IMG LIQUID ASSETS FUND INC, 485BPOS, 1995-10-26

IMG LIQUID ASSETS FUND INC
485BPOS, 1995-10-26

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October 25, 1995

Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549

RE: IMG LIQUID ASSETS FUND, INC.
33 Act Reg. No. 2-78054

Ladies and Gentlemen:

On behalf of the above referenced registrant, we herewith submit, pursuant
to Regulation S-T, the requisite electronic transmission of data constituting
Post-Effective Amendment No. 16 under the Securities Act of 1933 and Amendment
No. 15 under the Investment Company Act of 1940 of Form N-1A Registration
Statement (with exhibits);

The undersigned is of the opinion that the enclosed filing does not contain
disclosures which would render it ineligible to become effective pursuant to
Rule 485(b).

Pursuant to Rule 485(b), this Amendment shall become effective on October
27, 1995.

Pursuant to Rule 902(g) of Regulation S-T a complete paper copy of the
Registration Statement is being directed to: OFIS Filer Support, SEC Operation
Center, 6432 General Green Way, Alexandria, VA 22312-2413.

In the event you have any questions or comments concerning the enclosed
filing, please direct them to the undersigned at your earliest convenience.

Very truly yours,

JOHN C. MILES
For the Firm
Enclosures

<PAGE>
As filed with the Securities and Exchange Commission
on October 27, 1995
Registration No. 2-78054

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [_]

Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 15
(Check appropriate box or boxes.)

IMG LIQUID ASSETS FUND, INC.
(Exact Name of Registrant as Specified in Charter)
2203 Grand Avenue
Des Moines, Iowa 50312-5338
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number,
including Area Code: (515) 244-5426
DAVID W. MILES, President
IMG Liquid Assets Fund, Inc.
2203 Grand Avenue
Des Moines, Iowa 50312-5338
(Name and Address of Agent for Service)

Copies of all Communications to:
DONALD F. BURT, ESQ.
Cline, Williams, Wright, Johnson & Oldfather
1900 FirsTier Bank Building
Lincoln, Nebraska 68508

Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.

It is proposed that this filing will become effective on October 27, 1995
pursuant to paragraph (b) of Rule 485 under the Securities Act of 1933.

The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940, and the Rule 24f-2 Notice for the fiscal year ended June 30, 1995 was
filed on or about July 21, 1995.
<PAGE>

IMG LIQUID ASSETS FUND, INC.

Cross-Reference Sheet
Required by Rule 404(c)

N-1A Item No. Location in Prospectus

PART A
1. Cover Page.................................Cover Page
2. Synopsis...................................Highlights
3. Financial Highlights.......................Financial Highlights
4. General Description of Registrant..........Investment Objectives, Policies
and Restrictions; Organization
and Capital Structure
5. Management of the Fund.....................Organization and Capital
Structure; Management and Fees
6. Capital Stock and Other Securities.........Cover Page; Distributions and
Taxes; Organization and Capital
Structure
7. Purchase of Securities Being Offered.......Opening an Account--Purchasing
Shares
8. Redemption or Repurchase...................Redeeming Shares
9. Legal Proceedings..........................Not Applicable

PART B

Location in Statement of
Additional Information

10. Cover Page.................................Cover Page
11. Table of Contents..........................Table of Contents
12. General Information and History............Not Applicable
13. Investment Objective and Policies..........Investment Objectives, Policies
and Restrictions
14. Management of the Registrant...............Management
15. Control Persons and Principal
Holders of Securities......................Other Information--Principal
Shareholders
16. Investment Advisory and Other Services.....The Investment Management
Agreement
17. Brokerage Allocation.......................Other Information--Portfolio
Transactions
18. Capital Stock and Other Securities.........Other Information--Organization
and Capital Structure
19. Purchase, Redemption and Pricing
of Securities Being Offered................Purchases of Fund Shares;
Valuing the Fund's Shares
20. Tax Status.................................Taxation
21. Underwriters...............................Purchases of Fund Shares
22. Calculation of Yield Quotations
of Money Market Funds......................Calculation of Yield
23. Financial Statements.......................Cover Page

PART C

Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C to this Registration Statement.
<PAGE>

IMG Liquid Assets Fund, Inc. and
IMG Tax Exempt Liquid Assets Fund, Inc.

2203 Grand Avenue, Des Moines, Iowa 50312-5338

Prospectus October 27, 1995

IMG Liquid Assets Fund, Inc., and IMG Tax Exempt Liquid Assets Fund, Inc.,
(collectively, the "Funds") are money market mutual funds designed to enable
investors to meet short-term goals. Investors choose whichever Fund best suits
their needs and may, without charge, exchange Funds as their investment outlook
or goals change.

o IMG Liquid Assets Fund, Inc., ("Liquid Assets") seeks maximum current
income consistent with safety of principal and maintenance of liquidity. IMG Tax
Exempt Liquid Assets Fund, Inc., ("Tax Exempt") seeks maximum current income
exempt from federal income tax, consistent with safety of principal and
maintenance of liquidity. The shares of the Funds are offered and redeemed at
$1.00 per share under rules which allow the Funds to use the amortized cost
method of valuing the Funds' assets. Under extraordinary circumstances the value
of shares may vary from $1.00 and consequently, there can be no assurance that
the Funds will be able to maintain a stable net asset value of $1.00 per share.
Shares of the Funds are not FDIC insured, are not deposits or other obligations
of the bank or guaranteed by the bank, and involve investment risks, including
possible loss of principal amount invested.

This Prospectus sets forth basic information about each Fund investors
should know before investing and should be retained for future reference.
Statements of Additional Information (dated October 27, 1995) which contain more
detailed information about each Fund have been filed with the Securities and
Exchange Commission and are hereby incorporated by reference. The Statements of
Additional Information are available free upon request from IMG Financial
Services, Inc.

IMG Financial Services, Inc.......................................1-800-798-1819
515-244-5426

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

See page 24 for Table of Contents.
<PAGE>

SUMMARY OF FUND EXPENSES

The expense summary table is provided to assist you in understanding the various
costs and expenses that may be incurred directly or indirectly as a shareholder
of either Fund.

Liquid Assets Tax Exempt
A. Shareholder Transaction Expenses
Sales Load Imposed on Purchase.............. None None
Sales Load on Reinvested Dividends.......... None None
Deferred Sales Load on Redemptions.......... None None
Exchange Fees............................... None None

B. Annual Fund Operating Expenses (as a percentage of net assets)
Management Fees............................. 0.25% 0.25%
12b-1 Fees.................................. 0.75% 0.75%
Other Expenses.............................. 0.20% 0.38%
Total Fund Operating Expenses............... 1.20% 1.38%

C. Example
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a five percent annual return and (2) redemption at the end of
each time period:

1 Year 3 Years 5 Years 10 Years
Liquid Assets $12 $38 $66 $146
Tax Exempt $14 $44 $75 $166

Explanation of Table

A. Shareholder Transaction Expenses are charges you pay when you buy or sell
shares of a fund. There are none for these Funds.

B. Annual Fund Operating Expenses are based on each Fund's historical expenses.
Management Fees are paid by each Fund to Investors Management Group, for
managing its investments and business affairs. 12b-1 fees are fees related to
distribution and marketing expenses, principally shareholder services
provided by institutions who are Participating Organizations. 12b-1 Fees
include all distribution or other expenses incurred during the most recent
fiscal year under a plan adopted pursuant to Rule 12b-1 under the 1940 Act.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers. Each Fund incurs Other Expenses in maintaining
shareholder records, furnishing shareholders' reports, for custodial fees and
other services. All Fund Operating Expenses have already been reflected in
each Fund's share price and are not charged directly to individual
shareholder accounts. Wire transfers may be used to transfer federal funds
directly to/from the Funds' custodian bank. A $15.00 fee will be charged to
an individual shareholder account for redemption by wire. Please refer to
"Management and Fees" on page 15 for further information.

C. Example. The hypothetical example illustrates the expenses directly or
indirectly associated with a $1,000 investment in each Fund over periods of
1, 3, 5 and 10 years, based on the annual Fund operating expenses shown above
and an assumed annual rate of return of five percent. The return of five
percent and the expenses should not be considered indications of actual or
expected fund performance or expenses. Actual expenses and performance may
be higher or lower than those shown.

HIGHLIGHTS

The Investment Objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in
short-term debt obligations including, primarily, redeemable Trust Certificates
backed by federally insured student loans, commercial and industrial loans
backed by demand repayment commitments of the borrowers and bank letters of
credit, commercial paper, bank obligations, short-term corporate obligations,
and obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities and repurchase agreements collateralized by such obligations.

The Investment Objective of Tax Exempt is maximum current income exempt from
federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests primarily in high quality short-term municipal
securities which mature or have a demand feature exercisable in one year or less
from the date of acquisition. See "Investment Objectives, Policies and
Restrictions" on page 7.

The Net Asset Value, that is, the price at which shares of the Funds are sold
and redeemed, will be $1.00 per share, except under extraordinary circumstances.
See "Opening an Account -- Share Price" on page 17.

Shares of either Fund may be purchased at the next determined net asset value
per share, without a sales charge, with an initial investment of at least $250
and subsequent purchases of at least $25. Purchases may be made by check, wire,
electronic funds transfer and/or through Participating Organizations. See
"Purchasing Shares" on page 17.

Shares may be redeemed at their next determined net asset value by exchange,
check, wire, electronic funds transfer and/or through Participating
Organizations. See "Redeeming Shares" on page 21.

The Investment Advisor of the Funds is Investors Management Group, (the
"Adviser"), 2203 Grand Avenue, Des Moines, Iowa 50312-5338, a registered
investment adviser incorporated in Iowa in June 1982. See "Management and Fees"
on page 15. The Adviser is also the transfer agent for the Funds.

The Funds' Distributor is IMG Financial Services, Inc., a wholly owned
subsidiary of the Adviser. IMG Financial Services, Inc., is a registered
broker/dealer and was incorporated in Iowa in May, 1992.

The Investment Advisory Fee to be paid to the Adviser by the Funds will be a
monthly fee equal to a maximum annual rate of 0.25 of one percent of each Fund's
daily net assets up to $200,000,000, declining to 0.20 of one percent of average
daily net assets in excess of $600,000,000. See "Management and Fees" on page
15.

Distribution Fees are paid by the Funds to the Distributor and to certain
Participating Organizations pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), up to a maximum of 0.75 of one percent of the average
daily net asset value of all shareholder accounts of the respective Fund.

Dividends are declared daily and paid monthly (see "Distributions and Taxes" on
page 14) and will be automatically reinvested unless the shareholder elects
otherwise.

Retirement Accounts may be opened by qualified shareholders of Liquid Assets.
Retirement accounts are available for pension, profit sharing, employee benefit
and deferred compensation plans. See "Shareholder Services" on page 20.

FINANCIAL HIGHLIGHTS

The tables on the following pages gives you information about each Fund's
financial history. The Funds' fiscal year has been since inception July 1
through June 30. The tables use the Fund's fiscal year (which ends June 30) and
express investment and distribution information in terms of a single share
outstanding throughout each period.

The tables presented have been examined by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report covering the year ending June 30, 1995, is
included in the Annual Report to shareholders of each Fund. The Annual Report is
included in each Fund's Statement of Additional Information and will be provided
upon request without charge.
<PAGE>
<TABLE>
<CAPTION>
Selected Data for a Share of
Each Fund Outstanding
Throughout Each Period 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IMG Liquid Assets Fund, Inc.
Net Asset Value
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

Net Investment Income .047 .027 .027 .044 .063 .074 .076 .057 .051 .065

Dividends Distributed (.047) (.027) (.027) (.044) (.063) (.074) (.076) (.057) (.051) (.065)
---------------------------------------------------------------------------------------------------
Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
===================================================================================================
Total Return 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13% 6.53%

Ratio of Expenses to
Average Net Assets 1.20% 1.18% 1.16% 1.16% 1.15% 1.16% 1.17% 1.15% 1.17% 1.17%

Ratio of Net Income to
Average Net Assets 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13% 6.53%

Net Assets
End of Period (000 Omitted) $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $ 93,335 $ 73,525 $ 67,020 $ 77,373
<PAGE>
<CAPTION>
Selected Data for a Share of
Each Fund Outstanding
Throughout Each Period 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IMG Tax Exempt Liquid Assets Fund, Inc.
Net Asset Value
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

Net Investment Income .025 .015 .017 .030 .044 .050 .051 .039 .035 .046

Dividends Distributed (.025) (.015) (.017) (.030) (.044) (.050) (.051) (.039) (.035) (.046)
---------------------------------------------------------------------------------------------------
Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
===================================================================================================
Total Return 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45% 4.56%

Ratio of Expenses to
Average Net Assets 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52% 1.46% 1.50%

Ratio of Net Income to
Average Net Assets 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45% 4.56%

Net Assets
End of Period (000 Omitted) $ 16,130 $ 21,355 $ 23,764 $ 29,670 $ 26,683 $ 15,077 $ 12,619 $ 14,528 $ 14,560 $ 21,426
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Liquid Assets

The investment objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in the
following types of money market instruments maturing in one year or less from
time of investment, as defined herein:

(1) Obligations issued or guaranteed by the U.S. government or any agency or
instrumentality thereof. Such securities will include those supported by
the full faith and credit of the United States Treasury or the right of
the agency or instrumentality to borrow from the Treasury as well as
those supported only by the credit of the issuing agency or
instrumentality.

(2) Repurchase agreements involving securities in the immediately foregoing
categories. A repurchase agreement involves the sale of such securities
to the Fund with the concurrent agreement of the seller to repurchase
them at a specified time and price to yield an agreed upon rate of
interest. Repurchase agreements may involve certain risks which are
described in greater detail in the Statement of Additional Information.

(3) Commercial and industrial loans, either (a) made by the Fund, or (b)
purchased from Iowa banks ("Participating Banks") by means of a
participation interest. All such investments will be payable on demand
within seven days and will be backed by demand repayment commitments of
the borrowers and bank letters of credit (collectively referred to as
"Liquidity and Servicing Agreements"). Loans made by the Fund will
require the borrower to repay the principal and accrued interest on
demand within seven days. The borrower's repayment commitment must be
backed by an irrevocable demand bank letter of credit authorizing the
Fund to draw down funds within seven days in order to repay the loan and
accrued interest. Participation interests in bank loans will also be
backed by irrevocable demand bank letters of credit enabling the Fund to
liquidate its investment within seven days. In addition, loans or
participation interests with maturities longer than one year will, by
their terms, bear rates of interest that are adjusted upward or downward
no less frequently than semiannually by means of a formula intended to
reflect market changes in interest rates. The Statement of Additional
Information contains further details concerning the Fund's policies and
procedures with respect to investments in commercial and industrial
loans.

(4) Redeemable interest-bearing Trust Certificates (the "Trust Certificates")
issued by the Iowa Student Loan Trust (the "Trust"), for which Hawkeye
Bank of Des Moines, Des Moines, Iowa, is trustee, created for the sole
purpose of purchasing from Iowa banks federally insured student loans
originated by such banks. The Trust Certificates, which will be issuable
only to the Fund (except in extraordinary circumstances), will have
original maturities of 364 days but will be redeemable by the Fund at
their face amount upon not more than five days' written notice to the
Trust. Further details concerning the Trust and the Fund's investments in
Trust Certificates are found in the Statement of Additional Information.

(5) Commercial paper which at the time of investment (a) is rated (or the
issuer of which has been rated) highest quality by two nationally
recognized statistical rating organizations ("NRSROs") if rated by two or
more NRSROs; (b) is rated (or the issuer of which has been rated) highest
quality if rated by only one NRSRO; or (c) is determined to be of
equivalent quality by the Fund's board of directors if unrated.

(6) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which, at
the date of investment, have capital, surplus, and undivided profits (as
of the date of their most recently published financial statements) in
excess of $10,000,000; and obligations of other banks or savings and
loans if such obligations are insured by the Federal Deposit Insurance
Corporation ("FDIC"), provided that not more than 10 percent of the total
assets of the Fund will be invested in such insured obligations.

(7) Short-term (maturing in one year or less) corporate obligations which at
the time of investment (a) are rated in the top two categories by two
NRSROs, if rated by two or more NRSROs; (b) are rated in the top two
categories if rated by only one NRSRO; or (c) are determined to be of
equivalent quality by the Fund's board of directors if unrated.

(8) Redeemable interest-bearing ownership certificates (the "Certificates")
issued by one or more guaranteed loan trusts (the "Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The
Certificates, which will be issuable only to the Fund (except in
extraordinary circumstances), will have original maturities of 364 days
but will be redeemable by the Fund at their face amount upon not more
than five days' written notice to the Trust. Further details concerning
the Trusts and the Fund's investment in Certificates and FmHA guaranteed
loans are found in the Statement of Additional Information.

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "Opening an Account -- Share Price". Assets of the Fund will
consist of securities with maturities of one year or less at date of purchase
or, if maturing beyond one year, securities which are backed by Liquidity and
Servicing Agreements or Guaranteed Funding Agreements and which have variable
interest rates adjustable at least semiannually. In determining whether
particular variable rate investments backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner. While the underlying security in a repurchase agreement may have a
maturity of more than one year, the repurchase agreement itself will terminate
in less than one year, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in loans and/or loan
participations purchased from Participating Banks, and/or Trust Certificates,
and/or Certificates, except when such investments are either not available in
sufficient quantity or do not carry yields competitive with alternative
investments.

It is the policy of the Fund that any illiquid securities (including repurchase
agreements of more than seven days duration) may not constitute, at the time of
purchase or at any time, more than 10 percent of the value of the total net
assets of the Fund. Loans in which the Fund may invest with maturities in excess
of one year do not have the liquidity of conventional debt securities traded in
the secondary market and may be considered illiquid. The Fund will usually not
invest more than 10 percent of the Fund's total assets in loans with maturities
in excess of one year. While such loans may be deemed to be illiquid, the loans
will be similar to loans regularly sold to, or participated in by banks with
which the Participating Banks maintain a correspondent relationship or which are
used as collateral for the purposes of borrowing funds from a Federal Reserve
Bank. For these reasons, the Fund believes that, even though no public market
will exist for the loans and the participation interests, they will have some
degree of liquidity independent of the demand repayment feature, letters of
credit backing such loans, the liquidity and servicing agreements and guaranteed
funding agreements. To the extent that such loans are illiquid, and the
particular Participating Bank is unable to perform under the Liquidity and
Servicing Agreement or Guaranteed Funding Agreement, the Fund's ability to
dispose of such loans may affect the Fund's ability to meet redemption requests.

As a fundamental policy the Fund does not intend to concentrate its investments
in any one industry and pursuant to Section 18(f) of the 1940 Act, the Fund may
not issue senior securities. As a general policy, it is the Fund's intention to
hold investments until they mature. However, in an effort to increase portfolio
yields the Fund may periodically trade securities to take advantage of perceived
disparities between markets for various short-term money market instruments. It
is also possible that redemptions of Fund shares could necessitate the sale of
portfolio investments prior to maturity and at times when such sale would be
undesirable because of unfavorable market conditions.

While investments by the Fund will be confined to high quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible Participating Banks or borrowers will default on the provisions of
their agreements with the Fund or that banks originating student loans will
default on repurchase agreements with the Trust, which could cause the net asset
value per share to decrease.

In light of these various contingencies, there can be no assurances the Fund
will achieve its investment objectives.

The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares and include the following:

Without shareholder approval the Fund may not: (1) purchase any securities other
than those described above; (2) invest more than 80 percent of its total assets
in loans and/or loan participations purchased from Participating Banks,
Certificates and/or Trust Certificates; (3) invest more than 5 percent of its
total assets in the aggregate of loan participations purchased from, or loans
backed by letters of credit issued by any Participating Bank, Certificates
and/or Trust Certificates; (4) purchase or sell real estate (other than
short-term loans secured by real estate or interests therein or loans to
companies which invest in or engage in other activities related to real estate),
commodities or commodity contracts, interests in oil, gas or other mineral
exploration or development programs; (5) make short sales of securities or
maintain a short position or write, purchase, or sell puts (excluding repayment
and guarantee arrangements on loan participations purchased from Participating
Banks), calls, straddles, spreads or combinations thereof; (6) make loans to
other persons, provided the Fund may invest up to 80 percent of its total assets
in loans and/or loan participations purchased from Participating Banks,
Certificates and/or Trust Certificates, as described in (2) above, and may make
the investments and enter into repurchase agreements as described above; (7)
invest in securities with legal or contractual restrictions on resale (except
for repurchase agreements, loans, or loan participations purchased from
Participating Banks and Trust Certificates) or for which no ready market exists;
(8) purchase loan participations other than from banks within the State of Iowa
which have entered into a Liquidity and Servicing Agreement and which have a
record, together with predecessors, of at least five years of continuous
operation; (9) enter into repurchase agreements if, as a result thereof, more
than 5 percent of the Fund's total assets (taken at market value at the time of
such investment) would be subject to repurchase agreements maturing in more than
seven days; and (10) purchase loan participations from any Participating Bank if
5 percent or more of the securities of such Banks are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of the Bank.

The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (a) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (b)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.

Tax Exempt

The investment objective of Tax Exempt is maximum current income exempt from
federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests in the following types of money market instruments
maturing in one year or less from time of investment, as defined herein:

(1) Tax-exempt debt obligations issued by state and municipal governmental
units and public authorities within the United States and participation
interests therein. With few exceptions such obligations will be nonrated
and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank
letters of credit or guarantees (collectively referred to herein as
"Liquidity Agreements"). The Liquidity Agreements will permit the holder
of the securities to demand payment of the unpaid principal balance plus
accrued interest upon a specified number of days' notice either from the
issuer or by drawing on an irrevocable bank letter of credit or
guarantee. In addition, all obligations with maturities longer than one
year from date of purchase will, by their terms, bear rates of interest
that are adjusted upward or downward no less frequently than semiannually
by means of a formula intended to reflect market changes in interest
rates. Certain types of industrial development bonds issued by public
bodies to finance the construction of industrial and commercial
facilities and equipment are also purchased. The Statement of Additional
Information contains further details concerning the Fund's policies and
procedures with respect to investments in such tax-exempt obligations and
participation interests.

(2) High quality tax-exempt debt obligations issued by state and municipal
governments and by public authorities, including issues sold as interim
financing in anticipation of tax collections, revenue receipts or bond
sales, and tax-exempt Project Notes secured by the full faith and credit
of the United States. Such obligations will be purchased only if backed
by the full faith and credit of the United States or rated Aaa, Aa,
MIG-1, MIG-2 or Prime-1 by Moody's Investors Service, Inc., or AAA, AA,
or A-1 by Standard & Poor's Corporation. Nonrated securities may also be
purchased if determined by the Fund's board of directors to be of
comparable quality to the rated securities in which the Fund may invest.

(3) Taxable obligations issued or guaranteed by agencies or instrumentalities
of the U.S. Government may be acquired from time to time on a temporary
basis for defensive purposes.

(4) Repurchase agreements involving securities in the immediate foregoing
category. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them
at a specified time and price, to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "Opening an Account -- Share Price". Assets of the Fund will
consist of securities with maturities of one year or less at date of purchase
or, if maturing beyond one year, securities which are backed by Liquidity
Agreements and which have variable interest rates adjustable at least
semiannually and upon the adjustment of the interest rate the value of the
securities will be approximately equal to par. In determining whether particular
variable rate investments backed by Liquidity Agreements may be made, the period
remaining until maturity will be deemed to be the longer of the demand notice
period required before the Fund is entitled to receive payment of the principal
amount or the period remaining until the next interest adjustment. The
dollar-weighted average maturity of Fund investments will be 90 days or less,
determined in the same manner.

Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from regular federal income taxes. This fundamental
policy may not be changed without the approval of a majority of the Fund's
outstanding voting securities.

It is the policy of the Fund that any illiquid securities may not constitute, at
the time of purchase or at anytime, more than ten percent of the value of the
total net assets of the Fund. The Fund does not intend to concentrate its
investments in any one industry and pursuant to Section 18(f) of the 1940 Act
may not issue senior securities.

As a general policy, it is the Fund's intention to hold investments until they
mature or until immediately prior to the expiration of an applicable Liquidity
Agreement. However, in an effort to increase portfolio yields, the Fund may
periodically trade securities to take advantage of perceived disparities between
markets for various short-term money market instruments. It is also possible
that redemptions of Fund shares could necessitate the sale of portfolio
investments prior to maturity and at times when such sale would be undesirable
because of unfavorable market conditions.

New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial purchase commitment. The Fund may occasionally enter into
such commitments, subject to certain limitations and procedures discussed in the
Statement of Additional Information.

While investments by the Fund will be confined to high-quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances, described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible an issuer or bank will default on the provisions of their Liquidity
Agreements, which could cause the net asset value per share to decrease. In
light of these various contingencies, there can be no assurances the Fund will
achieve its investment objectives.

Without shareholder approval the Fund may not: (1) purchase any securities other
than those described under "Investment Policy"; (2) invest more than 80 percent
of its total assets in tax-exempt fixed and variable rate debt obligations (or
participation interests therein) issued by state and local governmental units
within the United States which are backed by Liquidity Agreements; (3) invest
more than 5 percent of its total assets in tax-exempt obligations or
participation interests therein subject to Liquidity Agreements issued by any
one bank; (4) purchase or sell real estate, commodities or commodity contracts,
interests in oil, gas or other mineral exploration or development programs; (5)
make short sales of securities or maintain a short position or write, purchase,
or sell puts (excluding Liquidity Agreements covering certain tax-exempt
obligations purchased by the Fund), calls, straddles, spreads or combinations
thereof; (6) make loans to other persons, provided the Fund may make investments
and enter into repurchase agreements as described above; (7) invest in
securities with legal or contractual restrictions on resale (except for
tax-exempt debt obligations subject to Liquidity Agreements) or for which no
ready market exists; (8) enter into a Liquidity Agreement with any bank unless
such bank is a United States bank which has a record, together with
predecessors, of at least five years of continuous operations; (9) enter into
repurchase agreements if, as a result thereof, more than 5 percent of the Fund's
total assets (taken at market value at the time of such investment) would be
subject to repurchase agreements maturing in more than seven days; and (10)
enter into Liquidity Agreements with any bank if 5 percent or more of the
securities of such bank are owned by the Advisor or by directors and officers of
the Fund or the Advisor, or if any director or officer of the Fund or the
Advisor owns more than 1/2 percent of the voting securities of such bank.

The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (1) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (2)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.

PERFORMANCE

Performance of each Fund may be quoted in advertising in terms of current yield
and effective yield. Current yield refers to the income generated by an
investment in either Fund over a seven day period, expressed as an annual
percentage rate. Effective yield is calculated similarly but assumes that income
earned from the investment is reinvested. Effective yield will be slightly
higher than current yield because of the compounding effect of this assumed
reinvestment.

The current and effective yields for the seven-day period ended June 30, 1995,
for Liquid Assets and Tax Exempt were 5.05 percent and 5.17 percent, and 3.12
percent and 3.17 percent respectively.

Performance of the Funds may also be compared to other mutual funds with similar
investment objectives, relevant indices or rankings prepared by independent
services or other financial publications, or yields on deposits at financial
institutions. Unlike the Funds, deposit accounts at financial institutions are
generally FDIC insured and do not fluctuate to the extent of the Funds.

Additionally, Tax Exempt may quote a taxable-equivalent yield based on a stated
income tax rate. Please see each Fund's Statement of Additional Information for
further discussion of the manner in which yields are calculated and the
comparative performance data which may be used.

Of course, the Funds' yields are not fixed nor is principal guaranteed.
Performance will fluctuate and any quotation should not be considered as
representative of the future performance of either Fund.

DISTRIBUTIONS AND TAXES

The daily net income of each Fund is declared as a dividend each business day to
holders of record immediately before 3:00 p.m. Des Moines time. Dividends are
credited to shareholders' accounts each business day and are automatically
reinvested in Fund shares unless cash payment has been requested. Cash payments,
if requested, will be made monthly. If a shareholder redeems the entire amount
in his account during the month, dividends credited to the account from the
beginning of the month through the date of redemption are paid with the
redemption proceeds.

Each Fund intends to qualify as a regulated investment company by distributing
substantially all of its taxable net income, including any realized capital
gains, and thus will not incur any Federal income taxes. Shareholders will
receive taxable dividend income, tax-exempt dividend income and/or capital
gains, as the case may be, from distributions whether paid in cash or received
in the form of additional shares.

Dividends derived from interest on federally tax-exempt debt obligations owned
by the Tax Exempt Fund are intended to constitute "exempt-interest dividends"
which are generally not Federally taxable to shareholders. Dividends derived
from other interest and the realization of capital gains are taxable to
shareholders whether or not reinvested.

Tax Exempt Fund expenses will be allocated between tax-exempt and taxable income
in the same proportion as the Fund's tax-exempt income bears to the total of
such exempt income and its gross income (excluding from gross income the excess
of capital gains over capital losses).

Promptly after the end of each calendar year, each shareholder will receive a
statement of the Federal income tax status of all dividends and distributions
paid during the year. This discussion is only a summary and relates solely to
Federal tax matters. Further discussion of the Federal Income Tax consequences
of an investment in the Fund is provided in the Statement of Additional
Information. Dividends may also be subject to local taxation. Shareholders are
encouraged to consult with their personal tax Advisors.

ORGANIZATION AND CAPITAL STRUCTURE

The Funds are open-end, diversified management investment companies organized as
Iowa corporations. Liquid Assets was incorporated in June 1982 under the name
Iowa Liquid Assets Fund, Inc., and changed its name to IMG Liquid Assets Fund,
Inc., in October 1987. Tax Exempt was incorporated under the name Iowa Tax Free
Liquid Assets Fund, Inc., in January 1983, and changed its name to IMG Tax
Exempt Liquid Assets Fund, Inc., in October 1987. Management of the affairs of
each Fund is legally vested in its board of directors, which meets periodically
to review activities of the Fund and the Advisor and to consider other policy
matters pertaining to the Fund. Each Fund has an authorized capital of
200,000,000 shares of Common Stock, par value $.001 per share. All shares have
equal rights and privileges and each share is entitled to one vote in the
election of directors and on other matters presented to shareholders and to
participate equally in the net distributable assets of the respective Fund on
liquidation. The shares are non-assessable, and have no preemptive, subscription
or conversion rights. The shares have no sinking fund provisions but are
redeemable upon request of the holders and are transferable.

MANAGEMENT AND FEES

Investors Management Group, ("IMG") manages the investments and business affairs
of the Funds. IMG is a registered investment Advisor located at 2203 Grand
Avenue, Des Moines, Iowa 50312-5338. IMG Financial Services, Inc., a wholly
owned subsidiary of IMG, is a registered broker/dealer and serves as the Funds'
Underwriter. Since IMG was founded in 1982, its principal business has been
providing continuous investment management to pension and profit-sharing plans,
insurance companies, public agencies, banks, endowments and charitable
institutions, other mutual funds, individuals and others. As of June 30, 1995,
IMG had approximately $1.1 billion in equity, fixed income and money market
assets under management. David W. Miles, Mark A. McClurg, and James W. Paulsen
are principal shareholders of IMG.

The Funds are managed by Jeffrey D. Lorenzen, CFA, Managing Director. Mr.
Lorenzen is a fixed income strategist and is a member of IMG's Investment Policy
Committee. Prior to joining IMG in 1992, his experience includes serving as a
securities analyst and corporate fixed income analyst for The Statesman Group
from 1989 to 1992. He received his Masters of Business Administration from Drake
University and his Bachelor of Business Administration degree from the
University of Iowa.

Under a management contract between each Fund and IMG, a fee is paid to IMG for
investment advisory services. Each Fund is responsible for paying operating
expenses not assumed by IMG.

The management fee for each Fund is calculated daily and paid monthly. The
maximum management fee for each Fund is 0.25 of 1 percent of each Fund's average
daily net assets up to $200,000,000. The management fee declines to 0.20 of 1
percent of average daily net assets in excess of $600,000,000. For the fiscal
year ended June 30, 1995, fees paid by Liquid Assets and Tax Exempt to IMG
amounted to approximately 0.25 of 1 percent of each Fund's average net assets,
or $374,373 and $52,311 respectively.

IMG also acts as transfer agent and dividend paying agent for the Funds, and
maintains all shareholder records. Each Fund pays fees based upon asset size and
number of accounts.

Expenses of operating each Fund include fees of directors not affiliated with
the Investment Advisor, custodial fees, taxes, auditing and legal expenses,
Securities and Exchange Commission fees, state securities qualification fees,
costs of preparing and printing prospectuses for regulatory purposes and for
distribution to shareholders, certain insurance premiums, transfer agent fees,
the publishing of reports to shareholders, and other expenses relating to the
operation of each Fund which are not expressly assumed by the Investment
Advisor.

Each Fund pays certain distribution fees related to marketing, selling and
distribution of fund shares, including, but not limited to, preparation and
distribution of promotional materials for the Fund, compensation to sales
personnel employed by the Underwriter, and for payment to institutions,
including banks ("Participating Organizations"), who render assistance in
distributing or promoting the sale of each Fund's shares under plans (the
"Plans") adopted pursuant to Rule 12b-1 under the Act. The maximum fees payable
under the Plans are 0.75 of 1 percent, computed monthly on the basis of the
average net asset value of all shareholder accounts in each Fund. For fiscal
year ended June 30, 1995, fees paid under the plan for Liquid Assets and Tax
Exempt were $1,176,124 and $156,932 respectively. The directors of each Fund
review quarterly a written report of the costs incurred associated with the
Plans and the purposes for which such costs were incurred. The directors believe
that the Plans are in compliance with Rule 12b-1 and are in the best interests
of the Funds.

The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Funds. If a Participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences. It is intended that none of the services provided by
such Participating Organizations other than through registered brokers will
involve the solicitation or sale of shares of the Funds.

Hawkeye Bank of Des Moines, Des Moines, Iowa, acts as custodian for the Funds'
cash and investments.

OPENING AN ACCOUNT

The Funds require a completed and signed application (which is attached), at the
time you open each new account. Additional paperwork may be required from
corporations, associations and certain fiduciaries. If you have questions call
IMG at 1-800-798-1819 from 8:00 - 4:30 CST.

Share Price

The shares of each Fund are sold without a sales charge. The price of one share
is its "net asset value" or NAV (generally $1.00). NAV is computed by adding the
value of each Fund's investments, plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV of each Funds' shares is determined twice each business day, at 10:00
a.m. Des Moines time and at the close of the New York Stock Exchange (normally
3:00 p.m. Des Moines time). The Funds are open for business each day the New
York Stock Exchange is open.

Your purchase will be processed at the next NAV calculated after your investment
has been converted to federal funds. If you invest by check, the Funds must
generally allow one or more days for conversion into federal funds before
accepting your purchase.

Rule 2a-7 under the Investment Company Act of 1940 permits the Funds to compute
net asset value per share using the amortized cost method of valuing portfolio
securities. As a condition for using the amortized cost method of valuation, the
Board of Directors established procedures to stabilize each Fund's net asset
value at $1.00 per share. These procedures are described in more detail in each
Fund's Statement of Additional Information.

Under the amortized cost method of valuation, a security is initially valued at
cost on the date of purchase and, thereafter, any discount or premium is
amortized on a straight-line basis to maturity, regardless of the effect of
fluctuating interest rates on the market value of the security. U.S. government
obligations; commercial and industrial loans, and participation interests
therein acquired from Participating Banks under Liquidity and Servicing
Agreements; Trust Certificates and Certificates, which are subject to mandatory
repurchase at their original purchase price; commercial paper; bank obligations;
short-term corporate obligations; investments in taxable and tax-exempt debt
obligations rated by a recognized bond rating agency and regularly traded in the
secondary market; and nonrated fixed and variable rate tax-exempt obligations
and participation interests therein, not regularly traded in the secondary
market but subject to Liquidity Agreements; will be valued at amortized cost.
Other assets are valued at a fair value determined in good faith by the board of
directors of each Fund.

Purchasing Shares

Shares of each Fund may be purchased directly from IMG Financial Services, Inc.,
as the distributor. Shares may also be purchased by customers of qualified
banks, savings and loan associations, broker/dealers, investment advisory firms,
and other organizations ("Participating Organizations") that have entered into
servicing agreements with the Distributor. A Participating Organization may
elect to hold record ownership of shares for its customers and to show
beneficial ownership of shares on the account statements it provides to them. In
the alternative, a Participating Organization may elect to establish its
customers' accounts of record with IMG as transfer agent for the Funds.
Generally all shares purchased through Participating Organizations will be held
by the Participating Organization as shareholder of record.

Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $250. Subsequent investments in each Fund must be made in amounts of not
less than $25. Participating Organizations may aggregate their customers'
purchases to satisfy the required minimums.

While the Funds themselves do not presently levy sales, redemption or account
service charges, Participating Organizations may elect to do so and the Funds
may elect to do so in the future. Investors should inquire regarding the nature
and costs of services provided by Participating Organizations and determine if
such services are desired, because the costs thereof will reduce the Funds'
yields to the investor below that obtainable by investing in the Funds directly.

Customers wishing to purchase shares through their Participating Organization
should contact such entity directly for appropriate instructions. (For a list of
the Participating Organizations in your area, call IMG Financial Services, Inc.,
at 1-800-798-1819 or 515-244-5426.) Direct investors may purchase shares in
accordance with the procedures described below, "Purchase Procedures".

SHAREHOLDER SERVICES

Some shareholder services may not be available if shares are purchased through
Participating Organizations. Call IMG Financial Services, Inc., at
1-800-798-1819 for more information.

Exchange Privilege. You may exchange shares of either Fund for shares in any
other fund managed by IMG. An exchange involves a redemption of the shares of
the fund being liquidated and a purchase of the shares of the fund in which the
redemption proceeds are to be invested. The exchange privilege is offered as a
convenience to shareholders and is not intended to be a means of speculating on
short-term movements in securities prices by transactions involving frequent
purchases and sales of shares. Each Fund reserves the right at any time and
without prior notice, to suspend, limit, modify or terminate exchange privileges
or their use by individual shareholders in order to prevent transactions
considered to be disadvantageous to existing shareholders.

Telephone Transfers. This service allows you to authorize transfers of money to
purchase or sell shares. Using Telephone Transfer you can move money between
your bank account and your account in the Funds with one phone call. Moneys may
be transferred either by wire or electronic funds transfer with an institution
which is a member of the Automated Clearing House ("ACH").

Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. A $15.00 fee will be charged to your account for redemptions by
wire.

Allow two (2) days after the call for electronic funds transfer via ACH to move
moneys between your bank account and your account with either Fund.

For moneys recently invested, allow normal clearing time before redemption
proceeds are sent to your bank. In order to change the financial institution
account designated to receive redemption proceeds, it will be necessary to send
a written request to the Fund with a signature guarantee from a national or
state bank, a trust company or a federal savings and loan association, or a
member firm of the New York, American, Boston, Midwest or Pacific Stock
Exchange.

You can also arrange systematic periodic investments (minimum $50) into your
Fund account. Simply select the regular investment schedule you would like when
completing your account application. Your bank account will automatically be
debited to purchase shares of the Fund you select. You will receive confirmation
of each transaction.

Your bank must be a member of ACH and you must have a checking or NOW/Money
Market Deposit account to use electronic funds transfer or systematic investing.
Please allow 20 days after receipt of your application to activate the Telephone
Transfer capability.

Retirement Plans. Through its custodian bank, Liquid Assets offers a number of
retirement plans, including Individual Retirement Accounts, Keogh Plans and
others. Please contact IMG for more information concerning plans available,
their benefits, provisions and fees. The Funds recommend that you consult a
qualified tax advisor or retirement specialist before establishing a retirement
plan.

Statements and Reports. You will receive a statement of your account listing
every transaction that affects your share balance no less than once per month.
At least twice a year you will receive the financial statements of the Fund in
which you have invested with a summary of that Fund's portfolio composition and
performance. Each Fund's Annual Report is reported on by the Funds' independent
auditors, KPMG Peat Marwick LLP.

REDEEMING SHARES

Shareholders may redeem (sell back) their shares on any day on which the New
York Stock Exchange is open for trading or on which the Fund is required to
compute its net asset value. Shares will be redeemed at their net asset value as
next determined after a redemption request in good order is received by the Fund
at its offices in Des Moines. If a redemption request is received before 10:00
a.m. Des Moines time the shares will be redeemed as of 10:00 a.m. and will earn
dividends through the previous day. Shares redeemed after 10:00 a.m. will earn
dividends through the day of redemption.

If you purchase shares through a Participating Organization, you may redeem
shares in accordance with that Organization's rules regarding redemption
requests. Direct shareholders may redeem shares in accordance with the
procedures described on page 21 under "How to Redeem Shares".

The Funds intend to pay redemption proceeds within two business days and in no
event will payment be made later than seven days after receipt of a redemption
request in good order. Payments to investors who request to redeem shares within
a few days after a purchase paid for by check may be delayed until the Funds can
verify the check has been collected.

The Funds reserve the right to suspend redemptions or to postpone the payment
therefor when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is closed
for other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has permitted such suspension; or (c) an emergency, as
determined by the Securities and Exchange Commission, exists, making sale of
portfolio securities or valuations of the Funds' net assets not reasonably
practicable.

A shareholder may not reduce the value of the shares in his account to less than
$100 by writing checks and the checkwriting and Telephone Transfer privileges
will automatically terminate when a shareholder requests the issuance of share
certificates. The Funds and the Custodian reserve the right to terminate the
checkwriting service or to institute charges for the service.

If an investor's account drops below $250 due to redemptions, the Funds reserve
the right to redeem any remaining shares if after 30 days' notice additional
investments to bring the account value to $250 are not made.

<PAGE>

How To Redeem Shares
_____________________________________________________________________________
| By Mail-- Send a "letter of instruction": a letter|
| To: 2203 Grand Avenue specifying the name of the Fund, |
| Des Moines, IA 50312-5338 the number of shares to be sold, your |
| name, your account number, and the |
| additional requirements listed below |
| that apply to your particular account. |
| |
| Type of Registration Requirements |
| __________________________________ _______________________________________ |
| Individual, Joint Tenants, Sole Letter of instruction signed by all |
| Proprietorship, Custodial (Uniform persons required to sign for the |
| Gifts or Transfers To Minors Act), account, exactly as it is registered, |
| General Partners accompanied by signature guarantee(s). |
| |
| Corporation, Association Letter of instruction and a corporate |
| signed by person(s) authorized to act |
| on the account, accompanied by |
| signature guarantee(s). |
| |
| Trust A letter of instruction signed by the |
| Trustee(s) (as Trustee), with a |
| signature guarantee. (If the Trustee's |
| name is not registered on your account, |
| also provide a copy of the trust |
| document, certified within the last |
| 60 days.) |
| |
| If you do not fall into any of these registration categories (e.g., |
| Executors, Administrators, Conservators or Guardians) please call for |
| further instructions. |
| |
| A signature guarantee is designed to protect you and the Fund against |
| fraudulent transactions by unauthorized persons. A signature guarantee is |
| required for all persons registered on an account. A signature guarantee |
| may be obtained from an eligible guarantor institution, as defined by the |
| Securities and Exchange Commission. These institutions include banks, |
| savings and loan associations, credit unions, brokerage firms, and others. |
| The words, "SIGNATURE GUARANTEED" must be stamped or typed near each |
| person's signature and appear with the printed name, title, and signature |
| of an officer and the name of the guarantor institution. Please note that |
| a notary public stamp or seal is not a Signature Guarantee. |
|_____________________________________________________________________________|
| By Check-- You must have applied for the |
| (minimum $250 checkwriting feature on your account |
| maximum $100,000) application. You may redeem provided |
| that the signatures you designated are |
| on the check. (There is no charge for |
| this service and you may write an |
| unlimited number of checks.) |
|_____________________________________________________________________________|
| FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819 |
|_____________________________________________________________________________|
| By Exchange-- You must meet the minimum investment |
| requirement of the other fund. You can |
| only exchange between accounts with |
| identical names, addresses, and |
| taxpayer identification numbers. |
|_____________________________________________________________________________|
| By Electronic Funds You must have applied for the Telephone |
| Transfer (ACH) or Wire-- Transfer feature on your application. |
| Allow two days via ACH. Call before |
| 10:00 a.m. for same day wire. |
| $15.00 fee for bank wires. |
|_____________________________________________________________________________|

<PAGE>

Table of Contents
Summary of Fund Expenses................................................2
Highlights..............................................................3
Financial Highlights....................................................4
Investment Objectives, Policies and Restrictions........................7
Liquid Assets...........................................................7
Tax Exempt.............................................................10
Performance............................................................13
Distributions and Taxes................................................14
Organization and Capital Structure.....................................15
Management and Fees....................................................15
Opening an Account.....................................................17
Share Price........................................................17
Purchasing Shares..................................................17
Shareholder Services...................................................20
Redeeming Shares.......................................................21

No salesman, or other person, has been authorized to give any information or to
make any representations, other than those contained in this Prospectus, in
connection with the offer contained in this Prospectus, and, if given or made,
such other information or representations must not be relied upon as having been
authorized by the Funds or by IMG Financial Services, Inc. This Prospectus does
not constitute an offering by IMG Financial Services, Inc., in any state in
which such offering may not lawfully be made.

IMG FINANCIAL SERVICES, INC.

IMG INVESTMENT CHECKING
2203 Grand Avenue
Des Moines, Iowa 50312-5338
<PAGE>

IMG LIQUID ASSETS FUND, INC. 2203 Grand Avenue
Des Moines, IA 50312-5338
________________________________________________________________________________

Statement of Additional Information October 27, 1995
________________________________________________________________________________

This statement is not a Prospectus but should be read in conjunction with the
Fund's current Prospectus (dated October 27, 1995). Please retain this Statement
for future reference. The Annual Report of the Fund for the fiscal period ended
June 30, 1995, is provided herewith by reference. To obtain an additional copy
of the Annual Report or Prospectus please call Investors Management Group.
________________________________________________________________________________
Investors Management Group........................................1-800-798-1819
1-515-244-5426
________________________________________________________________________________
Table of Contents:

Investment Objectives, Policies and Restrictions............2
Purchases of Fund Shares....................................5
Valuing the Fund's Shares...................................6
Calculation of Yield........................................6
Dividends...................................................8
Taxation....................................................8
Management..................................................8
Compensation Table..........................................9
The Investment Management Agreement........................10
Iowa Banking Structure.....................................11
The Iowa Student Loan Trust................................12
Guaranteed Loan Trusts.....................................13
Other Information..........................................13
Federal Holidays.........................................13
Portfolio Transactions...................................14
Organization and Capital Structure.......................14
Reports to Shareholders..................................14
Principal Shareholders...................................14
Custodian, Transfer Agent and Dividend Paying Agent......14
Legal Opinion............................................14
Independent Auditors.....................................14
Appendix A.................................................15
<PAGE>

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

IMG Liquid Assets Fund, Inc., ("Liquid Assets") seeks to provide maximum current
income consistent with safety of principal and maintenance of liquidity. In
order to accomplish this goal, assets of the Fund will be invested in the
following types of money market instruments maturing in one year or less from
time of investment, as defined herein:

(1) Securities issued or guaranteed by the United States Government.
These include, for example, Treasury Bills, Bonds and Notes which are
direct obligations of the United States Government.

(2) Obligations issued or guaranteed by agencies or instrumentalities of
the United States Government. Such agencies and instrumentalities
include for example, Federal Intermediate Credit Banks, Federal Home
Loan Banks, Federal National Mortgage Association and Farmers Home
Administration. Such securities will include, for example, those
supported by the full faith and credit of the United States Treasury
or the right of the agency or instrumentality to borrow from the
Treasury as well as those supported only by the credit of the issuing
agency or instrumentality.

(3) Repurchase agreements involving securities in the immediately
foregoing categories. A repurchase agreement involves the sale of
such securities to the Fund with the concurrent agreement of the
seller to repurchase them at a specified time and price, to yield an
agreed upon rate of interest. The Fund will enter into repurchase
agreements with brokers and banks. Thus, the Fund must initially rely
upon the credit of a particular broker or bank for completion of the
repurchase agreement. Such repurchase agreements are intended to be
fully collateralized, in an amount equal to at least the principal
amount of the transaction plus accrued interest earned thereon, by
the underlying Government or agency securities valued at their fair
market value each day. Although the Fund will normally have legal
title to and constructive possession of the collateral, it cannot
eliminate the risk of a default by a broker or bank which could
result in a loss to the Fund on the sale of the underlying securities
or delays in obtaining the collateral because of bankruptcy or
insolvency proceedings.

(4) Commercial and industrial loans, either (a) made by the Fund, or (b)
purchased from Iowa banks by means of a participation interest. All
such investments will be payable on demand within seven calendar days
and will be backed by demand repayment commitments of the borrowers
and bank letters of credit (collectively referred to as "Liquidity
and Servicing Agreements"). Loans made by the Fund will require the
borrower to repay the principal and accrued interest on demand within
seven calendar days. The borrower's repayment commitment must be
backed by an irrevocable demand bank letter of credit authorizing the
Fund to draw down funds within seven calendar days in order to repay
the loan and accrued interest. Participation interests in bank loans
will also be backed by irrevocable demand bank letters of credit
enabling the Fund to liquidate its investment within seven calendar
days. In addition, loans or participation interests with maturities
longer than one year will, by their terms, bear rates of interest
that are adjusted upward or downward no less frequently than
semiannually by means of a formula intended to reflect market changes
in interest rates.

The only banks (the "Participating Banks") which will be permitted to
sell participation interests in commercial and industrial loans to
the Fund, or to provide irrevocable letters of credit to back the
demand repayment commitments of borrowers to whom the Fund makes
loans, will be Iowa banks which have entered into irrevocable written
Liquidity and Servicing Agreements with respect thereto and have
agreed to furnish to the Fund whatever financial information may be
requested for purposes of evaluating the Participating Bank's
financial condition and capacity to fulfill its obligations to the
Fund and to perform such servicing duties as may be mutually agreed
to by the parties.

The financial condition and loan and investment loss record of all
prospective Participating Banks will be carefully evaluated by the
Advisor, based upon guidelines established by the Board of Directors,
prior to the execution of a Liquidity and Servicing Agreement by a
Participating Bank and periodically thereafter. The loans will bear
interest at or above the prevailing national prime rate and the rates
borne by loans with maturities longer than one year will be
adjustable at least semiannually to reflect subsequent changes in the
prime rates.

It is anticipated that commercial and industrial loans to be made or
participated in by the Fund will be those traditionally made by Iowa
banks. Such loans typically: will be short-term (90 to 180-day
maturities); may be either unsecured or secured by business
inventories and assets, farm commodities or third-party guarantees;
and will provide seasonal working capital for businesses and
agricultural enterprises in Iowa. The loans will be similar to loans
regularly sold to, or participated in, by larger banks with which the
Participating Banks maintain a correspondent relationship or which
are used as collateral for the purpose of borrowing funds from a
Federal Reserve Bank. For these reasons the Fund believes that, even
though no public market will exist for the loans and participation
interests, they will have some degree of liquidity independent of the
demand repayment feature and letters of credit.

For entering into a Liquidity and Servicing Agreement, a
Participating Bank will receive a service and letter of credit fee in
an amount equal to the excess of the interest paid on the commercial
or industrial loan above the negotiated yield required by the Fund.
Such fees may be adjusted if adjustments are made in the interest
rate paid on the loan. Each Participating Bank executing a Liquidity
and Servicing Agreement must be approved by the Board of Directors of
the Fund prior to, or at the next quarterly Board meeting following,
such execution. See "The Investment Management Agreement" on page 10
for a discussion of the criteria to be used in selecting
Participating Banks. The Board of Directors will review all
Participating Banks and Liquidity and Servicing Agreements quarterly
in an effort to assure continued liquidity and high quality in the
Fund's portfolio. For more information about Iowa banks which may
become Participating Banks, see "Iowa Banking Structure on page 11.

(5) Redeemable interest-bearing Trust Certificates (the "Trust
Certificates") issued by the Iowa Student Loan Trust (the "Trust"),
for which Hawkeye Bank of Des Moines, Des Moines, Iowa, is trustee,
created for the sole purpose of purchasing from Iowa banks federally
insured student loans originated by such banks. The Trust
Certificates, which will be issuable only to the Fund (except as
noted below), will have original maturities of 364 days but will be
redeemable by the Fund at their face amount upon not more than five
days' written notice to the Trust. Funds will be made available to
the Trust to meet early redemptions of Trust Certificates under an
agreement between the Trust and the originating banks requiring the
banks to repurchase, on not less than five business days' written
notice, all federally insured student loans sold to the Trust or, if
permissible under applicable securities laws, to purchase an
equivalent amount of Trust Certificates. There will be no public
market for the Trust Certificates. See "The Iowa Student Loan Trust"
on page 12.

(6) Commercial paper which at the time of investment (a) is rated (or the
issuer of which has been rated) highest quality by two nationally
recognized statistical rating organizations ("NRSROs") if rated by
two or more NRSROs; (b) is rated (or the issuer of which has been
rated) highest quality if rated by only one NRSRO; or (c) is
determined to be of equivalent quality by the Fund's board of
directors if unrated.

Commercial paper consists of short-term promissory notes of large
corporations with excellent credit ratings, issued to finance their
current obligations. The Fund presently considers the ratings of the
following NRSROs: Duff and Phelps, Inc. (Duff), Fitch Investors
Service, Inc. (Fitch), Moody's Investors Service Inc. (Moody's) and
Standard & Poor's Corporation (S&P). The highest rating categories of
Duff, Fitch, Moody's and S&P for commercial paper are Duff-1,
Fitch-1, Prime-1 and A-1 respectively. See Appendix A on page 15.

(7) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which,
at the date of investment, have capital, surplus, and undivided
profits (as of the date of their most recently published financial
statements) in excess of $10,000,000; and obligations of other banks
or savings and loans if such obligations are insured by the Federal
Deposit Insurance Corporation ("FDIC"), provided that not more than
10 percent of the total assets of the Fund will be invested in such
insured obligations.

The Fund invests in two types of bank obligations: (1) certificates
of deposit, which are negotiable certificates representing a
commercial bank's obligations to repay funds deposited with it,
earning specified rates of interest over given periods; and (2)
bankers' acceptances, which are negotiable obligations of a bank to
pay a draft which has been drawn on it by a customer (usually backed
by goods in international trade).

(8) Short-term (maturing in one year or less) corporate obligations which
at the time of investment (a) are rated in the top two categories by
two NRSROs, if rated by two or more NRSROs; (b) are rated in the top
two categories if rated by only one NRSRO; or (c) are determined to
be of equivalent quality by the Fund's board of directors if unrated.

Corporate obligations are bonds and notes issued by corporations and
other business organizations in order to finance their long-term
credit needs. For corporate obligations, the two highest rating
categories are Duff-1 and Duff-2, AAA and AA, Aaa and Aa, and AAA and
AA, respectively. See Appendix A on page 15.

(9) Redeemable interest-bearing ownership certificates ("Certificates")
issued by one or more guaranteed loan trusts ("Trusts"), each
created for the purpose of acquiring participation interests in the
guaranteed portion of Farmer's Home Administration ("FmHA")
guaranteed loans. The Certificates, which will be issuable only to
the Fund (except in extraordinary circumstances), will have original
maturities of 364 days but will be redeemable by the Fund at their
face amount upon not more than five days' written notice to the
Trust. Funds will be made available to the Trust to meet early
redemption of Certificates under an unconditional purchase
commitment between the Trusts and no less than 20 banks, including
the originating banks, requiring the banks to repurchase, on not less
than five business days' written notice up to five percent of the
guaranteed portion of FmHA guaranteed loans held by the Trust. See
"Guaranteed Loan Trusts" on page 13.

Assets of the Fund will consist of securities with maturities of one year or
less at date of purchase or, if maturing beyond one year, securities which are
backed by Liquidity and Servicing Agreements or Guaranteed Funding Agreements
and which have variable interest rates adjustable at least semiannually. In
determining whether particular variable rate investments backed by Liquidity and
Servicing Agreements or Guaranteed Funding Agreements may be made, the period
remaining until maturity will be deemed to be the longer of the demand notice
period required before the Fund is entitled to receive payment of the principal
amount or the period remaining until the next interest adjustment. For purposes
of Rule 2a-7 and the diversification requirements thereunder, the unconditional
commitments are limited in amounts necessary to keep any one bank from being
obligated to purchase more than five percent of the total assets held by the
Fund. The dollar-weighted average maturity of Fund investments will be 90 days
or less, determined in the same manner. While the underlying security in a
repurchase agreement may have a maturity of more than one year, the repurchase
agreement itself will terminate in less than one year, and typically within a
few days. The underlying securities will be issued or guaranteed by the United
States Government, its agencies or instrumentalities. In attempting to provide
its shareholders with the highest income consistent with safety of principal,
the Fund will not necessarily purchase investments bearing the highest interest
rates available as such investments may also involve a higher degree of risk.

As a fundamental policy the Fund does not intend to concentrate its investments
in any one industry and will not issue senior securities.

As a general policy, it is the Fund's intention to hold investments until they
mature. However, in an effort to increase portfolio yields the Fund may
periodically trade securities to take advantage of perceived disparities between
markets for various short-term money market instruments. It is also possible
that redemptions of Fund shares could necessitate the sale of portfolio
investments prior to maturity and at times when such sale would be undesirable.

While investments by the Fund will be confined to high-quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances (see "Valuing the Fund's Shares" on page 6 and "Dividends" on page
8), the net asset value of Fund shares could decrease. It is also possible
Participating Banks or borrowers will default on the provisions of their
agreements with the Fund or that banks originating student loans will default on
their repurchase agreements with the Trust, which could cause the net asset
value per share to decrease. In light of these various contingencies, there can
be no assurances the Fund will achieve its investment objectives.

The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the board of directors. Others may be changed only by
holders of a majority of the outstanding shares and include the following:

Without shareholder approval the Fund may not: (1) purchase any securities other
than those described under "Investment Objectives, Policies and Restrictions";
(2) invest more than 80 percent of its total assets in loans and/or loan
participations purchased from Participating Banks, Certificates and/or Trust
Certificates; (3) invest more than five percent of its total assets in loan
participations purchased from, or loans backed by letters of credit issued by,
any one Participating Bank; (4) invest with a view to exercising control or
influencing management; (5) purchase securities of other investment companies,
except in connection with a merger, acquisition, consolidation or
reorganization; (6) purchase or sell real estate, commodities or commodity
contracts, interests in oil, gas or other mineral exploration or development
programs; (7) purchase any securities on margin, except for the clearing of
occasional purchases or sales of portfolio securities; (8) make short sales of
securities or maintain a short position or write purchase or sell puts
(excluding repayment and guarantee arrangements on loan participations purchased
from Participating Banks), calls, straddles, spreads or combinations thereof;
(9) make loans to other persons, provided the Fund may invest up to 80 percent
of its total assets in loans and/or loan participations purchased from
Participating Banks, Certificates and/or Trust Certificates, as described in (2)
above, and may make the investments, and enter into repurchase agreements, as
described under "Investment Objectives, Policies and Restrictions"; (10) borrow
money, except to meet extraordinary or emergency needs for funds, and then only
from banks in amounts not exceeding 10 percent of its total assets, nor purchase
securities at any time borrowings exceed five percent of the Fund's total
assets; (11) mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any securities owned by the Fund except as may be
necessary in connection with borrowings outlined in (10) above and then
securities mortgaged, hypothecated or pledge may not exceed five percent of the
Funds' total assets taken at market value; (12) invest in securities with legal
or contractual restrictions on resale (except for repurchase agreements, loans,
loan participations purchased from Participating Banks and Trust Certificates)
or for which no ready market exists; (13) purchase loan participations other
than from banks within the State of Iowa which have entered into a Liquidity and
Servicing Agreement and which have a record, together with predecessors, of at
least five years of continuous operation; (14) act as an underwriter of
securities; (15) enter into repurchase agreements if, as a result thereof, more
than five percent of the Fund's total assets (taken at market value at the time
of such investment) would be subject to repurchase agreements maturing in more
than seven calendar days; and (16) purchase loan participations from any
Participating Bank if five percent or more of the securities of such Bank are
owned by the Advisor or by directors and officers of the Fund or the Advisor, or
if any director or officer of the Fund or the Advisor owns more than 1/2 percent
of the voting securities of such Bank.

The Fund intends to invest at least 25 percent of its total assets in loans
and/or loan participations purchased from Participating Banks and/or Trust
Certificates and/or Certificates, except when such investments are either not
available in sufficient quantity or do not carry yields competitive with
alternative investments.

PURCHASES OF FUND SHARES

See "Opening An Account - Purchasing Shares" in the Prospectus for basic
information on how to purchase shares of the Fund.

An order to purchase shares of the Fund is accepted when the Fund's Custodian
Bank receives payment in Federal funds (funds available for immediate
investment). This will occur upon receipt of the purchase price by Federal funds
wire or electronic funds transfer via the ACH system from the purchaser's bank,
or when a check or other negotiable bank draft received by the Fund has been
converted into Federal funds (normally one to two business days after its
receipt by the Fund).

An investor will become a shareholder when the net asset value applicable to his
order is determined. Net asset value of the Fund's shares is determined twice
each day at 10:00 a.m. Des Moines time and at the close of the New York Stock
Exchange (3:00 p.m. Des Moines time). If Federal funds are available to the Fund
before 10:00 a.m. Des Moines time, an order will be effective the same day, the
investor will become a shareholder of record that day, and shares will commence
earning dividends the day the order becomes effective. If Federal funds are
available after 10:00 a.m. but before 3:00 p.m. Des Moines time, the shares will
not commence earning dividends until the day after the order becomes effective.

Investments in the Fund may be made through transactions directly with the
Fund's Underwriter (IMG Financial Services, Inc.) and through qualified banks,
savings and loan associations, broker/dealers, investment advisory firms, and
other organizations ("Participating Organizations") selected by the Advisor and
approved by the Board of Directors of the Fund, based upon the Participating
Organization's capacity to provide processing of Fund transactions for its
customers in conjunction with other customer account relationships.
Participating Organizations will be required to enter into agreements with the
Fund's Underwriter to provide certain services to persons ("Participating
Investors") who invest in the Fund through Participating Organizations. These
will include: distributing copies of the Prospectus and sales literature to
prospective investors who request it; furnishing Participating Investors with
periodic account statements containing information regarding Fund share
purchases and redemptions, income earned and Fund investment balances; and
forwarding to Participating Investors periodic reports and proxy material mailed
by the Fund to its shareholders. Participating Organizations may satisfy the
Fund's required minimum, initial and subsequent purchase amounts by aggregating
investments on behalf of customers whose individual investments are less than
the Fund's required minimums. Participating Investors may, if they so elect,
authorize their Participating Organizations to purchase and redeem Fund shares
by means of special investment arrangements offered by the Participating
Organization.

The Fund adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940 on December 20, 1986, effective January 1,
1987. The Plan continues in force only if approved annually by the Board of
Directors and by a majority of directors who are not parties to the Plan or
interested persons of any party to the Plan, cast in person at a meeting called
for the purpose of voting on such approval, or by a majority of the outstanding
securities of the Fund. In adopting the Plan, the directors considered various
factors and determined that the Plan would benefit the Fund and its
shareholders. On November 21, 1990, the Fund's shareholders approved an
Amendment to the Plan, effective January 1, 1991, to allow for payment to
reimburse the Fund's Underwriter for direct and indirect expenses related to the
marketing, selling, and distribution of Fund shares, including but not limited
to, preparation and distribution of brochures, advertisements and other
promotional materials for the Fund, compensation to sales personnel employed by
the Underwriter, and payment to any securities dealer, financial institution or
any other Person (a "Participating Organization") who renders assistance in
distribution or promoting the sale of the Fund's shares pursuant to a written
agreement with the Underwriter; and to increase the maximum fee payable under
the Plan from 0.50 of 1 percent to 0.75 of one percent of the average net asset
value of the Fund. Participating Organizations make available to their customers
transaction services and provide monthly shareholder account reporting and
related ministerial duties with respect to customer accounts. Except as to
securities dealers, none of the compensation paid to such Participating
Organizations constitute expenses related to advertising, distribution of
prospectuses to other than current shareholders, underwriter's compensation or
compensation to dealers, or compensation of sales personnel, and payments made
are related solely to the cost of the Participating Organization's services in
providing the shareholder account services and shareholder account reporting.
Participating Organizations are not authorized to actually make sales of shares
of the Fund. All orders to purchase shares are subject to acceptance by the
Fund's Underwriter on behalf of the Fund. While the Fund itself does not
presently levy sales, redemption or account service charges, Participating
Organizations may elect to do so and the Fund may elect to do so in the future.
Investors should inquire regarding the nature and costs of services provided by
Participating Organizations and determine if such services are desired because
the costs thereof will reduce the Fund's yield to the investor below that
obtainable by investing in the Fund directly. While the Fund may purchase
portfolio securities from Participating Organizations, it will not give any
preference to them in selecting their investments.

No director or officer of the Fund or the Advisor has any direct or indirect
financial interest in the Plan. The Fund's Plan results in an efficient system
of customer investment in the Fund thereby potentially increasing the Fund's
ability to attract shareholders. The services rendered by the Participating
Organizations with respect to shareholder reporting are more efficient and
direct than that which the Fund might otherwise provide. The Fund believes that
the Plan and agreements with the Participating Organizations actually reduce
expenses for shareholder account reporting thereby reducing costs of the Fund
and increasing yields. For the year ended June 30, 1995, the Fund paid out a
total of $1,176,124 to Participating Organizations under the Plan. As of
September 30, 1995, there were 39 Participating Organizations under the Plan.

The Plan and any agreements related thereto will automatically terminate if
assigned and may be terminated by either party on 60 days' notice. The Plan may
be terminated by a majority of noninterested directors who have no direct or
indirect financial interest in the Plan or it may be terminated by a majority of
the outstanding voting shares of the Fund. Any changes in the Plan that would
materially increase the distribution costs require shareholder approval;
otherwise, the directors, including a majority of the noninterested directors,
may amend the Plan. The directors review quarterly a written report of
distribution costs incurred pursuant to the Plan.

The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Since the
only function of banks who may be engaged as Participating Organizations is to
perform administrative and shareholder servicing functions, the Fund believes
that such laws should not preclude banks from acting as Participating
Organizations; however, future changes in either Federal or State statutes or
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as judicial or administrative decisions or
interpretations of statutes or regulations, could prevent a bank from continuing
to perform all or part of its shareholder servicing activities. If a bank were
prohibited from so acting, its shareholder customers would be permitted to
remain shareholders in the Fund, and alternative means for continuing the
servicing of such shareholders would be sought. In such event, changes in the
operation of the Fund might occur, and shareholders serviced by such bank might
no longer be able to avail themselves of any investment or other services then
being provided by the bank. It is not expected that shareholders would incur any
adverse financial consequences as a result of any of these occurrences. It is
intended that none of the services provided by Participating Organizations other
than registered broker/dealers will involve the solicitation or sale of shares
of the Fund.

The Fund has received an opinion from Cline, Williams, Wright, Johnson &
Oldfather to the effect that, while the matter may not be entirely free from
doubt, the services to be performed by banks acting as Participating
Organizations are essentially ministerial in nature and not in violation of the
Glass-Steagall Act.

The Fund reserves the right to reject any purchase order and to modify
investment minimums from time to time. All purchase orders are subject to
acceptance by authorized officers of the Fund in Des Moines, Iowa, and are not
binding until so accepted. Once a purchase order has been accepted by the Fund,
it may not be cancelled or revoked by the investor although the purchased shares
may be redeemed.

VALUING THE FUND'S SHARES

The net asset value of the Fund's shares is determined twice each day, at 10:00
a.m. Des Moines time and at the close of the New York Stock Exchange (currently
3:00 p.m. Des Moines time). The Fund is required to compute its net asset value
on each day (except days on which no purchase or redemption orders are received)
on which the New York Stock Exchange is open for trading or during which there
is a sufficient degree of trading in its portfolio securities that its net asset
value might be materially affected. Net asset value is computed by adding the
value of all securities and other assets (including accrued interest),
subtracting liabilities (including dividends payable) and dividing by the number
of shares outstanding.

Rule 2a-7 under the Investment Company Act of 1940 permits the Fund to compute
its net asset value per share using the amortized cost method of valuing
portfolio securities. As a condition for using the amortized cost method of
valuation, the Board of Directors of the Fund established procedures to
stabilize the Fund's net asset value at $1.00 per share. These procedures
include a review by the Board of Directors as to the extent of any deviation of
net asset value based on available market quotations from the Fund's $1.00
amortized cost value per share. If such deviation exceeds $.005, the Board of
Directors will consider what action, if any, should be initiated to reasonably
eliminate or reduce material dilution or other unfair results to shareholders.
Such action may include redemption of shares in kind; selling portfolio
securities prior to maturity; withholding dividends or utilizing a net asset
value per share as determined by using available market quotations. In addition,
the Fund must maintain a dollar-weighted average portfolio maturity appropriate
to its investment objective but in any event not longer than 90 days, must limit
portfolio investments to those instruments which the Board of Directors
determines present minimal credit risks, and must observe certain other
reporting and recordkeeping procedures.

Accordingly, U.S. government obligations held by the Fund; commercial and
industrial loans, and participation interests therein acquired from
Participating Banks under Liquidity and Servicing Agreements; commercial paper;
bank obligations; short-term corporate obligations; and Trust Certificates,
which are subject to mandatory repurchase at their original purchase price; will
be valued at amortized cost. Other assets are valued at a fair value determined
in good faith by the Board of Directors of the Fund.

CALCULATION OF YIELD

"Current yield" (a seven-calendar-day historical yield) is calculated by first
dividing the average daily net investment income per share for that seven-day
period by the average daily net asset value per share for the same period. This
return is then annualized by multiplying the result times 365/7. Net investment
income does not include realized or unrealized gains or losses. "Effective
yield" is based on current yield and the distribution of dividends monthly.

Yield on shares of the Fund may fluctuate daily and does not provide a basis for
determining future yields. Yield is not guaranteed nor is the principal of the
Fund insured. In comparing the Fund's yield with those of alternative
investments (such as savings accounts, various types of bank deposits and other
money market funds), investors should consider differences between the Fund and
the alternative investments, including differences in the periods and methods
used in calculating the yields being compared.

The following are examples for purposes of illustration only, of the current
yield calculations and the effective yield calculations for the seven-day period
ended June 30, 1995:

Assumptions:
Value of a hypothetical pre-existing account
with exactly one share at the beginning of the period: $1.000000000

Value of the same amount (excluding capital changes)
at the end of the seven-day period: $1.000969074

Calculation:
Ending account value $1.000969074
Less beginning account value $1.000000000
Net change in account value $ .000969074*

Base period return:
(change/beginning account value)
.000969074/1.000000000 = .0009690974

Current yield = .000969074 x (365/7) = 5.05 percent
Effective yield = (1 + .050530303/12) 12-1 = 5.17 percent

Weighted average life to maturity of the portfolio on June 30, 1995, was 42.70
days.

*There are no monthly account charges.

The Prospectus may be in use for up to a full year; and accordingly, it can be
expected that yields will fluctuate substantially from the example shown above.

From time to time the Fund may quote its yield in advertisements or in reports
and other communications to shareholders. The Fund's yield changes in response
to fluctuations in interest rates and in the Fund's expenses. Consequently, any
given yield quotations should not be considered as representative of what the
Fund's yields may be for any specified period in the future.

Yield information may be useful in reviewing performance of the Fund and for
providing a basis for comparison with other investment alternatives. However,
the Fund's yields will fluctuate, unlike other investments which may pay a fixed
yield for a stated period of time.

Investors should recognize that in periods of declining interest rates the
Fund's yield will tend to be somewhat higher than prevailing market rates, and
in periods of rising interest rates, the Fund's yield will tend to be somewhat
lower. Also, when interest rates are falling, the inflow of net new money to the
Fund from the continuous sale of its shares will likely be invested in
instruments producing lower yields in the balance of the Fund's holdings,
thereby reducing the current yields of the Fund. In periods of rising interest
rates, the opposite can be expected to occur.

Advertisements and other sales literature may, from time to time, include
comparative performance information including data relating to the yield on
deposits at banking and savings and loan institutions (including savings
accounts, interest bearing checking accounts, NOW accounts and money market
deposit accounts). Yields are compiled periodically by the Advisor from a survey
of banking and savings and loan institutions and from reports published by major
newspapers. Additionally, such advertisements and other sales literature may
include references to yield information compiled by IBC/Donoghue's MONEY FUND
REPORT, The Bank Rate Monitor, Banxquote and other recognized industry sources.
Demand and savings deposit accounts at banking and savings and loan institutions
are generally FDIC-insured and such yields generally do not fluctuate to the
extent of the Fund.

DIVIDENDS

The daily net income of the Fund is declared as a dividend each business day to
holders of record immediately before 3:00 p.m. Des Moines time. Dividends are
credited to shareholders' accounts each business day and distributed monthly. If
a shareholder redeems the entire amount in his account during the month,
dividends credited to the account from the beginning of the month through the
date of redemption are paid with the redemption proceeds.

For purposes of calculating dividends, daily net income consists of interest
earned, including the amortization of any discount or premium to the date of
maturity, less accrued expenses of the Fund since the previous business day.
Monthly dividend distributions are reinvested in additional shares unless the
shareholder has requested payment in cash. A statement summarizing account
activity and a check for the amount of any dividends the shareholder may have
requested to be paid in cash are normally mailed monthly.

The Fund attempts to maintain its net asset value at $1.00 per share. See
"Valuing the Fund's Shares" on page 6. While this is expected to be possible
under most conditions, should the Fund incur or anticipate any unusual expenses,
loss, depreciation, gain or appreciation which would affect either net asset
value per share or income, the Board of Directors of the Fund will consider
whether to adhere to the dividend policy previously described or revise it in
light of the existing circumstances.

If the Fund's net asset value per share were reduced, or was expected to be
reduced, below $.995, the Board of Directors might temporarily suspend or reduce
dividend payments in order to maintain a net asset value of $1.00 per share. As
a result of such suspension or reduction of dividends, an investor might receive
less income during a given period than he might otherwise. Such expenses, losses
or depreciation might therefore result in an investor receiving no dividends for
the period he held his shares and receiving upon redemption a price per share
lower than the price he paid.

In its endeavor to maintain net asset value at $1.00 per share, the Fund is
required to adhere to certain conditions of Rule 2a-7 promulgated by the
Securities and Exchange Commission which permits the Fund to value its assets at
their amortized cost. These conditions require that: (1) the Fund seek to
maintain a dollar-weighted average portfolio maturity appropriate to its
objective of maintaining a stable net asset value and, in no event, longer than
90 days; (2) the board of directors of the Fund undertake to assure, to the
extent reasonably practicable, when taking into account current market
conditions affecting its investment objective, that the Fund's market-based net
asset value per share (that is, its net asset value computed on the basis of
available market quotations and estimates) will not deviate from $1.00; and (3)
the Board of Directors consider reducing or suspending dividend payments if the
market-based net asset value per share declines below $.995.

TAXATION

The Fund has qualified as a regulated investment company under Subchapter M of
the Internal Revenue Code since its inception, and intends to qualify as a
regulated investment company in the current fiscal year by distributing
substantially all of its taxable net income, including any realized capital
gains, and thus will not incur any Federal income taxes. Shareholders will
receive taxable dividend income or capital gains, as the case may be, from
distributions whether paid in cash or received in the form of additional shares.
Promptly after the end of each calendar year, each shareholder will receive a
statement of the Federal income tax status of all dividends and distributions
paid during the year.

The Fund is subject to the backup withholding provisions of the Tax Equity and
Fiscal Responsibility Act of 1982. Under these provisions, the Fund is required
to deduct and withhold income tax from dividends paid to Fund shareholders at a
31 percent rate if a shareholder fails to furnish the Fund with his taxpayer
identification number in the manner required, if the Internal Revenue Service
notifies the Fund that the taxpayer identification number furnished by the
shareholder is incorrect, or in certain other instances involving the
shareholder's under-reporting of dividend income or failure to make proper
certification with respect thereto. Accordingly, Fund shareholders are urged to
complete and return Internal Revenue Service Form W-9 when requested to do so by
the Fund.

This discussion of the Fund's tax matters is only a summary and relates
principally to Federal tax matters. Thus, shareholders are encouraged to consult
with their personal tax advisors.

MANAGEMENT

Officers and Directors of the Fund. The following table sets forth certain
information with respect to the officers and directors of the Fund:

Robert F. Galligan Business Administration Department Chairman,
Director Associate Professor, Grand View College;
Director, IMG Tax Exempt Liquid Assets Fund, Inc.

Chad L. Hensley Retired President and CEO, Preferred Risk Mutual
Director Insurance Company; Director, IMG Tax Exempt
Liquid Assets Fund, Inc.

Fred Lorber Chairman of Board, Lortex Inc., a manufacturer
Chairman and Director of textiles; Chairman and Director, IMG Tax
Exempt Liquid Assets Fund, Inc.

Darwin T. Lynner, Jr. President, Darwin T. Lynner Co., Inc., a
Director property management company; Director, IMG Tax
Exempt Liquid Assets Fund, Inc.

Mark A. McClurg* Vice President, Secretary and Senior Managing
Treasurer and Director Director of Investors Management Group and IMG
Financial Services, Inc.; Treasurer and
Director, IMG Tax Exempt Liquid Assets Fund, Inc.

David W. Miles* President, Treasurer and Senior Managing
President and Director Director of Investors Management Group, and IMG
Financial Services, Inc.; President and
Director, IMG Tax Exempt Liquid Assets Fund, Inc.

Richard A. Miller Vice President & General Counsel, Farmers
Director Casualty Company Mutual; Director, IMG Tax
Exempt Liquid Assets Fund, Inc.

James W. Paulsen* Senior Managing Director of Investors Management
Vice President and Director Group and IMG Financial Services, Inc.; Vice
President and Director; IMG Tax Exempt Liquid
Assets Fund, Inc.

Ruth L. Prochaska* Controller/Compliance Officer of Investors
Secretary Management Group, and IMG Financial Services,
Inc.; Vice President and Secretary, IMG Tax
Exempt Liquid Assets Fund, Inc.

William E. Timmons Partner in Patterson, Lorentzen, Duffield,
Director Timmons, Irish & Becker; Director, IMG Tax
Exempt Liquid Assets Fund, Inc.

Steven E. Zumbach Attorney at Belin, Harris, Lamson, McCormick;
Director Director, IMG Tax Exempt Liquid Assets Fund, Inc.

*Messrs. McClurg, Miles, and Paulsen and Ms. Prochaska are deemed to be
"interested persons" (as that term is defined in the Investment Company Act of
1940) of the Fund and the Advisor.

The mailing address of all officers and directors of the Fund is 2203 Grand
Avenue, Des Moines, Iowa 50312-5338.

The Fund pays a fee of $550 per Board meeting and $100 per committee meeting to
directors who are not interested persons of the Advisor. Under the Management
Agreement other remuneration, if any, of officers and directors is paid by the
Advisor.
<TABLE>
COMPENSATION TABLE
<CAPTION>
(1) (2) (3) (4) (5)
Aggregate Pension or Retirement Estimated Annual Total Compensation From
Name of Compensation Benefits Accrue As Benefits Upon Registrant and Fund
Person, Position From Registrant Part of Fund Expenses Retirement Complex Paid to Director
<S> <C> <C> <C> <C>
Robert F. Galligan $ 2,750 $ 0 $ 0 $ 2,750
Director

Chad L. Hensley 2,750 0 0 2,.750
Director

Fred Lorber 2,200 0 0 2,200
Director

Darwin T. Lynner 2,200 0 0 2,200
Director

Mark A. McClurg 0 0 0 0
Treasurer and
Director

David W. Miles 0 0 0 0
President and
Director

Richard A. Miller 2,750 0 0 2,750
Director

James W. Paulsen 0 0 0 0
Vice President
and Director

William E. Timmons 2,200 0 0 2,200
Director

Steven E. Zumbach 0 0 0 0
Director
</TABLE>

Management of the Advisor. David W. Miles, Mark A. McClurg, and James W.
Paulsen each beneficially own more than 10 percent of the outstanding voting
securities of the Advisor and are deemed to be control persons of the Advisors.
Senior Managing Directors of Investors Management Group, are Mark A. McClurg,
David W. Miles, and James W. Paulsen. They intend to devote substantially all
their time to the operation of the Advisor.
THE INVESTMENT MANAGEMENT AGREEMENT

See "Management and Fees" in the Prospectus for certain information concerning
Investors Management Group.

The Advisor furnishes continuous investment supervision to the Fund under a
Management and Investment Advisory Agreement (the "Management Agreement"). For
its services the Advisor receives a fee, computed and accrued daily and payable
monthly, at the following rate on the average daily closing net asset value of
the Fund:

Net Assets Annual Rate

For assets up to $200,000,000 .25 percent
For assets in excess of
$200,000,000 to $300,000,000 .24 percent
For assets in excess of
$300,000,000 to $400,000,000 .23 percent
For assets in excess of
$400,000,000 to $500,000,000 .22 percent
For assets in excess of
$500,000,000 to $600,000,000 .21 percent
Over $600,000,000 .20 percent

The above stated rates were voluntarily reduced by the Advisor from a maximum of
0.50 percent effective January 1, 1991.

Under the Management Agreement, the Advisor is responsible for selecting the
Fund's portfolio securities, including the solicitation and approval of Iowa
commercial banks selected as Participating Banks from which the Fund may
purchase participation interests in short-term loans subject to Liquidity and
Servicing Agreements or which may issue irrevocable letters of credit to back
the demand repayment commitments of borrowers. A careful review of the financial
condition and loan loss record of a prospective bank will be undertaken prior to
the bank being approved to enter into a Liquidity and Servicing Agreement and,
once approved, a Participating Bank's financial condition and loan loss record
will be reviewed at least annually thereafter.

The principal criteria which the Advisor will consider in approving, rejecting
or terminating Liquidity and Servicing Agreements with Participating Banks will
include a bank's (a) ratio of capital to deposits; (b) ratio of loan charge offs
to average loans outstanding; (c) ratio of loan loss reserves to net loans
outstanding and (d) ratio of capital to total assets. Ordinarily, the Advisor
will recommend that the Fund not enter into or continue a Liquidity and
Servicing Agreement with any bank whose ratios (as described above) are less
favorable than the average of all Iowa banks. The Advisor will also consider a
bank's classified loan experience, historical and current earnings and growth
trends, quality and liquidity of investments and stability of management and
ownership. Typically, the Advisor will utilize a variety of information sources;
including, annual audited financial statements, unaudited interim financial
statements, quarterly reports of condition and income filed with regulatory
agencies and periodic examination reports (if available) and reports of
federally insured banks concerning past-due-loans, renegotiated loans and other
loan problems.

The Advisor also provides office space and management and other personnel to the
Fund and pays the costs of computing the net asset value of the Fund and related
bookkeeping expenses. The Advisor will bear any sales or promotional costs
incurred in connection with the sale of the Fund's shares.

The Fund pays all expenses of operations not specifically assumed by the
Advisor. These include: custodian, transfer agent and shareholder recordkeeping
charges; charges for the services of legal counsel and independent public
accountants; compensation of directors other than those affiliated with the
Advisor and expenses incurred by them in connection with their services to the
Fund; certain insurance premiums; expenses of printing and distributing to
shareholders notices, proxy solicitation material, prospectuses and reports;
brokers' commissions; taxes; interest; and expenses of complying with Federal,
state and other laws.

The Advisor has also agreed to reimburse the Fund, up to the amount of the
advisory fees paid to the Advisor, to the extent that the total annual expenses
of the Fund, exclusive of all taxes, interest, brokers' commissions and other
related charges but including fees paid to the Advisor, exceed the most
restrictive limits prescribed by any state in which the Fund's shares may
eventually be offered for sale. The Fund believes that it presently is not
subject to any such restrictions. The Fund paid $292,661, $327,033, and $374,373
in management fees to the Advisor in fiscal 1993, 1994, and 1995 respectively.

The Management Agreement approved by the sole shareholder of the Fund on
September 21, 1982, for an initial term expiring September 30, 1983, will
continue in effect as long as it is approved annually by a majority of those
directors who are not parties to the Management Agreement or "interested
persons" of such parties and by either the board of directors of the Fund or a
majority of the outstanding voting securities of the Fund. The Management
Agreement which was last approved by the Fund's directors, as described above,
on July 18, 1995, may be terminated by either party without penalty on 60 days'
written notice and will automatically terminate in the event of its assignment.

The Management Agreement provides that neither the Advisor nor any of its
officers or directors, agents or employees will have any liability to the Fund
or its shareholders for any error of judgement, mistake of law or any loss
arising out of any investments or for any other act or omission in the
performance of its duties as investment advisor under the Management Agreement,
except for liability resulting from willful misfeasance, bad faith or gross
negligence on the part of the Advisor in the performance of its duties or from
reckless disregard by the Advisor of its obligations under the Management
Agreement.

IOWA BANKING STRUCTURE

There are 517 banks in Iowa with aggregate deposits of $32 billion and ranging
in size from $1.5 million to $3.6 billion in total deposits. Both state
chartered and national chartered banks operate within the state. Limited branch
banking is permitted and several large multi-bank holding companies operate
within the state. A bank or bank holding company may not, under state law,
control more than 10 percent of the state's total bank deposits.

Capital (shareholder's equity) as a percent of total assets is a frequently used
measure of a bank's capacity to absorb losses without jeopardizing its financial
condition. On December 31, 1994, the latest date as of which information is
available, the aggregate capital accounts of Iowa banks were equal to 8.8551
percent of total assets. This compares with an average capital-to-asset ratio of
8.79 percent for all commercial banks nationwide. Loan chargeoffs as a
percentage of loans outstanding provide a measure of a bank's ability to conduct
its lending activities in a sound manner. In 1994 Iowa banks charged off loans
equal to 0.5161 percent of average loans outstanding during the year, which
compares with chargeoffs equal to 2.2238 percent for all commercial banks. Loan
loss reserves as a percent of net loans outstanding reflect a bank's ability to
absorb loan losses. As of December 31, 1994, the aggregate loan loss reserves of
Iowa banks were equal to 1.6796 percent of net loans outstanding. This compares
with a ratio of 2.5347 percent for all commercial banks.

The principal economic activity in Iowa involves the production, processing and
distribution of farm commodities. Businesses engaged in the production of goods
and services employed in agriculture are also important to the state's economy.
The deposit balances and lending activities of Iowa commercial banks are thus
materially influenced by developments affecting the agricultural economy.

At June 30, 1995, assets of the Fund included Trust Certificates issued by the
Iowa Student Loan Trust in the amount of $82,435,000 which was equal to 49.4
percent of Fund net assets (see "The Iowa Student Loan Trust" below). Such
Certificates have an original maturity of not more than 364 days and may be
redeemed by the Fund upon not more than five business days' written notice to
the Trust. Proceeds from the issuance of Trust Certificates have been used by
the Trust to purchase federally insured student loans initiated by Iowa banks
which may be required to purchase such loans from the Trust on not more than
five business days' written notice. In the event a bank was unable to honor its
purchase commitment it would be necessary for the Trust to seek other purchasers
of the loans. Because such loans are federally insured and bear a variable
interest rate the Fund believes that a ready market for them exists.

THE IOWA STUDENT LOAN TRUST

The Iowa Student Loan Trust was formed for the purpose of purchasing federally
insured student loans originated and sold by Iowa banks subject to repurchase,
at the option of the Trust, on no more than five business days' written notice.
The Trustee is Hawkeye Bank, Des Moines, Iowa. The Trust will be funded by the
issuance and sale to the Fund of Trust Certificates which will have an original
maturity of not more than 364 days and which may be redeemed by the Fund upon
not more than five business days' written notice to the Trust. The Fund is under
no obligation to purchase Trust Certificates issued by the Trust.

The Fund's election to purchase Trust Certificates will be based upon the amount
of funds available for investment, the investment yield borne by the Trust
Certificates compared with yields available on other short-term liquid
investments and upon the aggregate amount of Trust Certificates, commercial and
industrial loans and participation interests therein owned by the Fund which may
not exceed 80 percent of Fund assets. The yield to the Fund on Trust
Certificates will be commensurate with current net yields on federally insured
student loans. Presently, net of servicing and trust fees, such loans yield
approximately the 91-day U.S. Treasury Bill rate plus .75 percent. Such fees
will be paid out of the Trust assets and no other fees will be paid directly or
indirectly by the Fund.

The Higher Education Act (the "Act") sets forth provisions establishing a
program of (i) direct federal insurance to holders of student loans, and (ii)
reimbursement to state agencies or private non-profit corporations administering
student loan insurance programs of losses sustained in the operation of their
programs (the "Federal GSL Program"). Under the Federal GSL Program, the
Secretary of Education (the "Secretary") is authorized to enter into guarantee
and interest subsidy agreements with the Iowa College Aid Commission, and
similar organizations (collectively the "Agencies"). The Federal GSL Program
provides for reimbursements to the Agencies for default claims paid by them, the
payments of administrative cost allowances to the Agencies, advances for the
Agencies' reserve funds and interest subsidy payments and Special Allowance
Payments to the holders of qualifying student loans made pursuant to the Federal
GSL Program.

Pursuant to Section 428(c)(1)(A) of the Act, the Agencies have entered into
guarantee agreements with the Secretary under which the respective Agencies
operate a Guarantee Program, whereby the Secretary agrees to reimburse the
Agencies in an amount equal to 80 percent of the amount expended by them in the
discharge of their insurance obligations on the unpaid balance of principal and
accrued interest with respect to loans guaranteed by the Agencies. The Act also
authorizes the Secretary to enter into supplemental guarantee agreements whereby
such federal reimbursement will be increased to a maximum of 100 percent of the
amount expended by the agencies in the discharge of their insurance obligations.
The supplemental guarantee agreements are subject to annual renegotiation and
the Secretary is not authorized to renew them unless the Agencies' Guarantee
Programs comply with all the terms of the supplemental guarantee agreements and
all the provisions of applicable federal regulations.

The Secretary and the Agencies have entered into interest subsidy agreements
under Section 428 (b) of the Act whereby the Secretary agrees to pay interest
subsidy payments to the holders of qualifying student loans for the benefit of
students meeting certain requirements. To be eligible for federal reimbursement
programs, such loans must be made by an "eligible lender" under the Agencies'
Guarantee Program, which must meet requirements prescribed by the rules and
regulations promulgated under the Act. The Trustee will be an eligible lender
and will purchase only loans originated by eligible lenders.

The Act, as amended in 1976, provides for Special Allowance Payments by the
Secretary to holders of qualifying student loans such as the Trust. Special
Allowance Payments are computed on the basis of the average of the bond
equivalent rates of the 91-day U.S. Treasury Bills auctioned during the
preceding quarter, and are provided as an inducement to lenders or holders of
loans to compensate them for the difference between the interest rate carried by
the student loan and the current commercial interest rates.

The Student Loan Reform Act of 1993 made various changes to the Federal
Guaranteed Student Loan Program. Effective October 1, 1993, Agencies are only
required to guarantee student loans at 98 percent of the unpaid balance of
principal and accrued interest on loans made after October 1, 1993. In addition
to other changes relating to origination fees, borrower interest rates,
technical revisions on how consolidated loans are treated and a limitation on
the amount of guarantee fee that can be charged by Agencies, commencing July 1,
1995, the lender yield for Guaranteed Student Loans disbursed after July 1, 1995
is reduced to the 90 day Treasury Bill rate plus 2.5 percent.

All student loans purchased by the Trust will be insured either directly by the
Secretary or under the Federal GSL Program and will qualify for interest subsidy
payments and Special Allowance Payments. Loans typically will be in amounts of
$25,000 or less, repayable over a term of 15 years or less.

GUARANTEED LOAN TRUSTS

The Fund may purchase Certificates from one or more guaranteed loan trusts
created for the purpose of acquiring participation interests in the guaranteed
portion of FmHA guaranteed loans. The guaranteed portion of the FmHA Loans would
be acquired by the Fund through Trusts established at Hawkeye Bank of Des
Moines, Des Moines, Iowa. Interest and principal payments of the FmHA Loans
would accrue to the benefit of the Fund net of certain Trust fees and other fees
payable to certain parties for servicing the FmHA Loans and arising out of the
participation of the guaranteed portion of the FmHA Loans. Each Certificate will
provide certain identifying information regarding the specific FmHA Loan
acquired including the effective rate and reset provision. Each Certificate will
also be redeemable upon not more than five business days' written notice by the
Fund to the Trustee for an amount equal to the unpaid balance of the
participated portion of the FmHA Loan and accrued interest due thereon. The
redemption feature of the Certificates is backed by unconditional purchase
commitments between the Trustee, the originating banks of the FmHA Loans, and
other Participating Banks which require the banks to purchase such loans at par
less a processing fee upon no more than five business days prior written notice.
Such purchase commitments are unconditional and are operative whether the FmHA
Loans are in default or experiencing difficulties. The unconditional purchase
commitments by the banks is intended to provide liquidity for the FmHA Loans
held by the Trust and beneficially owned by the Fund. Insofar as the
unconditional commitment creates this liquidity, for purposes of rule 2a-7 and
the diversification requirements thereunder, the unconditional commitments are
limited in amounts necessary to keep any one bank from being obligated to
purchase more than 5 percent of the total assets held by the Fund.

The sole purpose of the trust arrangement is to provide a convenient structure
for servicing the FmHA Loans and to eliminate the premium risk that could arise
if the Fund invested directly in the FmHA Loans and prepayment were to occur.
The Board of Directors believes that the arrangement presents minimal credit
risk and that the arrangement is a permissible investment. For purposes of Rule
2a-7, the Fund does not consider the FmHA Loans or the certificates evidencing
ownership as illiquid; considers the FmHA Loans as U.S. government securities,
and considers the arrangement with the participating banks as standby
unconditional put commitments.

FmHA guaranteed loans are originated by financial institutions, mostly
commercial banks, as a direct loan to the borrower. The FmHA guaranteed loans
acquired by the Fund will all have variable rates of interest which will rest no
less frequently than semi-annually and upon the adjustment of the interest rate
the value of the securities will be approximately equal to par. The FmHA, a
division of the U.S. Department of Agriculture, is an independent agency of the
United States government and has the authority to grant the United States
government's full faith and credit guarantee on loans originated by commercial
lenders. Through the Rural Development Act of 1972, the FmHA guaranteed loan
program was enacted by Congress to help meet the financing needs of small
businesses, farms and community facilities in rural areas. Guarantees are issued
on loans obtained by those persons who meet FmHA criteria. Typically borrowers
eligible for FmHA Loans face a degree of financial stress which prevents them
from qualifying for non-guaranteed credit based on the standards of commercial
lenders. Applications for loan guarantees are submitted by the lender to the
local FmHA county officer for approval. The application is reviewed by local
officials to determine whether the borrower, lender and proposed loan meet
program requirements. Loan terms are negotiated with the lender and the
borrowers, but the terms must fall within FmHA guidelines. The FmHA will
guarantee up to 90 percent of the total loan depending upon the loan's
soundness.

Under the FmHA Loan program, the guaranteed portion of FmHA loans may be
participated, sold by the originating bank and traded in the secondary market.
The Fund will only invest in the guaranteed portions of FmHA Loans which are so
participated. While the most current government figures indicate the outstanding
balance on guaranteed loans to be over $4 billion, it is estimated that
approximately 20 percent of the total outstanding balance of guaranteed loans
have actually been participated in the secondary market.

The FmHA guaranty guarantees the repayment of principal and interest
unconditionally and accrues to the benefit of the person owning the participated
portion of the guaranteed FmHA Loan. When the FmHA Loans are sold the guaranty
is assigned to the purchaser and is unconditional and irrevocable. As a result,
the FmHA Loans are deemed to be "government securities" as they meet the
definition of government securities described in Section 2(a)(16) of the
Investment Company Act and Rule 2a-7. All FmHA Loans purchased by the Trust will
be valued by the Fund at par.

The trustee will communicate to the Fund's Investment Adviser the status of loan
payments and delinquencies. In addition, Participating Banks, subject to the
unconditional commitments to purchase the participated FmHA Loans, will be
subject to on-going credit review by the Fund's Investment Adviser. To the
extent that any of the banks deteriorate in credit quality from the standard set
by regional banks with the highest credit ratings by NRSRO's the Investment
Adviser will take action to replace such banks with another bank with an
appropriate credit rating or if unrated, with a comparable credit quality based
on the Investment Adviser's analysis.

OTHER INFORMATION

Federal Holidays. The Fund will be closed for business and, therefore, will not
accept purchase or redemption orders nor calculate net asset value, on all
Federal Holidays -- currently; New Year's Day, Martin Luther King, Jr. Day,
President's Day, Memorial Day, Independence Day, Labor Day, Columbus Day,
Thanksgiving Day, Veterans' Day and Christmas Day.

Portfolio Transactions. Subject to policies set forth by the board of directors
of the Fund, the Advisor is authorized to determine, consistent with the Fund's
investment objectives and policies, which securities will be purchased, sold and
held by the Fund. Most of the Fund's portfolio securities will be purchased on a
principal basis directly from the issuer, from banks, underwriters or market
makers and, thus, will not involve payment of a brokerage commission. There were
no agency transactions in the last three fiscal years and thus no brokerage
commissions have been paid. Such purchases may include a discount, concession or
mark-up retained by an underwriter or dealer. The Advisor is authorized to
select the brokers or dealers that will execute the purchases and sales of
portfolio securities and is directed to use its best efforts to obtain the best
available price and most favorable execution on brokerage transactions. Some of
the portfolio transactions may be directed to brokers who furnish special
research and statistical information or services rendered in the execution of
orders which are of benefit to the Advisor. These may include advice or
information with respect to particular securities or issuers, information
concerning general market or economic conditions and the obtaining of
information from brokers, underwriters or market makers. While no dollar value
can be placed on such information or services, it allows the Advisor to
supplement its own research and analysis activities which can reduce its costs
but not those of the Fund.

Organization and Capital Structure. The Fund is an open-ended diversified
management investment company organized as an Iowa corporation under the name
Iowa Liquid Assets Fund, Inc., in June 1982. On October 13, 1987, the Fund
changed its name to IMG Liquid Assets Fund, Inc. The Fund has an authorized
capital of 200,000,000 shares of Common Stock, par value $.001 per share. All
shares have equal rights and privileges and each share is entitled to one vote
in the election of directors and other matters presented to shareholders and to
participate equally in the net distributable assets of the Fund on liquidation.
The shares are nonassessable, have no preemptive, subscription or conversion
rights. The shares have no sinking fund provisions but are redeemable upon
request of the holders and are transferable.

Reports to Shareholders. Semiannual and annual reports will include financial
statements which, in the case of the annual report, will be reported upon by the
Fund's independent auditors, KPMG Peat Marwick LLP. The Annual Report is
incorporated by reference into the Fund's Statement of Additional Information.

Principal Shareholders. As of August 15, 1995, no person is believed to own as
much as 5 percent of the Fund's shares and the Fund's officers and directors as
a group owned less than 1 percent of the Fund's shares.

Custodian, Transfer Agent and Dividend Paying Agent. The Fund has a Custodian
Agreement with Hawkeye Bank of Des Moines, Des Moines, Iowa (the "Custodian"),
which holds cash for the purchase and redemption of the Fund's shares and will
make available to interested investors services relating to establishment of
Keogh Act and Individual Retirement Account Programs. The Custodian will hold
the Fund's portfolio investments which may, in part, be deposited in central
depository systems as permitted by Federal law. The Fund has also contracted
with IMG to provide certain accounting services including; transfer of shares,
disbursement of dividends and the maintenance of shareholder accounting records.

Legal Opinion. Messrs. Cline, Williams, Wright, Johnson & Oldfather have
rendered an opinion to the Fund with respect to legality of the shares offered
in the Prospectus, tax matters, and Glass-Steagall Act matters.

Independent Auditors. KPMG Peat Marwick LLP, 2500 Ruan Center, Des Moines, Iowa,
50309, has been selected unanimously by the members of the Board of Directors of
the Fund who are not interested persons of the Fund as the Fund's independent
auditors to examine the books and securities of the Fund and to report on the
financial statements of the Fund.

APPENDIX A

Description of Moody's Investors Service, Inc.'s commercial paper rating:

Prime--1 (or related institutions) have a superior capacity for repayment of
short-term promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics:

- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt
and ample asset protection. - Broad margins in earnings coverage of
fixed financial charges and high internal cash generation. - Well
established access to a range of financial markets and assured sources
of alternate liquidity.

Prime--2 (or related supporting institutions) have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

Description of Moody's Investors Service, Inc.'s corporate bond ratings:

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.

Ba--Bonds which are rated Ba are judged to have speculative elements. Their
future cannot be considered, as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

Description of Standard & Poor's Corporation's commercial paper ratings:

A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.

A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.

Description of Standard & Poor's Corporation's corporate bond ratings:

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.

AA--Bonds rated AA also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.

<PAGE>
POWER OF ATTORNEY

We, the undersigned officers and directors of IMG Liquid Assets Fund, Inc.,
hereby severally constitute David W. Miles and Mark A. McClurg, and each of them
are true and lawful attorneys with full power to sign for us and in our names,
in the capacitites indicated below any and all amendments to the N-1A Registrant
Statement of IMG Liquid Assets Fund, Inc., to be filed with the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or either of them, to any and all amendments to
said Registration Statement.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Des Moines, State of Iowa, on the 17th day of October, 1995.

IMG LIQUID ASSETS FUND, INC.

By_________/s/ David W. Miles_______
David W. Miles

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on the date indicated.

SIGNATURES

IMG LIQUID ASSETS FUND, INC.

By ____________________________________
David W. Miles

Signature Title

________________________________ Chairman and Director
Fred Lorber

________________________________ President, Principal Executive Officer,
David W. Miles and Director

________________________________ Director
Mark A. McClurg

________________________________ Vice President and Director
James W. Paulsen

________________________________ Secretary
Ruth L. Prochaska

________________________________ Director
Robert F. Galligan

________________________________ Director
Chad L. Hensley

________________________________ Director
Darwin T. Lynner, Jr.

________________________________ Director
Richard A. Miller

________________________________ Director
William E. Timmons

________________________________ Director
Steven E. Zumbach

<PAGE>

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements

(1) Included in Part A:

Financial Highlights for the Years Ended June 30, 1995,
1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987, and 1986

(2) Incorporated in Part B:

Independent Auditors' Report dated July 18, 1995

Statement of Net Assets, June 30, 1995

Statement of Operations for the Year Ended June 30, 1995

Statements of Changes in Net Assets for the Two Years Ended
June 30, 1995 and 1994

(3) Included in Part C:

Consent of KPMG Peat Marwick LLP.

(b) Exhibits

Exhibit No. Description

*1. (a) Articles of Incorporation, incorporated by
reference to the Fund's Registration Statement,
filed June 17, 1982.

*1. (b) Amendment to the Articles of Incorporation,
incorporated by reference to the Fund's
Post-Effective Amendment No. 7, filed
October 22, 1987.

*1. (c) Amendment to the Articles of Incorporation,
incorporated by reference to the Fund's
Post-Effective Amendment No. 8, filed
October 13, 1988.

*2. Bylaws, incorporated by reference to the Fund's
Registration Statement, filed June 17, 1982.

*4. Specimen Common Stock Certificate, incorporated
by reference to the Fund's Pre-Effective
Amendment No. 2, filed October 14, 1982.

*5. Management and Investment Advisory Agreement,
incorporated by reference to the Fund's
Registration Statement, filed June 17, 1982.

*6. Underwriting Agreement, incorporated by reference
to the Fund's Registration Statement, filed
June 17, 1982.

*8. (a) Custodian Agreement with Hawkeye Bank of
Des Moines, incorporated by reference to the
Fund's Registration Statement, filed June 17, 1982.

*8. (b) Check Redemption Agreement, incorporated by
reference to the Fund's Pre-Effective Amendment
No. 2, filed October 14, 1982.

*9. (a) Form of Master Liquidity and Servicing Agreement,
incorporated by reference to the Fund's Post-
Effective Amendment No. 2, filed October 25, 1983.

*9. (b) Transfer Agent and Administrative Services
Agreement, incorporated by reference to the Fund's
Post-Effective Amendment No. 4, filed
October 1, 1984.

*9. (c) Trust Agreement, incorporated by reference to the
Fund's Pre-Effective Amendment No. 1, filed
September 7, 1982.

*9. (d) Student Loan Purchase Agreement, incorporated by
reference to the Fund's Pre-Effective Amendment
No. 1, filed September 7, 1982.

*9. (e) Trust Agreement and Guaranteed Funding Agreement.

*10. Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather, incorporated by reference to
the Fund's Post-Effective Amendment No. 4,
filed October 1, 1984.

*13. Representations of Initial Shareholder,
incorporated by reference to the Fund's
Registration Statement, filed June 17, 1982.

*14.(a) Prototype Self-Employed Profit-Sharing Plan,
incorporated by reference to the Fund's
Registration Statement, filed June 17, 1982.

*14.(b) Prototype Individual Retirement Plan, incorporated
by reference to the Fund's Registration
Statement, filed June 17, 1982.

*15.(a) Form of Rule 12b-1 Plan as amended, incorporated
by reference to the Fund's Registration
Statement filed November 8, 1990.

*15.(b) Form of Agreements, incorporated by reference to
the Fund's Post-Effective Amendment No. 7,
filed October 22, 1987.

16. Calculation of Yield Quotations, included in
Part B of this Registration Statement.

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*All previously filed as indicated.

Item 25. Persons Controlled by or under Common Control with Registrant.

None

Item 26. Number of Holders of Securities.

Title of Class Number of Record Holders

Common Stock 2,607 as of September 30, 1995

Item 27. Indemnification.

Section 496A.4(19) of the Iowa Business Corporation Act requires
or permits indemnification of officers and directors of the Registrant under
circumstances set forth therein. Reference is made to Article Ten of the
Articles of Incorporation (Exhibit 1(b) hereto), Article X of the Bylaws of
Registrant (Exhibit 2 hereto) and to Section 10 of the Underwriting Agreement
(Exhibit 6 hereto) for additional indemnification provisions.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the Opinion of the Securities and Exchange
Commission such indemnification by the Registrant is against public policy as
expressed in the Act and, therefore, may be unenforceable. In the event that a
claim for such indemnification (except insofar as it provides for the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted against the Registrant by such director, officer or controlling
person and the Securities and Exchange Commission is still of the same opinion,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether or not such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Item 28. Business and Other Connections of Investment Advisor.

Positions with Principal Occupations (Present
Name Advisor and for Past Two Years)

Mark A. McClurg Vice President, Secretary, Sales & Marketing Manager.
Director and Senior Joined IMG in February, 1989.
Managing Director

David W. Miles President, Treasurer, See caption "Management" in
Director, and Senior the Statement of Additional
Managing Information forming a part
Director of this Registration
Statement.

James W. Paulsen Director and Senior Managing Asset Management Manager,
Director Joined IMG in August 1991.
From May 1983 through
July 1991, President,
Securities Counselors of
Iowa.

Item 29. Principal Underwriters.

(a) IMG Tax Exempt Liquid Assets Fund, Inc.

(b)

Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant

Mark A. McClurg Vice President, Secretary, Treasurer and
2203 Grand Avenue Director and Senior Managing Director
Des Moines, IA 50312-5338 Director

David W. Miles President, Treasurer, President and
2203 Grand Avenue Director, and Senior Managing Director
Des Moines, IA 50312-5338 Director

James W. Paulsen Senior Managing Director Vice President
2203 Grand Avenue and Director
Des Moines, IA 50312-5338

Item 30. Location of Accounts and Records.

Shareholder account records will be maintained by Newtrend,
Regency West 7, 4400 Westown Parkway, West Des Moines, Iowa, 50265, pursuant to
an arrangement with Investors Management Group. All other required accounts,
books and records will be maintained by Ruth L. Prochaska, 2203 Grand Avenue,
Des Moines, Iowa 50312-5338.

Item 31. Management Services.

Not applicable.

Item 32. Undertakings.

Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to
file with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
<PAGE>

CONSENT OF INDEPENDENT AUDITORS

To the Directors and Shareholders of
IMG Liquid Assets Fund, Inc.:

We consent to the use of our report incorporated herein by reference and to the
references to our Firm under the headings "FINANCIAL HIGHLIGHTS" and
"SHAREHOLDERS SERVICES -- Statements and Reports" in the Prospectus and "Reports
to Shareholders" and "Independent Auditors" in the Statement of Additional
Information.

KPMG Peat Marwick LLP

Des Moines, Iowa
October 23, 1995
<PAGE>

IMG LIQUID ASSETS FUND, INC.

EXHIBIT VOLUME

POST-EFFECTIVE AMENDMENT NUMBER 16

FORM N-1A REGISTRATION STATEMENT

IMG LIQUID ASSETS FUND, INC.

EXHIBIT INDEX

Exhibit No. Description Page

*1. (a) Articles of Incorporation, incorporated by reference to
the Fund's Registration Statement, Filed June 17, 1982.......

*1. (b) Amendment to the Articles of Incorporation, incorporated
by reference to the Fund's Post-Effective Amendment No. 7,
filed October 22, 1987.......................................

*1. (c) Amendment to the Articles of Incorporation, incorporated
by reference to the Fund's Post-Effective Amendment No. 8,
filed October 13, 1988.......................................

*2. Bylaws, incorporated by reference to the Fund's
Registration Statement, filed June 17, 1982..................

*4. Specimen Common Stock Certificate, incorporated by
reference to the Fund's Pre-Effective Amendment No. 2,
filed October 14, 1982.......................................

*5. Management and Investment Advisory Agreement, incorporated by
reference to the Fund's Registration Statement,
filed June 17, 1982..........................................

*6. Underwriting Agreement, incorporated by reference to the
Fund's Registration Statement, filed June 17, 1982...........

*8. (a) Custodian Agreement with Hawkeye Bank of Des Moines,
incorporated by reference to the Fund's Registration
Statement, filed June 17, 1982...............................

*8. (b) Check Redemption Agreement, incorporated by reference to
the Fund's Pre-Effective Amendment No. 2, filed
October 14, 1982.............................................

*9. (a) Form of Master Liquidity and Servicing Agreement, incorporated
by reference to the Fund's Post-Effective Amendment No. 2,
filed October 25, 1983.......................................

*9. (b) Transfer Agent and Administrative Services Agreement,
incorporated by reference to the Fund's Post-Effective
Amendment No. 4, filed October 1, 1984.......................

*9. (c) Trust Agreement, incorporated by reference to the Fund's
Pre-Effective Amendment No. 1, filed September 7, 1982.......

*9. (d) Student Loan Purchase Agreement, incorporated by reference
to the Fund's Pre-Effective Amendment No. 1, filed
September 7, 1982............................................

*9. (e) Trust Agreement and Guaranteed Funding Agreement, incorporated
by reference to the Fund's Post-Effective Amendment No. 15
filed October 28, 1994.......................................

*10. Consent of Messrs. Cline, Williams, Wright, Johnson &
Oldfather, incorporated by reference to the Fund's Post-
Effective Amendment No. 4, filed October 1, 1984.............

*13. Representations of Initial Shareholder, incorporated by
reference to the Fund's Registration Statement,
filed June 17, 1982..........................................

*14.(a) Prototype Self-Employed Profit-Sharing Plan, incorporated
by reference to the Fund's Registration Statement,
filed June 17, 1982..........................................

*14.(b) Prototype Individual Retirement Plan, incorporated by
reference to the Fund's Registration Statement,
filed June 17, 1982..........................................

*15.(a) Form of Rule 12b-1 Plan as amended, incorporated by reference
to the Fund's Registration Statement, filed
November 8, 1990.............................................

*15.(b) Form of Agreements, incorporated by reference to the Fund's
Post-Effective Amendment No. 7, filed October 22, 1987.......

16. Calculation of Yield Quotations, included in Part B of
this Registration Statement..................................

- ------------------
*Previously filed