquiring Fund and Target are
sometimes referred to herein individually as a "Fund" and collectively as the
"Funds.")
This Agreement is intended to be, and is adopted as, a plan of a
reorganization described in section 368(a)(1)(C) of the Internal Revenue Code of
1986, as amended ("Code"). The reorganization will involve the transfer to
Acquiring Fund of Target's assets in exchange solely for voting shares of common
stock of Acquiring Fund, par value $0.01 per share ("Acquiring Fund Shares"),
and the assumption by Acquiring Fund of Target's liabilities, followed by the
constructive distribution of the Acquiring Fund Shares PRO RATA to the holders
of shares of common stock of Target ("Target Shares") in exchange therefor, all
on the terms and conditions set forth herein. The foregoing transactions are
referred to herein collectively as the "Reorganization."
Acquiring Fund Shares are currently divided into two classes, designated
Class A and Class Y shares ("Class A Acquiring Fund Shares" and "Class Y
Acquiring Fund Shares," respectively). The classes differ as follows:
(1) Class A Acquiring Fund Shares are offered at net asset value ("NAV")
plus a front-end sales charge ("FESC") and are subject to a service
fee ("Rule 12b-1 Fee"), at the annual rate of up to 0.25% of its
average daily net assets, imposed pursuant to a plan of distribution
adopted in accordance with Rule 12b-1 under the Investment Company
Act of 1940, as amended ("1940 Act"); and
(2) Class Y Acquiring Fund Shares are offered at NAV but are not subject
to either a FESC or a Rule 12b-1 Fee.
Target Shares also are divided into two classes, likewise designated Class A and
Class Y shares ("Class A Target Shares" and "Class Y Target Shares,"
respectively). Each class of Target Shares is substantially similar to the
correspondingly designated class of Acquiring Fund Shares.
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. PLAN OF REORGANIZATION AND TERMINATION
--------------------------------------
1.1. Target agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to Acquiring Fund.
Acquiring Fund agrees in exchange therefor --
(a) to issue and deliver to Target the number of full and fractional
(rounded to the third decimal place) (i) Class A Acquiring Fund
Shares determined by dividing the net value of Target (computed
as set forth in paragraph 2.1) ("Target Value") attributable to
the Class A Target Shares by the NAV (computed as set forth in
<PAGE>
paragraph 2.2) of a Class A Acquiring Fund Share, and (ii) Class
Y Acquiring Fund Shares determined by dividing the Target Value
attributable to the Class Y Target Shares by the NAV (as so
computed) of a Class Y Acquiring Fund Share; and
(b) to assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Target's books, and other property owned by Target at the
Effective Time (as defined in paragraph 3.1).
1.3. The Liabilities shall include (except as otherwise provided herein)
all of Target's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this Agreement.
Notwithstanding the foregoing, Target agrees to use its best efforts to
discharge all its known Liabilities before the Effective Time.
1.4. At or immediately before the Effective Time, Target shall declare
and pay to its shareholders a dividend and/or other distribution in an amount
large enough so that it will have distributed substantially all (and in any
event not less than 90%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and substantially all of its
realized net capital gain, if any, for the current taxable year through the
Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares received by it
pursuant to paragraph 1.1 to Target's shareholders of record, determined as of
the Effective Time (each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Target Shares. Such distribution shall be
accomplished by Acquiring Fund's transfer agent's opening accounts on Acquiring
Fund's share transfer books in the Shareholders' names and transferring such
Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with
the respective PRO RATA number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due that Shareholder, by class (I.E., the
account for a Shareholder of Class A Target Shares shall be credited with the
respective PRO RATA number of Class A Acquiring Fund Shares due that
Shareholder, and the account for a Shareholder of Class Y Target Shares shall be
credited with the respective PRO RATA number of Class Y Acquiring Fund Shares
due that Shareholder). All outstanding Target Shares, including any represented
by certificates, shall simultaneously be canceled on Target's share transfer
books. Acquiring Fund shall not issue certificates representing the Acquiring
Fund Shares issued in connection with the Reorganization.
1.6. As soon as reasonably practicable after distribution of the
Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within twelve
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months after the Effective Time, Target shall be terminated and any further
actions shall be taken in connection therewith as required by applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund Shares in
a name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
such Acquiring Fund Shares are to be issued, as a condition of such transfer.
2. VALUATION
---------
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a)
the value of the Assets computed as of the close of regular trading on the New
York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"),
using the valuation procedures set forth in Target's then-current prospectus and
statement of additional information ("SAI") less (b) the amount of the
Liabilities as of the Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund Share
shall be computed as of the Valuation Time, using the valuation procedures set
forth in Acquiring Fund's then-current prospectus and SAI.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of Waddell & Reed Investment Management Company
("WRIMCO").
3. CLOSING AND EFFECTIVE TIME
--------------------------
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal office on
June 30, 1999, or at such other place and/or on such other date as to which the
parties may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the close of business on the date thereof or at such
other time as to which the parties may agree ("Effective Time"). If, immediately
before the Valuation Time, (a) the NYSE is closed to trading or trading thereon
is restricted or (b) trading or the reporting of trading on the NYSE or
elsewhere is disrupted, so that accurate appraisal of the Target Value and the
NAV of an Acquiring Fund Share is impracticable, the Effective Time shall be
postponed until the first business day after the day when such trading shall
have been fully resumed and such reporting shall have been restored.
3.2. Target's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Target to Acquiring Fund, as
reflected on Acquiring Fund's books immediately following the Closing, does or
will conform to such information on Target's books immediately before the
Closing. Target's custodian shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Assets held by the custodian will be
transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes
in conjunction with the delivery of the Assets, including all applicable federal
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<PAGE>
and state stock transfer stamps, if any, have been paid or provision for payment
has been made.
3.3. Target shall deliver to Acquiring Fund at the Closing a list of the
names and addresses of the Shareholders and the number (by class) of outstanding
Target Shares owned by each Shareholder, all as of the Effective Time, certified
by the Secretary or Assistant Secretary of Target. Acquiring Fund's transfer
agent shall deliver at the Closing a certificate as to the opening on Acquiring
Fund's share transfer books of accounts in the Shareholders' names. Acquiring
Fund shall issue and deliver a confirmation to Target evidencing the Acquiring
Fund Shares (by class) to be credited to Target at the Effective Time or provide
evidence satisfactory to Target that such Acquiring Fund Shares have been
credited to Target's account on Acquiring Fund's books. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts, or other documents as the other party or its counsel may
reasonably request.
3.4. Each Fund shall deliver to the other at the Closing a certificate
executed in its name by its President or a Vice President in form and substance
satisfactory to the recipient and dated the Effective Time, to the effect that
the representations and warranties it made in this Agreement are true and
correct at the Effective Time except as they may be affected by the transactions
contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
4.1. Target represents and warrants as follows:
4.1.1. Target is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland; and a copy
of its Articles of Incorporation is on file with the Secretary of the
State of Maryland;
4.1.2. Target is duly registered as an open-end management
investment company under the 1940 Act, and such registration will be in
full force and effect at the Effective Time;
4.1.3. At the Closing, Target will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, Acquiring Fund will acquire
good and marketable title thereto;
4.1.4. Target's current prospectus and SAI conform in all material
respects to the applicable requirements of the Securities Act of 1933, as
amended ("1933 Act"), and the 1940 Act and the rules and regulations
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading;
4.1.5. Target is not in violation of, and the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, Maryland law or any
provision of Target's Articles of Incorporation or By-Laws or of any
agreement,
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instrument, lease, or other undertaking to which Target is a party or by
which it is bound or result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, judgment, or decree to
which Target is a party or by which it is bound, except as previously
disclosed in writing to and accepted by Acquiring Fund;
4.1.6. Except as otherwise disclosed in writing to and accepted by
Acquiring Fund, all material contracts and other commitments of or
applicable to Target (other than this Agreement and investment contracts,
including options, futures, and forward contracts) will be terminated, or
provision for discharge of any liabilities of Target thereunder will be
made, at or prior to the Effective Time, without either Fund's incurring
any liability or penalty with respect thereto and without diminishing or
releasing any rights Target may have had with respect to actions taken or
omitted or to be taken by any other party thereto prior to the Closing;
4.1.7. Except as otherwise disclosed in writing to and accepted by
Acquiring Fund, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or (to
Target's knowledge) threatened against Target that, if adversely
determined, would materially and adversely affect its financial condition
or the conduct of its business; Target knows of no facts that might form
the basis for the institution of any such litigation, proceeding, or
investigation and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially or adversely affects its business or its ability to consummate
the transactions contemplated hereby;
4.1.8. The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action on
the part of Target's board of directors, which has made the determinations
required by Rule 17a-8(a) under the 1940 Act; and, subject to approval by
Target's shareholders, this Agreement constitutes a valid and legally
binding obligation of Target, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
4.1.9. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Target's
shareholders;
4.1.10. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the Securities Exchange Act of
1934, as amended ("1934 Act"), or the 1940 Act for the execution or
performance of this Agreement by Target, except for (a) the filing with
the Securities and Exchange Commission ("SEC") of a registration statement
by Acquiring Fund on Form N-14 relating to the Acquiring Fund Shares
issuable hereunder, and any supplement or amendment thereto ("Registration
Statement"), including therein a prospectus/proxy statement ("Proxy
Statement"), and (b) such consents, approvals, authorizations, and filings
as have been made or received or as may be required subsequent to the
Effective Time;
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<PAGE>
4.1.11. On the effective date of the Registration Statement, at the
time of the shareholders' meeting referred to in paragraph 5.2, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act, and
the 1940 Act and the rules and regulations thereunder and (b) not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading; provided that the foregoing shall not apply to statements in
or omissions from the Proxy Statement made in reliance on and in
conformity with information furnished by Acquiring Fund for use therein;
4.1.12. The Liabilities were incurred by Target in the ordinary
course of its business; and there are no Liabilities other than
liabilities disclosed or provided for in Target's financial statements
referred to in paragraph 4.1.18 and liabilities incurred by Target in the
ordinary course of its business subsequent to December 31, 1998, or
otherwise previously disclosed to Acquiring Fund, none of which has been
materially adverse to the business, assets, or results of Target
operations;
4.1.13. Target qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable year
since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year; and it
has no earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it. The Assets shall be
invested at all times through the Effective Time in a manner that ensures
compliance with the foregoing;
4.1.14. Target is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
4.1.15. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers;
4.1.16. Target will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter;
4.1.17. Target's federal income tax returns, and all applicable
state and local tax returns, for all taxable years to and including the
taxable year ended December 31, 1997, have been timely filed and all taxes
payable pursuant to such returns have been timely paid; and
4.1.18. The financial statements of Target for the year ended
December 31, 1998, to be delivered to Acquiring Fund, fairly represent the
financial position of Target as of that date and the results of its
operations and changes in its net assets for the year then ended.
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<PAGE>
4.2. Acquiring Fund represents and warrants as follows:
4.2.1. Acquiring Fund is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the Secretary
of the State of Maryland;
4.2.2. Acquiring Fund is duly registered as an open-end management
investment company under the 1940 Act, and such registration will be in
full force and effect at the Effective Time;
4.2.3. Acquiring Fund has 1,000,000,000 authorized shares of common
stock, par value $0.01 per share, of which 5,682,000 shares were
outstanding, as of September 30, 1998. Because Acquiring Fund is an
open-end investment company engaged in the continuous offering and
redemption of its shares, the number of outstanding Acquiring Fund Shares
may change prior to the Effective Time;
4.2.4. No consideration other than Acquiring Fund Shares (and
Acquiring Fund's assumption of the Liabilities) will be issued in exchange
for the Assets in the Reorganization;
4.2.5. The Acquiring Fund Shares to be issued and delivered to
Target hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly and
validly issued and outstanding shares of Acquiring Fund, fully paid and
non-assessable;
4.2.6. Acquiring Fund's current prospectus and SAI conform in all
material respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations thereunder and do not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
4.2.7. Acquiring Fund is not in violation of, and the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby will not conflict with or violate, Maryland law or any
provision of Acquiring Fund's Articles of Incorporation or By-Laws or of
any provision of any agreement, instrument, lease, or other undertaking to
which Acquiring Fund is a party or by which it is bound or result in the
acceleration of any obligation, or the imposition of any penalty, under
any agreement, judgment, or decree to which Acquiring Fund is a party or
by which it is bound, except as previously disclosed in writing to and
accepted by Target;
4.2.8. Except as otherwise disclosed in writing to and accepted by
Target, no litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or (to
Acquiring Fund's knowledge) threatened against Acquiring Fund that, if
adversely determined, would materially and adversely affect Acquiring
Fund's financial condition or the conduct of its business; Acquiring Fund
knows of no facts that might form the basis for the institution of any
such litigation, proceeding, or investigation and is not a party to or
subject to the provisions of any order, decree, or judgment of any court
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or governmental body that materially or adversely affects its business or
its ability to consummate the transactions contemplated hereby;
4.2.9. The execution, delivery, and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action on
the part of Acquiring Fund's board of directors (together with Target's
board of directors, the "Boards"), which has made the determinations
required by Rule 17a-8(a) under the 1940 Act; and this Agreement
constitutes a valid and legally binding obligation of Acquiring Fund,
enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors' rights
and by general principles of equity;
4.2.10. No governmental consents, approvals, authorizations, or
filings are required under the 1933 Act, the 1934 Act, or the 1940 Act for
the execution or performance of this Agreement by Acquiring Fund, except
for (a) the filing with the SEC of the Registration Statement and (b) such
consents, approvals, authorizations, and filings as have been made or
received or as may be required subsequent to the Effective Time;
4.2.11. On the effective date of the Registration Statement, at the
time of the shareholders' meeting referred to in paragraph 5.2, and at the
Effective Time, the Proxy Statement will (a) comply in all material
respects with the applicable provisions of the 1933 Act, the 1934 Act, and
the 1940 Act and the rules and regulations thereunder and (b) not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading; provided that the foregoing shall not apply to statements in
or omissions from the Proxy Statement made in reliance on and in
conformity with information furnished by Target for use therein;
4.2.12. Acquiring Fund qualified for treatment as a RIC for each
past taxable year since it commenced operations and will continue to meet
all the requirements for such qualification for its current taxable year;
Acquiring Fund intends to continue to meet all such requirements for the
next taxable year; and it has no earnings and profits accumulated in any
taxable year in which the provisions of Subchapter M of the Code did not
apply to it;
4.2.13. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares
issued in the ordinary course of its business as an open-end investment
company; nor does Acquiring Fund have any plan or intention to redeem or
otherwise reacquire any Acquiring Fund Shares issued to the Shareholders
pursuant to the Reorganization, except to the extent it is required by the
1940 Act to redeem any of its shares presented for redemption at net asset
value in the ordinary course of that business;
4.2.14. Following the Reorganization, Acquiring Fund (a) will
continue Target's "historic business" (within the meaning of section
1.368-1(d)(2) of the Income Tax Regulations under the Code), (b) use a
significant portion of Target's historic business assets (within the
meaning of section 1.368-1(d)(3) of the Income Tax Regulations under the
Code) in a business, (c) has no plan or intention to sell or otherwise
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dispose of any of the Assets, except for dispositions made in the ordinary
course of that business and dispositions necessary to maintain its status
as a RIC, and (d) expects to retain substantially all the Assets in the
same form as it receives them in the Reorganization, unless and until
subsequent investment circumstances suggest the desirability of change or
it becomes necessary to make dispositions thereof to maintain such status;
4.2.15. There is no plan or intention for Acquiring Fund to be
dissolved or merged into another corporation or a business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the Code)
following the Reorganization;
4.2.16. Immediately after the Reorganization, (a) not more than 25%
of the value of Acquiring Fund's total assets (excluding cash, cash items,
and U.S. government securities) will be invested in the stock and
securities of any one issuer and (b) not more than 50% of the value of
such assets will be invested in the stock and securities of five or fewer
issuers;
4.2.17. Acquiring Fund does not own, directly or indirectly, nor at
the Effective Time will it own, directly or indirectly, nor has it owned,
directly or indirectly, at any time during the past five years, any shares
of Target;
4.2.18. Acquiring Fund's federal income tax returns, and all
applicable state and local tax returns, for all taxable years to and
including the taxable year ended September 30, 1997, have been timely
filed and all taxes payable pursuant to such returns have been timely
paid;
4.2.19. The financial statements of Acquiring Fund for the year
ended September 30, 1998, to be delivered to Target, fairly represent the
financial position of Acquiring Fund as of that date and the results of
its operations and changes in its net assets for the year then ended; and
4.2.20. If the Reorganization is consummated, Acquiring Fund will
treat each Shareholder that receives Acquiring Fund Shares in connection
with the Reorganization as having made a minimum initial purchase of
Acquiring Fund Shares for the purpose of making additional investments in
Acquiring Fund Shares, regardless of the value of the Acquiring Fund
Shares so received.
4.3. Each Fund represents and warrants as follows:
4.3.1. The aggregate fair market value of the Acquiring Fund
Shares, when received by the Shareholders, will be approximately equal to
the aggregate fair market value of their Target Shares constructively
surrendered in exchange therefor;
4.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Target Shares before the Reorganization to any person related
(within the meaning of section 1.368-1(e)(3) of the Income Tax Regulations
under the Code) to either Fund or (ii) any portion of the Acquiring Fund
Shares to be received by them in the Reorganization to any person related
(as so defined) to Acquiring Fund, (b) does not anticipate dispositions of
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those Acquiring Fund Shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of dispositions of
shares of Target as an open-end investment company, (c) expects that the
percentage of Shareholder interests, if any, that will be disposed of as a
result of or at the time of the Reorganization will be DE MINIMIS, and (d)
does not anticipate that there will be extraordinary redemptions of
Acquiring Fund Shares immediately following the Reorganization;
4.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
4.3.4. Immediately following consummation of the Reorganization,
Acquiring Fund will hold substantially the same assets and be subject to
substantially the same liabilities that Target held or was subject to
immediately prior thereto (in addition to the assets and liabilities
Acquiring Fund then held or was subject to), plus any liabilities and
expenses of the parties incurred in connection with the Reorganization;
4.3.5. The fair market value of the Assets on a going concern basis
will equal or exceed the Liabilities to be assumed by Acquiring Fund and
those to which the Assets are subject;
4.3.6. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount;
4.3.7. Pursuant to the Reorganization, Target will transfer to
Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the fair
market value of the net assets, and at least 70% of the fair market value
of the gross assets, held by Target immediately before the Reorganization.
For the purposes of this representation, any amounts used by Target to pay
its Reorganization expenses and to make redemptions and distributions
immediately before the Reorganization (except (a) redemptions not made as
part of the Reorganization and (b) distributions made to conform to its
policy of distributing all or substantially all of its income and gains to
avoid the obligation to pay federal income tax and/or the excise tax under
section 4982 of the Code) will be included as assets held thereby
immediately before the Reorganization;
4.3.8. None of the compensation received by any Shareholder who is
an employee of or service provider to Target will be separate
consideration for, or allocable to, any of the Target Shares held by such
Shareholder; none of the Acquiring Fund Shares received by any such
Shareholder will be separate consideration for, or allocable to, any
employment agreement, investment advisory agreement, or other service
agreement; and the consideration paid to any such Shareholder will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services;
4.3.9. Immediately after the Reorganization, the Shareholders will
not own shares constituting "control" of Acquiring Fund within the meaning
of section 304(c) of the Code; and
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4.3.10. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization (determined
in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1
C.B. 187) ("Reorganization Expenses").
5. COVENANTS
---------
5.1. Each Fund covenants to operate its respective business in the
ordinary course between the date hereof and the Closing, it being understood
that:
(a) such ordinary course will include declaring and paying customary
dividends and other distributions and such changes in operations
as are contemplated by each Fund's normal business activities;
and
(b) each Fund will retain exclusive control of the composition of
its portfolio until the Closing; provided that (1) Target shall
not dispose of more than an insignificant portion of its
historic business assets during such period without Acquiring
Fund's prior consent and (2) if Target's shareholders' approve
this Agreement (and the transactions contemplated hereby), then
between the date of such approval and the Closing, the Funds
shall coordinate their respective portfolios so that the
transfer of the Assets to Acquiring Fund will not cause it to
fail to be in compliance with all of its investment policies and
restrictions immediately after the Closing.
5.2. Target covenants to call a shareholders' meeting to consider and act
on this Agreement and to take all other action necessary to obtain approval of
the transactions contemplated hereby.
5.3. Target covenants that the Acquiring Fund Shares to be delivered
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in accordance with the terms hereof.
5.4. Target covenants that it will assist Acquiring Fund in obtaining
such information as Acquiring Fund reasonably requests concerning the beneficial
ownership of Target Shares.
5.5. Target covenants that its books and records (including all books and
records required to be maintained under the 1940 Act and the rules and
regulations thereunder) will be turned over to Acquiring Fund at the Closing.
5.6. Each Fund covenants to cooperate in preparing the Proxy Statement in
compliance with applicable federal securities laws.
5.7. Each Fund covenants that it will, from time to time, as and when
requested by the other Fund, execute and deliver or cause to be executed and
delivered all such assignments and other instruments, and will take or cause to
be taken such further action, as the other Fund may deem necessary or desirable
in order to vest in, and confirm to, (a) Acquiring Fund, title to and possession
A-11
<PAGE>
of all the Assets, and (b) Target, title to and possession of the Acquiring Fund
Shares to be delivered hereunder, and otherwise to carry out the intent and
purpose hereof.
5.8. Acquiring Fund covenants to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and such
state securities laws it may deem appropriate in order to continue its
operations after the Effective Time.
5.9. Subject to this Agreement, each Fund covenants to take or cause to
be taken all actions, and to do or cause to be done all things, reasonably
necessary, proper, or advisable to consummate and effectuate the transactions
contemplated hereby.
6. CONDITIONS PRECEDENT
--------------------
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made at
and as of the Effective Time, and (c) the following further conditions that, at
or before the Effective Time:
6.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by the Boards and shall have been approved by
Target's shareholders in accordance with applicable law.
6.2. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. The Registration Statement shall have become
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued, and the SEC shall not have issued an unfavorable
report with respect to the Reorganization under section 25(b) of the 1940 Act
nor instituted any proceedings seeking to enjoin consummation of the
transactions contemplated hereby under section 25(c) of the 1940 Act. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Fund to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained, except where
failure to obtain same would not involve a risk of a material adverse effect on
the assets or properties of either Fund, provided that either Fund may for
itself waive any of such conditions.
6.3. At the Effective Time, no action, suit, or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or to obtain damages or other relief in connection with,
the transactions contemplated hereby.
6.4. Target shall have received an opinion of Kirkpatrick & Lockhart LLP
substantially to the effect that:
6.4.1. Acquiring Fund is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland
with power under its Articles of Incorporation to own all its properties
A-12
<PAGE>
and assets and, to the knowledge of such counsel, to carry on its business
as presently conducted;
6.4.2. This Agreement (a) has been duly authorized, executed, and
delivered by Acquiring Fund and (b) assuming due authorization, execution,
and delivery of this Agreement by Target, is a valid and legally binding
obligation of Acquiring Fund, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
6.4.3. The Acquiring Fund Shares to be issued and distributed to
the Shareholders under this Agreement, assuming their due delivery as
contemplated by this Agreement, will be duly authorized and validly issued
and outstanding and fully paid and non-assessable;
6.4.4. The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not,
materially violate Acquiring Fund's Articles of Incorporation or By-Laws
or any provision of any agreement (known to such counsel, without any
independent inquiry or investigation) to which Acquiring Fund is a party
or by which it is bound or (to the knowledge of such counsel, without any
independent inquiry or investigation) result in the acceleration of any
obligation, or the imposition of any penalty, under any agreement,
judgment, or decree to which Acquiring Fund is a party or by which it is
bound, except as set forth in such opinion or as previously disclosed in
writing to and accepted by Target;
6.4.5. To the knowledge of such counsel (without any independent
inquiry or investigation), no consent, approval, authorization, or order
of any court or governmental authority is required for the consummation by
Acquiring Fund of the transactions contemplated herein, except such as
have been obtained under the 1933 Act, the 1934 Act, and the 1940 Act and
such as may be required under state securities laws;
6.4.6. Acquiring Fund is registered with the SEC as an investment
company, and to the knowledge of such counsel no order has been issued or
proceeding instituted to suspend such registration; and
6.4.7. To the knowledge of such counsel (without any independent
inquiry or investigation), (a) no litigation, administrative proceeding,
or investigation of or before any court or governmental body is pending or
threatened as to Acquiring Fund or any of its properties or assets and (b)
Acquiring Fund is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects its business, except as set forth in such
opinion or as otherwise disclosed in writing to and accepted by Target.
In rendering such opinion, such counsel may (1) rely, as to matters governed by
the laws of the State of Maryland, on an opinion of competent Maryland counsel,
(2) make assumptions regarding the authenticity, genuineness, and/or conformity
of documents and copies thereof without independent verification thereof, (3)
limit such opinion to applicable federal and state law, and (4) define the word
"knowledge" and related terms to mean the knowledge of attorneys then with such
A-13
<PAGE>
firm who have devoted substantive attention to matters directly related to this
Agreement and the Reorganization.
6.5. Acquiring Fund shall have received an opinion of Kirkpatrick &
Lockhart LLP substantially to the effect that:
6.5.1. Target is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland with power
under its Articles of Incorporation to own all its properties and assets
and, to the knowledge of such counsel, to carry on its business as
presently conducted;
6.5.2. This Agreement (a) has been duly authorized, executed, and
delivered by Target and (b) assuming due authorization, execution, and
delivery of this Agreement by Acquiring Fund, is a valid and legally
binding obligation of Target, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or
affecting creditors' rights and by general principles of equity;
6.5.3. The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not,
materially violate Target's Articles of Incorporation or By-Laws or any
provision of any agreement (known to such counsel, without any independent
inquiry or investigation) to which Target is a party or by which it is
bound or (to the knowledge of such counsel, without any independent
inquiry or investigation) result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, judgment, or decree to
which Target is a party or by which it is bound, except as set forth in
such opinion or as previously disclosed in writing to and accepted by
Acquiring Fund;
6.5.4. To the knowledge of such counsel (without any independent
inquiry or investigation), no consent, approval, authorization, or order
of any court or governmental authority is required for the consummation by
Target of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act, and the 1940 Act and such as
may be required under state securities laws;
6.5.5. Target is registered with the SEC as an investment company,
and to the knowledge of such counsel no order has been issued or
proceeding instituted to suspend such registration; and
6.5.6. To the knowledge of such counsel (without any independent
inquiry or investigation), (a) no litigation, administrative proceeding,
or investigation of or before any court or governmental body is pending or
threatened as to Target or any of its properties or assets and (b) Target
is not a party to or subject to the provisions of any order, decree, or
judgment of any court or governmental body that materially and adversely
affects Target's business, except as set forth in such opinion or as
otherwise disclosed in writing to and accepted by Acquiring Fund.
A-14
<PAGE>
In rendering such opinion, such counsel may (1) rely, as to matters governed by
the laws of the State of Maryland, on an opinion of competent Maryland counsel,
(2) make assumptions regarding the authenticity, genuineness, and/or conformity
of documents and copies thereof without independent verification thereof, (3)
limit such opinion to applicable federal and state law, and (4) define the word
"knowledge" and related terms to mean the knowledge of attorneys then with such
firm who have devoted substantive attention to matters directly related to this
Agreement and the Reorganization.
6.6. Each Fund shall have received an opinion of Kirkpatrick & Lockhart
LLP, addressed to and in form and substance satisfactory to it, as to the
federal income tax consequences mentioned below ("Tax Opinion"). In rendering
the Tax Opinion, such counsel may rely as to factual matters, exclusively and
without independent verification, on the representations made in this Agreement
(or in separate letters addressed to such counsel) and the certificates
delivered pursuant to paragraph 3.4. The Tax Opinion shall be substantially to
the effect that, based on the facts and assumptions stated therein, for federal
income tax purposes:
6.6.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares and Acquiring Fund's assumption of the
Liabilities, followed by Target's distribution of those shares PRO RATA to
the Shareholders constructively in exchange for the Shareholders' Target
Shares, will constitute a reorganization within the meaning of section
368(a)(1)(C) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
6.6.2. Target will recognize no gain or loss on the transfer to
Acquiring Fund of the Assets in exchange solely for Acquiring Fund Shares
and Acquiring Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive exchange
for their Target Shares;
6.6.3. Acquiring Fund will recognize no gain or loss on its receipt
of the Assets in exchange solely for Acquiring Fund Shares and its
assumption of the Liabilities;
6.6.4. Acquiring Fund's basis for the Assets will be the same as
the basis thereof in Target's hands immediately before the Reorganization,
and Acquiring Fund's holding period for the Assets will include Target's
holding period therefor;
6.6.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring Fund
Shares pursuant to the Reorganization; and
6.6.6. A Shareholder's aggregate basis for the Acquiring Fund
Shares to be received by it in the Reorganization will be the same as the
aggregate basis for its Target Shares to be constructively surrendered in
exchange for those Acquiring Fund Shares, and its holding period for those
Acquiring Fund Shares will include its holding period for those Target
Shares, provided they are held as capital assets by the Shareholder at the
Effective Time.
Notwithstanding subparagraphs 6.6.2 and 6.6.4, the Tax Opinion may state that no
opinion is expressed as to the effect of the Reorganization on the Funds or any
A-15
<PAGE>
Shareholder with respect to any asset as to which any unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a mark-to-market
system of accounting.
At any time before the Closing, either Fund may waive any of the foregoing
conditions (except that set forth in paragraph 6.1) if, in the judgment of its
Board, such waiver will not have a material adverse effect on its Fund's
shareholders' interests.
7. BROKERAGE FEES AND EXPENSES
---------------------------
7.1. Each Fund represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
7.2. Except as otherwise provided herein, Reorganization Expenses will be
borne 50% by each Fund.
8. ENTIRE AGREEMENT; NO SURVIVAL
-----------------------------
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
9. TERMINATION OF AGREEMENT
------------------------
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Target's shareholders:
9.1. By either Fund (a) in the event of the other Fund's material breach
of any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before December 31, 1999; or
9.2. By the parties' mutual agreement.
In the event of termination under paragraphs 9.1(c) or 9.2, there shall be no
liability for damages on the part of either Fund, or its directors or officers,
to the other Fund.
10. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Target's shareholders, in such manner as may
be mutually agreed upon in writing by the parties; provided that following such
approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
A-16
<PAGE>
11. MISCELLANEOUS
-------------
11.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
11.2. Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
11.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each Fund and delivered to
the other party hereto. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
ATTEST: United Gold & Government Fund, Inc.
By:
- ---------------------- -------------------------------
Secretary Senior Vice President
ATTEST: United Asset Strategy Fund, Inc.
By:
- ---------------------- -------------------------------
Secretary Senior Vice President
A-17
<PAGE>
UNITED ASSET STRATEGY FUND, INC.
UNITED GOLD & GOVERNMENT FUND, INC.
6300 Lamar Avenue
Overland Park, Kansas 66202
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates specifically to the
proposed Reorganization whereby United Asset Strategy Fund, Inc. ("Asset
Strategy Fund") would acquire the assets of United Gold & Government Fund, Inc.
("Gold & Government Fund") in exchange solely for shares of Asset Strategy Fund
and the assumption by Asset Strategy Fund of all of Gold & Government Fund's
liabilities. This Statement of Additional Information consists of this cover
page, the pro forma financial statements of Asset Strategy Fund (giving effect
to the Reorganization) for the fiscal year ended September 31, 1998, and the
following described documents, each of which is incorporated by reference
herein:
(1) The Statement of Additional Information of Asset Strategy
Fund, dated January 31, 1999.
(2) The Statement of Additional Information of Gold & Government
Fund, dated April 15, 1999.
(3) The Annual Report to Shareholders of Asset Strategy Fund for
the fiscal year ended September 30, 1998.
(4) The Annual Report to Shareholders of Gold & Government Fund
for the fiscal year ended December 31, 1998.
This Statement of Additional Information is not a prospectus and should
be read only in conjunction with the Proxy Statement dated [May __, 1999]
relating to the above-referenced matter. A copy of the Proxy Statement may be
obtained by calling toll-free 1-800-366-5465. This Statement of Additional
Information is dated [May __, 1999.]
<TABLE>
<CAPTION>
UNITED ASSET STRATEGY FUND, INC.
UNITED GOLD & GOVERNMENT FUND, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR SEPTEMBER 30, 1998
(UNAUDITED)
The following unaudited Pro Forma Combined Statement of Assets and Liabilities, including the unaudited Pro Forma Combined
Investments, of United Asset Strategy Fund, Inc. and United Gold & Government Fund, Inc. as of September 30, 1998 has been derived
from the respective statements of assets and liabilities, including the schedules of investments, of United Asset Strategy Fund,
Inc. and United Gold & Government Fund, Inc. as of September 30, 1998. The Pro Forma Combined Statement of Assets and Liabilities
does not reflect the expense of Reorganization of either fund.
The Pro Forma combined Statement of Assets and Liabilities is presented for informational purposes only and does not purport to be
indicative of the financial condition that would have resulted if the Reorganization had been consummated on September 30, 1998. The
unaudited Pro Forma Financial Statements should be read in conjunction with the respective financial statements and related notes of
United Asset Strategy Fund, Inc. and United Gold & Government Fund, Inc. incorporated by reference in this Statement of Additional
Information.
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- ------------------------------------------ -------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
BULLION
5,017 5,017 Gold $ 1,487,140 $ 1,487,140
(Cost: $1,473,593)
COMMON STOCKS AND WARRANTS
Business Services
11,100 11,100 Cerner Corporation* $ 296,578 296,578
Chemicals and Allied Products
SEE NOTES TO PRO FORMA COMBINED INVESTMENTS ON PAGE.
<PAGE>
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- -------------------------------------------- ----------------------------------------------------
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
9,300 9,300 Lilly (Eli) and Company 728,306 728,306
2,700 2,700 Merck & Co., Inc. 349,819 349,819
11,500 11,500 Monsanto Company 648,312 648,312
9,300 9,300 Warner-Lambert Company 702,150 702,150
Total 2,428,587 2,428,587
COMMUNICATION
6,100 6,100 Cox Communications, Inc.,
Class A* 333,213 333,213
7,600 7,600 MediaOne Group, Inc.* 337,725 337,725
9,450 9,450 SBC Communications Inc. 419,934 419,934
Total 1,090,872 1,090,872
ELECTRIC, GAS AND SANITARY SERVICES
24,400 24,400 Allied Waste Industries,
Inc. New* 571,112 571,112
8,100 8,100 Duke Energy Corp. 536,119 536,119
Total 1,107,231 1,107,231
GENERAL MERCHANDISE STORES
5,000 5,000 Wal-Mart Stores, Inc. 273,125 273,125
GOLD - CANADA
80,000 80,000 Agnico-Eagle Mines Limited 340,000 340,000
9,450 32,000 41,450 Barrick Gold Corporation 189,000 640,000 829,000
98,100 98,100 Cambior Inc. 588,446 588,446
Euro-Nevada Mining
37,400 37,400 Corporation Limited 619,084 619,084
Franco-Nevada Mining
23,200 23,200 Corporation Limited 482,129 482,129
SEE NOTES TO PRO FORMA COMBINED INVESTMENTS ON PAGE.
2
<PAGE>
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- ------------------------------------- -----------------------------------------------
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
GOLD - CANADA (CONTINUED)
30,000 30,000 Goldcorp Inc., Class A* 154,386 154,386
188,900 188,900 Greenstone Resources Ltd.* 335,596 335,596
110,000 110,000 Kinross Gold Corporation* 332,437 332,437
50,000 50,000 Placer Dome Inc. 690,625 690,625
140,000 140,000 Repadre Capital Corporation* 298,282 298,282
200,000 200,000 TVX Gold, Inc.* 537,500 537,500
195,000 195,000 Vengold Inc.* 164,907 164,907
Total 189,000 5,183,392 5,372,392
GOLD - UNITED STATES
30,000 30,000 Battle Mountain Gold Company 181,875 181,875
25,100 25,100 Getchell Gold Corporation* 528,669 528,669
14,175 45,000 59,175 Homestake Mining Company 171,872 545,625 717,497
7,560 28,000 35,560 Newmont Mining Corporation 183,330 679,000 862,330
Total 355,202 1,935,169 2,290,371
HEALTH SERVICES
10,000 10,000 Quorum Health Group, Inc.* 162,500 162,500
8,700 8,700 Tenet Healthcare Corporation* 250,125 250,125
Total 412,625 412,625
SEE NOTES TO PRO FORMA COMBINED INVESTMENTS ON PAGE .
3
<PAGE>
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- ----------------------------------------- ----------------------------------------------
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
INSTRUMENTS AND RELATED PRODUCTS
6,100 6,100 Medtronic, Inc. 353,038 353,038
MISCELLANEOUS METAL MINING
12,000 12,000 Rio Tinto plc, ADR 588,000 588,000
Freeport-McMoRan Copper &
40,000 40,000 Gold Inc. 475,000 475,000
500 500 Stillwater Mining Company* 15,781 15,781
Total 1,078,781 1,078,781
MISCELLANEOUS RETAIL
6,000 6,000 Costco Companies, Inc.* 284,250 284,250
MOTION PICTURES
3,900 3,900 Time Warner Incorporated 341,494 341,494
NONDEPOSITORY INSTITUTIONS
8,600 8,600 Fannie Mae 552,550 552,550
REAL ESTATE
24,100 24,100 ElderTrust 352,462 352,462
STONE, CLAY AND GLASS PRODUCTS
294,400 294,400 Geomaque Explorations Ltd.* 308,798 308,798
Geomaque Explorations Ltd.,
25,000 25,000 Warrants* 328 328
Total 309,126 309,126
TOTAL COMMON STOCKS
& WARRANTS $ 8,037,014 $ 8,506,468 $16,543,482
(Cost: $14,968,508)
SEE NOTES TO PRO FORMA COMBINED INVESTMENTS ON PAGE .
4
<PAGE>
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- ------------------------------------- ----------------------------------------------------
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
PREFERRED STOCKS
GOLD - UNITED STATES
Battle Mountain Gold Company, $3.25,
10,000 10,000 Convertible 439,375 439,375
Hecla Mining Company, 7.0%,
8,000 8,000 Convertible 336,000 336,000
10,000 10,000 Kinam Gold Inc. 3.75% Convertible 427,500 427,500
TOTAL PREFERRED STOCKS --- $ 1,202,875 $ 1,202,875
(Cost: $1,358,954)
CORPORATE DEBT SECURITY
INDUSTRIAL MACHINERY AND EQUIPMENT
Tyco International Ltd.,
$500 $500 6.5%, 11-1-2001 $ 518,405 $--- $ 518,405
(Cost: $495,988)
UNITED STATES
GOVERNMENT SECURITIES
Federal Home Loan
Banks:
500 500 6.38%, 4-29-2003 500,545 500,545
500 500 6.2%, 2-27-2004 500,445 500,445
500 500 6.225%, 2-27-2004 502,345 502,345
500 500 6.57%, 2-11-2005 502,890 502,890
500 500 6.245%, 9-22-2005 502,580 502,580
500 500 6.02%, 3-30-2006 501,405 501,405
500 500 6.75%, 2-5-2008 502,655 502,655
500 500 6.75%, 2-12-2008 502,810 502,810
Federal Home Loan Mortgage
Corporation,
5,000 5,000 6.5%, 2-15-2023
(Interest only) 729,900 729,900
SEE NOTES TO PRO FORMA COMBINED INVESTMENTS ON PAGE.
5
<PAGE>
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- ---------------------------------------- ----------------------------------------------------
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
United States Treasury:
7,250 7,250 5.625%, 12-31-2002 7,603,438 7,603,438
5,000 5,000 6.125%, 8-15-2007 5,596,850 5,596,850
$2,000 2,000 7.875%, 2-15-2021 2,698,740 2,698,740
TOTAL UNITED STATES GOVERNMENT
SECURITIES $17,945,863 $ 2,698,740 $20,644,603
(Cost: $20,164,717)
SHORT-TERM SECURITIES
COMMERCIAL PAPER
ENGINEERING AND MANAGEMENT SERVICES
Halliburton Co.,
1,200 1,200 5.52%, 10-16-98 1,197,240 1,197,240
FABRICATED METAL PRODUCTS
Danaher Corporation,
389 389 5.3438%, Master Note 389,000 389,000
Snap-On Inc.,
1,500 1,500 5.51%, 10-15-98 1,496,786 1,496,786
Total 1,885,786 1,885,786
FOOD AND KINDRED PRODUCTS
General Mills, Inc.,
547 547 5.1988%, Master Note 547,000 547,000
SEE NOTES TO PRO FORMA COMBINED INVESTMENTS ON PAGE.
6
<PAGE>
PRO FORMA COMBINED INVESTMENTS OF
UNITED ASSET STRATEGY FUND, INC. AND
UNITED GOLD & GOVERNMENT FUND, INC.
SEPTEMBER 30, 1998
(Unaudited)
TROY OUNCES, SHARES OR
PRINCIPAL AMOUNT (000 OMITTED) VALUE
- --------------------------------------- ----------------------------------------------------
ASSET GOLD & PRO FORMA ASSET GOLD & PRO FORMA
STRATEGY GOVERNMENT COMBINED STRATEGY GOVERNMENT COMBINED
PERSONAL SERVICES
Block Financial Corp.,
2,275 2,275 5.48%, 10-30-98 2,264,957 2,264,957
TOTAL COMMERCIAL PAPER 5,894,983
REPURCHASE AGREEMENT
J.P. Morgan Securities, 5.15%
Repurchase Agreement dated
9-30-98, to be repurchased
260 260 at $260,037 on 10-1-98** 260,000 260,000
TOTAL SHORT-TERM
SECURITIES $5,894,983 $ 260,000 $ 6,154,983
(Cost: $6,154,983)
TOTAL INVESTMENT
SECURITIES $32,396,265 $14,155,223 $46,551,488
(Cost: $44,616,743)
CASH AND OTHER ASSETS, NET OF
LIABILITIES 703,582
NET ASSETS $47,255,070
NOTES TO PRO FORMA COMBINED INVESTMENTS
*No income dividends were paid during the preceding 12 months.
**Collateralized by $265,399 U.S. Treasury Notes, 8.5% due 2-15-2020 market value and accrued interest aggregate $267,463.
7
<PAGE>
UNITED ASSET STRATEGY FUND, INC. AND UNITED GOLD & GOVERNMENT FUND, INC.
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
(Unaudited)
Pro Forma
Asset Gold & for Combined
Strategy Government Adjustments Fund
-------- ---------- ----------- --------
ASSETS
Investment securities -- at value
(Notes 1 and 4) ........................................ $32,396,265 $14,155,223 $46,551,488
Cash ...................................................... 2,561 713 3,274
Receivables:
Investment securities sold ............................. 429,668 --- 429,668
Dividends and interest ................................. 227,000 34,897 261,897
Fund shares sold ....................................... 142,668 1,125 143,793
Unamortized organization
expenses (Note 2) ...................................... 14,859 --- 14,859
Prepaid insurance premium ................................. 1,199 510 1,709
---------- ----------- ------- -----------
Total assets ......................................... 33,214,220 14,192,468 47,406,688
---------- ----------- ------- -----------
LIABILITIES
Payable to Fund shareholders .............................. 69,560 30,559 100,119
Organization expenses payable ............................. 14,859 --- 14,859
Accrued transfer agency and dividend
disbursing (Note 3) .................................... 8,359 10,268 18,627
Accrued service fee (Note 3) .............................. 6,900 --- 6,900
Accrued accounting services
fee(Note 3)............................................ 1,667 833 2,500
Accrued management fee (Note 3) ........................... 627 269 896
Other liabilities ......................................... 1,597 6,120 7,717
---------- ----------- ------- -----------
Total liabilities .................................... 103,569 48,049 151,618
---------- ----------- ------- -----------
Total net assets .................................. $33,110,651 $14,144,419 $47,255,070
=========== =========== ======= ===========
NET ASSETS
Par value capital stock Asset Strategy -
$0.01, Gold & Government - $1.00
Capital stock ........................................... $ 57,236 2,126,553 (2,102,082)** 81,707
Additional paid-in capital .............................. 30,138,355 28,994,932 2,102,082 61,235,369
8
<PAGE>
Accumulated undistributed income:
Accumulated undistributed net
investment income .................................... 28,639 31,749 60,388
Accumulated undistributed net
realized gain (loss) on
investment transactions .............................. 1,411,136 (17,468,275) (16,057,139)
Net unrealized appreciation in
value of investments ................................. 1,475,285 459,460 1,934,745
---------- ----------- ------- -----------
Net assets applicable to outstanding
units of capital .................................. $33,110,651 $14,144,419 $47,255,070
========== =========== ======= ===========
Net asset value per share (net
assets divided by shares outstanding)
Class A ................................................... $5.78 $6.65 $5.78
Class Y ................................................... $5.78 $6.68 $5.78
Capital shares outstanding
Class A ................................................... 5,681,661 2,110,583
Class Y ................................................... 41,907 16,045
Capital shares authorized .................................... 1,000,000,000 100,000,000 1,000,000,000
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
9
<PAGE>
UNITED ASSET STRATEGY FUND, INC. AND UNITED GOLD & GOVERNMENT FUND, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Fiscal Year Ended SEPTEMBER 30, 1998
(UNAUDITED)
The following unaudited Pro Forma Combined Statement of Operations for United Asset Strategy Fund, Inc. and United Gold & Government
Fund, Inc. has been derived from the Statements of Operations of United Asset Strategy Fund, Inc. and United Gold & Government Fund,
Inc. for the fiscal year ended September 30, 1998. Such information has been adjusted to give effect to the Reorganization as if it
had occurred on October 1, 1997, and reflects Pro Forma adjustments that are directly attributable to the transaction and are
expected to have a continuing impact. The Pro Forma Combined Statement of Operations does not reflect the expenses of the
Reorganization of either fund. Such amount is estimated to be approximately $56,000.
The unaudited Pro Forma Statement of Operations is presented for informational purposes only and does not purport to be indicative
of the results of operations that would have occurred if the Reorganization had been consummated on October 1, 1997. The unaudited
Pro Forma Financial Statements should be read in conjunction with the financial statements and related notes of the respective funds
incorporated by reference in this Statement of Additional Information.
PRO FORMA
ASSET GOLD & FOR COMBINED
STRATEGY GOVERNMENT ADJUSTMENTS FUND
-------- ---------- ----------- --------
INVESTMENT INCOME
Income (Note 1B):
Interest and amortization .............................. $1,099,760 $ 424,544 $1,524,304
Dividends .............................................. 124,900 109,773 234,673
---------- ----------- ------- -----------
Total income ......................................... 1,224,660 534,317 1,758,977
---------- ----------- ------- -----------
Expenses (Notes 2 and 3):
Investment management fee .............................. 208,147 113,891 322,038
Transfer agency and dividend
disbursing - Class A.................................. 82,468 121,106 2,700* 206,274
Service fee - Class A .................................. 71,998 39,159 111,157
Registration fees ...................................... 29,061 27,586 (27,000)* 29,647
Accounting services fee ................................ 20,000 10,000 (10,000)* 20,000
Audit fees ............................................. 11,635 10,740 (10,000)* 12,375
Amortization of organization
expenses ............................................. 9,907 --- 9,907
10
<PAGE>
Custodian fees ......................................... 6,686 10,792 17,478
Legal fees ............................................. 2,444 2,623 5,067
Distribution fee - Class A ............................. 747 819 1,566
Report Printing......................................... 37,467 28,778 (27,000)* 39,245
Other .................................................. 6,302 4,578 10,880
---------- ----------- ------- -----------
Total expenses ....................................... 486,862 370,072 (71,300) 785,634
---------- ----------- ------- -----------
Net investment income ............................. 737,798 164,245 71,300 973,343
---------- ----------- ------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1)
Realized net gain (loss)on
securities ............................................. 2,287,537 (2,823,754) (536,217)
Realized net gain (loss) on foreign
currency transactions .................................. (3,615) 5,956 2,341
---------- ----------- ------- -----------
Realized net gain (loss) on
investments .......................................... 2,283,922 (2,817,798) (533,876)
Unrealized depreciation in value of
investments during the period .......................... (750,325) (341,061) (1,091,386)
---------- ----------- ------- -----------
Net gain (loss) on investments........................ 1,533,597 (3,158,859) (1,625,262)
---------- ----------- ------- -----------
Net increase (decrease) in
net assets resulting
from operations ................................ $2,271,395 $(2,994,614) $71,300 $ (651,919)
========== ============ ====== ===========
*REFLECTS THE ANTICIPATED NET SAVINGS AS A RESULT OF THE REORGANIZATION.
**NET ISSUANCE OF SHARES OF UNITED ASSET STRATEGY FUND TO THE HOLDERS OF SHARES OF UNITED GOLD & GOVERNMENT FUND.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
11
<PAGE>
UNITED ASSET STRATEGY FUND, INC. AND UNITED GOLD & GOVERNMENT FUND, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Unaudited)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
United Asset Strategy Fund, Inc. and United Gold & Government Fund, Inc. (the "Funds") are registered under the Investment Company
Act of 1940 as diversified, open-end management investment companies. United Asset Strategy Fund's investment objective is to
provide a high total return with reduced risk over the long term through investments in stocks, bonds and short-term instruments.
United Gold & Government Fund's investment objective is to seek a high total return through investments in precious metals,
minerals-related securities or U.S. Government Securities. The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of the pro forma conbined financial statements. The policies are in conformity
with generally accepted accounting principles.
A. Security valuation -- Each stock and convertible bond is valued at the latest sale price thereof on the last business day of
the fiscal period as reported by the principal securities exchange on which the issue is traded or, if no sale is reported
for a stock, the average of the latest bid and asked prices. Bonds, other than convertible bonds, are valued using a pricing
system provided by a pricing service or dealer in bonds. Convertible bonds are valued using this pricing system only on days
when there is no sale reported. Stocks which are traded over-the-counter are priced using the Nasdaq Stock Market, which
provides information on bid and asked prices quoted by major dealers in such stocks. Gold and silver bullion are valued at
the last spot settlement price for current delivery as calculated by the Commodity Exchange, Inc. as of the close of that
exchange. Platinum bullion is valued at the last spot settlement price for current delivery as calculated by the New York
Mercantile Exchange as of the close of that exchange. Restricted securities and securities for which market quotations are
not readily available are valued at fair value as determined in good faith under procedures established by and under the
general supervision of the Funds' Board of Directors. Short-term debt securities are valued at amortized cost, which
approximates market.
B. Security transactions and related investment income -- Security transactions are accounted for on the trade date (date the
order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Original issue
discount (as defined in the Internal Revenue Code), premiums on the purchase of bonds and post-1984 market discount are
amortized for both financial and tax reporting purposes. Dividend income is recorded on the ex-dividend date except that
certain dividends from foreign securities are recorded as soon as the respective fund is informed of the ex-dividend date.
Interest income is recorded on the accrual basis.
12
<PAGE>
C. Foreign currency translations -- All assets and liabilities denominated in foreign currencies are translated into U.S.
dollars daily. Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of
exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities and
bullion, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency
exchange rates. The respective fund combines fluctuations from currency exchange rates and fluctuations in market value when
computing net realized and unrealized gain or loss from investments.
D. Federal income taxes -- It is the Funds' policy to distribute all of its taxable income and capital gains to its shareholders
and otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, the
Funds intends to pay distributions as required to avoid imposition of excise tax. Accordingly, provision has not been made
for Federal income taxes.
The preparation of pro forma combined financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
NOTE 2 -- ORGANIZATION
United Asset Strategy Fund, a Maryland corporation, was organized on August 25, 1994 and was inactive (except for matters
relating to its organization and registration as an investment company under the Investment Company Act of 1940 and the registration
of its shares under the Securities Act of 1933) until March 9, 1995 (the date of the initial public offering).
On February 23, 1995, Waddell & Reed, Inc. ("W&R") purchased for investment 20,000 shares of the United Asset Strategy Fund
at their net asset value of $5.00 per share.
United Asset Strategy Fund's organizational expenses in the amount of $49,530 were advanced to it by W&R and are an
obligation to be paid by it. These expenses are being amortized and are payable evenly over 60 months following the date of the
initial public offering. In the event that all or a part of W&R's initial investment in United Asset Strategy Fund's shares is
redeemed prior to the full reimbursement of these organizational expenses, the United Asset Strategy Fund's obligation to make
further reimbursement will cease.
NOTE 3 -- INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS
The Funds pays a fee for investment management services. The fee is computed daily based on the net asset value at the close
of business. The fee consists of two elements: (i) a "Specific" fee computed on net asset value as of the close of business each day
at the annual rate of .30% of net assets for each of the two funds and (ii) a "Group" fee computed each day on the combined net
asset values of all of the funds in the United Group of mutual funds (approximately $18.9 billion of combined net assets at
13
<PAGE>
September 30, 1998) at annual rates of .51% of the first $750 million of combined net assets, .49% on that amount between $750
million and $1.5 billion, .47% between $1.5 billion and $2.25 billion, .45% between $2.25 billion and $3 billion, .43% between $3
billion and $3.75 billion, .40% between $3.75 billion and $7.5 billion, .38% between $7.5 billion and $12 billion, and .36% of that
amount over $12 billion. Both Funds accrue and pay this fee daily.
Pursuant to assignment of the Investment Management Agreement between the Funds and W&R, Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly owned subsidiary of W&R, serves as the Funds' investment manager.
The Funds have an Accounting Services Agreement with Waddell & Reed Services Company ("WARSCO"), a wholly owned subsidiary of
W&R. Under the agreement, WARSCO acts as the agent in providing accounting services and assistance to the Funds and pricing daily
the value of shares of the Funds. For these services, the Funds pay WARSCO a monthly fee of one-twelfth of the annual fee shown in
the following table.
ACCOUNTING SERVICES FEE
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
For Class A shares, the Funds also pay WARSCO a monthly per account charge for transfer agency and dividend disbursement
services of $1.3125 for each shareholder account which was in existence at any time during the prior month, plus $0.30 for each
account on which a dividend or distribution of cash or shares had a record date in that month. With respect to Class Y shares, the
Funds pay WARSCO a monthly fee at an annual rate of .15% of the average daily net assets of the class for the preceding month. The
Funds also reimburse W&R and WARSCO for certain out-of-pocket costs.
As principal underwriter for the Funds' shares, W&R received gross sales commissions for Class A shares (which are not an
expense of the Funds) of $215,190 and $ 28,353 for United Asset Strategy Fund and United Gold & Government Fund, respectively, out
14
<PAGE>
of which W&R paid sales commissions of $123,799 and $15,954 for United Asset Strategy Fund and United Gold & Government Fund,
respectively, and all expenses in connection with the sale of the Funds' shares, except for registration fees and related expenses.
Under a Distribution and Service Plan for Class A shares adopted by the Funds pursuant to Rule 12b-1 under the Investment
Company Act of 1940, the Funds may pay monthly a distribution and/or service fee to W&R in an amount not to exceed .25% of the
Funds' respective Class A average annual net assets. The fee is to be paid to reimburse W&R for amounts it expends in connection
with the distribution of the Class A shares and/or provision of personal services to Funds shareholders and/or maintenance of
shareholder accounts.
The Funds paid Directors' fees of $1,037 and $627 for United Asset Strategy Fund and United Gold & Government Fund,
respectively, which are included in other expenses.
W&R is a subsidiary of Waddell & Reed Financial, Inc., a holding company, and a direct subsidiary of Waddell & Reed Financial
Services, Inc., a holding company.
15
</TABLE>
REGISTRATION STATEMENT
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Reference is made to Article X of the Articles of Incorporation of
Registrant filed December 1, 1998 as EX-99.B1-charter to Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A, Article IX of the
By-Laws, filed December 27, 1996 as EX-99.B2-asbylaws as Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A, and to Article II of
the Underwriting Agreement, filed July 14, 1994 as EX-99.B6-asua to
Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A, each
of which provides indemnification. Also refer to Section 2-418 of the Maryland
General Corporation Law regarding indemnification of directors, officers,
employees and agents.
Item 16. Exhibits
--------
(1) (a) Articles of Incorporation, filed October 3, 1994 as
EX-99.B1-asarticles to the initial Registration Statement on
Form N-1A.*
(b) Articles Supplementary, filed December 28, 1995 as
EX-99.B1-asartsup to Post- Effective Amendment No. 3 to the
Registration Statement on Form N-1A.*
(2) By-Laws, filed December 27, 1996 as EX-99.B2-asbylaws to
Post-Effective Amendment No. 4 to the Registration Statement
on Form N-1A.*
(3) Voting trust agreement - not applicable.
(4) Form of Agreement and Plan of Reorganization and Termination
is attached hereto as Appendix A to the Prospectus/Proxy
Statement.
(5) Instruments Defining the Rights of Shareholders - not
applicable.
(6) Investment Management Agreement, filed October 3, 1994 as
EX-99.B5-asima to the initial Registration Statement on Form
N-1A.*
(7) Underwriting Agreement, filed March 7, 1995 as EX-99.B6-asua
to Pre-Effective Amendment No. 2 to the Registration Statement
on Form N-1A.*
(8) Bonus, Profit Sharing, Pension or Similar Contracts - not
applicable.
<PAGE>
(9) Custodian Agreement, as amended, filed December 1, 1998 as
EX-99.B8-asca to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A.*
(10) (a) Service Plan, as restated, filed July 14, 1995 as
EX-99.B15-assp to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A.*
(b) Distribution and Service Plan for Class A shares, filed
December 29, 1997 as EX- 99.B15-asdsp to Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A.*
(c) Multiple Class Plan, as amended, filed December 28, 1995 as
EX-99.B18-asmcp to Post-Effective Amendment No. 3 to the
Registration Statement on Form N-1A.*
(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
the legality of securities being registered is filed
electronically herewith.
(12) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with United Asset Strategy
Fund will be filed as a post-effective amendment to this
Registration Statement.
(13) (a) Shareholder Servicing Agreement, filed December 1, 1998 as
EX-99.B9-asssa to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A.*
(b) Accounting Services Agreement, filed October 3, 1994 as
EX-99.B9-asasa to the initial Registration Statement on Form
N-1A.*
(c) Service Agreement, filed October 3, 1994 as EX-99.B9-assa to
the initial Registration Statement on Form N-1A.*
(d) Amendment to Service Agreement, filed July 14, 1995 as
EX-99.B9-assaam to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A.*
(e) Fund NAV Application, filed March 7, 1995 as EX-99.B9-asnavapp
to Pre- Effective Amendment No. 2 to the Registration
Statement on Form N-1A.*
(f) Fund Class A Application, as amended, filed May 30, 1997 as
EX-99.B9-asappca to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A.*
(g) Fund Class Y Application, filed July 14, 1995 as
EX-99.B9-ascyapp to Post- Effective Amendment No. 1 to the
Registration Statement on Form N-1A.*
(h) Class Y Letter of Understanding, filed December 27, 1996 as
EX-99.B9-aslou to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A.*
<PAGE>
(14) (a) Consent of Deloitte & Touche LLP, Independent Accountants,
pertaining to United Gold & Government Fund, Inc., is filed
electronically herewith.
(b) Consent of Deloitte & Touche LLP, Independent Accountants,
pertaining to United Asset Strategy Fund, Inc. is filed
electronically herewith.
(15) Financial statements omitted from part B - not applicable.
(16) Copy of manually signed Power of Attorney is filed
electronically herewith.
(17) Additional Exhibits.
(a) Form of Proxy Card is filed electronically herewith.
*is incorporated herein by reference.
Item 17. Undertakings
------------
(1) The undersigned Registrant agrees that prior to any public
re-offering of the securities registered through the use of the prospectus which
is a part of this Registration Statement by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c) of the Securities Act of
1933, the re-offering prospectus will contain the information called for by the
applicable registration form for re-offering by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this
Registration Statement has been signed on behalf of Registrant, in the City of
Overland Park, and State of Kansas, on this 16th day of April 1999.
UNITED ASSET STRATEGY FUND, INC.
(Registrant)
By: /s/ Robert L. Hechler*
--------------------------------
Robert L. Hechler, President
Attest: /s/ David R. Burford
-------------------------------------
David R. Burford, Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
Signature Title Date
- --------- ----- ----
/s/ Keith A. Tucker* Chairman of the Board April 16, 1999
- ------------------------
Keith A. Tucker
/s/ Robert L. Hechler* President, Principal Financial April 16, 1999
- ------------------------ Officer and Director
Robert L. Hechler
/s/ Henry J. Herrmann* Vice President and Director April 16, 1999
- ------------------------
Henry J. Herrmann
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Theodore W. Howard* Vice President, Treasurer and April 16, 1999
- ------------------------ Principal Accounting Officer
Theodore W. Howard
/s/ James A. Concannon* Director April 16, 1999
- ------------------------
James A. Concannon
/s/ John A. Dillingham* Director April 16, 1999
- ------------------------
John A. Dillingham
/s/ David P. Gardner* Director April 16, 1999
- ------------------------
David P. Gardner
/s/ Linda K. Graves* Director April 16, 1999
- ------------------------
Linda K. Graves
/s/ Joseph Harroz, Jr.* Director April 16, 1999
- ------------------------
Joseph Harroz, Jr.
/s/ John F. Hayes* Director April 16, 1999
- ------------------------
John F. Hayes
/s/ Glendon E. Johnson* Director April 16, 1999
- ------------------------
Glendon E. Johnson
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ William T. Morgan* Director April 16, 1999
- ------------------------
William T. Morgan
/s/ Ronald C. Reimer* Director April 16, 1999
- ------------------------
Ronald C. Reimer
/s/ Frank J. Ross, Jr.* Director April 16, 1999
- ------------------------
Frank J. Ross, Jr.
/s/ Eleanor B. Schwartz* Director April 16, 1999
- ------------------------
Eleanor B. Schwartz
/s/ Frederick Vogel III* Director April 16, 1999
- ------------------------
Frederick Vogel III
By: April 16, 1999
* /s/ Kristen A. Richards
------------------------
Kristen A. Richards
Attorney-in-Fact
Attest: April 16, 1999
* /s/ David R. Burford
------------------------
David R. Burford
Assistant Secretary
<PAGE>
POWER OF ATTORNEY
* KNOW ALL MEN BY THESE PRESENTS, That each of the undersigned, UNITED FUNDS,
INC., UNITED INTERNATIONAL GROWTH FUND, INC., UNITED MUNICIPAL BOND FUND, INC.
UNITED VANGUARD FUND, INC., UNITED HIGH INCOME FUND, INC., UNITED CASH
MANAGEMENT, INC., UNITED NEW CONCEPTS FUND, INC., UNITED GOVERNMENT SECURITIES
FUND, INC., UNITED MUNICIPAL HIGH INCOME FUND, INC., UNITED GOLD & GOVERNMENT
FUND, INC., UNITED HIGH INCOME FUND II, INC., UNITED CONTINENTAL INCOME FUND,
INC., UNITED RETIREMENT SHARES, INC, UNITED ASSET STRATEGY FUND, INC.,
TARGET/UNITED FUNDS, INC. AND WADDELL & REED FUNDS, INC. (each hereinafter
called the "Corporation"), and certain directors and officers for the
Corporation, do hereby constitute and appoint KEITH A. TUCKER, ROBERT L.
HECHLER, and KRISTEN A. RICHARDS, and each of them individually, their true and
lawful attorneys and agents to take any and all action and execute any and all
instruments which said attorneys and agents may deem necessary or advisable to
enable each Corporation to comply with the Securities Act of 1933, as amended
("1933 Act") and/or the Investment Company Act of 1940, as amended ("1940 Act")
and any rule, regulations, orders or other requirements of the United States
Securities and Exchange Commission ("SEC") thereunder, in connection with the
registration under the 1933 Act or the 1940 Act, including specifically, but
without limitation of the foregoing, power and authority to sign the names of
each of such directors and officers in his/her behalf and such director or
officer as indicated below opposite his/her signature hereto, to any
Registration Statement and to any amendment or supplement to the Registration
Statement filed with the SEC under the 1933 Act and/or the 1940 Act, and to any
instruments or documents filed to be filed as a part of or in connection with
such Registration Statement or amendment or supplement thereto; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
Date: November 18, 1998 /s/ Robert L. Hechler
-------------------------
Robert L. Hechler, President
Signature Title Date
- --------- ----- ----
/s/ Keith A. Tucker Chairman of the Board November 18, 1998
- ------------------------
Keith A. Tucker
/s/ Robert L. Hechler President, Principal Financial November 18, 1998
- ------------------------ Officer and Director
Robert L. Hechler
/s/ Henry J. Herrmann Vice President and Director November 18, 1998
- ------------------------
Henry J. Herrmann
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Theodore W. Howard Vice President, Treasurer and November 18, 1998
- ------------------------ Principal Accounting Officer
Theodore W. Howard
/s/ James A. Concannon Director November 18, 1998
- ------------------------
James A. Concannon
/s/ John A. Dillingham Director November 18, 1998
- ------------------------
John A. Dillingham
/s/ David P. Gardner Director November 18, 1998
- ------------------------
David P. Gardner
/s/ Linda K. Graves Director November 18, 1998
- ------------------------
Linda K. Graves
/s/ Joseph Harroz, Jr. Director November 18, 1998
- ------------------------
Joseph Harroz, Jr.
/s/ John F. Hayes Director November 18, 1998
- ------------------------
John F. Hayes
/s/ Glendon E. Johnson Director November 18, 1998
- ------------------------
Glendon E. Johnson
/s/ William T. Morgan Director November 18, 1998
- ------------------------
William T. Morgan
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Ronald C. Reimer Director November 18, 1998
- ------------------------
Ronald C. Reimer
/s/ Frank J. Ross, Jr. Director November 18, 1998
- ------------------------
Frank J. Ross, Jr.
/s/ Eleanor B. Schwartz Director November 18, 1998
- ------------------------
Eleanor B. Schwartz
/s/ Frederick Vogel III Director November 18, 1998
- ------------------------
Frederick Vogel III
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
(4) Form of Agreement and Plan of Reorganization and Termination
is attached hereto as Appendix A to the Prospectus/Proxy
Statement.
(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
the legality of securities being registered is filed
electronically herewith.
(14) (a) Consent of Deloitte & Touche LLP, Independent Accountants,
pertaining to United Gold & Government Fund, Inc., is filed
electronically herewith.
(b) Consent of Deloitte & Touche LLP, Independent Accountants,
pertaining to United Asset Strategy Fund, Inc., is filed
electronically herewith.
(16) Copy of manually signed Power of Attorney is filed
electronically herewith.
(17) Form of Proxy Card is filed electronically herewith.
<PAGE>
UNITED GOLD & GOVERNMENT FUND, INC.
6300 LAMAR AVENUE
OVERLAND PARK, KANSAS 66202
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
JUNE 22, 1999
This proxy is being solicited on behalf of the Board of Directors of
United Gold & Government Fund (the "Fund") and relates to a proposal with
respect to the Fund. The undersigned hereby appoints as proxies Keith A. Tucker
and Helge K. Lee, and each of them (with power of substitution), to vote all
shares of common stock of the undersigned in the Fund at the Special Meeting of
Shareholders to be held on June 22, 1999, at 11:00 a.m., local time, at 6300
Lamar Avenue, Overland Park, Kansas 66202, and any adjournment thereof
("Meeting"), with all the power the undersigned would have if personally
present. This proxy shall remain in effect for a period of one year from its
date.
The shares represented by this proxy will be voted as instructed. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" the proposal relating to the Fund with discretionary power to vote upon
such other business as may properly come before the Meeting.
Please sign exactly as your name appears hereon. If shares are registered
in more than one name, all should sign, but if one signs, it binds the others.
When signing as attorney, executor, administrator, agent, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by an authorized person. If a partnership, please sign in partnership name
by an authorized person.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-888-221-0697 TOLL
FREE OR VISIT HTTP://WWW.PROXYWEB.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE
FAX YOUR COMPLETED PROXY CARD TO [1-800-___-____.]
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X]
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
UNITED GOLD AND GOVERNMENT FUND, INC.
VOTE ON PROPOSAL FOR AGAINST ABSTAIN
Approval of an Agreement and Plan of / / / / / /
Reorganization and Termination under which
United Asset Strategy Fund, Inc. ("Asset
Strategy Fund"), would acquire all of the assets
of the Fund, in exchange solely for shares of
Asset Strategy Fund and the assumption by Asset
Strategy Fund of all of the Fund's liabilities,
followed by the distribution of those shares to
the shareholders of the Fund, all as described
in the accompanying Prospectus/Proxy Statement.
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Signature (PLEASE SIGN WITHIN BOX) Date
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Signature (Joint Owners) Date
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
www.kl.com
R. DARRELL MOUNTS
(202) 778-9298
[email protected]
April 16, 1999
United Asset Strategy Fund, Inc.
6300 Lamar Avenue
Overland Park, Kansas 66202
Ladies and Gentlemen:
You have requested our opinion, as counsel to United Asset Strategy Fund,
Inc. (the "Company"), a Maryland corporation, as to certain matters regarding
the issuance of Shares of the Company in connection with the reorganization of
United Gold & Government Fund, Inc. (the "Acquired Fund"), also a Maryland
corporation, into the Company, as provided for in the Agreement and Plan of
Reorganization and Termination between the Company and the Acquired Fund (the
"Plan"). The Plan provides for the Acquired Fund to transfer its assets to the
Company in exchange solely for the issuance of Shares and the Company's
assumption of the liabilities of the Acquired Fund. (As used in this letter, the
term "Shares" means the Class A and Class Y shares of common stock of the
Company issued in connection with the Plan.)
As such counsel, we have examined certified or other copies, believed by
us to be genuine, of the Company's Articles of Incorporation, dated August 29,
1994, as supplemented August 23, 1995, and Bylaws and such other documents
relating to its organization and operation as we have deemed relevant to our
opinion, as set forth herein. Our opinion is limited to the laws and facts in
existence on the date hereof, and it is further limited to the laws (other than
the conflict of law rules) of the State of Maryland that in our experience are
normally applicable to the issuance of shares by corporations and to the
Securities Act of 1933, as amended ("1933 Act"), the Investment Company Act of
1940, as amended ("1940 Act") and the rules and regulations of the Securities
and Exchange Commission ("SEC") thereunder.
Based on the foregoing, we are of the opinion that the issuance of the
Shares has been duly authorized by the Company and that, when issued and sold in
accordance with the terms contemplated by the Company's registration statement
on Form N-14 ("Registration Statement"), including receipt by the Company of
full payment for the Shares and compliance with the 1933 Act and the 1940 Act,
the Shares will have been legally issued, fully paid, and non-assessable.
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United Asset Strategy Fund, Inc.
April 16, 1999
Page 2
We hereby consent to this opinion accompanying the Registration Statement
when it is filed with the SEC and to the reference to our firm in the
Registration Statement.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By: /s/ R. Darrell Mounts
---------------------------
R. Darrell Mounts
DELOITTE & TOUCHE LLP
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form N-14 of our report dated February 5, 1999, appearing in the Annual Report
of the United Gold & Government Fund, Inc. for the year ended December 31, 1998,
and to the reference to us under the caption "Financial Highlights" and
"Experts" appearing in the Prospectus/Proxy Statement, which are part of such
Registration Statement.
Kansas City, Missouri
April 14, 1999
DELOITTE & TOUCHE LLP
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form N-14 of our report dated November 6, 1998, appearing in the Annual Report
of the United Asset Strategy Fund, Inc. for the year ended September 30, 1998,
and to the reference to us under the caption "Financial Highlights" and
"Experts" appearing in the Prospectus/Proxy Statement, which are part of such
Registration Statement.
Kansas City, Missouri
April 14, 1999
