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Shareholders inquiries should be directed to State Street Bank and Trust Company, c/o NFDS, P. ©. Box 26070, Kansas City, MO 64196. State Street Bank and Trust Company of P. O. Box 1713, Boston, MA 02105 is the Fund’s Custodian, Transfer and Dividend Disbursing Agent and also acts as the Trustee and Custodian under the retirement plans offered by the Fund. . The Fund’s general counsel is Tygrett and Walker, Attorneys at Law, 8171 Preston Road, Suite 715, Dallas, Texas 75225. Counsel has passed upon the legality of the shares of the Fund. . The financial statements of the Fund appearing in the Prospectus and in the Statement of Additional Information have been examined by Cheshier & Fuller, Inc., independent accountants, as set forth in their report, and are included in reliance upon such reports given on the authority of said firm as experts in accounting and auditing. OTHER MATTERS As a result of an investigation commenced in 1987 by the Securities and Exchange Commission (“SEC"} involving the Strategic Family of Funds (“Funds”) and Strategic Management, Inc., the Funds’ Investment Adviser, the SEC staff has raised a number of issues pertaining to the adequacy of the Funds’ disclosures and certain related matters. The staff has informed the Funds and the Investment Adviser through their respective counsel that it intends to recommend that the SEC institute enforcement action against the Funds’ Investment Adviser and certain of its officers and directors and certain Funds’ officers and directors, including, possibly, certain of the Funds’ disinterested directors for alleged violations of various federal securities laws and rules and reguiations thereunder. Presently, counsel for the Funds and the Investment Adviser is exploring the possibility of achieving a settlement arrangement with the SEC, however, no assurances can be made that counsel will be successful | in these matters. The source of these matters which may be the subject of the proceedings are as follows: 1. Transactions by Strategic Silver Fund, Inc. (“Silver”) } In early 1985 through earty 1988, as a result of a breakdown of internal controls, Strategic Management, inc. as Investment Adviser to Silver, caused Silver to acquire approximately 39% of the outstanding common shares of Adams Resources, Inc. (“Adams”), thus exceeding Silver’s investment restriction of not purchasing more than 10% of the outstanding sectirities of any class of any issuer. [n January, 1986, this position was liquidated at a loss to Silver. The Board of Directors of Silver, in June 1986, directed the Investment Adviser to refund the losses caiculated to be $570,000 to Silver. In 1986, Silver and the Investment Adviser entered into an interim settlement in which the Investment Adviser voluntarily agreed to apply 50% of its annual management fee received from Silver to any final settlement. The Board of Directors did not consider any further action against the Investment Adviser at this time. These monies are currently being deposited on a monthly basis into a special trust account for the benefit of current and former shareholders of Silver who suffered losses as a result of the Adams transactions. All such payments have been timely made since December, 1986. Prior to that time, however, the Investment Adviser, because it experienced cash flow problems, had been Jate on two payments (aggregating approximately $15,804) since entering into this arrangement and subsequently did arrange to fund the arrearages including the payment of accrued interest (approximately $1, 008)... . On August 24, 1987, Silver filed a Jawsuit to seek recovery of the losses incurred by such Fund as a result of possibly fradulent conduct on the part of the broker-dealer and another person invoived with the Adams transactions. See Strategic Silver Fund y. Dean Witter Reynolds (Canada) ine., No. C 87 1126 EFL (United : ran on