IMG LIQUID ASSETS FUND, INC.
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
A N N U A L F I N A N C I A L R E P O R T
June 30, 1995
<PAGE>
LETTER TO SHAREHOLDERS
We are pleased to present the annual financial report for IMG Liquid Assets
Fund, Inc. ("Liquid Assets"), and IMG Tax Exempt Liquid Assets Fund, Inc.
("Tax Exempt"), for the year ending June 30, 1995.
Starting in February 1994, the Federal Reserve began moving to slow the U.S.
economy by raising the federal funds rate. This pattern continued throughout the
last twelve months. As a result, short-term interest rates have remained high.
Yields on the 90-day Treasury bill, for example, rose from 4.2 percent to 5.6
percent from June 30, 1994 to June 30, 1995. These higher rates have translated
to much higher yields on Liquid Assets, which finished the year at 5.04 percent.
Yields on Tax Exempt also rose, finishing the year at 3.06 percent.
We are also pleased that our shareholders continue to invest more moneys in the
Funds. On a combined basis, your Funds reached new highs during the early months
of 1995, ending the year at $183 million.
Looking forward, we see continued slowing in the economy. The Federal Reserve,
in our view, will be very successful in its efforts to stave off inflation. This
may well result in declining short-term interest rates. In fact, at the time of
this writing, the Fed had already reduced the fed funds rate by 0.25 percent. We
anticipate further easing going forward.
We continue to add to the Participating Organizations offering the Funds to
their customers, and expect added growth in the latter half of 1995. A growing
number of businesses and individuals are investing in the Funds through their
local financial institutions using our "Investment Checking" service.
Thank you again for your continued support of the Funds. As always, we welcome
your comments and suggestions. If you wish to contact the Funds, please write or
call IMG directly at (800) 798-1819, or contact any of the Participating
Organizations through which investments in the Funds may be made.
David W. Miles, President
IMG Liquid Assets Fund, Inc.
IMG Tax Exempt Liquid Assets Fund, Inc.
July 7, 1995
<PAGE>
MANAGEMENT DISCUSSION
Over the last twelve months, short-term interest rates have moved higher, only
recently reversing their upward trend. Economic data released throughout the
first half of the year indicated a slowing economy, which in turn pressured
short-term rates. As the economy slows, the Federal Reserve often lowers
short-term rates to fuel economic growth. It's apparent investors believed such
an action would be forthcoming, and on July 6 they were proven correct when the
Fed lowered rates 0.25 percent.
During much of the last several years, the short-term portion of the yield curve
has remained quite steep. On June 30, 1994, the yield on the one-year Treasury
was 126 basis points (BP) or 1.26 percentage points greater than the three-month
Treasury bill. Recently, with the change in attitudes toward short-term interest
rates, that portion of the yield curve has become inverted. As of June 30, 1995,
the yield on the one-year Treasury was actually 10 BP less than the yield on the
three-month Treasury bill. This is often a precursor that the market expects the
fed funds rate to decline and makes it difficult to add additional yield to your
Funds.
Throughout the last year, we maintained an average maturity in Liquid Assets
similar to that of the Donohue Taxable Money Market Fund Index. We continued to
favor agency securities versus Treasury securities for Liquid Assets because of
the additional yield achieved over the holding period. Value has been difficult
to find within the tax-exempt market, but we added positions to Tax Exempt as
opportunities arose.
Since a portion of each Fund is extremely sensitive to overnight rates, we can
expect that as the fed funds rate declines, the yield on the Fund will decline
as well. While we try to minimize the Funds sensitivity to rate declines, it is
necessary to remain highly liquid to accommodate investors needs. We believe
even with a decline in the fed funds rate, we should maintain a competitive
portfolio yield relative to other money market funds.
Currently, we believe the Funds are well positioned for further short-term
interest rate moves. We continue to search for ways to increase the Funds' yield
while maintaining their high quality standards.
Jeffrey D. Lorenzen
Managing Director
<PAGE>
IMG LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS
June 30, 1995
(Showing Percentage of Net Assets)
<TABLE>
<CAPTION>
Yield at
Par Time of Amortized
Value Description Purchase Due Date Cost
___________ ____________________________ __________ __________ ____________
<C> <C> <C> <C> <C>
DISCOUNTED GOVERNMENT SECURITIES -- 31.8%
$ 3,000,000 FHLB Disc Note 5.88% 14-Jul-95 $ 2,993,922
3,000,000 FHLB Disc Note 6.42% 26-Jul-95 2,987,250
3,000,000 FHLB Disc Note 6.30% 27-Jul-95 2,986,892
3,000,000 FHLB Disc Note 6.13% 10-Aug-95 2,980,267
3,000,000 FHLB Disc Note 6.27% 28-Aug-95 2,971,000
3,000,000 FFCB Disc Note 6.30% 12-Sep-95 2,963,378
1,000,000 FHLB Disc Note 6.11% 21-Sep-95 986,607
3,000,000 FHLB Disc Note 6.31% 05-Oct-95 2,951,760
3,000,000 FFCB Disc Note 6.33% 06-Oct-95 2,951,096
3,000,000 FHLB Disc Note 6.34% 24-Oct-95 2,941,925
2,500,000 FFCB Disc Note 6.10% 03-Nov-95 2,449,306
2,000,000 FHLB Disc Note 5.66% 06-Nov-95 1,961,244
3,000,000 FFCB Disc Note 5.95% 29-Nov-95 2,928,275
3,000,000 FFCB Disc Note 7.32% 19-Dec-95 2,902,530
2,000,000 FHLB Disc Note 7.41% 29-Dec-95 1,930,315
2,000,000 FHLB Disc Note 6.24% 05-Jan-96 1,937,855
3,000,000 FHLB Disc Note 5.74% 19-Jan-96 2,907,417
3,000,000 FHLB Disc Note 6.27% 29-Jan-96 2,894,530
3,000,000 FHLB Disc Note 6.33% 29-Jan-96 2,893,647
2,690,000 FHLB Disc Note 5.73% 20-Feb-96 2,594,182
------------
TOTAL (cost - $ 53,113,398) $ 53,113,398
------------
COUPON SECURITIES -- 1.8%
$ 3,000,000 FFCB, 5.30% 5.53% 05-Jul-95 $ 2,999,922
------------
TOTAL (cost - $2,999,922) $ 2,999,922
------------
LOAN CERTIFICATES* - FmHA GUARANTEED LOAN CERTIFICATES -- 8.9%
$14,923,828 Guaranteed Loan Trust 7.00%* 01-Jun-97 to 19-Dec-34 $ 14,923,828
------------
TOTAL (cost - $14,923,828) $ 14,923,828
------------
*Interest rate fluctuates daily, monthly, or quarterly with Prime Rate. Put option subject
to no longer than 7-day settlement.
See Notes to Financial Statements.
<PAGE>
IMG LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS, (continued)
June 30, 1995
(Showing Percentage of Net Assets)
<CAPTION>
Yield at
Par Time of Amortized
Value Description Purchase Due Date Cost
___________ ____________________________ _________ ____________________ ____________
<C> <C> <C> <C> <C>
TRUST CERTIFICATES** - U.S. GOVT. GUARANTEED STUDENT LOANS -- 49.4%
$82,435,000 Iowa Student Loan Trust 6.26% 06-Jul-95 to 29-Jun-96 $ 82,435,000
------------
TOTAL (cost - $82,435,000) $ 82,435,000
------------
SECURITIES PURCHASED UNDER AGREEMENT TO RESELL -- 7.7%
$12,867,009 Merrill Lynch LMS Repo Agreement 6.05% 03-Jul-95 $ 12,867,009
------------
TOTAL (cost - $12,867,009) $ 12,867,009
------------
TOTAL INVESTMENTS -- 99.6% $166,339,157
TOTAL (cost - $166,339,157)
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 0.4% $ 745,778
------------
(Includes $35,478 payable to investment advisor and
$723,835 dividends payable to shareholders)
NET ASSETS -- 100%
Applicable to 167,084,935 outstanding shares of $.001 par value
common stock (200,000,000 shares authorized) $167,084,935
============
NET ASSET VALUE:
Offering and redemption price per share ($167,084,935
divided by 167,084,935 shares outstanding) $ 1.00
============
**Interest rate fluctuates with 3-month U.S. Treasury Bill rate. Put option subject to no
longer than 7-day settlement.
</TABLE>
See Notes to Financial Statements.
<PAGE>
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS
June 30, 1995
(Showing Percentage of Net Assets)
<TABLE>
<CAPTION>
Yield at
Par Time of Amortized
Value Description Purchase Due Date Cost
__________ ________________________________________ _________ _________ ___________
<C> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT BONDS -- 13.0%
$ 95,245 Iowa HFA (Gayman Project) 5.81%** 15-Aug-99 $ 95,245
520,330 Vinton, IA (Twin City Concrete) 5.64%** 15-Jun-02 520,330
1,238,267 Sioux City, IA (Handy Partnership Proj.) 5.81%** 15-Sep-04 1,238,267
242,640 Iowa HFA (Starr-Terry Proj.) 6.31%** 15-May-05 242,640
-----------
TOTAL (cost - $ 2,096,482) $ 2,096,482
-----------
VARIABLE RATE DEMAND OBLIGATIONS -- 46.5%
$ 500,000 Louisiana State Recovery District DTN 4.35%* 01-Jul-97 $ 500,000
400,000 Louisiana State Recovery District DTN 4.35%* 01-Jul-98 400,000
100,000 North Alabama DTN 4.35%* 01-Dec-00 100,000
1,200,000 Harris Co., TX HFC, Ser 88A 7-Day 4.55%** 01-Jun-05 1,200,000
800,000 Florida HFA Ser J 7-Day 4.65%** 01-Dec-05 800,000
1,000,000 Washington State HFA 7-Day 3.80%** 01-Jan-10 1,000,000
1,000,000 Savannah, GA Multi-Family Housing 7-Day 4.10%** 01-Oct-13 1,000,000
1,100,000 Mt. Vernon, IA, Cornell College 7-Day 4.10%** 01-Oct-15 1,100,000
1,000,000 Illinois Dev Finance Auth (Aurora) 7-Day 4.15%** 01-Apr-24 1,000,000
400,000 Putnam Co., FL DTN 4.20%* 01-Sep-24 400,000
-----------
TOTAL (cost - $7,500,000) $ 7,500,000
-----------
MUNICIPAL NOTES -- 39.2%
$ 200,000 Austin, TX, 8.70% 4.00% 01-Jul-95 $ 200,050
100,000 Burlington, VT Waterworks System, 9.875% 4.00% 01-Jul-95 103,031
200,000 Florida State Div Bd Finance Dept, 4.20% 5.20% 01-Jul-95 199,989
383,000 New Mexico State Severance Tax, 7.60% 4.00% 01-Jul-95 383,073
250,000 Seattle, WA Metro Sewer Rev, 3.50% 4.00% 01-Jul-95 249,993
100,000 Washoe Co., NV Reno-Sparks, 9.25% 3.82% 01-Jul-95 102,024
500,000 Iowa Schools Corp Cash Antic., 4.25% 4.80% 17-Jul-95 499,856
100,000 Illinois State, 6.00% 4.72% 01-Aug-95 100,105
300,000 Palm Beach Co., FL School District, 7.70% 4.01% 01-Aug-95 309,869
300,000 Washington State Refunding Ser R-94A, 3.40% 4.65% 01-Aug-95 299,676
250,000 District of Columbia Hospital Rev., 3.75% 5.91% 15-Aug-95 249,353
* Variable rate, put option subject to next business day settlement.
** Variable rate, put option subject to no longer than 7-day settlement.
See Notes to Financial Statements.
<PAGE>
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS (continued)
June 30, 1995
(Showing Percentage of Net Assets)
<CAPTION>
Yield at
Par Time of Amortized
Value Description Purchase Due Date Cost
__________ ____________________________________ ________ __________ ____________
<C> <C> <C> <C> <C>
$ 50,000 Waterloo, IA Wheaton Franciscan
Services. Rev, 6.75% 4.35% 15-Aug-95 $ 50,142
50,000 Jefferson Parish, LA, 9.70% 4.40% 01-Sep-95 51,425
250,000 Harris Co., TX Road Refunding, 8.60% 4.55% 01-Oct-95 252,490
100,000 Oakland Co., MI Acacia Park
Drainage Dist, 8.00% 4.50% 01-Oct-95 100,854
100,000 Ohio State Building Authority, 4.00% 4.30% 01-Oct-95 99,924
100,000 Sarasota Co., FL Public Hospital, 9.75% 4.00% 01-Oct-95 103,384
250,000 Seminole Co., FL Water & Sewer Rev, 3.60% 4.80% 01-Oct-95 249,260
100,000 Wisconsin State Refunding, Ser 4, 3.00% 6.35% 01-Nov-95 98,914
200,000 Austin, TX Utility System Rev, 9.25% 5.09% 15-Nov-95 202,994
50,000 California State Dept Water Resources, 7.50% 4.40% 01-Dec-95 51,369
160,000 Carson City, NV Highway Impr Rev, 6.75% 5.10% 01-Dec-95 161,063
100,000 Chicago, IL Public Building
Commission, 3.45% 4.60% 01-Dec-95 99,529
250,000 Wichita, KS Refunding, Series A, 3.20% 4.50% 01-Dec-95 248,673
100,000 Georgia State Municipal Electric
Auth, 7.875% 4.28% 01-Jan-96 103,708
110,000 Opa Locka, FL Capital Impr Rev, 5.00% 4.54% 01-Jan-96 110,243
120,000 North Carolina Municipal Power
Agency, 8.50% 4.52% 01-Jan-96 124,662
100,000 Seattle, WA Metro Sewer Rev, 4.75% 5.12% 01-Jan-96 99,817
105,000 South Carolina Public Service Auth, 7.875% 4.69% 01-Jan-96 108,671
100,000 Indianapolis, IN Public Impr Ser B, 4.40% 4.62% 10-Jan-96 99,883
250,000 Chesterfield, Co., VA, 7.30% 5.10% 15-Jan-96 252,877
500,000 Iowa School Corp Wt Ctf, 5.75% 5.00% 01-Feb-96 502,103
355,000 Green Bay, WI Area Public School
Dist, 3.60% 4.70% 01-Apr-96 352,159
100,000 DuPage Co., IL Forest Reserve, 7.00% 4.10% 01-Jun-96 104,508
-----------
TOTAL (cost - $6,325,671) $ 6,325,671
-----------
TOTAL INVESTMENTS -- 98.7% $15,922,153
TOTAL (cost - $15,922,153)
See Notes to Financial Statements.
<PAGE>
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS (continued)
June 30, 1995
(Showing Percentage of Net Assets)
<CAPTION>
Yield at
Par Time of Amortized
Value Description Purchase Due Date Cost
__________ _________________________________________ ________ _________ ___________
<C> <C> <C> <C> <C>
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 1.3%
(Includes $3,566 payable
to investment advisor and $41,296
dividends payable to shareholders ) $ 207,737
-----------
NET ASSETS -- 100%
Applicable to 16,129,890 outstanding shares of $.001 par value
common stock (200,000,000 shares authorized) $16,129,890
===========
NET ASSET VALUE
Offering and redemption price per share ($16,129,890
divided by 16,120,890 shares outstanding) $ 1.00
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS
For the year ended June 30, 1995
IMG Tax
IMG Liquid Exempt Liquid
Assets Fund, Inc. Assets Fund, Inc.
INVESTMENT INCOME:
Interest $ 9,201,540 $ 817,011
------------ -----------
EXPENSES:
Advisory and service fees (Note 2) 374,373 52,311
Shareholder servicing costs 37,476 14,616
Directors' fees 16,289 5,749
Custodian fees and expenses 188,295 36,668
Portfolio accounting fees (Note 2) 50,000 7,323
Distribution fees (Note 3) 1,176,124 156,932
Legal and auditing fees 22,196 13,041
Printing and postage 14,217 1,839
Registration fees 5,748 --
Miscellaneous 3,580 --
------------ -----------
Total Expenses 1,888,298 288,479
------------ -----------
NET INVESTMENT INCOME $ 7,313,242 $ 528,532
============ ===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30
<TABLE>
<CAPTION>
IMG Liquid IMG Tax Exempt
Assets Fund, Inc. Liquid Assets Fund, Inc.
______________________________ _____________________________
1995 1994 1995 1994
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income and amounts
distributed to shareholders (Note 1) $ 7,313,242 $ 3,609,093 $ 528,532 $ 366,058
============== ============ =========== ===========
FROM SHARE TRANSACTIONS:
(at constant net asset value of $1 per share)
Shares sold $1,115,555,874 $987,111,867 $91,834,860 $96,320,813
Shares issued in reinvestment of
dividends from net investment income 107,888 11,542 532 653
------------- ------------ ----------- -----------
1,115,663,762 987,123,409 91,835,392 96,321,466
Shares redeemed 1,089,596,341 970,055,141 97,060,399 98,730,286
------------- ------------ ----------- -----------
Net increase (decrease) in net assets
derived from share transactions 26,067,421 17,068,268 (5,225,007) (2,408,820)
NET ASSETS:
Beginning of year 141,017,514 123,949,246 21,354,897 23,763,717
------------- ------------ ----------- -----------
End of year $ 167,084,935 $141,017,514 $16,129,890 $21,354,897
============== ============ =========== ===========
</TABLE>
See Notes to Financial Statements
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Data for a Share of
Each Fund Outstanding
Throughout Each Period 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
_____________________________ __________ ________ ________ ________ ________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IMG Liquid Assets Fund, Inc.
Net Asset Value
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .047 .027 .027 .044 .063 .074 .076 .057 .051 .065
Dividends Distributed (.047) (.027) (.027) (.044) (.063) (.074) (.076) (.057) (.051) (.065)
----------------------------------------------------------------------------------------------------
Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================
Total Return 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13% 6.53%
Ratio of Expenses to
Average Net Assets 1.20% 1.18% 1.16% 1.16% 1.15% 1.16% 1.17% 1.15% 1.17% 1.17%
Ratio of Net Income to
Average Net Assets 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13% 6.53%
Net Assets
End of Period (000 Omitted) $ 167,085 141,018 123,949 117,238 111,405 104,014 93,335 73,525 67,020 77,373
See Notes to Financial Statements
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Selected Data for a Share of
Each Fund Outstanding
Throughout Each Period 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
_____________________________ __________ ________ ________ ________ ________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IMG Tax Exempt Liquid Assets Fund, Inc.
Net Asset Value
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .025 .015 .017 .030 .044 .050 .051 .039 .035 .046
Dividends Distributed (.025) (.015) (.017) (.030) (.044) (.050) (.051) (.039) (.035) (.046)
----------------------------------------------------------------------------------------------------
Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================
Total Return 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45% 4.56%
Ratio of Expenses to
Average Net Assets 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52% 1.46% 1.50%
Ratio of Net Income to
Average Net Assets 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45% 4.56%
Net Assets
End of Period (000 Omitted) $ 16,130 21,355 23,764 29,670 26,683 15,077 12,619 14,528 14,560 21,426
</TABLE>
See Notes to Financial Statements
<PAGE>
THE IMG FUNDS
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
The IMG Liquid Assets Fund, Inc. and the IMG Tax Exempt Liquid Assets
Fund, Inc. (the Funds) are registered under the Investment Company Act
of 1940 (the Act), as open-end, diversified investment companies,
established as Iowa corporations. Investors Management Group
("Advisor"), through an affiliated company (IMG Financial Services,
Inc.), acts as the exclusive distributor of the Funds' shares which are
sold to the public without a sales charge.
It is each Fund's policy to maintain a continuous net asset value per
share of $1.00; the Funds have adopted certain investment portfolio
valuation and dividend and distribution policies to enable them to do
so.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions
are recorded on a trade date basis. Realized gains or losses, if any,
from securities transactions are recorded on the identified cost basis.
Interest income is recorded on the accrual basis. Cost of investments
represents amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. It is the policy of
the Fund to declare and accrue dividends from net investment income on
each business day.
FEDERAL INCOME TAXES. The Funds intend to comply with requirements of
the Internal Revenue Code applicable to regulated investment companies
and to distribute taxable income to shareholders in amounts which avoid
or minimize federal income or excise taxes for the Funds.
INVESTMENT VALUATION. The investments are valued at amortized cost
pursuant to Rule 2a-7 of the Act. This involves valuing a portfolio
security at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium.
REPURCHASE AGREEMENTS. The Funds may engage in repurchase agreements
with banks and broker dealers whereby independent custodians receive
delivery of the underlying securities. The market value of these
securities (including accrued interest) on acquisition date is required
to be an amount equal to 102 percent of the resale price, and will not
be less than 100 percent of the resale price over the term of the
agreement. At June 30, 1995, the securities purchased under overnight
agreements to resell were collateralized by Government Agency mortgage
backed securities with a market value of $13,150,746 for IMG Liquid
Assets Fund.
LOAN CERTIFICATES. FmHA Guaranteed Loan Certificates represent
interests in the guaranteed portion of Farmer's Home Administration
("FmHA") loans issued by one or more guaranteed loan trusts subject to
repurchase on no more than 5 business days' written notice. The Loan
Certificates are diversified through limitations on certificates sold
by any one individual bank.
TRUST CERTIFICATES. U.S. Government Guaranteed Student Loans (the
Trust) represent interests in student loans sold by certain Iowa banks
subject to repurchase, on no more than 7 days written notice. The Trust
and, accordingly, the Trust Certificates are diversified through a
limitation on certificates sold by any individual bank. Each individual
bank may not sell more than five percent of the outstanding Trust
Certificates.
(2) ADVISORY AND SERVICE FEES:
Under its management and investment advisory agreement, the Advisor
provides the Funds with investment supervision, office space,
management and other personnel, and will pay the costs of computing the
Funds' net asset value and related bookkeeping expenses. For these
services, each Fund pays a fee computed daily and payable monthly at an
annual rate of 0.25 percent of average daily assets up to $200 million
and at a sliding rate from 0.24 percent to 0.20 percent of average
daily net assets exceeding $200 million. For the year ended June 30,
1995, IMG Liquid Assets Fund and IMG Tax Exempt Liquid Assets Fund paid
$374,373 and $52,311, respectively, to the Advisor for advisory and
service fees.
The Funds have also entered into an administrative services agreement
with the Advisor to provide portfolio fund accounting services to the
Funds. For these services, each Fund pays a fee computed daily and
payable monthly at an annual rate of 0.035 percent of average daily
assets to a maximum of $50,000 per year.
Certain officers of the Fund are also officers of the Advisor. At June
30, 1995, the Advisor owned 535,273 shares in IMG Liquid Assets Fund.
IMG also acts as transfer agent and dividend paying agent for the
Funds, and maintains all shareholder records. Fees for such services
are based upon the number of accounts and are reflected as shareholder
servicing costs in the accompanying statement of operations.
(3) DISTRIBUTION EXPENSE PLAN:
Under distribution expense plans (the "Plans") adopted January 1, 1987
pursuant to Rule 12b-1 under the Act, and amended effective January 8,
1991 the Fund may make payments to IMG Financial Services, Inc. ("IFS")
for the reimbursement of expenses related to marketing or distribution
of the Funds. Aggregate payments by each Fund under the Plans in any
month cannot exceed the annual rate of 0.75 percent of the Fund's
average daily net asset value. For the year ended June 30, 1995,
amounts under the Plans used by IFS to compensate financial
institutions for automated processing of Fund transactions and for
other services relating to the distribution of the Funds' shares
totaled $1,176,124 and $156,932 for IMG Liquid Assets Fund, and IMG Tax
Exempt Liquid Assets Fund, respectively, and Rule 12b-1 fees payable at
June 30, 1995, were $106,433 and $10,698, respectively.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors IMG Liquid Assets Fund, Inc., and IMG Tax
Exempt Liquid Assets Fund, Inc.:
We have audited the accompanying statements of net assets of IMG Liquid Assets
Fund, Inc., and IMG Tax Exempt Liquid Assets Fund, Inc., as of June 30, 1995,
and the related statements of operations for the year then ended and the
statements of changes in net assets for each of the years in the two-year period
then ended and the financial highlights for each of the years in the eight-year
period then ended. The financial highlights of IMG Liquid Assets Fund, Inc., and
IMG Tax Exempt Liquid Assets Fund, Inc., for each of the years in the two-year
period ended June 30, 1987, were examined by other auditors whose reports dated
July 31, 1987, expressed an unqualified opinion on that information. These
financial statements, including the financial highlights, are the responsibility
of the Funds' management. Our responsibility is to express an opinion on the
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of IMG Liquid
Assets Fund, Inc., and IMG Tax Exempt Liquid Assets Fund, Inc., at June 30, 1995
and the results of their operations for the year then ended and the changes in
their net assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the eight-year period then ended
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
July 18, 1995
<PAGE>
INVESTMENT ADVISOR, TRANSFER AND UNDERWRITER
DIVIDEND DISBURSING AGENT IMG Financial Services, Inc.
Investors Management Group 2203 Grand Avenue
2203 Grand Avenue Des Moines, Iowa 50312-5338
Des Moines, Iowa 50312-5338
CUSTODIAN AUDITORS
Hawkeye Bank of Des Moines KPMG Peat Marwick LLP
East 5th & Locust Streets 2500 Ruan Center
Des Moines, Iowa 50307 Des Moines, Iowa 50309
COUNSEL
Cline, Williams, Wright, Johnson
& Oldfather
1900 FirsTier Bank Building
Lincoln, Nebraska 68508
