<PAGE>
LAW OFFICES OF
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER
1900 FIRST BANK BUILDING
LINCOLN, NE 68508-2095
(402) 474-6900
August 15, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
RE: IMG Liquid Assets Fund, Inc.
Registration 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. 19 under the Securities Act of 1933
and Amendment No. 18 under the Investment Company Act of 1940 of Form N-1A
Registration Statement (with exhibits).
This Amendment is being submitted under the provisions of Rule
485(a)(1). The Amendment adds additional classes of shares and reflects the
Fund's adoption of a new name, an increase of its authorized capital shares,
some changes to its investment policies, the adoption of shareholder servicing
plans and a new Rule 12b-1 Plan. This Amendment also reflects the annual update
of the financial information.
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
<PAGE>
As filed with the Securities and Exchange Commission
Registration No. 2-78054
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 19 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18 [X]
(Check appropriate box or boxes.)
IMG LIQUID ASSETS FUND, INC.
d/b/a Government Assets Fund
(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:
JOHN C. MILES, ESQ.
Cline, Williams, Wright, Johnson & Oldfather
1900 First 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 pursuant to paragraph
(a)(1) 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, 1996, was
filed on or about July 24, 1996.
<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 Shares of the Fund
5. Management of the Fund.....................Organization and Shares of the
Fund; Management and Fees
6. Capital Stock and Other Securities.........Cover Page; Distributions and
Taxes; Organization and Shares
of the Fund
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............General Information and History
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 Shares of Fund
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>
GOVERNMENT ASSETS FUND AND SWEEP SHARES
MUNICIPAL ASSETS FUND
2203 GRAND AVENUE, DES MOINES, IOWA 50312-5338
IMG FINANCIAL SERVICES, INC......................................1-800-798-1819
...................................................................515-244-5426
PROSPECTUS OCTOBER __, 1996
Government Assets Fund and Municipal Assets Fund, each of these a "Fund",
(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.
Each Fund offers three classes of shares. This Prospectus describes the "Sweep
Shares" of each Fund. Sweep Shares are offered to customers of banks. Sweep
Shares are normally offered through financial institutions providing automatic
"sweep" investment programs to their own customers. The Funds also offer "Trust
Shares" and "Institutional Shares" which accrue daily dividends in the same
manner as Sweep Shares except that each class bears separate distribution and/or
shareholder administrative servicing fees (see "Organization and Shares of the
Funds").
o GOVERNMENT ASSETS FUND, ("Government Assets") seeks maximum current income
consistent with safety of principal and maintenance of liquidity. MUNICIPAL
ASSETS FUND, ("Municipal Assets") seeks maximum current income exempt from
federal income tax, consistent with safety of principal and maintenance of
liquidity. Sweep Shares 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. AN INVESTMENT IN SHARES OF
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED STATES, BY ANY STATE, OR BY
THE FDIC, IS NOT A DEPOSIT OR OTHER OBLIGATION OF THE UNITED STATES, ANY STATE,
OR A BANK, OR GUARANTEED BY A BANK, AND INVOLVES 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 (as of the date of this Prospectus) 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., at the address and telephone number indicated above.
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.
<PAGE>
EXPENSE SUMMARY
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. There are no transaction fees imposed upon the purchase,
redemption, or exchange of shares.
Government Assets Municipal Assets
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees................. 0.25% 0.00%
12b-1 Distribution Fees......... 0.75% 0.50%
Other Expenses.................. 0.20% 0.40%
Total Fund Operating Expenses... 1.20% 0.90%
Effective September 1, 1996, the Advisor and the Distributor have agreed to
voluntarily waive a portion or all of their fees and to reimburse certain
expenses of Municipal Assets. The Advisor and Distributor each reserves the
right to terminate its waiver or reimbursement at any time in its sole
discretion. Absent these waivers, the Management Fees and 12b-1 Fees for
Municipal Assets would be 0.25 percent and 0.75 percent of average net assets
respectively. Additional operating expenses information may be found under
"Management and Fees".
EXAMPLES
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period:
1 Year 3 Years 5 Years 10 Years
Government Assets $12 $38 $66 $145
Municipal Assets $9 $29 $50 $111
EXPLANATION OF TABLE
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN. The Expense Summary and Examples do not reflect any
charges that may be imposed by financial institutions on their customers.
The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Sweep Shares. Certain figures contained in the above tables are based on amounts
incurred during each Fund's most recent fiscal year and have been adjusted as
necessary to reflect current service provider fees and/or reimbursements. There
is no assurance that any fee waivers will continue at their present level; if
any current fee waivers and/or reimbursements are discontinued, the amounts
contained in the examples may increase. The information in the above tables
relates only to Sweep Shares. The Funds also offer Trust Shares and
Institutional Shares. Long-term shareholders may eventually pay more than the
economic equivalent of the maximum front-end sales charge otherwise permitted by
the National Association of Securities Dealers, Inc. Wire transfers may be used
to transfer federal funds directly to/from the Funds' custodian bank. A $15.00
fee may be charged to an individual shareholder account for redemption by wire.
Please refer to "Management and Fees" for further information.
HIGHLIGHTS
The INVESTMENT OBJECTIVE of Government Assets is maximum current income
consistent with safety of principal and maintenance of liquidity. The Fund
invests in short-term debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities and repurchase agreements
collateralized by such obligations including, redeemable Certificates backed by
Farmers Home Administration guaranteed loans and primarily, federally insured
student loans.
The INVESTMENT OBJECTIVE of Municipal Assets 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".
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".
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 (subject to certain exceptions).
Purchases may be made by check, wire, electronic funds transfer and/or through
Participating Organizations. See "Purchasing Shares".
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".
The ADVISOR of the Funds is Investors Management Group, (the "Advisor"), 2203
Grand Avenue, Des Moines, Iowa 50312-5338, a registered investment advisor
incorporated in June 1982. See "Management and Fees". The Advisor is
also the transfer agent for the Funds.
The Funds' DISTRIBUTOR is IMG Financial Services, Inc., a wholly owned
subsidiary of the Advisor. IMG Financial Services, Inc., is a registered
broker/dealer and was incorporated in May 1992.
The Advisor is entitled to an INVESTMENT ADVISORY FEE which is calculated daily
and paid monthly at an annual rate of 0.25 percent of each Fund's net assets up
to $200,000,000, declining to 0.20 percent of average daily net assets in excess
of $600,000,000. Effective September 1, 1996, the Advisor has voluntarily agreed
to waive all of its fee with respect to Municipal Assets. This waiver is
voluntary and may be terminated at any time in the Advisor's sole discretion.
See "Management and Fees".
DISTRIBUTION FEES are paid by the Funds to the Distributor and by it 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 percent of the average daily
net asset value of all Sweep Shares issued and outstanding for Government Assets
and 0.50 percent of the average daily net assets of all Sweep Shares issued and
outstanding for Municipal Assets. Effective September 1, 1996, the Distributor
has voluntarily agreed to waive 0.25 percent of its Distribution Fees and to
reimburse certain expenses of Municipal Assets. This waiver and reimbursement of
fees is voluntary and may be terminated at any time in the Distributors sole
discretion.
DIVIDENDS are declared daily and paid monthly (see "Distributions and Taxes")
and will be automatically reinvested unless the shareholder elects otherwise.
FINANCIAL HIGHLIGHTS
The "Financial Highlights" on the following pages give information about each
Fund's financial history. The Funds' fiscal year has been July 1 through June 30
since their inception. The tables use the Funds' fiscal years (which end June
30) and express investment and distribution information in terms of a single
share outstanding throughout each period. As of the date hereof, each Fund
offered a single class of shares. The tables illustrate the actual performance
of those shares during the period.
The tables presented for the years 1987 through 1996 have been examined by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report covering the
year ending June 30, 1996, 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 to the address and telephone
number on Page 1 of this Prospectus without charge.
<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A SWEEP SHARE OF
EACH FUND OUTSTANDING THROUGHOUT
EACH PERIOD 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT ASSETS FUND
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 0.047 0.047 0.027 0.027 0.044 0.063 0.074 0.076 0.057 0.051
Dividends Distributed (0.047) (0.047) (0.027) (0.027) (0.044) (0.063) (0.074) (0.076) (0.057) (0.051)
---------------------------------------------------------------------------------------------------
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 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%
Ratio of Expenses to
Average Net Assets 1.20% 1.20% 1.18% 1.16% 1.16% 1.15% 1.16% 1.17% 1.15% 1.17%
Ratio of Net Income to
Average Net Assets 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%
Net Assets
End of Period (000 Omitted) $176,633 $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $ 93,335 $ 73,525 $ 67,020
On September 25, 1996, the shareholders approved amendments to the Fund's Articles of Incorporation to reclassify all outstanding
shares as Sweep Shares. This reclassification did not effect the existing fee structure.
<PAGE>
<CAPTION>
SELECTED DATA FOR A SWEEP SHARE OF
EACH FUND OUTSTANDING THROUGHOUT
EACH PERIOD 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL ASSETS FUND
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 0.026 0.025 0.015 0.017 0.030 0.044 0.050 0.051 0.039 0.035
Dividends Distributed (0.026) (0.025) (0.015) (0.017) (0.030) (0.044) (0.050) (0.051) (0.039) (0.035)
---------------------------------------------------------------------------------------------------
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 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
Ratio of Expenses to
Average Net Assets 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52% 1.46%
Ratio of Net Income to
Average Net Assets 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
Net Assets
End of Period (000 Omitted) $ 10,146 $ 16,130 $ 21,355 $ 23,764 $ 29,670 $ 26,683 $ 15,077 $ 12,619 $ 14,528 $ 14,560
On September 25, 1996, the shareholders approved amendments to the Fund's Articles of Incorporation to reclassify all outstanding
shares as Sweep Shares. This reclassification did not effect the existing fee structure.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
GOVERNMENT ASSETS
The investment objective of Government Assets is maximum current income
consistent with safety of principal and maintenance of liquidity. The Fund
invests solely in the following U.S. government issued or guaranteed money
market instruments maturing in 397 days or less from time of investment,
including the following (with certain exceptions):
(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) Redeemable interest-bearing trust certificates ("Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund, ("Student Loan Trusts"), created for
the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The Student
Loan Certificates will have original maturities of no more than 397 days
but will be redeemable by the Fund at their face amount upon not more than
five days' written notice to the issuing Student Loan Trust. Further
details concerning the Student Loan Trusts and the Fund's investments in
Student Loan Certificates are found in the Statement of Additional
Information.
(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The FmHA
Certificates will have original maturities of no more than 397 days but
will be redeemable by the Fund at their face amount upon not more than five
days' written notice to the issuing FmHA Trust. Further details concerning
the FmHA Trusts and the Fund's investment in FmHA 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 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will 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 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA 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 ten percent of the value of the total net
assets of the Fund.
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 will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, 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 Student Loan Certificates and/or FmHA Certificates; (3) 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; (4) 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; (5)
make loans to other persons, provided the Fund may invest up to 80 percent of
its total assets in Student Loan Certificates or FmHA Certificates, as described
in (2) above, and may make the investments and enter into repurchase agreements
as described above; (6) invest in securities with legal or contractual
restrictions on resale (except for repurchase agreements, Student Loan
Certificates, and FmHA Certificates) or for which no ready market exists; (7)
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 days.
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.
MUNICIPAL ASSETS
The investment objective of Municipal Assets 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 397 days or less from time of investment (with certain exceptions),
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 397
days 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 invest 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 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually 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 federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. 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.
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 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 five percent of its total assets (determined as of the date of
purchase) 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 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 days; and (10) enter into Liquidity Agreements with
any 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 0.05 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, 1996,
for Government Assets and Municipal Assets were 4.50 percent and 4.60 percent,
and 2.41 percent and 2.44 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, Municipal Assets 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
Dividends from the net income of each Fund are declared daily on each business
day and paid monthly to holders of record immediately before 3:00 p.m. Central
Time. Dividends are automatically reinvested in Sweep Shares unless cash payment
has been requested. 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.
Dividends on each class of shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder administrative servicing fees (see "Organization
and Shares of the Funds").
Dividends declared in October, November, or December of any year payable, to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
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 Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets 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 SHARES OF THE FUNDS
The Funds are open-end, diversified management investment companies organized as
Iowa corporations. Government 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. In March 1996, the IMG Liquid Assets Fund, Inc.,
adopted the fictitious name IMG Government Assets Fund and has registered the
name with the State of Iowa. Municipal Assets 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. On September 25, 1996,
the Funds each increased authorized capital to five billion shares of Common
Stock, par value $.001 per share, changed the Fund's names to Government Assets
Fund and Municipal Assets Fund, respectively, and amended their respective
Articles of Incorporation to authorize the Boards of Directors to issue one or
more additional classes of shares. Simultaneously, the Boards approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares". 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.
Sweep Shares of the Funds are described in this Prospectus. The Funds also offer
Trust Shares and Institutional Shares. All shares are offered to individual and
institutional investors acting on their own behalf or on behalf of their
customers and bear their pro rata portion of all operating expenses paid by the
Funds, except that Sweep Shares and Trust Shares bear separate distribution
and/or shareholder servicing fees. Institutional Shares bear no distribution or
shareholder servicing fees.
Each class of shares offers different privileges. Sweep Shares are normally
offered through financial institutions providing automatic "sweep" investment
programs to their customers, and offer a check writing privilege. Trust Shares
are normally offered through trust organizations or others providing shareholder
services such as establishing and maintaining accounts and records for their
customers who invest in Trust Shares, assisting customers in processing
purchase, exchange and redemption requests, and responding to customers'
inquiries concerning their investments. Institutional Shares are available
directly from the Distributor only and offer only the Exchange and Telephone
Transfer services. Each class of shares is exchangeable only for Shares of the
same class. Financial institutions selling or servicing Sweep Shares and Trust
Shares may receive different compensation with respect to one class over
another.
Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of Sweep Shares will
vote on matters relating to the Distribution Plan for Sweep Shares and only
holders of Trust Shares will vote on matters pertaining to the Administrative
Services Plan for Trust Shares.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this Prospectus, Shares
will be fully paid and nonassessable.
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, 1996,
IMG had approximately $1.4 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 degree
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 percent of each Fund's average
daily net assets up to $200,000,000. The management fee declines to 0.20 percent
of average daily net assets in excess of $600,000,000. For the fiscal year ended
June 30, 1996, fees paid by Government Assets and Municipal Assets to IMG
amounted to approximately 0.25 percent of each Fund's average net assets, or
$444,793 and $43,217, respectively.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
Effective September 1, 1996, IMG voluntarily agreed to waive all of its advisory
fees on Municipal Assets. Without such waiver, IMG would have been entitled to
receive a fee at the annual rate of 0.25 percent of the average daily net assets
of Municipal Assets. This waiver is terminable without further notification at
any time in IMG's sole discretion.
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 Sweep Shares, including, but not limited to, preparation and
distribution of promotional materials, compensation to sales personnel employed
by the Distributor, and for payment to institutions, including financial
institutions ("Participating Organizations"), who render assistance in
distributing or promoting the sale of each Fund's Sweep Shares under plans (the
"Plans") adopted pursuant to Rule 12b-1 under the Act. The maximum fees payable
under the Plans are an annual rate of 0.75 percent for Government Assets and
0.50 percent for Municipal Assets, computed monthly on the basis of the average
net asset value of the Sweep Shares issued by each Fund. For fiscal year ended
June 30, 1996, fees paid under the plan for Government Assets and Municipal
Assets were $1,334,402 and $129,650, respectively. The Directors of each Fund
review quarterly a written report of the costs incurred associated with the
Plans. 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.
Mercantile Bank of Polk County, Des Moines, Iowa, acts as custodian for the
Funds' cash and investments through November 30, 1996. Effective December 1,
1996, the Funds' custodian is -------------------------------------------------.
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 CENTRAL TIME.
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 11:00
a.m. Central Time and at the close of the New York Stock Exchange (normally 3:00
p.m. Central 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, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, 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. The Participating Organization is
responsible for transmitting purchase orders directly to the Fund's 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, 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, except where purchases are made thorough financial institutions
providing an automatic "sweep" investment program, in which case there is no
minimum. Participating Organizations may aggregate their customers' purchases to
satisfy the required minimums.
Purchases may be effected on business days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for Sweep Shares received and accepted by the Funds by 10:00
a.m. Central Time on a business day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Sweep Shares received after 10:00 a.m. Central
Time and prior to 3:00 p.m. Central Time on a business day for which such Funds
have been received by 3:00 p.m. Central Time will be effected as of 3:00 p.m.
Central Time, and will begin to accrue dividends on the following business day.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.
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".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $250 (minimum) $25 (minimum)
Please make your check payable Please make your check
to the Fund selected and mail payable to the Fund
to the address indicated on selected, with your account
the application. number on the check and
mail to the address printed
on your account statement.
BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial investment
at 1-800-798-1819 or
515-244-5426.
Federal Funds should be wired to: Prior to November 30, 1996, Federal Reserve
Bank of Chicago for Mercantile Bank of Polk County, Des Moines, together with
the name of the Fund, your account number and names. After December 1, 1996
_________
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
BY ELECTRONIC Not available for initial Shareholders who have an
FUNDS TRANSFER purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
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 Sweep Shares of either Fund for Sweep
Shares in the other Fund described in this Prospectus. 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 may 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.
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 request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
and accepted by the Distributor before 10:00 a.m. Central Time on a business day
will be redeemed as of 11:00 a.m. Central Time and will earn dividends through
the previous day; proceeds normally will be sent electronically the same day (or
mailed by check the next business day) to the organization that placed the
redemption order in good form. Redemption orders received after 10:00 a.m.
Central Time or on a non-business day will be redeemed as of 3:00 p.m. Central
Time or at the next determined net asset value and earn dividends through the
date the redemption request was received; proceeds will be sent electronically
on the next business day (or mailed by check on the second business day
thereafter). While the Funds use their best efforts to maintain their net asset
value per share at $1.00, the proceeds paid upon redemption may be more or less
than the amount originally invested.
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 23 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 their account to less than $100 by
writing checks. The check writing privilege is not available when purchases are
made through a financial institution providing an automatic "sweep" investment
program. The Funds and the Custodian reserve the right to terminate the check
writing 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.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter
TO: 2203 GRAND AVENUE specifying the name of the Fund, the number of
DES MOINES, IA 50312-5338 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, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as
Custodial (Uniform Gifts it is registered, accompanied by signature
or Transfers To Minors guarantee(s).
Act), General Partners
Corporation, Association Letter of instruction and a corporate
resolution 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 check writing
(minimum $250 feature on your account application. You may
maximum $100,000) 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.
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TABLE OF CONTENTS
Expense Summary for Sweep Shares............................................2
Highlights..................................................................2
Financial Highlights........................................................3
Investment Objectives, Policies and Restrictions............................6
Government Assets...........................................................6
Municipal Assets............................................................7
Performance.................................................................9
Distributions and Taxes.....................................................9
Organization and Shares of the Fund........................................10
Management and Fees........................................................10
Opening an Account.........................................................11
Share Price............................................................11
Purchasing Shares......................................................12
Shareholder Services.......................................................13
Redeeming Shares...........................................................14
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.
Investors Management Group
2203 Grand Avenue
Des Moines, Iowa 50312-5338
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GOVERNMENT ASSETS FUND AND TRUST SHARES
MUNICIPAL ASSETS FUND
2203 GRAND AVENUE, DES MOINES, IOWA 50312-5338
IMG FINANCIAL SERVICES, INC......................................1-800-798-1819
...................................................................515-244-5426
PROSPECTUS OCTOBER __, 1996
Government Assets Fund and Municipal Assets Fund, each of these a "Fund",
(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.
Each Fund offers three classes of shares. This Prospectus describes the "Trust
Shares" of each Fund. Trust Shares are offered to customers of banks. Trust
Shares are normally offered through trust organizations or others providing
shareholder services such as establishing and maintaining accounts and records
for their customers who invest in Trust Shares, assisting customers in
processing purchase, exchange and redemption requests, and responding to
customers' inquiries regarding their accounts. The Funds also offer "Sweep
Shares" and "Institutional Shares" which accrue daily dividends in the same
manner as Trust Shares except that each class bears separate distribution and/or
shareholder administrative servicing fees (see "Organization and Shares of the
Funds").
GOVERNMENT ASSETS FUND, ("Government Assets") seeks maximum current income
consistent with safety of principal and maintenance of liquidity. MUNICIPAL
ASSETS FUND, ("Municipal Assets") seeks maximum current income exempt from
federal income tax, consistent with safety of principal and maintenance of
liquidity. Trust Shares 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. AN INVESTMENT IN SHARES OF
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED STATES, BY ANY STATE, OR BY
THE FDIC, IS NOT A DEPOSIT OR OTHER OBLIGATION OF THE UNITED STATES, ANY STATE,
OR A BANK, OR GUARANTEED BY A BANK, AND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
This Prospectus sets forth basic information about each Fund that investors
should know before investing and should be retained for future reference.
Statements of Additional Information (as of the date of this Prospectus) 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., at the address and telephone number indicated above.
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.
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EXPENSE SUMMARY
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. There are no transaction fees imposed upon the purchase,
redemption, or exchange of shares.
Government Assets Municipal Assets
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees................... 0.25% 0.00%
Shareholder Service Fees.......... 0.25% 0.25%
Other Expenses.................... 0.20% 0.40%
Total Fund Operating Expenses..... 0.70% 0.65%
Effective September 1, 1996, the Advisor has agreed to voluntarily waive a
portion or all of its fees and to reimburse certain expenses of Municipal
Assets. The Advisor reserves the right to terminate its waiver or reimbursement
at any time in its sole discretion. Absent these waivers, the Management Fees
for Municipal Assets would be 0.25 percent of average net assets. Additional
operating expenses information may be found under "Management and Fees".
EXAMPLES
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period:
1 Year 3 Years 5 Years 10 Years
Government Assets $7 $22 $39 $87
Municipal Assets $7 $21 $36 $81
EXPLANATION OF TABLE
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN. The Expense Summary and Examples do not reflect any
charges that may be imposed by financial institutions on their customers.
The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Trust Shares. Certain figures contained in the above tables are based on amounts
incurred during each Fund's most recent fiscal year and have been adjusted as
necessary to reflect current services provider fees and/or reimbursements. There
is no assurance that any fee waivers will continue at their present level; if
any current fee waivers and/or reimbursements are discontinued, the amounts
contained in the examples may increase. The information in the above tables
relates only to Trust Shares. The Funds also offer Sweep Shares and
Institutional Shares.
Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. A $15.00 fee may be charged to an individual shareholder account
for redemption by wire. Please refer to "Management and Fees" on page 17 for
further information.
HIGHLIGHTS
The INVESTMENT OBJECTIVE of Government Assets is maximum current income
consistent with safety of principal and maintenance of liquidity. The Fund
invests in short-term debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities and repurchase agreements
collateralized by such obligations including, redeemable Certificates backed by
Farmers Home Administration guaranteed loans and primarily, federally insured
student loans.
The INVESTMENT OBJECTIVE of Municipal Assets 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".
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".
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 (subject to certain exceptions).
Purchases may be made by check, wire, electronic funds transfer and/or through
Participating Organizations. See "Purchasing Shares".
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".
The ADVISOR of the Funds is Investors Management Group, (the "Advisor"), 2203
Grand Avenue, Des Moines, Iowa 50312-5338, a registered investment advisor
incorporated in June 1982. See "Management and Fees". The Advisor is also the
transfer agent for the Funds.
The Funds' DISTRIBUTOR is IMG Financial Services, Inc., a wholly owned
subsidiary of the Advisor. IMG Financial Services, Inc., is a registered
broker/dealer and was incorporated in May 1992.
The Advisor is entitled to an INVESTMENT ADVISORY FEE which is calculated daily
and paid monthly at an annual rate of 0.25 percent of each Fund's net assets up
to $200,000,000, declining to 0.20 percent of average daily net assets in excess
of $600,000,000. Effective September 1, 1996, the Advisor has voluntarily agreed
to waive all of its fee with respect to Municipal Assets. This waiver is
voluntary and may be terminated at any time in the Advisor's sole discretion.
See "Management and Fees".
ADMINISTRATIVE SERVICES FEES are paid by the Funds to certain Participating
Organizations up to a maximum of 0.25 percent of the average daily net asset
value of all Trust Shares issued and outstanding for the respective Fund.
DIVIDENDS are declared daily and paid monthly (see "Distributions and Taxes")
and will be automatically reinvested unless the shareholder elects otherwise.
FINANCIAL HIGHLIGHTS
The "Financial Highlights" on the following pages give information about each
Fund's financial history. The Funds' fiscal year has been July 1 through June 30
since their inception. The tables use the Funds' fiscal years (which end June
30) and express investment and distribution information in terms of a single
share outstanding throughout each period. As of the date hereof, each Fund
offered a single class of shares. The tables illustrate the actual performance
of those shares during the period.
The tables presented for the years 1987 through 1996 have been examined by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report covering the
year ending June 30, 1996, 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 to the address and telephone
number on Page 1 of this Prospectus without charge.
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<TABLE>
<CAPTION>
SELECTED DATA FOR A SWEEP SHARE OF
EACH FUND OUTSTANDING THROUGHOUT
EACH PERIOD 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT ASSETS FUND
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 0.047 0.047 0.027 0.027 0.044 0.063 0.074 0.076 0.057 0.051
Dividends Distributed (0.047) (0.047) (0.027) (0.027) (0.044) (0.063) (0.074) (0.076) (0.057) (0.051)
---------------------------------------------------------------------------------------------------
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 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%
Ratio of Expenses to
Average Net Assets 1.20% 1.20% 1.18% 1.16% 1.16% 1.15% 1.16% 1.17% 1.15% 1.17%
Ratio of Net Income to
Average Net Assets 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%
Net Assets
End of Period (000 Omitted) $176,633 $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $ 93,335 $ 73,525 $ 67,020
On September 25, 1996, the shareholders approved amendments to the Fund's Articles of Incorporation to reclassify all outstanding
shares as Sweep Shares. This reclassification did not effect the existing fee structure.
<PAGE>
<CAPTION>
SELECTED DATA FOR A SWEEP SHARE OF
EACH FUND OUTSTANDING THROUGHOUT
EACH PERIOD 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL ASSETS FUND
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 0.026 0.025 0.015 0.017 0.030 0.044 0.050 0.051 0.039 0.035
Dividends Distributed (0.026) (0.025) (0.015) (0.017) (0.030) (0.044) (0.050) (0.051) (0.039) (0.035)
---------------------------------------------------------------------------------------------------
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 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
Ratio of Expenses to
Average Net Assets 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52% 1.46%
Ratio of Net Income to
Average Net Assets 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
Net Assets
End of Period (000 Omitted) $ 10,146 $ 16,130 $ 21,355 $ 23,764 $ 29,670 $ 26,683 $ 15,077 $ 12,619 $ 14,528 $ 14,560
On September 25, 1996, the shareholders approved amendments to the Fund's Articles of Incorporation to reclassify all outstanding
shares as Sweep Shares. This reclassification did not effect the existing fee structure.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
GOVERNMENT ASSETS
The investment objective of Government Assets is maximum current income
consistent with safety of principal and maintenance of liquidity. The Fund
invests solely in the following U.S. government issued or guaranteed money
market instruments maturing in 397 days or less from time of investment,
including the following (with certain exceptions):
(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) Redeemable interest-bearing trust certificates (the " Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund,(the "Student Loan Trusts"), created
for the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The Student
Loan Certificates will have original maturities of no more than 397 days
but will be redeemable by the Fund at their face amount upon not more than
five days' written notice to the issuing Student Loan Trust. Further
details concerning the Student Loan Trusts and the Fund's investments in
Student Loan Certificates are found in the Statement of Additional
Information.
(4) Redeemable interest-bearing ownership certificates (the "FmHA
Certificates") issued by one or more guaranteed loan trusts (the "FmHA
Trusts"), each created for the purpose of acquiring participation interests
in the guaranteed portion of Farmer's Home Administration ("FmHA")
guaranteed loans. The FmHA Certificates will have original maturities of no
more than 397 days but will be redeemable by the Fund at their face amount
upon not more than five days' written notice to the issuing FmHA Trust.
Further details concerning the FmHA Trusts and the Fund's investment in
FmHA 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 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will 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 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA 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 ten percent of the value of the total net
assets of the Fund.
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 will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, 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 Student Loan Certificates and/or FmHA Certificates; (3) 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; (4) 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; (5)
make loans to other persons, provided the Fund may invest up to 80 percent of
its total assets in Student Loan Certificates or FmHA Certificates, as described
in (2) above, and may make the investments and enter into repurchase agreements
as described above; (6) invest in securities with legal or contractual
restrictions on resale (except for repurchase agreements, Student Loan
Certificates, and FmHA Certificates) or for which no ready market exists; (7)
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 days.
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.
MUNICIPAL ASSETS
The investment objective of Municipal Assets 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 397 days or less from time of investment (with certain exceptions),
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 397
days 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 invest 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 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually 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 federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. 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.
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 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 five percent of its total assets (determined as of the date of
purchase) 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 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 days; and (10) enter into Liquidity Agreements with
any 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 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, 1996,
for Government Assets and Municipal Assets were 4.50 percent and 4.60 percent,
and 2.41 percent and 2.44 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, Municipal Assets 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
Dividends from the net income of each Fund are declared daily on each business
day and paid monthly to holders of record immediately before 3:00 p.m. Central
Time. Dividends are automatically reinvested in Trust Shares unless cash payment
has been requested. 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.
Dividends on each class of Shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder administrative servicing fees (see "Organization
and Shares of the Funds").
Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
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 Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets 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 SHARES OF THE FUNDS
The Funds are open-end, diversified management investment companies organized as
Iowa corporations. Government 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. In March 1996, the IMG Liquid Assets Fund, Inc.,
adopted the fictitious name IMG Government Assets Fund and has registered the
name with the State of Iowa. Municipal Assets 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. On September 25, 1996,
the Funds each increased authorized capital to five billion shares of Common
Stock, par value $.001 per share, changed the Fund's names to Government Assets
Fund and Municipal Assets Fund, respectively, and amended their respective
Articles of Incorporation to authorize the Boards of Directors to issue one or
more additional classes of shares. Simultaneously, the Boards approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares". 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.
Trust Shares of the Funds are described in this Prospectus. The Funds also offer
Sweep Shares and Institutional Shares. All shares are offered to individual and
institutional investors acting on their own behalf or on behalf of their
customers and bear their pro rata portion of all operating expenses paid by the
Funds, except that Sweep Shares and Trust Shares bear separate distribution
and/or shareholder servicing fees. Institutional Shares bear no distribution
and/or shareholder servicing fees.
Each class of shares offers different privileges. Sweep Shares are normally
offered through financial institutions providing automatic "sweep" investment
programs to their customers, and offer a check writing privilege. Trust Shares
are normally offered through trust organizations or others providing shareholder
services such as establishing and maintaining accounts and records for their
customers who invest in Trust Shares, assisting customers in processing
purchase, exchange and redemption requests, and responding to customers'
inquiries concerning their investments. Institutional Shares offer only the
Exchange and Telephone Transfer services. Each class of shares is exchangeable
only for shares of the same class. Financial institutions selling or servicing
Sweep Shares and Trust Shares may receive different compensation with respect to
one class over another.
Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of Sweep Shares will
vote on matters relating to the Distribution Plan for Sweep Shares and only
holders of Trust Shares will vote on matters pertaining to the Shareholder
Services Plan for Trust Shares.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this Prospectus, shares
will be fully paid and nonassessable.
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, 1996,
IMG had approximately $1.4 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 degree
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 percent of each Fund's average
daily net assets up to $200,000,000. The management fee declines to 0.20 percent
of average daily net assets in excess of $600,000,000. For the fiscal year ended
June 30, 1996, fees paid by Government Assets and Municipal Assets to IMG
amounted to approximately 0.25 percent of each Fund's average net assets, or
$444,793 and $43,217, respectively.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
Effective September 1, 1996, IMG voluntarily agreed to waive all of its advisory
on Municipal Assets. Without such waiver, IMG would have been entitled to
receive a fee at the annual rate of 0.25 percent of the average daily net assets
of Municipal Assets. This waiver is terminable without further notification at
any time in IMG's sole discretion.
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.
Effective October 15, 1996, each Fund pays certain shareholder servicing fees to
financial institutions ("Participating Organizations"), who render assistance in
servicing their customers who are direct or beneficial owners of each Fund's
Trust Shares under Shareholder Services Plans (the "Plans") adopted by the
Funds' Boards of Directors. The maximum fees payable under the Plans are an
annual rate of 0.25 percent, computed monthly on the basis of the average daily
net asset value of the Trust Shares issued by each Fund. The directors of each
Fund review quarterly a written report of the costs incurred associated with the
Plans. The directors believe that the Plans 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.
Mercantile Bank of Polk County, Des Moines, Iowa, acts as custodian for the
Funds' cash and investments through November 30, 1996. Effective December 1,
1996, the Funds' custodian is -------------------------------------------------
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 11:00
a.m. Central Time and at the close of the New York Stock Exchange (normally 3:00
p.m. Central 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, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, 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. The Participating Organization is
responsible for transmitting purchase orders directly to the Fund's 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, 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, except where purchases are made thorough Participating
Organizations, in which case there is no minimum. Participating Organizations
may aggregate their customers' purchases to satisfy the required minimums.
Purchases may be effected on business days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for Trust Shares received and accepted by the Funds by 10:00
a.m. Central Time on a business day is effected at the net asset value per Share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Trust Shares received after 10:00 a.m. Central
Time and prior to 3:00 p.m. Central Time on a business day for which such Funds
have been received by 3:00 p.m. Central Time will be effected as of 3:00 p.m.
Central Time, and will begin to accrue dividends on the following business day.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Orders received at other times will not be accepted. Payment for
orders which are not accepted or are canceled will be returned after prompt
inquiry to the transmitting organization.
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".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $250 (minimum) $25 (minimum)
Please make your check payable Please make your check
to the Fund selected and mail payable to the Fund
to the address indicated on selected, with your account
the application. number on the check and
mail to the address printed
on your account statement.
BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial investment
at 1-800-798-1819 or
515-244-5426.
Federal Funds should be wired to: Prior to November 30, 1996, Federal Reserve
Bank of Chicago for Mercantile Bank of Polk County, Des Moines, together with
the name of the Fund, your account number and names. After December 1, 1996
_________
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
BY ELECTRONIC Not available for initial Shareholders who have an
FUNDS TRANSFER purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
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 Trust Shares of either Fund for Trust
Shares in the other Fund described in this Prospectus. An exchange involves a
redemption of thesShares 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 may 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.
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 request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
and accepted by the Distributor before 10:00 a.m. Central Time on a business day
will be redeemed as of 11:00 a.m. Central Time and will earn dividends through
the previous day; proceeds normally will be sent electronically the same day (or
mailed by check the next business day) to the organization that placed the
redemption order in good form. Redemption orders received after 10:00 a.m.
Central Time or on a non-business day will be redeemed as of 3:00 p.m. Central
Time or at the next determined net asset value and earn dividends through the
date the redemption request was received; proceeds will be sent electronically
on the next business day (or mailed by check on the second business day
thereafter). While the Funds use their best efforts to maintain their net asset
value per share at $1.00, the proceeds paid upon redemption may be more or less
than the amount originally invested.
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 23 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.
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.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter
TO: 2203 GRAND AVENUE specifying the name of the Fund, the number of
DES MOINES, IA 50312-5338 shares to besold, your name, your account
number, and the additional requirements listed
below that apply to your particular account.
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as
Custodial (Uniform Gifts it is registered, accompanied by signature
or Transfers To Minors Act), guarantee(s).
General Partners
Corporation, Association Letter of instruction and a corporate
resolution 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.
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
Expense Summary for Trust Shares............................................2
Highlights..................................................................2
Financial Highlights........................................................3
Investment Objectives, Policies and Restrictions............................6
Government Assets...........................................................6
Municipal Assets............................................................7
Performance.................................................................9
Distributions and Taxes.....................................................9
Organization and Shares of the Fund........................................10
Management and Fees........................................................10
Opening an Account.........................................................11
Share Price............................................................11
Purchasing Shares......................................................12
Shareholder Services.......................................................13
Redeeming Shares...........................................................14
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.
Investors Management Group
2203 Grand Avenue
Des Moines, Iowa 50312-5338
<PAGE>
GOVERNMENT ASSETS FUND AND INSTITUTIONAL SHARES
MUNICIPAL ASSETS FUND
2203 GRAND AVENUE, DES MOINES, IOWA 50312-5338
IMG FINANCIAL SERVICES, INC......................................1-800-798-1819
...................................................................515-244-5426
PROSPECTUS OCTOBER __, 1996
Government Assets Fund and Municipal Assets Fund, each of these a "Fund",
(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.
Each Fund offers three classes of shares. This Prospectus describes the
"Institutional Shares" of each Fund. Institutional Shares are offered to
individual and institutional customers (acting on their own behalf or on the
behalf of individuals). The Funds also offer "Sweep Shares" and "Trust Shares"
which accrue daily dividends in the same manner as Institutional Shares except
that each class bears separate distribution and/or shareholder administrative
servicing fees (see "Organization and Shares of the Funds").
GOVERNMENT ASSETS FUND, ("Government Assets") seeks maximum current income
consistent with safety of principal and maintenance of liquidity. MUNICIPAL
ASSETS FUND, ("Municipal Assets") seeks maximum current income exempt from
federal income tax, consistent with safety of principal and maintenance of
liquidity. Institutional Shares 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. AN INVESTMENT
IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED STATES, BY ANY
STATE, OR BY THE FDIC, IS NOT A DEPOSIT OR OTHER OBLIGATION OF THE UNITED
STATES, ANY STATE, OR A BANK, OR GUARANTEED BY A BANK, AND INVOLVES 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 (as of the date of this Prospectus) 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., at the address and telephone number indicated above.
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.
<PAGE>
EXPENSE SUMMARY
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. There are no transaction fees imposed upon the purchase,
redemption, or exchange of shares.
Government Assets Municipal Assets
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees............................... 0.25% 0.00%
Other Expenses................................ 0.20% 0.40%
Total Fund Operating Expenses................. 0.45% 0.40%
Effective September 1, 1996, the Advisor has agreed to voluntarily waive a
portion or all of their fees and to reimburse certain expenses of Municipal
Assets. The Advisor reserves the right to terminate its waiver or reimbursement
at any time in its sole discretion. Absent these waivers, the Management Fees
for Municipal Assets would be 0.25 percent of average net assets. Additional
operating expenses information may be found under "Management and Fees".
EXAMPLES
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period:
1 Year 3 Years 5 Years 10 Years
Government Assets $ 5 $14 $25 $57
Municipal Assets $ 4 $13 $22 $51
EXPLANATION OF TABLE
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN. The Expense Summary and Examples do not reflect any
charges that may be imposed by financial institutions on their customers.
The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Institutional Shares. Certain figures contained in the above tables are based on
amounts incurred during each Fund's most recent fiscal year and have been
adjusted as necessary to reflect current services provider fees and/or
reimbursements. There is no assurance that any fee waivers will continue at
their present level; if any current fee waivers and/or reimbursements are
discontinued, the amounts contained in the examples may increase. The
information in the above tables relates only to Institutional Shares. The Funds
also offer Sweep Shares and Trust Shares.
Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. A $15.00 fee may be charged to an individual shareholder account
for redemption by wire. Please refer to "Management and Fees" for further
information.
HIGHLIGHTS
The INVESTMENT OBJECTIVE of Government Assets is maximum current income
consistent with safety of principal and maintenance of liquidity. The Fund
invests in short-term debt obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities and repurchase agreements
collateralized by such obligations including, redeemable Certificates backed by
Farmers Home Administration guaranteed loans and primarily, federally insured
student loans.
The INVESTMENT OBJECTIVE of Municipal Assets 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".
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".
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 (subject to certain exceptions).
Purchases may be made by check, wire, electronic funds transfer and/or through
Participating Organizations. See "Purchasing Shares".
SHARES MAY BE REDEEMED at their next determined net asset value by exchange,
check, wire, and/or electronic funds transfer. See "Redeeming Shares".
The ADVISOR of the Funds is Investors Management Group, (the "Advisor"), 2203
Grand Avenue, Des Moines, Iowa 50312-5338, a registered investment advisor
incorporated in June 1982. See "Management and Fees". The Advisor is also the
transfer agent for the Funds.
The Funds' DISTRIBUTOR is IMG Financial Services, Inc., a wholly owned
subsidiary of the Advisor. IMG Financial Services, Inc., is a registered
broker/dealer and was incorporated in May 1992.
The Advisor is entitled to an INVESTMENT ADVISORY FEE which is calculated daily
and paid monthly at an annual rate of 0.25 percent of each Fund's net assets up
to $200,000,000, declining to 0.20 percent of average daily net assets in excess
of $600,000,000. Effective September 1, 1996, the Advisor has voluntarily agreed
to waive all of its fee with respect to Municipal Assets. This waiver is
voluntary and may be terminated at any time in the Advisor's sole discretion.
See "Management and Fees".
DIVIDENDS are declared daily and paid monthly (see "Distributions and Taxes")
and will be automatically reinvested unless the shareholder elects otherwise.
FINANCIAL HIGHLIGHTS
The "Financial Highlights" on the following pages give information about each
Fund's financial history. The Funds' fiscal year has been July 1 through June 30
since their inception. The tables use the Funds' fiscal years (which end June
30) and express investment and distribution information in terms of a single
share outstanding throughout each period. As of the date hereof, each Fund
offered a single class of shares. The tables illustrate the actual performance
of those shares during the period.
The tables presented for the years 1987 through 1996 have been examined by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report covering the
year ending June 30, 1996, 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 to the address and telephone
number on Page 1 of this Prospectus without charge.
<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A SWEEP SHARE OF
EACH FUND OUTSTANDING THROUGHOUT
EACH PERIOD 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT ASSETS FUND
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 0.047 0.047 0.027 0.027 0.044 0.063 0.074 0.076 0.057 0.051
Dividends Distributed (0.047) (0.047) (0.027) (0.027) (0.044) (0.063) (0.074) (0.076) (0.057) (0.051)
---------------------------------------------------------------------------------------------------
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 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%
Ratio of Expenses to
Average Net Assets 1.20% 1.20% 1.18% 1.16% 1.16% 1.15% 1.16% 1.17% 1.15% 1.17%
Ratio of Net Income to
Average Net Assets 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%
Net Assets
End of Period (000 Omitted) $176,633 $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $ 93,335 $ 73,525 $ 67,020
On September 25, 1996, the shareholders approved amendments to the Fund's Articles of Incorporation to reclassify all outstanding
shares as Sweep Shares. This reclassification did not effect the existing fee structure.
<PAGE>
<CAPTION>
SELECTED DATA FOR A SWEEP SHARE OF
EACH FUND OUTSTANDING THROUGHOUT
EACH PERIOD 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL ASSETS FUND
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 0.026 0.025 0.015 0.017 0.030 0.044 0.050 0.051 0.039 0.035
Dividends Distributed (0.026) (0.025) (0.015) (0.017) (0.030) (0.044) (0.050) (0.051) (0.039) (0.035)
---------------------------------------------------------------------------------------------------
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 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
Ratio of Expenses to
Average Net Assets 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52% 1.46%
Ratio of Net Income to
Average Net Assets 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
Net Assets
End of Period (000 Omitted) $ 10,146 $ 16,130 $ 21,355 $ 23,764 $ 29,670 $ 26,683 $ 15,077 $ 12,619 $ 14,528 $ 14,560
On September 25, 1996, the shareholders approved amendments to the Fund's Articles of Incorporation to reclassify all outstanding
shares as Sweep Shares. This reclassification did not effect the existing fee structure.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
GOVERNMENT ASSETS
The investment objective of Government Assets is maximum current income
consistent with safety of principal and maintenance of liquidity. The Fund
invests solely in the following U.S. government issued or guaranteed money
market instruments maturing in 397 days or less from time of investment,
including the following (with certain exceptions):
(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) Redeemable interest-bearing trust certificates (the "Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund, (the "Student Loan Trusts"), created
for the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The
Student Loan Certificates will have original maturities of no more than
397 days but will be redeemable by the Fund at their face amount upon not
more than five days' written notice to the issuing Student Loan Trust.
Further details concerning the Student Loan Trusts and the Fund's
investments in Student Loan Certificates are found in the Statement of
Additional Information.
(4) Redeemable interest-bearing ownership certificates (the "FmHA
Certificates") issued by one or more guaranteed loan trusts (the "FmHA
Trusts"), each created for the purpose of acquiring participation
interests in the guaranteed portion of Farmer's Home Administration
("FmHA") guaranteed loans. The FmHA Certificates will have original
maturities of no more than 397 days but will be redeemable by the Fund at
their face amount upon not more than five days' written notice to the
issuing FmHA Trust. Further details concerning the FmHA Trusts and the
Fund's investment in FmHA 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 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will 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 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA 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 ten percent of the value of the total net
assets of the Fund.
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 will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, 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 Student Loan Certificates and/or FmHA Certificates; (3) 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; (4) 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; (5)
make loans to other persons, provided the Fund may invest up to 80 percent of
its total assets in Student Loan Certificates or FmHA Certificates, as described
in (2) above, and may make the investments and enter into repurchase agreements
as described above; (6) invest in securities with legal or contractual
restrictions on resale (except for repurchase agreements, Student Loan
Certificates, and FmHA Certificates) or for which no ready market exists; (7)
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 days.
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.
MUNICIPAL ASSETS
The investment objective of Municipal Assets 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 397 days or less from time of investment (with certain exceptions),
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 397
days 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 invest 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 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually 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 federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. 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.
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 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 five percent of its total assets (determined as of the date of
purchase) 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 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 days; and (10) enter into Liquidity Agreements with
any 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 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, 1996,
for Government Assets and Municipal Assets were 4.50 percent and 4.60 percent,
and 2.41 percent and 2.44 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, Municipal Assets 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
Dividends from the net income of each Fund are declared daily on each business
day and paid monthly to holders of record immediately before 3:00 p.m. Central
Time. Dividends are automatically reinvested in Institutional Shares unless cash
payment has been requested. 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.
Dividends on each class of shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder administrative servicing fees (see "Organization
and Shares of the Funds").
Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
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 Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets 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 SHARES OF THE FUNDS
The Funds are open-end, diversified management investment companies organized as
Iowa corporations. Government 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. In March 1996, the IMG Liquid Assets Fund, Inc.,
adopted the fictitious name IMG Government Assets Fund and has registered the
name with the State of Iowa. Municipal Assets 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. On September 25, 1996,
the Funds each increased authorized capital to five billion shares of Common
Stock, par value $.001 per share, changed the Fund's names to Government Assets
Fund and Municipal Assets Fund, respectively, and amended their respective
Articles of Incorporation to authorize the Boards of Directors to issue one or
more additional classes of shares. Simultaneously, the Boards approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares". 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.
Institutional Shares of the Funds are described in this Prospectus. The Funds
also offer investors Sweep Shares and Trust Shares. All shares are offered to
individual and institutional investors acting on their own behalf or on behalf
of their customers and bear their pro rata portion of all operating expenses
paid by the Funds, except that Sweep Shares and Trust Shares bear separate
distribution and/or shareholder servicing fees. Institutional Shares bear no
distribution and/or shareholder servicing fees.
Each class of sares offers different privileges. Sweep Shares are normally
offered through financial institutions providing automatic "sweep" investment
programs to their customers, and offer a check writing privilege. Trust Shares
are normally offered through trust organizations or others providing shareholder
services such as establishing and maintaining accounts and records for their
customers who invest in Trust Shares, assisting customers in processing
purchase, exchange and redemption requests, and responding to customers'
inquiries concerning their investments. Institutional Shares offer only the
Exchange and Telephone Transfer services. Each class of sares is exchangeable
only for sares of the same class. Financial institutions selling or servicing
Sweep Shares and Trust Shares may receive different compensation with respect to
one class over another.
Shareholders are entitled to one vote for each full sare held and proportionate
fractional votes for fractional sares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of Sweep Shares will
vote on matters relating to the Distribution Plan for Sweep Shares and only
holders of Trust Shares will vote on matters pertaining to the Shareholder
Services Plan for Trust Shares.
Shares of the Funds have non-cumulative voting rights and,accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this Prospectus, sares
will be fully paid and nonassessable.
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, 1996,
IMG had approximately $1.4 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 degree
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 percent of each Fund's average
daily net assets up to $200,000,000. The management fee declines to 0.20 percent
of average daily net assets in excess of $600,000,000. For the fiscal year ended
June 30, 1996, fees paid by Government Assets and Municipal Assets to IMG
amounted to approximately 0.25 percent of each Fund's average net assets, or
$444,793 and $43,217,respectively.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
Effective September 1, 1996, IMG voluntarily agreed to waive all of its advisory
fees on Municipal Assets. Without such waiver, IMG would have been entitled to
receive a fee at the annual rate of 0.25 percent of the average daily net assets
of Municipal Assets. This waiver is terminable without further notification at
any time in IMG's sole discretion.
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.
Mercantile Bank of Polk County, Des Moines, Iowa, acts as custodian for the
Funds' cash and investments through November 30, 1996. Effective December 1,
1996, the Funds' custodian is -------------------------------------------------.
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. Central Time and at the close of the New York Stock Exchange (normally 3:00
p.m. Central 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, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, 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. The Participating Organization is
responsible for transmitting purchase orders directly to the Fund's 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, 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, except where purchases are made through Participating
Organizations. Participating Organizations may aggregate their customers'
purchases to satisfy the required minimums.
Purchases may be effected on business days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for Institutional Shares received and accepted by the Funds by
10:00 a.m. Central Time on a business day is effected at the net asset value per
Share calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Institutional Shares received after 10:00 a.m.
Central Time and prior to 3:00 p.m. Central Time on a business day for which
such Funds have been received by 3:00 p.m. Central Time will be effected as of
3:00 p.m. Central Time, and will begin to accrue dividends on the following
business day. If federal funds are not available by 3:00 p.m. Central Time, the
order will be canceled. Orders received at other times will not be accepted.
Payment for orders which are not accepted or are canceled will be returned after
prompt inquiry to the transmitting organization.
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".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $250 (minimum) $25 (minimum)
Please make your check payable Please make your check
to the Fund selected and mail payable to the Fund
to the address indicated on selected, with your
the application. account number on the
check and mail to the
address printed on your
account statement.
BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial investment
at 1-800-798-1819 or
515-244-5426.
Federal Funds should be wired to: Prior to November 30, 1996, Federal Reserve
Bank of Chicago for Mercantile Bank of Polk County, Des Moines, together with
the name of the Fund, your account number and names. After December 1, 1996
_________
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
BY ELECTRONIC Not available for initial Shareholders who have an
FUNDS TRANSFER purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
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 Institutional Shares of either Fund for
Institutional Shares in the other Fund described in this Prospectus. 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 may 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.
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 request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
and accepted by the Distributor before 10:00 a.m. Central Time on a business day
will be redeemed as of 11:00 a.m. Central Time and will earn dividends through
the previous day; proceeds normally will be sent electronically the same day (or
mailed by check the next business day) to the organization that placed the
redemption order in good form. Redemption orders received after 10:00 a.m.
Central Time or on a non-business day will be redeemed as of 3:00 p.m. Central
Time or at the next determined net asset value and earn dividends through the
date the redemption request was received; proceeds will be sent electronically
on the next business day (or mailed by check on the second business day
thereafter). While the Funds use their best efforts to maintain their net asset
value per share at $1.00, the proceeds paid upon redemption may be more or less
than the amount originally invested.
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 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.
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.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter
TO: 2203 GRAND AVENUE specifying the name of the Fund, the number of
DES MOINES, IA 50312-5338 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, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as
Custodial (Uniform Gifts it is registered, accompanied by signature
or Transfers To Minors Act), guarantee(s).
General Partners
Corporation, Association Letter of instruction and a corporate
resolution 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.
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
Expense Summary for Institutional Shares....................................2
Highlights..................................................................2
Financial Highlights........................................................3
Investment Objectives, Policies and Restrictions............................6
Government Assets...........................................................6
Municipal Assets............................................................7
Performance.................................................................9
Distributions and Taxes.....................................................9
Organization and Shares of the Fund........................................10
Management and Fees........................................................10
Opening an Account.........................................................11
Share Price............................................................11
Purchasing Shares......................................................12
Shareholder Services.......................................................13
Redeeming Shares...........................................................13
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.
Investors Management Group
2203 Grand Avenue
Des Moines, Iowa 50312-5338
<PAGE>
GOVERNMENT ASSETS FUND 2203 GRAND AVENUE
DES MOINES, IA 50312-5338
STATEMENT OF ADDITIONAL INFORMATION OCTOBER __, 1996
This statement is not a Prospectus but should be read in conjunction
with the Fund's current Prospectuses (dated October __, 1996). Please retain
this Statement for future reference. The Annual Report of the Fund for the
fiscal period ended June 30, 1996, is incorporated herewith by reference. To
obtain the Annual Report or any Prospectus please call IMG Financial Services,
Inc.
IMG Financial Services, Inc......................................1-800-798-1819
.....................................1-515-244-5426
Table of Contents:
General Information and History............................................2
Investment Objectives, Policies and Restrictions...........................2
Purchases of Fund Shares...................................................4
Valuing the Fund's Shares..................................................6
Calculation of Yield.......................................................7
Dividends..................................................................8
Taxation...................................................................8
Management.................................................................9
Compensation Table........................................................10
The Investment Management Agreement.......................................10
Student Loan Trusts.......................................................12
Guaranteed Loan Trusts....................................................13
Other Information.........................................................14
Federal Holidays......................................................14
Portfolio Transactions................................................14
Organization and Shares of the Fund...................................14
Reports to Shareholders...............................................15
Principal Shareholders................................................15
Custodian, Transfer Agent and Dividend Paying Agent...................15
Legal Opinion.........................................................15
Independent Auditors..................................................15
<PAGE>
GENERAL INFORMATION AND HISTORY
The Fund is an open-end 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.
On March 18, 1996, the Fund adopted the fictitious name IMG Government Assets
Fund to more properly describe the Fund's investments and registered the name
with the Iowa Secretary of State. On September 25, 1996, the Fund increased its
authorized capital from one billion to five billion shares of Common Stock, par
value $.001 per share, changed its name to Government Assets Fund, and amended
the articles of incorporation to authorize the Board of Directors to issue one
or more additional classes of shares. Simultaneously, the Board approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares".
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Government Assets Fund ("Government 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 U. S.
government issued or guaranteed money market instruments maturing in 397 days or
less from time of investment, including the following (with certain exceptions):
(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) Redeemable interest-bearing Trust Certificates (the "Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other
Student Loan Trusts established by the Fund,(the "Student Loan
Trusts"), created for the sole purpose of purchasing from banks (which
qualify as "eligible lenders") federally insured student loans
originated by banks. The Student Loan Certificates will have original
maturities of not more than 397 days but will be redeemable by the Fund
at their face amount upon not more than five days' written notice to
the issuing Student Loan Trust. Funds will be made available to the
issuing Student Loan Trust to meet early redemptions of Student Loan
Certificates under an agreement between the Student Loan Trusts and
various financial institutions ("Participating Banks") requiring the
Participating Banks to repurchase, on not less than five business days'
written notice, all federally insured student loans sold to the Student
Loan Trust or, if permissible under applicable securities laws, to
purchase an agreed to amount of Student Loan Certificates. There will
be no public market for the Student Loan Certificates. See "Student
Loan Trusts".
(5) Redeemable interest-bearing ownership certificates (the "Certificates")
issued by one or more guaranteed loan trusts (the "FmHA Trusts"), each
created for the purpose of acquiring participation interests in the
guaranteed portion of Farmer's Home Administration ("FmHA") guaranteed
loans. The FmHA Certificates will have original maturities of not more
than 397 days but will be redeemable by the Fund at their face amount
upon not more than five days' written notice to the issuing FmHA Trust.
Funds will be made available to the issuing FmHA Trust to meet early
redemption of FmHA Certificates under an unconditional purchase
commitment between the FmHA Trusts and various financial institutions
("Participating Banks")requiring the Participating Banks to repurchase,
on not less than five business days' written notice an agreed to amount
of the guaranteed portion of FmHA guaranteed loans held by the FmHA
Trust. See "Guaranteed Loan Trusts".
Assets of the Fund will consist of securities with maturities of 397 days or
less at date of purchase or, if maturing beyond 397 days, 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 financial
institution from being obligated to purchase more than five percent of the total
assets held by the Fund (determined as of the date of purchase of the Student
Loan and/or FmHA Certificates). 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 397 days,
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" and "Dividends"), the net asset
value of Fund shares could decrease. It is also possible Participating Banks or
issuers 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 Student Loan Trusts or the FmHA Trusts, 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, Student Loan Certificates
and/or FmHA 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 (determined as of the date of purchase);
(4) invest with a view to exercising control or influencing management; (5)
invest more than 10 percent of the value of its total assets in securities of
other investment companies, except in connection with a merger, acquisition,
consolidation or reorganization, subject to Section 12(d)(1) of the Investment
Company Act of 1940; (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, Student Loan Certificates and/or FmHA 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 5
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 5
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 Student Loan and FmHA Certificates) or for which no ready market
exists; (13) purchase loan participations other than from banks 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 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
Participating 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 Fund intends to invest at least 25 percent of its total assets in Student
Loan Certificates and/or FmHA 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 11:00 a.m. Central Time and at the close of the New York Stock
Exchange (normally 3:00 p.m. Central Time). If a purchase order is received and
accepted by the Fund by 10:00 a.m. Central Time and Federal funds are available
to the Fund before 3:00 p.m. Central 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 a purchase
order is received and accepted by the Fund after 10:00 a.m. Central Time but
before 3:00 p.m. Central Time and Federal funds are available before 3:00 p.m.
Central Time, the shares will not commence earning dividends until the day after
the order is received.
Investments in Sweep Shares in the Fund may be made through transactions
directly with the Fund's Distributor (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 Distributor 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
(including automatic "Sweep" investment programs) offered by the Participating
Organization.
"Trust Shares" may be purchased only by financial institutions acting on their
own behalf or on behalf of certain customers' accounts. "Institutional Shares"
may be purchased by individual and institutional investors directly from the
Fund's Distributor.
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 Distributor 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 Distributor, and payment to any securities dealer, financial institution or
any other Person (a "Participating Organization") who renders assistance in
distributing or promoting the sale of the Fund's shares pursuant to a written
agreement with the Distributor; and to increase the maximum fee payable under
the Plan from 0.50 percent to 0.75 percent of the average net asset value of the
Fund. In conjunction with a plan to allow the Fund to issue multiple classes of
shares, the Board of Directors redesignated the existing shares of the Fund
"Sweep Shares" and made the Plan applicable solely to Sweep Shares. The Board
also approved an amendment to the Plan eliminating a restriction on payments by
the Plan to the amount of distribution-related expenses actually incurred by the
Distributor each quarter. Participating Organizations make available to their
customers transaction services (including automatic "sweep" investment programs)
and may 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
relating 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
Participating Organization's services in providing the customer transaction
services. 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 Distributor 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 customer transactions (including automatic sweep
investment programs) 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 reduce expenses for shareholder transactions thereby
reducing costs of the Fund and increasing yields. For the year ended June 30,
1996, the Fund paid out a total of $1,334,402 under the Plan and all payments
were made to Participating Organizations. As of July 31, 1996, there were 40
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.
On August 13, 1996, the Fund adopted a Shareholder Services Plan ("Services
Plan") with respect to Trust Shares. Pursuant to the Plan, the Fund may enter
into Servicing Agreements with Participating Organizations providing that those
Participating Organizations will render certain shareholder administrative
support services to their customers who are record or beneficial owners of Trust
Shares. Services provided pursuant to the Services Plan may include some or all
of the following: (i) processing dividend and distribution payments from the
Fund on behalf of customers; (ii) providing information periodically to
customers showing their position in Trust Shares; (iii) arranging for bank
wires; (iv) responding to routine customer inquiries relating to services
performed by the Participating Organizations (v) providing sub-accounting with
respect to shares owned of record or beneficially by customers or the
information needed for sub-accounting; (vi) forwarding shareholder
communications (such as proxies, shareholder reports, annual and semi-annual
financial reports, and dividend, distribution and tax notices) to customers;
(vii) forwarding to customers proxy statements and proxies containing any
proposals regarding the Services Plan; (viii) aggregating and processing
purchase, redemption, and exchange requests from customers and placing net
purchase and redemption orders with the Fund's Distributor; (ix) providing
customers with a service that invests the assets of their accounts in Trust
Shares pursuant to specific or pre-authorized instructions; (x) maintaining
records relating to each customer's share transactions; or (xi) other similar
services if requested by the Fund and permitted by law. In addition,
Participating Organizations may also provide dedicated facilities and equipment
in various local locations to serve the needs of investors, including walk-in
facilities, 800 numbers, and communication systems to handle shareholder
inquiries, and in connection with such facilities, provide on-site management
personnel and monitoring services for their customers who have invested in Trust
Shares, including the operation of telephone lines for daily quotations of
return information.
The Services Plan is an administrative support services plan. Pursuant to the
Plan, the Fund's arrangement with Participating Organizations must be approved
annually by a majority of the Fund's Directors, including a majority of the
Directors who are not "interested persons" of the Fund as defined in the 1940
Act and have no direct or indirect financial interest in such arrangements.
Under the terms of the Services Plan, the Fund may pay a fee to Participating
Organizations equal to annual rate of 0.25 percent of the average net assets of
Trust Shares.
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 canceled 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 11:00
a.m. Central Time and at the close of the New York Stock Exchange (normally 3:00
p.m. Central 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.
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.
Accordingly, U.S. government obligations held by the Fund, Student Loan
Certificates and FmHA 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, 1996:
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: $ 1.000863830
Calculation:
Ending account value $ 1.000863830
Less beginning account value $ 1.000000000
Net change in account value $ .000863830*
Base period return:
(change/beginning account value)
.000863830/1.000000000 = .000863830
Current yield = .000863830 x (365/7) = 4.50 percent
Effective yield = (1 + .045042569/12) 12-1 = 4.60 percent
Weighted average life to maturity of the portfolio on June 30, 1996 was 63.06
days.
*There are no monthly account charges.
The Prospectus may be in use for up to sixteen months; 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 5. 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, age 61 Business Administration Department Chairman,
Director Associate Professor, Grand View College;
Director, IMG Tax Exempt Liquid Assets Fund, Inc.
Chad L. Hensley, age 72 Retired President and CEO, Preferred Risk Mutual
Director Insurance Company; Director, IMG Tax Exempt
Liquid Assets Fund, Inc.
Fred Lorber, age 72 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., age 52 President, Darwin T. Lynner Co., Inc., a property
Director management company; Director, IMG Tax Exempt
Liquid Assets Fund, Inc.
Mark A. McClurg*, age 43 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*, age 39 President, Treasurer and Senior Managing Director
President and Director of Investors Management Group, and IMG Financial
Services, Inc.; President and Director, IMG Tax
Exempt Liquid Assets Fund, Inc.
Richard A. Miller, age 56 Vice President & General Counsel, Farmers
Director Casualty Company Mutual; IMG Director Tax Exempt
Liquid Assets Fund, Inc.
James W. Paulsen*, age 38 Senior Managing Director of Investors Management
Vice President and Group and IMG Financial Services, Inc.; Vice
Director President and Director, IMG Tax Exempt Liquid
Assets Fund, Inc.
Ruth L. Prochaska*, age 43 Controller/Compliance Officer of Investors
Secretary Management Group, and IMG Financial Services,
Inc., Secretary, IMG Tax Exempt Liquid
Assets Fund, Inc.
William E. Timmons, age 72 Partner in Patterson, Lorentzen, Duffield,
Director Timmons, Irish & Becker; Director, IMG Tax
Exempt Liquid Assets Fund, Inc.
Steven E. Zumbach, age 46 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.
COMPENSATION TABLE
Aggregate Total Compensation From
Name of Compensation Fund and Fund
Person, Position From Fund Complex Paid to Director
Robert F. Galligan $2,200 $ 3,200
Director
Chad L. Hensley 2,200 3,200
Director
Fred Lorber 2,200 3,200
Director
Darwin T. Lynner, Jr. 1,650 2,400
Director
Mark A. McClurg 0 0
Treasurer and
Director
David W. Miles 0 0
President and
Director
Richard A. Miller 2,200 3,200
Director
James W. Paulsen 0 0
Vice President
and Director
William E. Timmons 2,200 3,200
Director
Steven E. Zumbach 1,100 1,600
Director
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 David W. Miles, Mark A.
McClurg 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 is entitled to receive 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.
From time to time, the Advisor may voluntarily waive all or a portion of the
management fee and/or absorb certain expenses of the Fund without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for
the Fund and increasing the Fund's overall yield to investors at the time any
such amounts are waiver and/or absorbed.
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 $327,033, $374,373, and $444,793
in management fees to the Advisor in fiscal 1994, 1995, and 1996 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 August 13, 1996, 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 judgment, 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.
STUDENT LOAN TRUSTS
The Fund is authorized to purchase Student Loan Certificates from one or more
Student Loan Trusts. The Fund will only purchase Student Loan Certificates from
Student Loan Trusts formed for the purpose of purchasing federally insured
student loans originated and sold by banks subject to purchase, at the option of
the Student Loan Trust, on no more than five business days' written notice.
Student Loan Trusts are funded by the issuance and sale to the Fund of Student
Loan Certificates which have an original maturity of no more than 397 days and
which may be redeemed by the Fund upon not more than five business days' written
notice to the issuing Student Loan Trust. The Fund is under no obligation to
purchase Student Loan Certificates issued by any Student Loan Trust.
The Fund's election to purchase Student Loan Certificates will be based upon the
amount of funds available for investment, the investment yield borne by the
Student Loan Certificates compared with yields available on other short-term
liquid investments and upon the aggregate amount of Student Loan 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
Student Loan 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 0.65 to
0.75 percent. Such fees will be paid out of the Student Loan 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,
other changes were made 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
was reduced to the 90 day Treasury Bill rate plus 2.five percent.
The Student Loan Trusts from which the Fund purchases Student Loan Certificates
have agreed that 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.
At June 30, 1996, assets of the Fund included Student Loan Certificates issued
by the Iowa Student Loan Trust in the amount of $87,435,000 which was equal to
48.6 percent of Fund net assets.. These 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 Iowa Student Loan Trust. Proceeds from
the issuance of Student Loan Certificates have been used by the Iowa Student
Loan Trust to purchase federally insured student loans initiated by Iowa banks
which may be required to purchase such loans from the Iowa Student Loan 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 Iowa Student Loan
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.
GUARANTEED LOAN TRUSTS
The Fund may purchase FmHA Certificates from one or more guaranteed loan trusts
created for the purpose of acquiring participation interests in the guaranteed
portion of FmHA guaranteed loans ("FmHA Trusts"). Interest and principal
payments of the FmHA Loans would accrue to the benefit of the Fund net of
certain FmHA 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 FmHA Certificate will provide certain identifying
information regarding the specific FmHA Loan acquired including the effective
rate and reset provision. Each FmHA 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 FmHA
Certificates is backed by unconditional purchase commitments between the
Trustee, and 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 Participating Banks are intended to provide
liquidity for the FmHA Loans held by the FmHA 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
Participating Bank from being obligated to purchase more than five percent of
the total assets held by the Fund (as of the date of purchase of the FmHA
Certificate).
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 SHARES OF THE FUND. The Fund is an open-end 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. On March 18, 1996, the Fund
adopted the fictitious name IMG Government Assets Fund to more properly describe
the Fund's investments and registered the name with the Iowa Secretary of State.
The Fund has an authorized capital of 1 billion shares of Common Stock, par
value $.001 per share. On September 25, 1996, the Fund increased its authorized
capital from 1 billion to 5 billion shares of Common Stock, par value $.001 per
share, changed its name to Government Assets Fund, and amended the articles of
incorporation to authorize the Board of Directors to issue one or more
additional classes of shares. Simultaneously, the Board approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares".
Sweep Shares of the Fund are offered to individual and institutional investors
(acting on their own behalf or on the behalf of their customers). Sweep Shares
are normally offered through financial institutions providing automatic "sweep"
investment programs to their customers, and bear the costs of the Fund's
Distribution Plan (See "Purchases of Fund Shares" above.)
Trust Shares are offered to individual and institutional investors (acting on
their own behalf or on the behalf of their customers). Trust Shares are normally
offered through trust organizations or others providing shareholder services
such as establishing and maintaining accounts and records for their customers
who invest in such Shares, assisting customers in processing purchase, exchange
and redemption requests, and responding to customers' inquiries concerning their
investments. Trust Shares also bear the costs of the Fund's Administrative
Services Plan (See "Purchases of Fund Shares" above.)
Institutional Shares of the Fund are offered to individual and institutional
investors directly by the Fund's Distributor.
All Shares bear their pro-rata portion of all operating expenses paid by the
Fund, except that Sweep Shares bear the full costs of the Distribution Plan and
Trust Shares bear the full costs of the Administrative Services Plan.
Institutional Shares bear no distribution and/or Administrative Services fees.
Shareholders are entitled to one vote for each full Share held and proportionate
fractional votes for fractional Shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement and
investment objective and fundamental policies. Only holders of Sweep Shares will
vote on matters relating to the Distribution Plan for Sweep Shares and only
holders of Trust Shares will vote on matters pertaining to the Administrative
Services Plan for Trust Shares.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of the Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payment as described in the Prospectus, Shares will
be fully paid and nonassessable.
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 herein by reference into the Fund's Statement of Additional
Information and is available upon request without charge by calling the number
on the cover page of this Statement of Additional Information.
PRINCIPAL SHAREHOLDERS. As of the date hereof, no person is believed to own as
much as five 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's Custodian holds
cash for the purchase and redemption of the Fund's shares. The Custodian will
hold the Fund's portfolio investments which may, in part, be deposited in
central depository systems as permitted by Federal law. Mercantile Bank of Polk
County, Des Moines, serves as the Fund's custodian through November 30, 1996.
Beginning December 1, 1996, the Fund's custodian is
___________________________________. 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.
<PAGE>
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 14th day of August, 1996.
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.
Signature Title
___/s/ David W. Miles__________ President, Principal Executive Officer,
David W. Miles and Director
________________________________________
|
___/s/ Fred Lorber_____________ Chairman and Director |
Fred Lorber |
|
___/s/ Mark A. McClurg_________ Principal Financial and Accounting |
Mark A. McClurg Officer, Treasurer and Director |
|
___/s/ James W. Paulsen________ Vice President and Director |
James W. Paulsen ________________________|
|
___/s/ Ruth L. Prochaska_______ Secretary | ___/s/ David W. Miles___
Ruth L. Prochaska > by David W. Miles
| Attorney in Fact
___/s/ Robert F. Galligan______ Director | August 14, 1996
Robert F. Galligan |
|
___/s/ Chad L. Hensley_________ Director |
Chad L. Hensley |
|
___/s/ Darwin T. Lynner, Jr.___ Director |
Darwin T. Lynner, Jr. |
|
___/s/ Richard A. Miller_______ Director |
Richard A. Miller |
|
___/s/ William E. Timmons______ Director |
William E. Timmons |
|
___/s/ Steven E. Zumbach_______ 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, 1996, 1995,
1994, 1993, 1992, 1991, 1990, 1989, 1988, and 1987(audited)
(2) Incorporated in Part B
Independent Auditors' Report dated July 19, 1996
Statement of Net Assets, June 30, 1996
Statement of Operations for the Year Ended June 30, 1996
Statements of Changes in Net Assets for the Two Years Ended
June 30, 1996 and 1995
(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.
*1. (d) Certified Resolution adopting fictitious name.
1. (e) Form of Amendment to the Articles of Incorporation
*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.
9. (f) Shareholder Services Plan
9. (g) Shareholder Services 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.
15.(c) Form of Amended Rule 12b-1 Plan
*16. Calculation of Yield Quotations, included in
Part B of this Registration Statement.
17. Financial Data Schedule
18. Rule 18f(3) Plan
- ---------------------------
*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 2,676 as of July 31, 1996
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
(c) Not applicable.
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 Government Assets Fund:
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
August 8, 1996
<PAGE>
IMG LIQUID ASSETS FUND, INC.
EXHIBIT VOLUME
TO
POST-EFFECTIVE AMENDMENT NUMBER 19
TO
FORM N-1A REGISTRATION STATEMENT
<PAGE>
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.......................................
*1. (d) Certified Resolution adopting fictitious name................
1. (e) Form of Amendment to Articles of Incorporation...............
*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.......................................
9. (f) Shareholder Services Plan....................................
9. (g) Shareholder Services 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.......
15.(c) Form of Amended Rule 12b-1 Plan..............................
*16. Calculation of Yield Quotations, included in Part B of
this Registration Statement..................................
17. Financial Data Schedule......................................
18. Rule 18f(3) Plan.............................................
- ------------------
*Previously filed
Exhibit No. 1. (e)
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
IMG LIQUID ASSETS FUND, INC.
ARTICLE I
The name of the corporation is IMG Liquid Assets Fund, Inc.
ARTICLE II
The Articles of Incorporation as amended, are amended and restated as
follows, such amendments changing the name of the Corporation and providing for
an increase in the number of shares the Corporation is authorized to issue and
to give power to the Board of Directors to issue shares in classes and series.
"ARTICLE ONE
The name of the corporation is "Liquid Assets Funds, Inc."
ARTICLE THREE
(a) The aggregate number of shares which the corporation shall have
authority to issue is 5,000,000,000 shares of common stock of the par value of
$0.001 ("Shares"), thereby having an aggregate par value of $5,000,000.
Initially, 2,400,000,000 of the Shares shall be divided into one class
designated Government Assets Fund Shares. Such class of common stock, together
with any further classes of Shares created by the Board of Directors, being
referred to herein individually as "Class" or collectively as "Classes". Shares
designated Government Assets Fund shall be further divided into three Series of
800,000,000 Shares of Series A Shares, 800,000,000 Shares of Series B Shares and
800,000,000 Shares of Series C Shares. Such Series A, Series B and Series C
Shares of each Class to be referred to as "Sweep", "Trust" and "Institutional"
Shares, respectively, or such other names as the Board of Directors may
determine from time to time as a convenient and proper method for identifying
such Shares in a Registration Statement filed with the Securities and Exchange
Commission covering the offer and sale of such Shares to the public. The Board
of Directors of the Corporation shall have the power and authority to further
classify or reclassify any unissued Shares from time to time by setting or
changing the preferences, conversion rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such unissued Shares. The Board of Directors, shall, for purposes of
identification, have the power and authority to designate a name for the new
Series or Class or change a name of any Series or Class without shareholder
vote.
(b) A description of the relative preferences, conversion rights,
voting powers, restrictions, limitations as to dividends, qualification and
terms and conditions of redemption of all Classes and Series of Shares which
represent ownership in a separate investment portfolio operated as an open-end
investment management company is as follows, unless otherwise set forth in
Articles of Amendment filed with the Iowa Secretary of State describing any
further Class or Series from time to time created by the Board of Directors is
as follows:
(i) ASSETS BELONGING TO A CLASS. All consideration
received by the Corporation for the issue or sale of
Shares of a particular Class, together with all
assets in which such consideration is invested or
reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be,
shall irrevocably belong to that Class for all
purposes, subject only to the rights of creditors,
and shall be so recorded upon the books of account of
the Corporation. Such consideration, assets, income,
earnings, or profits, including any proceeds derived
from the sale, exchange or liquidation of such
assets, and any funds or payment derived from any
reinvestment of such proceeds, in whatever form the
same may be, together with any general asset items
(as hereinafter defined) allocated to that Class as
provided in the following sentence, are herein
referred to as "assets belonging to" that Class. In
the event that there are any assets, income,
earnings, profits or process thereof, funds or
payments which are not readily identifiable as
belonging to any particular Class (collectively
"General Asset Items"), the Board of Directors shall
allocate such General Asset Items to and among any
one or more of the Classes created from time to time
in such manner and on such basis as it, in its sole
discretion, deems fair and equitable; and any General
Asset Items so allocated to a particular Class shall
belong to that Class. Each such allocation by the
Board of Directors shall be conclusive and binding
upon the stockholders of all Classes for all
purposes.
(ii) LIABILITIES BELONGING TO A CLASS. The assets
belonging to each Class shall be charged with the
liabilities of the Corporation in respect of the
Class, and with all expenses (except distribution
expenses), costs, charges and reserves attributable
to that Class and shall be so recorded upon the books
of account of the Corporation. Such liabilities,
expenses (except distribution, shareholder servicing,
administrative and transfer agency expenses if
approved by the Board of Directors), costs, charges
and reserves, together with any general liability
terms (as hereinafter defined) allocated to that
Class as provided in the following sentence, so
charged that Class are herein referred to as
"liabilities belonging to" that Class. In the event
that there are any general liabilities, expenses,
costs, charges or reserves of the Corporation which
are not readily identifiable as belonging to any
particular Class (collectively "General Liability
Items"), the Board of Directors shall allocate and
charge such General Liability Items to and among any
one or more of the Classes created from time to time
in such manner and on such basis as the Board of
Directors in its sole discretion deems fair and
equitable; and any General Liability Items so
allocated and charged to a particular Class shall
belong to that Class. Each such allocation by the
Board of Directors shall be conclusive under a Rule
12b-1 Plan, or a shareholder servicing plan,
administrative services plan or transfer agency
agreement, as approved by the Board of Directors
pursuant to Rule 18f-3 under the Investment Company
Act of 1940 and binding upon the stockholders of all
such Classes for all purposes.
(iii) DISTRIBUTION EXPENSES. Expenses related to the
distribution of Shares of any Class under a Rule
12b-1 Plan, or a shareholder servicing plan,
administrative services plan or transfer agency
agreement, as approved by the Board of Directors
pursuant to Rule 18f-3 under the Investment Company
Act of 1940 shall be allocated between the Series A,
Series B and Series C Shares of the Class and borne
solely by the Shares of the Series to which the
expense relates. The accounting for an allocation of
such expenses to Shares of the Series A, Series B and
Series C Shares of each Class shall be appropriately
reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends,
distribution and liquidation rights of the Shares of
such Class and Series. The Series A Shares shall be
subject to a Rule 12b-1 distribution fee as
determined by the Board of Directors from time to
time prior to the issuance of such Shares.
(iv) DIVIDENDS AND DISTRIBUTIONS. Unless otherwise
expressly provided hereunder, or hereafter in any
Articles of Amendment creating any additional Classes
or Series of Shares, the holders of each Series and
Class of Shares of the Corporation with different
rights and preferences shall be entitled to dividends
and distributions in such amounts and at such times
as may be determined by the Board of Directors.
Dividends and distributions paid with respect to the
various Classes or Series of Shares may vary among
such Series and Classes. Expenses related to
distribution of, and other identified expenses as
should be properly allocated to, the Shares of a
particular Class or Series of Shares, may be charged
to and borne solely by such Class and the bearing of
expenses solely by such Class may be appropriately
reflected (in a manner determined by the Board of
Directors) and cause differences in the net asset
value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of such Class
of capital stock.
(v) VOTING RIGHTS. Unless otherwise expressively provided
for hereunder or hereafter in any Article of
Amendment creating any Class or Series of Shares, on
each matter submitted to a vote of stockholders, each
holder of a Share of the capital stock of the
Corporation shall be entitled to one vote for each
Share outstanding and in such holder's name on the
books of the Corporation, irrespective to Classes or
Series thereof, and all Shares of all Classes and
Series shall vote together as a single Class;
provided, however, the (a) as to any matter with
respect to which separate votes of any Class or
Series is required by the Investment Company Act of
1940, as in effect from time to time, or any rules,
regulations or orders issued thereunder, or by the
Iowa general corporation law, such requirement as to
a separate vote of that Class or Series shall apply
in lieu of a general vote of all Classes and Series
as described above; (b) in the event that the
separate vote requirements referred to in (a) above
apply with respect to one or more Classes or Series,
then subject to paragraph (c) below, the Shares of
all other Classes or Series not entitled to a
separate vote shall vote together as a single Class;
and (c) as to any manner, which, in the judgment of
the Board of Directors (which shall be conclusive),
does not affect the interest of a particular Series
or Class, such Series or Class shall not be entitled
to any vote and only the holders of Shares of one or
more affected Series and Class shall be entitled to
vote.
(vi) LIQUIDATION. Unless otherwise expressly provided for
hereunder or hereafter in any Articles of Amendment
creating any Class or Series of capital stock, in the
event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary,
holders of Shares of capital stock of the Corporation
shall be entitled, after payment or provision for
payment of the debts and the liabilities of the
Corporation (as such liabilities may affect one or
more Classes of Shares of capital stock of the
Corporation), to share ratably in the assets of the
Series in which they have investment. The
determination of the Board of Directors shall be
conclusive as to the amount of liabilities, including
accrued expenses and reserves, as to the allocation
of such liabilities and expenses to a given Series,
and as to whether the general assets of the
Corporation are allocable to any one or more Series.
ARTICLE III
On the later of October 15, 1996 or the date the Corporation's
Registration Statement, filed with the Securities and Exchange Commission is
effective with respect to the implementation of the Multi-Class Structure, all
shares then currently outstanding shall be, without any further action by the
Corporation, the Board of Directors or the shareholders, reclassified as "Sweep
Shares" of the class designated Government Assets Fund shares.
ARTICLE IV
This Amendment was adopted by the Board of Directors on August 13, 1996
and by the shareholders on September 25, 1996. At the time of the meeting, there
were xxx,xxx,xxx undesignated shares outstanding of which xxx,xxx,xxx shares
were indisputably represented at the meeting. Of the shares indisputably
represented at the meeting, xxx,xxx,xxx shares voted for the amendment,
xxx,xxx,xxx voted against the amendment and xxx,xxx,xxx shares did not vote. The
number cast for approval was sufficient.
Exhibit No. 9. (f)
IMG GOVERNMENT ASSETS FUND
SHAREHOLDER SERVICES PLAN
Shareholder Services Plan dated as of August 13, 1996, of IMG Government Assets
Fund, an Iowa corporation (hereinafter the "Fund").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management investment
company and is registered under the Investment Company Act of 1940, as amended
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"); and
WHEREAS, the Fund has entered into a Shareholder Services Agreement (the
"Agreement") with Investors Management Group, ("IMG") for the provision of
various shareholder services, all subject to the terms of this Plan.
NOW, THEREFORE, the Board of Directors of the Fund hereby adopt this Plan for
the Fund on the following terms and conditions:
SECTION 1--ALLOCATION OF RESPONSIBILITIES.
(a) The Fund shall be solely responsible for all actions required to be taken
in connection with servicing shareholder accounts, other than such
actions as are expressly assumed by IMG pursuant to the terms of the Plan
and the Agreement.
(b) In furtherance of the purposes and intents of the Plan, IMG, or any other
party who shall agree to assume the obligations and responsibilities
described in the Agreement, shall be solely responsible for the provision
of office space and equipment, telephone facilities and personnel as are
necessary and beneficial for providing information and services to
Shareholders of the Fund. Such services and assistance may include, but
are not necessarily limited to, establishing and maintaining Shareholder
accounts, subaccounts and records, processing and forwarding purchase and
redemption transaction orders, answering routine client inquiries
regarding the Fund, assistance to Shareholders in changing dividends and
investment options, account designations and addresses, and such other
services as are usual, customary and necessary as a result thereof.
SECTION 2--PAYMENT OF COSTS OF SHAREHOLDER SERVICES.
As long as the Agreement or any amendment thereto shall remain in effect, it is
understood that IMG shall be paid fees as set forth in the Agreement and which
shall be no greater than 0.25% annually of the various Fund's average daily net
assets. Unless otherwise specifically approved by the Board of Directors of the
Fund, IMG shall be solely responsible for all costs and expenses incurred by it
in delivery of such services and its sole compensation shall be the receipt of
its fees.
SECTION 3--FUND APPROVAL.
(a) The Fund represents that the Plan, together with the Agreement has been
approved by a vote of the Board of Directors of the Fund who are not
interested persons of the Fund, as defined in Section 2(a)(19) of the
1940 Act and who do not have direct or indirect financial interest in the
operation of the Plan or in the Agreement, or any other agreement related
to the Plan ("Interested Persons"), cast in person at a meeting called
for the purpose of voting on the Plan.
(b) In approving the Plan and the Agreement, the Directors of the Fund have
undertaken the following:
(1) The Directors have concluded, in the exercise of reasonable
business judgment, in light of their fiduciary duties under state
law and Section 36(a) and 36(b) of the 1940 Act that the Plan will
benefit the Fund and its Shareholders.
(2) The Directors have requested and evaluated such information as was
reasonably necessary to make an informed determination as to
whether the Plan should be implemented and, in connection
therewith, IMG, as a party to agreements relating to the Plan, has
furnished such information reasonably necessary for the foregoing
purposes.
(3) The Directors have considered and given appropriate weight to all
pertinent factors, including without limitation, the following:
(i) the need for independent counsel or experts to assist the
Directors in reaching a determination;
(ii) the nature of the problems or circumstances which
purportedly make implementation of the Plan necessary and
appropriate.
(iii) the causes of such problems or circumstances;
(iv) the way in which the Plan would address these problems or
circumstances and how it is expected to resolve or alleviate
them, including the nature and approximate amount of the
expenditure to the overall cost structure of the Fund, the
nature of the anticipated benefits and the time it would
take for those benefits to be achieved;
(v) the merits of possible alternative plans;
(vi) the interrelationship between the Plan and the activities of
any other person who provides Shareholder services to the
Fund; and
(vii) the possible benefits of the Plan to any other person
relative to those expected to inure to the Fund.
SECTION 4--REPORTS TO AND REVIEWED BY THE BOARD OF DIRECTORS OF THE FUND.
(a) Any person authorized to direct the disposition of monies paid or payable
by the Fund pursuant to the Plan, the Agreement, or any other agreement
related to the Plan, shall provide the Board of Directors of the Fund,
and the Board of Directors of the Fund shall review, at least quarterly,
written reports of the specific purposes for which such expenditures were
made.
(b) The Agreement, and any other agreement related to the Plan shall, by
their respective terms, provide that appropriate officers of IMG, or any
other party to such other agreement, shall provide the Directors of the
Fund with such information as may be reasonably necessary for the
purposes required by Sections 3(a), 3(b), and 8(c) of the Plan.
SECTION 5--SELECTION OF DIRECTORS.
In connection with the implementation and continuation of the Plan, the Fund
hereby undertakes to commit the selection and nomination of Directors of the
Fund who are not Interested Persons to a committee comprised of such Directors
who are not such Interested Persons.
SECTION 6--THE AGREEMENT AND OTHER AGREEMENTS RELATED TO THE PLAN.
In addition to the requirements contained in Section 4(b) and 8 of the Plan, the
Agreement, and any other agreement related to the Plan shall be in writing and
shall provide, in substance, that such agreement shall be terminated:
(a) At any time without payment of any penalty, by a vote of the majority of
the Board of Directors of the Fund who are not Interested Persons on not
more than sixty (60) days' written notice to the other party thereto; and
(b) Automatically, in the event of its assignment.
SECTION 7--AMENDMENTS AND MODIFICATIONS.
The Plan, the Agreement, and any other agreement related to the Plan shall not
be amended, modified or superseded, except by an agreement in writing and, in
addition, may not be amended to materially increase the amount to be spent for
costs of Shareholder services of any portfolio of the Fund, as provided in
Section 2 of the Plan, without the approval of a majority of the Board of
Directors who are not Interested Persons, and consistent with the procedures
specified by Section 3(a), 3(b), and 8(c) of the Plan.
SECTION 8--CONTINUATION AND TERMINATION.
(a) The Plan, the Agreement and any other agreement related to the Plan shall
continue in effect for a period of more than one (1) year from its
adoption, only so long as the continuance is specifically approved in the
manner described in subsection (c) of this Section 8.
(b) The Plan may be terminated at any time by a majority of the Board of
Directors of the Fund who are not Interested Persons.
(c) In determining whether the Plan shall be continued or terminated as
provided in this Section 8, the Directors of the Fund shall make such
determination in the manner provided in, and consistent with, the
procedures specified by Section 3(a) and 3(b) of the Plan; provided that,
in addition to the factors specified in Section 3(b)(3), the Directors of
the Fund shall also consider and give appropriate weight to the following
factors:
(1) The effect of the Plan on existing Shareholders; and
(2) Whether the Plan has, in fact, produced the anticipated benefits
for the Fund and its Shareholders.
SECTION 9--PRESERVATION OF INFORMATION.
(a) The Fund shall, for a period of not less than six (6) years, preserve the
following information and documentation:
(1) The Shareholder Services Plan;
(2) The Shareholder Services Agreement;
(3) Any other agreement related to the Plan;
(4) Any report made pursuant to Section 4 of the Plan; and
(5) All minutes which were recorded as a result of the requirements of
Section 3, 7, or 8 of the Plan and which relate to the approval,
amendment or continuation of the Plan, the Agreement, or any other
agreement related to the Plan.
(b) With respect to the information and documentation required to be
preserved pursuant to subsection (a) of this Section 9, such information
and documentation shall be preserved in an easily accessible place for a
period of not less than two (2) years.
SECTION 10--EFFECTIVE DATE.
The effective date of the Plan shall be August 13, 1996.
Exhibit No. 9 (g)
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT dated this 13th day of August, 1996, by and between IMG GOVERNMENT
ASSETS FUND, an Iowa corporation having its principal office and place of
business at 2203 Grand Avenue, Des Moines, Iowa 50312-5338 (the "Company") and
INVESTORS MANAGEMENT GROUP, an Iowa corporation having its principal office and
place of business at 2203 Grand Avenue, Des Moines, Iowa, 50312-5338 ("IMG").
WHEREAS, the Company desires to retain IMG to provide certain shareholder
services to the Company's portfolios as set forth on Schedule 1 hereto, as such
may be revised from time to time (each a "Fund" or collectively "Funds"); and
IMG is willing to provide such services upon the terms and conditions as set
forth herein;
NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. The Company hereby appoints IMG to provide information and shareholder
services for the benefit of the Funds and their shareholders. In this
regard, IMG may, in its discretion, appoint broker-dealer firms and other
financial services firms ("Firms") to provide related services and
facilities for their clients who are shareholders of the Funds ("clients").
IMG and/or the Firms shall provide such office space and equipment,
telephone facilities and personnel as are necessary or beneficial for
providing information and services to shareholders of the Funds. Such
services and assistance may include, but are not limited to, establishing
and maintaining shareholder accounts and records, processing purchase and
redemption transactions, answering routine client inquiries regarding the
Funds and their special features, assistance to clients in changing
dividend and investment options, account designations and addresses, and
such other services as the Funds or IMG may reasonably request. It is
anticipated that IMG will also provide these services directly to
shareholders of the Funds.
IMG accepts such appointment and agrees during such period to render such
services and to assume the obligations herein set forth for the
compensation herein provided. IMG shall for all purposes herein provided be
deemed to be an independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Funds in any way or otherwise be deemed an agent of the Funds. IMG, by
separate agreement with the Funds, also serves the Funds in other
capacities in carrying out its duties and responsibilities hereunder. IMG
may appoint various Firms to provide administrative and other services
described herein directly to or for the benefit of shareholders of the
Funds who may be clients of such Firms. Such Firms shall at all times be
deemed to be independent contractors retained by IMG and not the Funds. IMG
and not the Funds will be responsible for the payment of compensation to
such Firms for such services.
2. For the services and facilities described in Section 1, the Company will
pay to IMG at the end of each calendar month an shareholder service fee at
the annual rate set forth opposite each Fund's name on Schedule 1 hereto,
based upon the value of average daily net assets of each Fund represented
by "Sweep", "Trust" or "Institutional" Shares as defined in the
Registration Statement. For the month and year in which this Agreement
becomes effective or terminates there shall be an appropriate proration on
the basis of the number of days that the Agreement is in effect during such
month and year, respectively. The services of IMG to the Funds under this
Agreement are not to be deemed exclusive, and IMG shall be free to render
similar services or other services to others.
The net asset value for each share of each Fund shall be calculated in
accordance with the provisions of the Funds' current prospectus. On each
day when net asset value is not calculated, the net asset value of a share
of each Fund shall be deemed to be the net asset value of such a share as
of the close of business on the last day on which such calculation was made
for the purpose of the foregoing computations.
3. The Funds shall assume and pay all charges and expenses of their operations
not specifically assumed or otherwise to be provided by IMG under this
Agreement.
4. This Agreement may not be amended to increase the amount to be paid to IMG
for services hereunder above 0.25 percent of the average daily net assets
of the Funds without the vote of a majority of the outstanding voting
securities of the Funds. All material amendments to this Agreement must in
any event be approved by vote of the Board of Directors of the Funds.
5. As to each Fund, this Agreement shall continue until the date set forth
opposite such Fund's name on Schedule 1 hereto (the "Reapproval Date"), and
thereafter shall continue automatically for successive annual periods
ending on the day of each year set forth opposite the Fund's name on
Schedule 2 hereto (the "Reapproval Day"), provided such continuance is
specifically approved as to the Company at least annually by (a) the Board
of Directors or (b) vote of a majority (as defined in the 1940 Act) of the
Fund's outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Directors who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. As to each Fund, this Agreement is terminable
without penalty, on not more than 60 days' written notice to IMG, by the
Company's Directors or by vote of the holders of a majority of such Fund's
shares or, upon not less than 90 days' written notice to the Company by
IMG. This Agreement also will terminate automatically, as to the relevant
Funds, in the event of its assignment (as defined in the 1940 Act).
6. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
7. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
8. This Agreement has been executed by and on behalf of the Company by its
representatives as such representatives and not individually, and the
obligations of the Company hereunder are not binding upon any of the
directors, officers or shareholders of the Company individually but are
binding upon only the assets and property of the Funds. With respect to any
claim by IMG for recovery of that portion of the shareholder services fee
(or any other liability of the Funds arising hereunder) allocated to a
particular Fund, whether in accordance with the express terms hereof or
otherwise, IMG shall have recourse solely against the assets of that Fund
to satisfy such claim and shall have no recourse against the assets of any
other Fund for such purpose.
9. This Agreement shall be construed in accordance with applicable federal law
and the laws of the State of Iowa.
IN WITNESS WHEREOF, the Funds and IMG have caused this Agreement to be executed
as of the day and year first above written.
IMG GOVERNMENT ASSETS FUND
Attest:
________________________________ By:_____________________________________
Ruth L. Prochaska David W. Miles
Secretary President
INVESTORS MANAGEMENT GROUP
Attest:
_________________________________ By:_____________________________________
Mark A. McClurg David W. Miles
Vice President President
<PAGE>
SCHEDULE 1
REAPPROVAL
NAME OF FUND ANNUAL FEE DATE
IMG Government Assets Fund
Sweep 0.00% August 13, 1997
Trust 0.25% August 13, 1997
Institutional 0.00% August 13, 1997
Exhibit No. 15. (c)
LIQUID ASSETS FUND, INC.
AMENDED DISTRIBUTION PLAN UNDER RULE 12B-1
I. Subject to the approval of shareholders of IMG Liquid Assets Fund, Inc.,
d/b/a Government Assets Fund, of an Amendment to the Articles of Incorporation,
and upon effectiveness of the Fund's Registration Statement on Form N-1A
implementing a "Multi-class Structurs" for the distribution of the Fund's
shares, all outstanding shares of the Fund will be reclassified as "Sweep
Shares" of the class of shares designated Government Assets Fund. Other classes
of the Fund designated "Trust Shares" and "Institutional Shares" will also be
offered. Only "Sweep Shares" will be subject to this Amended Distribution Plan
pursuant to Rule 12b-1. This Amended Distribution Plan will only be applicable
to Trust Shares and Institutional Shares if approved by the Board of Directors
and shareholders of Trust Shares and/or Institutional Shares.
II. Payments by the Sweep Shares of the Government Assets Fund (the "Fund") to
Promote the Sale of the Fund Shares
Subject to the following conditions, the Fund may make payments from
the assets of the Sweep Shares of the Fund to the Fund's Underwriter for the
following purposes:
(A) to compensate the Underwriter for services related to the
marketing, selling, and distribution of Fund's Sweep Shares,
including, but not limited to, preparation and distribution of
brochures, advertisements, and other promotional materials for
the Fund's Sweep Shares, and compensation to sales personnel
employed by the Underwriter, and
(B) to compensate any securities dealer, financial institution or
any other Person (a "Participating Organization") who renders
services in distributing or promoting the sale of the Fund's
Sweep Shares pursuant to a written agreement (the "Related
Agreement"), provided:
(1) No Related Agreement shall be entered into, and no
payments shall be made pursuant to any Related
Agreement, unless such Related Agreement is in
writing and has first been delivered to and approved
by a vote of the board of directors of the Fund, and
of a majority of the members of the board of
directors of the Fund who are not interested Persons
of the Fund and have no direct or indirect financial
interests in the operation of the Plan or in any
Related Agreement (the "Disinterested Directors"),
cast in person at a meeting called for the purpose of
voting on such Related Agreement.
(2) Any Related Agreement shall describe the services to
be performed by the Participating Organization and
shall specify the amount of, or the method for
determining compensation to the Participating
Organization.
(3) No Related Agreement may be entered into unless it
provides that it may be terminated at any time,
without the payment of any penalty, by vote of a
majority of the Disinterested Directors or by vote of
a Majority of the Outstanding Voting Securities of
the Fund on not more than 60 days' written notice to
other party to the Related Agreement and that the
Related Agreement shall automatically terminate in
the event of its assignment.
(4) Any Related Agreement shall continue in effect for a
period of more than one year from the date of its
execution or adoption only if it provides that such
continuance is specifically approved at least
annually by a vote of the board of directors of the
Fund, and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting
on such Related Agreement.
(C) Aggregate payments by the Fund under this Plan in any month
shall not exceed the annual rate of 0.75 of 1% of the average
net asset value (determined as of the close of business on the
last business day of the prior month) of all issued and
outstanding shares of the Fund.
(D) If and to the extent that the Fund is deemed to be acting as a
distributor of its shares by reason of payments to the Fund's
investment adviser under any investment advisory contract,
such payments are authorized. If and to the extent that the
investment advisory contract in effect as of the effective
date of this plan is inconsistent with any provision of this
plan, the provisions of this plan shall supersede the
provisions of such investment advisory contract. If and to the
extent that the Fund is deemed to be acting as a distributor
of its shares by reason of any payments by the Fund's
investment adviser to third parties to assist in distribution
of the Fund's shares, such payments are authorized if made
pursuant to an agreement that satisfies the requirements of a
Related Agreement set forth in Section 1. Notwithstanding any
other provision in this plan, payments to the Fund's
investment adviser under any investment advisory contract and
any payments by the investment adviser shall not be subject to
the limitations set forth in paragraph (C) of Section I and
such payments shall not be included in calculating the maximum
aggregate payments to all Participating Organizations set
forth in paragraph (C) of Section I.
III. Quarterly Reports
The Underwriter of the Fund shall provide to the board of directors,
and the board of directors shall review, at least quarterly, a written report of
all amounts expended pursuant to this Plan. This report shall include the
identities of all Participating Organizations and the payments received by them,
and explain the purposes for which all amounts were expended.
IV. Effective Date and Duration of the Plan
This Plan shall become effective immediately upon the later of the
approval by (a) both the vote of the Board of Directors of the Fund, and of the
Disinterested Directors, cast in person at the meeting called for the purpose of
voting on the approval of this plan and (b) the vote of a Majority of the
Outstanding Voting Securities of the Fund and the date the Fund's Registration
disclosing the terms of the Amended becoming effective, whichever is later. This
plan shall continue in effect for a period of one year from its effective date
unless terminated pursuant to its terms. Thereafter, this plan shall continue
from year to year, provided that such continuance is approved at least annually
by a vote of the board of directors of the Fund, and of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting on such
continuance. This plan may be terminated at any time by the vote of (a) the
board of directors, (b) a majority of the Disinterested Directors or (c) a
Majority of the Outstanding Voting Securities of the Fund.
V. Selection of Disinterested Directors
During the period in which this plan is effective, the selection and
nomination of those directors of the Fund who are not Interested Persons of the
Fund shall be committed to the discretion of the directors who are not
Interested Persons of the Fund.
VI. Amendments
All material amendments of this plan shall be in writing and shall be
approved by a vote of the board of directors of the Fund, and of the
Disinterested Directors, cast in person at a meeting called for the purpose of
voting on such amendment. This plan may not be amended to increase materially
the amount to be spent by the Fund hereunder without approval by a Majority of
the Outstanding Voting Securities of the Fund.
VII. Capitalized Terms
Capitalized terms used herein without definition shall have the meaning
set forth in the Investment Company Act of 1940, as amended.
Exhibit No. 18
PLAN ADOPTED PURSUANT TO RULE 18F-3
PROVIDING FOR THE ISSUANCE
OF MULTIPLE CLASSES OF SHARES
AS OF AUGUST 13, 1996
1. SUMMARY OF PROPOSED MULTI-CLASS STRUCTURE.
In order to accommodate the requirements of a variety of groups of
investors in a cost-efficient and equitable manner, the Company may offer an
unlimited number of classes or series of new Shares ("new Classes") in their
existing and future investment portfolios. These might be offered (1) in
connection with a plan or plans adopted pursuant to Rule 12b-1 under the Act
(the "12b-1 Plan(s)") and/or (2) in connection with a non-Rule 12b-1 shareholder
services plan or plans (the "Shareholder Services Plan(s)"); and/or (3) in
connection with the allocation of certain expenses (referred to herein as "Class
Expenses") that are directly attributable only to certain of such new or
existing class(es) and (4) subject to certain conversion features. The 12b-1
Plan(s) and the Shareholder Services Plan(s) are sometimes collectively referred
to herein as "Plans".1 Any references herein to "Board of Directors" shall be
deemed to include the Board of Directors of the Company.
Currently, the Company is authorized to offer Shares in one separate
investment portfolio, ("Portfolio"), the Government Assets Fund, seeking maximum
current income consistent with safety of principal and maintenance of liquidity.
Shares of the currently authorized Portfolio will be offered on a
continuous basis by IFS. At present it is contemplated that all Shares will be
sold and redeemed at net asset value without a sales or redemption charge.
However, 12b-1 and servicing fees will be charged to Sweep and Trust Shares,
respectively. Transfer agency expenses have been treated as a general expenses
of the Portfolio.
Each class of Shares in the Portfolio is intended to bear Class
Expenses which are related to the level of services provided to the investors in
such Portfolio. Currently, Sweep Shares are anticipated to bear the expense of a
12b-1 Plan fee at an annual rate currently not in excess of 0.75% of the average
net asset value of the Portfolio's outstanding Sweep Shares. In addition, Trust
Shares would bear the expense of a Shareholder Services Plan, including a
service fee as defined in Article III, Section 2(b)(9) of the National
Association of Securities Dealers, Inc.'s ("NASD") Rules of Fair Practice of up
to 0.25% of the average annual net asset value of the Portfolio's outstanding
Trust Shares.
IMG serves as the Portfolio's investment adviser; ___________________
serves as the Portfolio's custodian; IMG serves as the Portfolio's transfer and
dividend disbursing agent; and IFS serves as the Portfolio's distributor.
2. DESCRIPTION OF CLASSES OF SHARES REPRESENTING INTERESTS IN THE PORTFOLIOS.
As a result of increased competition for the assets of public investors,
the Board of Directors believe that it is imperative that the Company be able to
tailor its services and expenses, to the extent possible, to the investment
needs of the particular investor. In order to accomplish this, and to expand its
marketing alternatives, the Company has created three classes of Shares in its
Portfolio and is contemplating the creation of other classes of Shares in
existing and future Portfolios.
Except for its class designation, the allocation of certain expenses,
voting rights, differences in exchange privileges, and conversion features as
described below, each class of Shares would be identical in all respects and
would be subject to the same investment objective, policies and limitations that
apply to the existing class of Shares or other class(es) of Shares in the same
Portfolio. The net asset value per share in each Portfolio would be calculated
and would be determined in the same manner and on the same days and at the same
times, regardless of class; the net investment income and capital gains, if any,
of each Portfolio would be declared and paid at the same times to all
shareholders of the Portfolio; and expenses, other than Plan payments and Class
Expenses described below, would be borne on a pro rata basis by each class on
the basis of the relative net asset value of the respective class.
B. UNLIMITED NUMBER OF CLASSES.
The Company is permitted to offer an unlimited number of classes of Shares
in its existing and future investment Portfolios. These classes might be offered
(1) in connection with a 12b-1 Plan or Plans; and/or (2) in connection with a
Shareholder Services Plan or Plans; and/or (3) in connection with the allocation
of certain Class Expenses attributable directly only to certain of such classes;
and/or (4) subject to certain conversion features.
C. 12B-1 PLAN(S) AND SHAREHOLDER SERVICES PLAN(S).
With respect to each class, the Company could adopt a 12b-1 Plan and/or a
Shareholder Services Plan concerning the financing of marketing programs
intended to result in the sale of Shares (for example, the payment of printing
costs for prospectuses and sales literature) and the provision of various
distribution and administrative services. Such services might be provided
directly by a Company's distributor and/or administrator, or by groups,
organizations or institutions ("Organizations") which have entered into
agreements (collectively, "Plan Agreements") with that Company or its
distributor or administrator concerning the provision of services to the
clients, members or customers of such Organizations who from time to time
beneficially own Shares of a particular class ("Class Shareholders").
The services to be provided by the Company's distributor or Organizations
under a 12b-1 Plan could include: (i) advertising via radio, television,
newspapers, magazines and otherwise; (ii) preparing, printing and distributing
sales materials, brochures and prospectuses (except for prospectuses used for
regulatory purposes or for distribution to existing shareholders); (iii)
establishing and maintaining shareholder accounts and records; (iv) maintaining
telephone and in-house telemarketing activities; and (v) other advertising and
marketing efforts. Payments under a 12b-1 Plan could be used for, but would not
be limited to, the payment of sales commissions and incentive compensation, as
well as payment for advertising and promotional costs. Since the services and
expenses contemplated under a 12b-1 Plan would be distribution-related, such
Plan would be adopted pursuant to Rule 12b-1 under the Act.
The services to be provided by a Company's administrator or qualified banks
and other financial institutions ("Shareholder Service Organizations") under a
Shareholder Services Plan could include: (i) establishing and maintaining
accounts and records relating to a customer's Shares; (ii) aggregating and
processing purchase, exchange and redemption requests from customers and placing
net purchase, exchange and redemption orders with the distributor; (iii)
providing customers with a service that invests the assets of their accounts in
Shares pursuant to specific or pre-authorized instructions; (iv) providing
periodic statements showing a customer's account balance and integrating such
statements with those of other transactions and balances in the customer's other
accounts serviced by a Shareholder Service Organization; (v) arranging for bank
wires; (vi) processing dividend payments from a Company on behalf of customers
and assisting customers in changing dividend options, account designations and
addresses; (vii) providing and maintaining elective services such as check
writing and wire transfer services; (viii) acting as sole shareholder of record
and nominee for customers; (ix) maintaining account records for customers; (x)
issuing confirmations of transactions; (xi) providing sub-accounting with
respect to Shares beneficially owned by customers or the information to a
Company necessary for sub-accounting; (xii) if required by law, forwarding
shareholder communications from a Company (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to Customers; and (xiii) providing other similar services. Some of such
services will constitute a "service fee" under NASD rules and others will not be
service fees. A Shareholder Services Plan will not provide for payments for
activities intended to result in the sale of Shares.
In addition, it is possible that a Company's administrator would provide
certain services under a Shareholder Services Plan that are not required for all
Share classes offered by a Portfolio. These services could include the
development and monitoring of various programs from time to time for individual
and retail shareholders, such as IRAs, automatic deposit and withdrawal
programs, check writing privileges, audio response services, payment of
dividends through automated clearing house funds, lock box facilities and direct
deposit programs; and the maintenance of dedicated walk-in facilities, staff and
communications systems for investors. A Company's administrator might also
undertake under a Shareholder Services Plan to provide oversight and other
support services that are intended to ensure the delivery of quality service to
individual and retail investors, including review of correspondence from a
Company's transfer agent to shareholders for accuracy and timeliness in handling
inquiries and review of dividend checks, statements and purchase and redemption
orders for proper turn-around; preparation of regular reports for internal use
and for distribution to the Company's Board of Directors concerning shareholder
activity; preparation and mailing of confirmation statements for Share
transactions; development and monitoring of order-taking facilities for public
investors; distribution of written communications to such investors, such as
copies of the Company's annual and semi-annual reports and prospectuses; and
responsibility for responding to shareholder inquiries and problems.
Organizations may charge other fees directly to their Class Shareholders
who are the beneficial owners of Shares in connection with their Class
Shareholder accounts. These fees would be in addition to any amounts received by
the Organization under a Plan Agreement with a Company. Under the terms of such
Plan Agreements, Organizations would be required to provide their Class
Shareholders with a schedule of fees charged to such Class Shareholders which
relate to their investments in Shares.
D. NO DUPLICATION OF SERVICES.
The provision of services under the Plans would augment or replace (and not
be duplicative of) the services otherwise provided by a Company's investment
adviser, transfer agent and administrator. The services provided by these
service contractors generally relate either to the internal operations of the
Company (for example, investment of assets and maintenance of books and records)
or to the Company's relationships with the shareholders of record (for example,
the transmission of proxy materials and shareholder reports to record
shareholders, and the processing of purchase and redemption orders from record
shareholders), or are otherwise intended to benefit all classes of Shares in a
Portfolio. On the other hand, the support services described above that would be
provided pursuant to the Shareholder Services Plan(s) will relate either to the
indirect relationship between a Company and the beneficial owners of Shares, or
to the services available only to certain Share classes. Similarly, payments by
a Company for distribution activities that are authorized by a 12b-1 Plan would
be for distribution-related expenses and services undertaken in connection with
the sale of Shares covered by the Plan. When a class is subject to both a 12b-1
Plan and a Shareholder Services Plan, the provision of services under one Plan
would augment (and not be duplicative of) the services provided under the other
Plan.
Essentially, the Company is unbundling the services that may be provided to
it to permit the Company's distributor, administrator and Organizations
flexibility in providing services under one or both types of Plans with respect
to Class Shareholders, with the precise services to be tailored to the needs of
the Class Shareholders and specified in the particular Plans.
E. PLAN PAYMENTS.
With respect to each class, the Company could pay its distributor,
administrator or Organizations for expenses, services and assistance in
accordance with the terms of the particular Plan (such payments are herein
referred to as "Plan Payments") and such Plan Payments would be borne entirely
by the beneficial owners of the class of the Portfolio to which the payments
relate. The maximum level of payments made pursuant to a Plan might vary based
upon an independent determination by the Board of Directors and, in the case of
a 12b-1 Plan, subject to shareholder approval of the affected class. In all
cases, however, the Company shall comply with Article III, Section 26 of the
Rules of Fair Practice of the NASD as it relates to the maximum amount of
asset-based sales charges and service fees that may be imposed by an investment
company, when and in the form (as amended from time to time) the provisions of
such Rules relating to such charges become effective, and for as long as they
remain in effect.
F. EFFICIENCIES RESULTING FROM PROPOSED CLASS STRUCTURE.
The Board of Directors believe that by offering Shares in connection with
Plans as described above, and by also creating and offering Shares independently
of Plans, the Companies may be able to achieve added flexibility in meeting the
service and investment needs of shareholders and future investors. If Shares are
created and Plans adopted as described, the Company will be able to address more
precisely the needs of the particular investors and to cause the associated
expenses to be borne by such investors. While this objective might be achieved
through the organization of new investment Portfolios, the Board of Directors
believe that it would be inefficient, and probably economically or operationally
unfeasible, to organize a separate investment Portfolio for each new Class of
Shares to be created. Not only would unnecessary accounting and bookkeeping
costs be incurred in organizing and operating such new Portfolios, but
management of the new Portfolios as well as the existing Portfolios might also
be hampered. For example, unless the new Portfolios grew at a sufficient rate
and to a sufficient size, the new Portfolios could be faced with liquidity and
diversification problems that would prevent them from performing well. The risk
that the new Portfolios would ultimately fail because of such duplicative costs
and management problems would not be insignificant in light of today's extremely
competitive environment where investors may choose from a broad array of
investment alternatives and expect to get services suited to their needs without
sacrificing safety or performance.
In order to obviate the foregoing risks, the Board of Directors wish to use
a structure under which new Classes could be created without having to establish
corresponding separate Portfolios. Under this arrangement, all Shares of a
particular Portfolio would represent interests in the Portfolio, although Shares
of each class may have a different net asset value (and thus represent a
different proportionate interest in the Portfolio's assets), and, as described
above, would have identical voting, dividend, liquidation and other rights,
preferences, powers, restrictions, limitations, qualifications, designations and
terms and conditions. The only differences between the classes of Shares of the
same Portfolio will relate solely to: (a) the impact of (i) expenses assessed to
a class pursuant to a Plan, (ii) other Class Expenses which would be limited to
(A) transfer agent fees identified by the transfer agent as being attributable
to a specific class of Shares; (B) fees and expenses of a Company's
administrator that are identified and approved by the Company's Board of
Directors as being attributable to a specific class of Shares; (C) printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders of a
class; (D) blue sky registration fees incurred by a class of Shares; (E) SEC
registration fees incurred by a class of Shares; (F) the expense of
administrative personnel and services as required to support the shareholders of
a specific class; (G) litigation or other legal expenses or audit or other
accounting expenses relating solely to one class of Shares; and (H) directors'
fees incurred as a result of issues relating no one class of Shares; and (iii)
any other incremental expenses subsequently identified that should be properly
allocated to one class and which are approved by the Commission pursuant to an
amended order; and (b) the fact that the classes will vote separately with
respect to a Portfolio's Plans, except as provided below; and (c) the different
exchange privileges of the classes of Shares; and (d) the designation of each
class of Shares of a Portfolio; and (e) certain conversion features offered by
some of the classes.
G. ALLOCATION OF EXPENSES.
Expenses of the Company that can not be attributed directly to any one
Portfolio ("Company Expenses") shall be allocated to each Portfolio based on the
relative net assets of such Portfolio or as otherwise determined under the
supervision of its Board of Directors. Company Expenses could include, for
example, directors' fees and expenses, audit fees and legal fees, insurance
premiums, SEC and state blue sky registration fees, and dues paid to
organizations such as the Investment Company Institute.
Certain expenses may be attributable to a Portfolio but not to a particular
class ("Portfolio Expenses"). All such Portfolio Expenses incurred by the
Portfolio shall be allocated to each class on the basis of the relative net
asset value of the respective classes in the Portfolio. Portfolio Expenses could
include, for example, advisory fees, Portfolio accounting fees, custodian fees,
and fees related to preparation of separate documents of the Portfolio.
Class Expenses consist of the following types of fees or expenses which the
Company identifies and determines are directly attributable to a particular
class and are to be allocated to that class exclusively: (a) transfer agent fees
identified by the transfer agent as being attributable to a specific class of
Shares; (b) fees and expenses of the administrator that are identified and
approved by the Company's Board of Directors as being attributable to a specific
class of Shares; (c) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxies to
current shareholders of a class; (d) blue sky registration fees incurred by a
class of Shares; (e) SEC registration fees incurred by a class of Shares; (f)
the expense of administration personnel and services as required to support the
shareholders of a specific class; (g) litigation or other legal expenses or
audit or other accounting expenses relating solely to one class of Shares; and
(h) directors' fees incurred as a result of issues relating to one class of
Shares.
Currently, the Company does not intend to allocate any transfer agency
expenses on a class basis, but the Board of Directors of the Company may
determine that such an allocation is appropriate, and may amend this Plan to add
this authority to make such allocations. It is contemplated that certain
transfer agency expenses may be among those allocated on a class rather than
Portfolio basis in the future. For example, it is anticipated that certain
classes which are to be marketed to retail customers may provide investors with
a check-writing feature which will increase the transfer agency expenses for
such classes. Accounts in these retail classes of Shares are also likely to be
smaller, on average, resulting in higher transfer agency expenses on a per Share
and aggregate basis. In contrast, Organizations may serve as the record
shareholder for their customers' investments, thereby decreasing a Company's
transfer agency expenses for a class. These variations and similar factors may
contribute to a significant disparity in the transfer agency portion of the
expense ratios for different classes of Shares, justifying the allocation of
these expenses according to class rather than Portfolio. To the extent that a
class may bear transfer agency or other expenses not being borne by other
classes of the same Portfolio, appropriate disclosure would be included in the
applicable Portfolio's prospectus.
The Company's investment adviser or other service contractor may choose to
reimburse or waive Class Expenses on certain classes on a voluntary, temporary
basis. The amount of Class Expenses waived or reimbursed by the investment
adviser or other service contractor may vary from class to class. Class Expenses
are by their nature specific to a given class and obviously expected to vary
from one class to another. Applicants believe that it is acceptable and
consistent with shareholder expectations to reimburse or waive Class Expenses at
different levels for different classes of the same Portfolio.
In addition, the investment adviser or other service contractor way waive
or reimburse Company Expenses and/or Portfolio Expenses (with or without a
waiver or reimbursement of Class Expenses) but only if the same proportionate
amount of Company Expenses and/or Portfolio Expenses are waived or reimbursed
for each class of a Portfolio. Thus, any Company Expenses that are waived or
reimbursed would be credited to each class of a Portfolio based on the relative
net assets of the classes. Similarly, any Portfolio Expenses that are waived or
reimbursed would be credited to each class of that Portfolio according to the
relative net assets of the classes. Company Expenses and Portfolio Expenses
apply equally to all classes of a given Portfolio. Accordingly, it may not be
appropriate to waive or reimburse Company Expenses or Portfolio Expenses at
different levels for different classes of the same portfolio.
Certain expenses shall be allocated differently if their method of
imposition changes. Thus, if a Class Expense can no longer be attributed to a
class or the Company determines that it should not be allocated to a particular
class exclusively, it will be charged as a Portfolio Expense or a Company
Expense, as may be appropriate; similarly, if a Company Expense becomes
attributable to a Portfolio, it will become a Portfolio Expense. However, any
additional Class Expenses (including Plan Payments) not specifically identified
above which are subsequently identified and determined to be properly allocated
to one class of Shares shall not be so allocated until approved by the Board of
Directors.
H. DIFFERENCES IN NET INCOME PER SHARE; NET ASSET VALUE.
Because of the Plan Payments and Class Expenses that may be borne by each
class of Shares, the per Share net income of, and dividends to, each class may
be different from the net income of, and dividends to, the other classes of
Shares of the Portfolio. For example, if one class bore the expense of a Plan
Payment that did not apply to another class, the per Share net income and
dividends of the former class would be expected to be lower than the per Share
net income and dividends of the latter class. In addition and apart from the
allocation of Plan Payments, to the extent aggregate Class Expenses (such as
transfer agency fees, administration fees and prospectus printing costs) are
higher with respect to one class of a Portfolio, the per Share net income and
dividends of that class would be lower than the per Share net income and
dividends of the other classes of the Portfolio's Shares. Dividends paid to each
class of Shares in a Portfolio would, however, be declared and paid on the same
days and at the same times, and, except as noted with respect to the expenses of
Plan Payments and Class Expenses, would be determined in the same manner and
paid in the same amounts.
The net asset value of all outstanding Shares in a Portfolio would be
computed on the same days and at the same times.
The Board of Directors believes that the issuance and sale of the various
classes of Shares in the Portfolios will better enable the Company to meet the
competitive demands of today's financial services industry. The arrangement will
permit the Company to both facilitate the distribution of its securities and
expand the depth and scope of its services without assuming excessive
operational costs or unnecessary investment risks. Under the proposed
arrangement, the Company could, among other things, compensate financial
intermediaries for providing support services that are tailored to the needs of
their customers. Customers who enjoy such services would, in turn, bear the
associated expenses. Such customers would enjoy not only the benefits of such
services, but also the additional investment safety and stability resulting from
their ability to invest in established, sizable investment Portfolios. Moreover,
since holders of additional classes of Shares may invest in existing Portfolios,
all shareholders of the applicable Portfolios would benefit from the economies
of scale that result where a portion of the fixed costs normally associated with
open-end management investment companies would, potentially, be spread over a
greater number of Shares than they would be otherwise. In addition, the
Companies would be able, under the proposed arrangement, to match more precisely
their distribution costs, administrative support, and transfer agency and other
expenses with those investors on whose behalf such costs and expenses are
incurred.
The Board of Directors believe that the allocation of expenses and voting
rights relating to the Plans in the manner described is in conformity to Rule
18f-3 under the Act and is equitable and would not discriminate against any
group of shareholders. Activities financed by Plan Payments or Class Expenses
would be intended for the investors that purchase the Shares bearing these
Payments and Expenses. Moreover, because, with respect to any Portfolio, the
rights and privileges of all classes in the Portfolio is substantially
identical, the possibility that the interests of the respective classes would
ever conflict would be remote. In any event, the interests of each class of
shareholders would be adequately protected pursuant to the conditions set forth
in Part V below, including the requirement that each Plan, along with the Plan
Agreements, conform to the requirements of Rule 12b-1 or the protections
described in condition 5 hereof, including the requirement that they be approved
by the Board of Directors.
The multi-class structure will also enable the Company (and its
shareholders) to save the organizational and other continuing costs that would
be incurred if a Company were required to establish a new separate investment
Portfolio for each class of Shares.
The Board of Directors is sensitive, with respect to the proposed
arrangement, of the need for full disclosure of class-related payments. Among
other things, the Board of Directors direct that management shall take all
appropriate steps to ensure that to the extent required by SEC rules, the
respective performance data of all classes of Shares in a Portfolio are fairly
disclosed in the prospectuses and shareholder reports for such Portfolio. In
this regard, to the extent required by applicable SEC rules, the performance
data of all classes in each Portfolio shall be posted separately, and would
reflect the impact of any Plan Payments borne and Class Expenses by the
class(es) involved.
The issuance of multiple classes of shares as described herein shall be
subject to the following conditions:
1. Each class of Shares representing interests in the same Portfolio
of a Company will be identical in all respects, except as set forth below. The
only differences between the classes of Shares of the same Portfolio will relate
solely to: (a) the impact of (i) expenses assessed to a class pursuant to a
Plan, (ii) other Class Expenses which would be limited to (A) transfer agent
fees identified by the transfer agent as being attributable to a specific class
of Shares; (B) fees and expenses of a Company's administrator that are
identified and approved by the Company's Board of Directors as being
attributable to a specific class of Shares; (C) printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders of a class; (D) blue sky
registration fees incurred by a class of Shares; (E) SEC registration fees
incurred by a class of Shares; (F) the expense of administrative personnel and
services as required to support the shareholders of a specific class; (G)
litigation or other legal expenses or audit or other accounting expenses
relating solely to one class of Shares; and (H) directors' fees incurred as a
result of issues relating no one class of Shares; and (iii) any other
incremental expenses subsequently identified that should be properly allocated
to one class and which are approved by the Commission pursuant to an amended
order; and (b) the fact that the classes will vote separately with respect to a
Portfolio's Plans, except as provided in Condition 17 below; and (c) the
different exchange privileges of the classes of Shares; and (d) the designation
of each class of Shares of a Portfolio.
2. On an ongoing basis, the Board of Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will monitor each
Portfolio having a multi-class system for the existence of any material
conflicts among the interests of the various classes of each Portfolio. The
directors, including a majority of the independent directors, shall take such
action as is reasonably necessary to eliminate any such conflicts that may
develop. A Portfolio's investment adviser and distributor will be responsible
for reporting any potential or existing conflicts to the directors. If a
conflict arises, a Portfolio's investment adviser and/or distributor at their
own cost will remedy such conflict up to and including establishing a new
registered management investment company.
3. Any Shareholder Services Plan will be adopted and operated in
accordance with the procedures set forth in Rule 12b-1(b) through (f) as if the
expenditures made thereunder were subject to Rule 12b-1, except that
shareholders need not enjoy the voting rights specified in Rule 12b-1.
4. The Board of Directors shall receive quarterly and annual
statements concerning distribution and shareholder servicing expenditures
complying with paragraph (b)(3)(ii) of Rule 12b-1, as it may be amended from
time to time. In the statements, only expenditures properly attributable to the
sale or servicing of a particular class of Shares will be used to justify any
distribution or servicing expenditure charged to that class. Expenditures not
related to the sale or servicing of a particular class will not be presented to
the directors to justify any fee attributable to that class. The statements,
including the allocations upon which they are based, will be subject to the
review and approval of the independent directors in the exercise of their
fiduciary duties.
5. Dividends paid by a Portfolio with respect to each class of its
Shares, to the extent any dividends are paid, will be calculated in the same
manner, at the same time, on the same day, and will be in the same amount,
except that Plan Payments relating to each respective class of Shares and the
Class Expenses relating to each class of Shares will be borne exclusively by
that class.
6. The Administrator shall have adequate facilities in place to ensure
implementation of the methodology and procedures for calculating the net asset
value and dividends and distributions of the various classes of Shares and the
proper allocation of expenses among the classes of Shares.
7. The Distributor of the Company will adopt compliance standards for
any Portfolio which has a multi-class system, which standards will relate to
when each class of Shares may appropriately be sold to particular investors.
8. Each Portfolio having a multi-class system will disclose the
respective expenses, performance data, distribution arrangements, services,
fees, front-end sales loads, CDSCs, conversion features, and exchange privileges
applicable to each class of Shares in a Portfolio in every prospectus relating
to such Portfolio, regardless of whether all classes of Shares are offered
through each prospectus. Each such Portfolio will disclose the respective
expenses and performance data applicable to all classes of Shares in a Portfolio
in every shareholder report relating to such Portfolio. The shareholder reports
for each such Portfolio will contain, in the statement of assets and liabilities
and statement of operations, information related to the Portfolio as a whole
generally and not on a per class basis (each Portfolio's per Share data,
however, will be prepared on a per class basis with respect to all classes of
Shares of such Portfolio). To the extent any advertisement or sales literature
describes the expenses or performance data applicable to any class of Shares, it
will also disclose the respective expenses and/or performance data applicable to
all classes of Shares. The information provided by the Applicants for
publication in any newspaper or similar listing of any Portfolio's net asset
value and public offering price will present each class of Shares separately.
footnote 1. The Company will not implement the multiple class structure with
respect to any Portfolio or allocate Class Expenses until after the
Company amends its Registration Statement as necessary to reflect the
offering of additional classes of Shares in a Portfolio.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT FOR THE PERIOD JULY 1, 1995 TO JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT PREVIOUSLY FILED WITH THE
COMMISSION ON OR ABOUT AUGUST 5, 1996 PURSUANT TO RULE 30b2-1.
</LEGEND>
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 178,330,111
<INVESTMENTS-AT-VALUE> 178,330,111
<RECEIVABLES> 2,082,008
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 180,412,119
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 779,304
<TOTAL-LIABILITIES> 779,304
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 179,632,815
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,489,812
<OTHER-INCOME> 0
<EXPENSES-NET> 2,138,527
<NET-INVESTMENT-INCOME> 8,351,285
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,351,285
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,141,629,915
<NUMBER-OF-SHARES-REDEEMED> 1,129,241,627
<SHARES-REINVESTED> 159,592
<NET-CHANGE-IN-ASSETS> 12,547,880
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 444,793
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 177,920,322
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.047
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.047
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
