SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6 (e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IMG 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 Government Assets Fund
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
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a) (2) of Schedule 14A.
[ ] $500 per each part to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
<PAGE>
IMG GOVERNMENT ASSETS FUND
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
ON SEPTEMBER 25, 1996
TO THE SHAREHOLDERS OF IMG GOVERNMENT ASSETS FUND:
You are cordially invited to attend the Annual Meeting of Shareholders of IMG
Government Assets Fund, which will be held at 2203 Grand Avenue, Des Moines,
Iowa, 50312-5338, on Wednesday, September 25, 1996, at 10:00 a.m., for the
following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting and
until their successors are elected and have qualified;
2. To ratify the selection of KPMG Peat Marwick LLP as the independent
auditors for the Fund;
3. To approve or disapprove an amendment to the Articles of Incorporation
changing the Fund's name;
4. To approve or disapprove an amendment to the Articles of Incorporation
giving authority to the Fund's Board of Directors to allow the Fund to
issue shares in series and classes, thereby allowing the Fund to offer
multiple portfolios and to offer shares with varying distribution fees
and charges;
5. To approve or disapprove an amendment to the Fund's Rule 12b-1 Plan
making it "compensatory" and making it applicable to the multiple class
structure, subject to the shareholders approving proposal number 4; and
6. To approve or disapprove changes in the investment objectives, policies
and restrictions of the Fund.
In addition, we will report to you on the business and affairs of the Fund for
the year ended June 30, 1996. The Annual Financial Report is enclosed for your
information.
The close of business on Thursday, August 1, 1996, has been fixed as the record
date for determination of shareholders entitled to notice of and to vote at the
Annual Meeting. There were 186,360,396 shares outstanding on August 1, 1996. A
list of such shareholders will be maintained at the offices of Investors
Management Group, (the "Advisor" or "IMG") at 2203 Grand Avenue, Des Moines,
Iowa 50312-5338, during the ten day period preceding the Annual Meeting.
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE
PROVIDED. No postage is required. Prompt return of your proxy card will be
appreciated. Your vote is important no matter how many shares you own.
Des Moines, Iowa BY ORDER OF THE BOARD OF DIRECTORS
August 20, 1996
Ruth Prochaska
Secretary
<PAGE>
IMG GOVERNMENT ASSETS FUND
PROXY STATEMENT
This statement was first mailed to shareholders on or about August 20,
1996. The Fund's annual report for the year ending June 30, 1996, is included
herewith. Shareholders should send proxies and any correspondence to the
following address:
IMG Government Assets Fund
2203 Grand Avenue
Des Moines, Iowa 50312-5338
SOLICITATION OF PROXIES
This Statement is furnished to shareholders of IMG Government Assets Fund
(the "Fund") in connection with the solicitation of proxies by the Board of
Directors to be used at the Annual Meeting of the Shareholders to be held at
10:00 a.m., Des Moines time, on September 25, 1996, at 2203 Grand Avenue, Des
Moines, Iowa.
VOTING RIGHTS
The close of business on August 1, 1996, has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at the
Annual Meeting. There were 186,360,396 shares outstanding at the close of
business on August 1, 1996. Each shareholder will be entitled to one vote for
each full share held and an appropriate fraction of a vote for each fractional
share held on each matter presented for shareholder vote at the Annual Meeting.
If the enclosed form of proxy is properly executed and returned, the shares
represented thereby will be voted at the meeting for the election of the ten
directors identified thereon (unless authority is withheld) and unless otherwise
indicated by the shareholder, the proxy will be voted for the other proposals
set forth herein and appearing on the proxy. A shareholder executing a proxy may
revoke it at any time before it has been voted at the meeting by giving written
notice to the Fund, at the address shown above. The proxy may also be revoked by
executing a new proxy or attending and voting at the meeting. Nominees for
directors who receive a majority of votes cast by the shareholders entitled to
vote at the annual meeting will be elected. Abstentions are not counted in
determining the number of shares voting for or against any matter listed on the
accompanying Notice of Annual Meeting, but will be included in determining the
number of shares present at the Annual Meeting. Broker "non-votes" (i.e. proxies
from brokers or nominees indicating such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter or for which such persons do not have discretionary power to
vote) will be treated as abstentions. Cumulative voting is not authorized.
In the event that a quorum is not present at the Annual Meeting, or in the
event that a quorum is present but sufficient votes to approve the various
proposals are not received, the persons named as proxies may propose one or more
adjournments of the Annual Meeting, to permit further solicitation of proxies.
In determining whether to adjourn the Annual Meeting, the following factors may
be considered: (1) the nature of the particular proposal lacking a sufficient
number of votes, (2) the percentage of votes actually cast, (3) the percentage
of negative votes cast, (4) the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for
solicitation. Any adjournment will require the affirmative vote of a majority of
those shares represented at the Annual Meeting in person or by proxy. A
shareholder vote may be taken on any proposal prior to any adjournment if
sufficient votes have been received for approval.
To the knowledge of the Fund, no shareholders owned beneficially as of the
record date 5 percent or more of the Fund's outstanding shares.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals by shareholders of the Fund which are intended to be presented by
such shareholders at the Fund's 1997 Annual Meeting must be received by the Fund
no later than May 10, 1997, in order that they may be included in the proxy
statement and form of proxy relating to that meeting. Any such proposals
submitted should be mailed Certified Mail -- Return Receipt Requested to the
Fund at the Fund's address set forth above.
1. ELECTION OF DIRECTORS
A board of ten directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Fund's ten nominees named below. Messrs. Miller and Timmons and have been
directors of the Fund since its inception, and Mr. Galligan has served since
October 1988. Messrs. Lorber, Hensley and Lynner have served since October 1989.
Mr. Zumbach has served since July 18, 1995. In the event that any nominee of the
Fund is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Shareholders or until his successor has been elected and qualified.
Described below are the nominees and their principal occupations held
during the past five years. Each director who is deemed an "interested person"
of the Fund, as defined in the Investment Company Act of 1940, is indicated by
an asterisk (*). The address of each director is that of the Fund unless
otherwise indicated.
<TABLE>
<CAPTION>
No. of Shares of
the Fund
Beneficially
Owned Directly
Principal Occupations Served as or Indirectly
and Other Material Director as of
Name Age Affiliations From August 1, 1996
<S> <C> <C> <C> <C>
Robert F. Galligan 61 Business Administration Department 10-88 27,101
Des Moines, Iowa Chairman, Associate Professor, Grand
Director View College; Director, IMG Tax Ex-
empt Liquid Assets Fund, Inc.
Chad L. Hensley 72 Retired President and CEO, Preferred 10-89 -0-
Des Moines, Iowa Risk Mutual Insurance Co.; Director,
Director IMG Tax Exempt Liquid Assets Fund, Inc.
Fred Lorber 72 Chairman of Board, Lortex, Inc.; 10-89 -0-
Des Moines, Iowa Chairman and Director, IMG Tax Exempt
Chairman and Director Liquid Assets Fund, Inc.
Darwin T. Lynner, Jr. 52 President, Darwin T. Lynner Co., Inc.; 10-89 -0-
Des Moines, Iowa Director, IMG Tax Exempt Liquid
Director Assets Fund, Inc.
Mark A. McClurg* 43 Vice President, Secretary and Senior 7-95 -0-
Des Moines, Iowa Managing Director, Investors Management
Treasurer and Director Group and IMG Financial Services, Inc.;
Treasurer and Director, IMG Tax Exempt
Liquid Assets Fund, Inc.
David W. Miles* 39 President, Treasurer and Senior Manag- 7-95 22,567
Des Moines, Iowa ing Director, Investors Management
President and Director Group and IMG Financial Services, Inc.;
President and Director, IMG Tax Exempt
Liquid Assets Fund, Inc.
Richard A. Miller 56 Vice President & General Counsel, 6-82 -0-
Des Moines, Iowa Farmers Casualty Company Mutual;
Director Director, IMG Tax Exempt Liquid
Assets Fund, Inc.
James W. Paulsen* 38 Senior Managing Director of Investors 7-95 -0-
Des Moines, Iowa Management Group and IMG Finan-
Vice President and Director cial Services, Inc.; Vice President and
Director, IMG Tax Exempt Liquid
Assets Fund, Inc.
William E. Timmons 72 Retired Partner, Patterson Law Firm; 6-82 -0-
Des Moines, Iowa Director, IMG Tax Exempt Liquid Assets
Director Fund, Inc.; Director, Ag Hail Insurance
Company; Director, Allied Group.
Steven E. Zumbach 46 Attorney, Belin, Harris, Lamson, 7-95 -0-
Des Moines, Iowa McCormick; Director, IMG Tax Exempt
Liquid Assets Fund, Inc.
</TABLE>
The Fund has an Executive Committee consisting of Messrs. Galligan and
Timmons. Subject to certain limitations, the Executive Committee may exercise
the powers of the Board of Directors between the quarterly meetings of the
Board. During the fiscal year ended June 30, 1996, the Board of Directors met
four times and the Executive Committee did not meet. No incumbent director
attended fewer than 75 percent of the meetings of the Board of Directors. The
Fund has a nominating committee consisting of Messrs. Lorber and Hensley. The
Fund has no standing audit or compensation committee.
The total number of shares held by all directors as of August 1, 1996
represented less than 1 percent of the outstanding shares.
The executive officers of the Fund are David W. Miles, President; Mark A.
McClurg, Treasurer; James W. Paulsen, Vice President; and Ruth L. Prochaska (43)
Secretary. Mr. Miles is President, Treasurer and Senior Managing Director of
IMG. Ms. Prochaska is Controller/Compliance Officer of IMG. Mr. McClurg is Vice
President, Secretary, and Senior Managing Director of IMG. Mr. Paulsen is Senior
Managing Director of IMG. All are deemed to be interested persons of the Fund
and the Advisor. The address of the officers is that of the Fund.
REMUNERATION OF OFFICERS AND DIRECTORS
AND OTHER TRANSACTIONS WITH DIRECTORS
During the fiscal year ended June 30, 1996, the Fund paid no remuneration
to any of its directors or officers for acting as such, except a maximum fee of
$550 per Board meeting and $100 per committee meeting, paid only to the
directors who are not interested persons of the Fund's Investment Advisor. Under
the terms of the Management and Investment Advisory Agreement, all other
remuneration of officers and directors is paid by the Investment Advisor. In
fiscal 1996, payments by the Fund to directors for attendance at directors'
Board and committee meetings aggregated $13,750.
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
Chairman & Director
Darwin T. Lynner 1,650 2,400
Director
Mark A. McClurg 0 0
Treasurer & Director
David W. Miles 0 0
President & Director
Richard A. Miller 2,200 3,200
Director
James W. Paulsen 0 0
Vice President & Director
William E. Timmons 2,200 3,200
Director
Steven E. Zumbach 1,100 1,600
Director
2. RATIFICATION OF SELECTION OF AUDITORS
On August 13, 1996, the Board of Directors of the Fund, including a
majority of those members of the Board who are not interested persons of the
Fund, selected KPMG Peat Marwick LLP, independent auditors, to examine the books
and securities of the Fund and to certify from time to time financial statements
of the Fund. KPMG Peat Marwick LLP has advised the Fund that such firm has no
direct or material indirect financial interest in the Fund or its Investment
Advisor. Representatives of KPMG Peat Marwick LLP will be at the meeting to
answer questions and will have an opportunity to make a statement if they desire
to do so. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
3. CHANGE OF FUND NAME
The Fund's current name as set forth in the Articles of Incorporation, as
amended, is IMG Liquid Assets Fund, Inc. The Fund has also adopted the tradename
IMG Government Assets Fund under which the Fund generally does business. The
Distributor, IMG Financial Services, Inc., has proposed to expand the
distribution of the Fund and has recommended that the Fund be named simply,
"Liquid Assets Funds, Inc." The Board of Directors considered this proposal in
light of the proposals described below in connection with the adoption of a
multiple series and class structure for shares and believes that the name change
will allow for wider distribution of the Fund. A wider distribution of the Fund
will result in a larger Fund, thereby presumably creating economies of scale by
allowing the Fund to purchase larger denominations of government securities at
lower overall cost. As a result, the Board of Directors believes that it is in
the best interest of the shareholders and therefore RECOMMENDS THAT THE
SHAREHOLDERS APPROVE THE NAME CHANGE FROM IMG LIQUID ASSETS FUND, INC. TO LIQUID
ASSETS FUNDS, INC. A vote for this proposal will authorize the officers of the
Fund, and each of them, to execute and file with the Secretary of the State of
Iowa, Articles of Amendment to the Articles of Incorporation of the Fund and
take all other actions necessary and proper to effectuate the name change. The
affirmative vote of a plurality of shares voting at a meeting of shareholders at
which a quorum is present is required.
4. SERIES AND CLASSES OF SHARES
The Distributor and the Advisor have recommended a change in the
distribution approach for the Fund, which they believe will result in wider
distribution of the Fund. In addition to the name change discussed above, the
Distributor and Advisor have recommended establishing a multiple series and
class structure for the shares of the Fund as allowed under the Investment
Company Act of 1940 and Rule 18f(3) thereunder. Under the Iowa Business
Corporation Act, Section 490.601 and Section 490.602, if the Articles of
Incorporation so provide, the Board of Directors may authorize the issuance of
shares in classes and series.
SERIES STRUCTURE
At present, the Fund is authorized to issue only one class of stock and no
series. The Board is recommending that the Articles be amended to allow the
issuance of multiple series of shares so that the Fund can offer investment
portfolios other than the current Fund. This structure, generally referred to as
a "Series Fund", allows one corporation to offer several mutual funds, each
identified as a separate series of shares. If the amendment is approved, shares
may be approved by the Board from time to time which each represent distinct
portfolios of investments. The existing Fund would simply be one series of
shares, which would be designated Government Assets Fund shares. At a later
date, the Board of Directors could authorize additional shares named
appropriately for other investment portfolios which would be offered to the
public with their own separate investment objectives and policies.
Assets and liabilities of a series of shares are distinct and separate from
other series, although certain expenses of the corporation not identifiable to a
series are allocated among the series pro rata. Each series of shares has its
own net asset value. Shareholders of each series vote on matters specifically
attributable to the series, including such matters as approval of management
agreements, distribution plans and reorganizations. On matters affecting the
corporation as a whole, such as approval of auditors and election of Directors,
all series would vote as a group.
At the present time, the Board of Directors has not authorized the creation
of additional series and does not expect to do so in the future. However, if the
amendment is approved, the existing shares representing the Fund would be
reclassified "Government Assets Fund shares".
CLASS STRUCTURE
The class structure features the issuance of classes of shares within the
series (Fund) ("Multi-Class Structure"). Each class of a series would have
different class level expenses. A Multi-Class Structure would give the Fund
greater flexibility in the distribution of Fund shares. Currently the Fund is
distributed with no sales charge or service fees, although a distribution fee is
paid. With a Multi-Class Structure, the Fund could be sold through new
distribution channels that require the payment of compensation or that couple
the sale of Fund shares with the provision of certain other services. For
example, classes of shares may be created that would allow investors to purchase
such shares (i) with a distribution fee pursuant to a Rule 12b-1 Plan or a
shareholder services fee; (ii) with no distribution fee, but with a shareholders
services fee; (iii) with neither a distribution fee or shareholder services fee;
(iv) with a conventional front-end sales load; or (v) without a front-end sales
load, but subject to a contingent deferred sales charge ("CDSC") and a
distribution fee pursuant to a Rule 12b-1 Plan. In addition, the Fund may
provide for the conversion of one class of shares to another class of shares
after a certain period of time. For example, a class of shares that is subject
to a CDSC and a distribution fee that remains outstanding for a certain period
of time may automatically convert to a class of shares that is not subject to a
Rule 12b-1 Plan.
The amendment of the Fund's Articles of Incorporation to permit the
Multi-Class Structure was approved by the Directors insofar as it is in the best
interests of the Fund and its stockholders to give the Fund the ability to
implement a Multi-Class Structure in order to (i) facilitate distribution of the
Fund's shares; (ii) help maintain the competitive position of the Fund in
relation to other funds that have implemented or are seeking to implement
similar distribution arrangements; (iii) enable investors paying a sales charge
or distribution fee to choose the purchasing option best suited to their
individual situations, thereby encouraging then current stockholders to make
additional investments in the Fund and attracting new investors and assets to
the Fund to the benefit of the Fund and its stockholders; and (iv) permit
possible economies of scale through increased Fund size.
If the Multi-Class Structure is approved, each share of a series of the
Fund would represent an identical legal interest in the corresponding investment
portfolio (series) and have the same rights, except that each class of a series
may bear certain expenses specifically related to the distribution of its shares
and each class may bear certain other expenses specifically allocated to that
class such as transfer agency fees. Although the legal rights of the classes of
shares would be identical, it is likely that the different expenses borne by
each class would result in different net asset values and dividends. For
example, a class of shares that is subject to a Rule 12b-1 Plan would bear the
expenses of a distribution fee that would cause those shares to have a higher
expense ratio and to pay lower dividends than another class of shares. Each
class would have exclusive voting rights with respect to any plan of
distribution adopted for that class pursuant to Rule 12b-1 under the 1940 Act.
The classes would also have different exchange privileges. Upon any liquidation
of the Fund, holders of shares subject to a Rule 12b-1 Plan might receive less
than holders of another class of shares as a result of higher accumulated
expenses from the distribution fee.
IMPLEMENTATION OF THE SERIES AND MULTI-CLASS STRUCTURE WOULD NOT ALTER THE
RIGHTS AND PRIVILEGES OF THE CURRENT STOCKHOLDERS OF THE FUND, NOR WILL IT
AFFECT THE NET ASSET VALUE OF A CURRENT STOCKHOLDER'S INVESTMENT IN THE FUND. By
providing investors with a broader choice as to the method of purchasing shares,
the Directors believe that the Multi-Class Structure, if implemented, may
attract more investment dollars to the Fund, which would benefit the holders of
all classes of shares by facilitating the management of the Fund and by reducing
the operating expense ratios of the Fund.
If the stockholders approve this proposal, the Articles of Incorporation
will be amended to increase the total authorized shares to $5 billion shares,
authorizing $2.4 billion shares for the Government Assets Fund and to allow for
the creation of separate classes and series of shares and to define the effects
of the creation of separate classes. By the amendment, stockholders would be
giving the Board of Directors authority, without further stockholder approval,
to create classes and series of stock in the future with such preferences,
rights and privileges as the Board of Directors determines, subject to the
requirements of the 1940 Act. Specific classes of shares may or may not be
available to any particular group or type of investors.
In approving the amendment adding the Multi-Class Structure, the Board also
approved, subject to shareholder approval of the amendment, a proposal to
implement the Multi-Class Structure and begin offering shares in the Multi-Class
Structure upon effectiveness of a registration statement filed with the
Securities and Exchange Commission. The Multi-Class Structure proposed would
convert the outstanding shares of the Fund to shares designated Government
Assets Fund. Three "classes" of the Government Assets Fund shares would be
further authorized and designated "Sweep Shares", "Trust Shares" and
"Institutional Shares". Presently outstanding shares would be reclassified as
Sweep Shares, which would have the same fee structure as the current Fund's
shares. Trust Shares and Institutional Shares when offered, would be offered
without a Rule 12b-1 Plan fee, but Trust Shares would have a shareholder
servicing fee. Institutional Shares would be offered without any Rule 12b-1 fee
or shareholder servicing fee.
If the amendment is approved, outstanding shares of the Fund would be
converted to Sweep Shares of the series designated Government Assets Fund on the
date that the Articles of Amendment would be filed with the Secretary of State,
on or about October 15th. At the present time, the Fund does not intend to offer
any kind of conversion rights between the classes of shares. Trust Shares are
intended to be offered solely to trust departments and pension/profit sharing
plans and Institutional Shares are intended to be offered solely to certain
financial institutions meeting certain requirements established by the Fund.
THE FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE AMENDMENT TO THE FUND'S ARTICLES OF INCORPORATION attached
hereto as Exhibit A, subject to such further changes or additions as may be
reasonable and prudent or as may otherwise be required by the Securities and
Exchange Commission or other regulatory authorities, to effectuate the Fund's
conversion to a series company with the Multi-Class Structure described above.
5. AMEND RULE 12B-1 PLAN
At the August 13, 1996 meeting, the Board of Directors reviewed and
approved the Fund's current Rule 12b-1 distribution plan (the "Plan"). In light
of the proposals to implement the Multi-Class Structure as discussed above, the
Advisor and Distributor also recommended that the Plan be amended to conform to
the Multi-Class Structure and to make the Plan a compensatory plan rather than a
reimbursement plan as is presently the case. A copy of the Plan as proposed to
be amended is attached hereto as Exhibit B.
The Amended Plan provides for compensation payments rather than
reimbursement payments to various persons in connection with distribution of the
Fund shares. Under the former Plan, the Fund reimbursed the Distributor for
expenses incurred by the Distributor in facilitating the sale of Fund shares up
to 0.75 percent of the average annual net assets of the Fund. The Distributor
was required to account for all expenses subject to reimbursement. Under the
Amended Plan, the Distributor and other persons, subject to separate written
agreements approved by the Board of Directors, are paid up to 0.75 percent of
the net assets of the Fund's shares attributable to the services that such
persons render. The fee is paid regardless of the expenses incurred by the
service provider.
In addition, the Amended Plan is to be only applicable to the Fund's "Sweep
Shares" unless the Board of Directors subsequently approve making the "Trust",
"Institutional" and/or other classes of shares subject to the Plan and the
shareholders of the other classes approve the application of the Plan to these
classes of shares.
Considering approval of the Amended Plan, the Directors requested
information from the Advisor and Distributor relating to the operation of the
existing Plan and their intentions with respect to the operation under the
Amended Plan. In evaluating the information provided by the Advisor and
Distributor, the Directors considered a number of factors. The primary factor
addressed was the problem and circumstances facing the Fund in distributing its
shares through financial institutions and other participating organizations.
Mergers and consolidations within the banking industry and increased competition
from other mutual funds in the financial services industry were highlighted as
major concerns. The Distributor and the Advisor noted that many banks and
financial institutions were seeking to distribute money market funds and that
the Fund's distribution system must be competitive with other money market funds
offering similar services. The Board of Directors considered the Fund's
historical distribution system and the likelihood that without changes the Fund
could experience difficulty in retaining existing shareholders or obtaining new
shareholders. In approving the Amended Plan, the Directors determined that the
new distribution arrangement for the Fund necessarily required that the Plan be
flexible in its arrangements with respect to distribution activities. Because
the Fund will have multiple classes of shares that could be offered through
participating organizations, including banks and also other institutions and
distribution channels, the Board determined that a compensatory arrangement
rather than a reimbursement arrangement would allow the Distributor to more
easily market the shares. It further determined that the existing Distribution
Plan put the Fund in a less advantageous position in respect to competing funds
who had adopted compensatory arrangements in distributing their shares in the
financial services industry. Additionally, the Board of Directors determined
that a single agreement with a Distributor through which the Fund paid
reimbursement for distribution related expenses did not allow the Fund
sufficient flexibility to contract directly with financial institutions and
others. The Board of Directors acknowledged that the Fund's existing
Distribution Plan had demonstrated historic basis for producing wider
distribution of the Fund shares and economies of scale.
The Board also considered the potential difficulty in maintaining the
Fund's yield in the event of a loss of shareholders and/or slow growth in the
total assets under management within the Fund. The Board of Directors believes
that the economies of scale resulting from the size of the Fund is an important
factor to support the approval and amendment of the Rule 12b-1 Plan.
The Board also considered the inter-relationship between the Plan and the
activities of the Distributor and Advisor in connection with the distribution of
Fund shares. The Board of Directors believes that the Distributor and Advisor
should be fairly compensated for their services in negotiating and promoting new
distribution channels for the Fund shares and believes that, particularly with
respect to distribution of the sweep shares through financial institutions, that
such compensation arrangement is reasonable. The Board of Directors acknowledge
that insofar as they have a continuing responsibility to review the operation of
the Plan that continued payments under the Plan will be reviewed periodically to
ensure that such compensation continues to be reasonable in light of the
services rendered.
The Board also considered the effect of the Plan on existing shareholders
and noted that the Plan was not being amended to increase the amount of
compensation paid and therefore would have virtually no effect on shareholders
from the standpoint of the yield of the Fund.
Under the Amended Plan, the Board of Directors must approve each agreement
with a participating organization relating to payments made pursuant to the
Distribution Plan and that such agreement may be between the Distributor and
other parties.
BASED UPON THE FOREGOING, THE BOARD OF DIRECTORS DETERMINED THAT THERE WAS
A REASONABLE LIKELIHOOD THAT THE PLAN WOULD BENEFIT THE FUND AND THE
SHAREHOLDERS AND THEREFORE RECOMMEND APPROVAL OF THE AMENDED PLAN. For this
purpose, shareholder approval requires the approval of a "majority" of the
Fund's outstanding shares, that is, 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 more
than 50 percent of the outstanding shares of common stock, whichever is less.
The Plan would become effective at the time that the Multi-Class Structure of
the Fund becomes effective with the Securities and Exchange Commission, which is
anticipated to be on or about October 15, 1996.
The Fund's existing Distribution Plan was first adopted by the shareholders
of the Fund on December 20, 1986 and the Plan was last amended on November 21,
1990. Under the existing Plan, the Fund makes payments to the Distributor for
reimbursement of expenses incurred in connection with distribution of the Fund's
shares. Such reimbursement cannot exceed 0.75 percent of the annual net asset
value of the Fund. In the most recent fiscal year, the Fund paid distribution
fees to the Distributor in the amount of $1,334,402, which represented 0.75
percent of the Fund's average net assets for the year.
6. CHANGE IN INVESTMENT OBJECTIVES AND POLICIES
At the August 13, 1996 meeting, the Board of Directors also considered and
approved a proposal to make revisions to certain fundamental investment
objectives and policies of the Fund. A change in the fundamental investment
objectives and policies of the Fund requires shareholder approval. For this
purpose, shareholder approval requires the approval of a "majority" of the
Fund's outstanding shares, that is, 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 more
than 50 percent of the outstanding shares of common stock, whichever is less.
The changes to the fundamental investment objectives and policies of the
Fund recommended by the Board of Directors generally relate to making the Fund
more marketable in connection with the implementation of the Multi-Class
Structure. The Board of Directors is proposing the changes in the aggregate;
that is, the Board of Directors is not presenting each change to the fundamental
objectives and policies as a separate proposal, but is aggregating the proposals
and requesting shareholders approve all proposals as a group. Approval of the
proposal will result in all changes being made effective on the date the Fund's
Registration Statement is declared effective with the Securities and Exchange
Commission, which is anticipated to be on or about October 15, 1996. Failure to
obtain shareholder approval will result in none of the changes being effected. A
short summary of the changes and the reasons why the Board of Directors believes
that such changes are recommended is provided below.
Each proposal is discussed separately.
EXTENSION OF THE MAXIMUM MATURITY OF INVESTMENTS PURCHASED BY THE FUND FROM ONE
YEAR TO 397 DAYS.
At the present time, the Fund restricts itself to buying U.S. Government
issued or guaranteed money market instruments which mature in one year or less
from the date of the investment. The Fund originally obtained an order from the
Securities and Exchange Commission which allowed it to use the amortized cost
method of valuation of its securities. Subsequent to the receipt of that order,
Rule 2a-7 under the Investment Company Act was adopted which generally governs a
money market fund's use of the amortized cost method of valuation and provides
certain credit quality and diversification requirements for money market funds.
Under Rule 2a-7, a money market fund may purchase securities with maturities up
to 397 days, so long as the Fund maintains an average dollar weighted portfolio
maturity of 90 days or less. The Board of Directors is recommending that the
Fund's investment objectives and policies be amended to allow the Fund to invest
in securities with maturities up to 397 days consistent with Rule 2a-7. The
approval of this proposal will not result in any significant changes in Fund
operations, but will give the Investment Advisor added flexibility in allowing
it to purchase some securities that have slightly longer maturities than one
year. This ability to invest in slightly longer maturity securities gives the
Investment Advisor more flexibility in managing the investment portfolio and
conforms the Fund's operations to that of money market funds generally. The
Distributor and the Advisor believes that by conforming the Fund's maturity
requirements to that of Rule 2a-7, the Fund will be better able to compete with
other money market funds in the market place who have had such ability for some
time.
ALLOW THE FUND TO INVEST IN REDEEMABLE INTEREST BEARING TRUST CERTIFICATES
REPRESENTING STUDENT LOANS FROM ANY JURISDICTION.
The Fund's Board of Directors believes that in attempting to achieve a
wider distribution of the Fund, that the state-specific nature of the Fund be
eliminated. While the Fund may invest in a variety of generic U.S. Government
and agency securities and repurchase agreements thereon, the Fund presently is
restricted to buying trust certificates issued by the Iowa Student Loan Trust
and in that case, only Iowa student loans. While the Investment Advisor believes
that there is nothing inherently wrong or negative in restricting its investment
activities in student loans to only those originated in the State of Iowa and
then only those held by Iowa Student Loan Trust, making the Fund state-specific
may have a negative impact on distribution when distribution is intended to be
in many states. The Board of Directors therefore is recommending that the
investment objectives and policies be amended to allow the Fund to invest in
other Student Loan Trusts authorized under other state laws and to purchase
student loans originated in other states.
ALLOW THE FUND TO INVEST IN SECURITIES OF OTHER REGISTERED INVESTMENT MANAGEMENT
COMPANIES SUBJECT TO CERTAIN LIMITS.
Since its inception the Fund has been prohibited from investing any of its
assets in any other investment company, except in connection with a merger,
acquisition, consolidation or reorganization. This has resulted in the Fund
restricting its investments to those only consisting of the enumerated
securities and repurchase agreements set forth in the Prospectus. The Investment
Advisor to the Fund believes that the occasional use of the shares of other
money market funds would be a beneficial tool in cash management. The Board of
Directors agrees and proposes to amend the fundamental investment objectives and
policies to allow the Fund to invest up to 10 percent of its assets in
securities of other investment companies, which would be money market funds.
Under Section 12(d)(1) of the Investment Company Act of 1940, a registered
investment management company may not purchase or otherwise acquire any security
issued by any other registered investment management company if (i) the
acquiring company, immediately after such purchase, owns in the aggregate more
than 3 percent of the total outstanding voting stock of the acquired company;
(ii) securities issued by the acquired company have an aggregate value in excess
of 5 percent of the value of the total assets of the acquiring company; or (iii)
securities issued by the acquired company and all other investment companies
having an aggregate value in excess of 10 percent of the value of the total
assets of the acquiring company. The Board of Directors seeks shareholder
approval to amend the fundamental investment objectives, policies and
restrictions to allow the Fund to invest in the securities of other registered
investment management companies pursuant to Section 12(d)(1) under the
Investment Company Act of 1940. This change would again place the Fund on an
even competitive basis with other money market mutual funds which have this
ability. The securities of other registered investment management companies will
only be acquired pursuant to Section 12(d)(1). THE BOARD OF DIRECTORS RECOMMENDS
THE APPROVAL OF THE CHANGES IN FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES.
THE INVESTMENT ADVISOR
The Fund has retained IMG (the "Advisor") to act as its investment advisor.
The address of the Advisor is that of the Fund. The Advisor is a registered
investment advisor organized in 1982. Since then, 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. IMG has approximately
$1.4 billion in equity, fixed income, and money market assets under management.
IMG Financial Services, Inc., a wholly-owned subsidiary of IMG, serves as
distributor for the Fund. The Fund pays a fee computed daily and payable monthly
at an annual rate of 0.75 percent of average daily assets. The Fund paid
$1,334,402 in distribution fees during the fiscal year ended June 30, 1996.
The Advisor is also the investment advisor of IMG Tax Exempt Liquid Assets
Fund, Inc., IMG Mutual Fund, Inc., Iowa Public Agency Investment Trust, Iowa
Schools Joint Investment Trust and Sub-Advisor of Capital Value Fund, Inc., and
engages in certain other activities unrelated to investment companies.
David W. Miles is President, Treasurer, and director of the Advisor, Mark
A. McClurg is Vice President, Secretary, and director of the Advisor, and James
W. Paulsen is a director of the Advisor. Each owns in excess of 20 percent of
the outstanding voting securities of the Advisor. Senior Managing Directors of
the Advisor and its wholly-owned subsidiary 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. Their address is that of the Advisor.
EXPENSES
The cost of preparing, assembling and mailing this Proxy Statement, the
accompanying Notice of Meeting and form of Proxy, and any additional material
relating to the meeting which may be furnished to the shareholders subsequent to
the furnishing of this statement has been or is to be borne by the Fund. In
addition to the solicitation of proxies by use of the mails, proxies may be
solicited, without additional costs to the Fund, except for out-of-pocket
expenses, by certain officers and employees of the Fund or of the Advisor,
personally or by telephone or telegraph. Brokerage houses, banks and other
fiduciaries may be requested to forward soliciting material to their principals
and obtain authorization for the execution of proxies. They will be reimbursed
for their out-of-pocket expenses for these services.
OTHER MATTERS
The officers and directors of the Fund do not know of any matters to be
presented to the meeting other than those specified above. If, however, any
other matters should come before the meeting, it is intended that the persons
named in the enclosed form of proxy, or their substitutes, will vote such proxy
in accordance with their best judgment on such matters.
Des Moines, Iowa BY ORDER OF THE BOARD OF DIRECTORS
August 20, 1996
Ruth Prochaska, Secretary
PLEASE PROMPTLY EXECUTE YOUR PROXY AND RETURN IT
<PAGE>
Exhibit A
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.
<PAGE>
Exhibit B
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 Structure" 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.
