IMG LIQUID ASSETS FUND, INC.
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
INTERIM FINANCIAL REPORT
December 31, 1995
<PAGE>
LETTER TO SHAREHOLDERS
- - ----------------------
We are pleased to present the Interim Financial Report for IMG Liquid Assets
Fund, Inc. ("Liquid Assets"), and IMG Tax Exempt Liquid Assets Fund, Inc. ("Tax
Exempt"), for the six-month period ending December 31, 1995.
The last six-months of 1995 brought a long-awaited change in the direction of
short-term interest rates. The Federal Reserve cut the federal funds rate 0.25
percent in July and again in December, bringing the rate to 5.50 percent by
year-end. As a consequence, yields on IMG Liquid Assets fell from 5.04 percent
on July 1 to 4.61 percent on December 31. IMG Tax Exempt moved from 3.05 percent
to an average of 2.81 percent during December 1995. Despite absolute lower
yields, your Funds continued to pay a very competitive rate, as evidenced by
assets invested. Liquid Assets finished the year at a record $196.1 million; Tax
Exempt assets were essentially unchanged at $21.1 million.
Looking forward, we anticipate continued growth in the Funds. Most shareholders
invest in the Funds through an automated sweep service offered by their local
financial institution. Interest among prospective bank clients has never been
more keen. Our investment outlook is addressed in the Management Discussion
which follows.
We look forward to expanding our servicing area to new banks in 1996.
Thank you for your continued support of Liquid Assets and Tax Exempt. 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.
January 21, 1996
<PAGE>
MANAGEMENT DISCUSSION
- - ---------------------
Over the period July 1, to December 31, 1995, the bond market continued to
benefit from weaker economic data. Year-over-year declines in the leading
economic indicators and industrial commodity prices, as well as declining
corporate profits, upward trending unemployment claims, poor retail sales, weak
auto sales, declining home starts, and anemic monetary growth forced interest
rates lower, producing tremendous returns in bonds. What has been even more
important is that inflation has remained quite low. Historically, long-term
bonds yield about 2.50 percent above the rate of inflation. The GDP deflator,
one of many gauges for inflation, has shown a meager 1.40 percent annual
increase. By historic norms, this would indicate that long-term bonds, which
currently yield about 6.00 percent, should trend toward 4.50 percent.
During the last six months, short-term interest rates have declined
approximately half a percent. This decline in Treasury yield equals the two
Federal Reserve fed fund rate cuts of 0.25 percent each, in July and December.
We think these cuts were warranted and believe future cuts will become
necessary.
We are posturing the portfolio to maintain as much yield as possible in this
declining rate environment, without adding unnecessary risk. In IMG Liquid
Assets, we are utilizing agency securities to augment yields above that
available from U.S. Treasury bills or notes. While we would like to increase the
average days-to-maturity, we have curtailed the average life in order to capture
higher yields available on select short-term agency securities. Based on the
large amount of incremental yield achieved, we think this represents a better
strategy than stretching the maturity of the portfolio. In IMG Tax Exempt Liquid
Assets, we look to augment yields by purchasing municipal notes, rated AA or
better by a nationally recognized statistical rating organization. We are
posturing the portfolio to maintain a longer-than-average maturity in order to
provide for higher yields. In the tax-exempt market, it seldom provides any
benefit to remain in the shorter maturities, except to provide for liquidity. As
always, in both portfolios, we strive to provide a high yielding product without
sacrificing the safety of principal. We appreciate your continued support in IMG
Liquid Assets and IMG Tax Exempt Liquid Assets, and hope to provide all
investors with safe, competitive short-term yields.
Jeffrey D. Lorenzen
Managing Director
<PAGE>
IMG LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1995
(Showing Percentage of Net Assets)
- - ----------------------------------
<TABLE>
<CAPTION>
Yield at
Par Time of Due Amortized
Value Description Purchase Date Cost
- - ----------- ---------------------------------- -------- ----------------------- ------------
DISCOUNTED GOVERNMENT SECURITIES -- 34.0%
<C> <C> <C> <C> <C>
$ 2,000,000 Federal Home Loan Bank Disc Note 6.24% 05-Jan-96 $ 1,998,678
3,000,000 Federal Home Loan Bank Disc Note 5.72% 08-Jan-96 2,996,757
3,000,000 Federal Home Loan Bank Disc Note 5.73% 19-Jan-96 2,991,750
3,000,000 Federal Home Loan Bank Disc Note 5.71% 25-Jan-95 2,988,980
3,000,000 Federal Home Loan Bank Disc Note 6.27% 29-Jan-96 2,986,070
3,000,000 Federal Home Loan Bank Disc Note 6.32% 29-Jan-96 2,985,953
3,000,000 Federal Home Loan Bank Disc Note 5.70% 09-Feb-96 2,981,995
3,000,000 Federal Home Loan Bank Disc Note 5.67% 15-Feb-96 2,979,487
2,690,000 Federal Home Loan Bank Disc Note 5.73% 20-Feb-96 2,669,526
3,000,000 Federal Home Loan Bank Disc Note 5.66% 29-Feb-96 2,973,302
3,000,000 Federal Home Loan Bank Disc Note 5.71% 06-Mar-96 2,970,371
3,000,000 Federal Farm Credit Bank Disc Note 5.69% 08-Apr-96 2,955,492
3,000,000 Federal Farm Credit Bank Disc Note 5.71% 09-Apr-96 2,954,872
3,000,000 Federal Home Loan Bank Disc Note 5.70% 11-Apr-96 2,954,045
3,000,000 Federal Home Loan Bank Disc Note 5.69% 12-Apr-96 2,953,675
3,000,000 Federal Farm Credit Bank Disc Note 5.64% 10-May-96 2,941,500
1,800,000 Federal Home Loan Bank Disc Note 5.62% 23-May-96 1,761,533
3,000,000 Federal Farm Credit Bank Disc Note 5.50% 05-Jun-96 2,931,490
5,000,000 Federal Farm Credit Bank Disc Note 5.49% 06-Jun-95 4,885,303
5,000,000 Federal Farm Credit Bank Disc Note 5.45% 06-Jun-95 4,885,450
3,000,000 Federal Home Loan Bank Disc Note 5.48% 14-Jun-96 2,927,813
3,000,000 Federal Home Loan Bank Disc Note 5.69% 25-Jul-96 2,906,957
------------
TOTAL (cost - $66,580,999) $ 66,580,999
------------
COUPON SECURITIES -- 2.9%
$ 550,000 Federal Home Loan Mtge Corp, 4.100% 5.74% 18-Jan-96 $ 549,579
1,000,000 Federal Farm Credit Bank Float 5.74% 08-Feb-96 1,000,288
1,000,000 Federal Home Loan Mtge Corp, 4.530% 5.66% 01-Jul-96 994,474
1,400,000 Student Loan Mortgage Assn. Float 5.71% 01-Jul-96 1,402,376
250,000 Student Loan Mortgage Assn Float 5.58% 01-Jul-96 250,596
See Notes to Financial Statements.
<PAGE>
IMG LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS (continued)
December 31, 1995
(Showing Percentage of Net Assets)
- - ----------------------------------
Yield at
Par Time of Due Amortized
Value Description Purchase Date Cost
- - ----------- ---------------------------------- -------- ----------------------- ------------
$ 958,820 Federal Home Loan Bank, 3.346% 5.82% 23-Jul-96 $ 945,916
528,067 Federal Nat'l Mtge Assn CMO, 7.500% 5.69% 25-Jul-96 528,534
------------
TOTAL (cost - $5,671,763) $ 5,671,763
------------
LOAN CERTIFICATES* FmHA GUARANTEED LOAN CERTIFICATES -- 7.0%
$13,727,550 Guaranteed Loan Trust 6.75%* 01-Jun-97 to 19-Dec-34 $ 13,727,550
------------
TOTAL (cost - $13,727,550) $ 13,727,550
------------
TRUST CERTIFICATES** U.S. GOVT. GUARANTEED STUDENT LOANS -- 44.5%
$87,435,000 Iowa Student Loan Trust 6.26%** 02-Jan-96 to 24-Dec-96 $ 87,435,000
------------
TOTAL (cost - $87,435,000) $ 87,435,000
------------
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL -- 11.2%
$21,966,133 J P Morgan Repo Agreement 5.45% 02-Jan-96 $ 21,966,133
------------
TOTAL (cost - $21,966,133) $ 21,966,133
------------
TOTAL INVESTMENTS-- 99.6% $195,381,445
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES-- 0.4% $ 726,174
(Includes $41,761 payable to investment advisor and $796,682 ------------
dividends payable to shareholders)
NET ASSETS -- 100%
Applicable to 196,107,619 outstanding shares of $.001 par value
common stock (1,000,000,000 shares authorized) $196,107,619
============
NET ASSET VALUE:
Offering and redemption price per share ($196,107,619
divided by 196,107,619 shares outstanding) $ 1.00
============
*Interest rate fluctuates daily, monthly, or quarterly with Prime rate. Put
option subject to no longer than 7-day settlement. **Interest rate fluctuates
with 3-month U.S. Treasury Bill rate. Put option subject to no longer than 7-day
settlement.
See Notes to Financial Statements.
</TABLE>
<PAGE>
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1995
(Showing Percentage of Net Assets)
- - ----------------------------------
<TABLE>
<CAPTION>
Yield at
Par Time of Due Amortized
Value Description Purchase Date Cost
- - ----------- ------------------------------------------- --------- ------------- -------------
INDUSTRIAL DEVELOPMENT BONDS -- 9.5%
<C> <C> <C> <C> <C>
$ 86,156 Iowa HFA (Gayman Project) 5.27%** 15-Aug-99 $ 86,156
489,603 Vinton, IA (Twin City Concrete) 5.25%** 15-Jun-02 489,603
1,200,022 Sioux City, IA. (Handy Partnership Proj) 5.27%** 15-Sep-04 1,200,022
235,738 Iowa HFA (Starr-Terry Project) 5.77%** 15-May-05 235,738
------------
TOTAL (cost - $2,011,519) $ 2,011,519
------------
VARIABLE RATE DEMAND OBLIGATIONS -- 39.3%
$ 700,000 Louisiana ST Recovery Dist DTN 6.00%* 01-Jul-97 $ 700,000
1,200,000 Harris Co., TX HFC, Ser 88A 7-Day 5.20%** 01-Jun-05 1,200,000
1,000,000 Portland, Port of, OR PCR (Reynolds) DTN 6.00%* 01-Dec-09 1,000,000
1,000,000 Hawaii Housing Auth 7-Day 5.15%** 01-Jul-10 1,000,000
900,000 Savannah, GA Multi-Family Housing 7-Day 5.15%** 01-Oct-13 900,000
1,100,000 Mt. Vernon, IA, Cornell College 7-Day 4.90%** 01-Oct-15 1,100,000
900,000 Dearborn, MI Economic Dev 7-Day 5.10%** 01-Mar-23 900,000
1,000,000 Grapevine, TX IDR Ser A4 DTN 6.00%* 01-Dec-24 1,000,000
500,000 St. Charles, IL IDR 7-Day 5.15%** 15-Dec-26 500,000
------------
TOTAL (cost - $8,300,000) $ 8,300,000
------------
MUNICIPAL NOTES -- 49.9%
$ 100,000 DuPage & Will Cos., IL CSD, 3.80% 4.01% 30-Dec-95 $ 99,999
100,000 Escambia Co, FL Utility Auth, 9.60% 3.92% 01-Jan-96 102,015
100,000 Georgia State Municipal Elec Auth, 7.875% 4.28% 01-Jan-96 102,009
100,000 Horry Co., SC Detention Fac, 7.90% 3.90% 01-Jan-96 102,010
100,000 Michigan Public Pwr Agency Rev, 7.00% 3.90% 01-Jan-96 101,008
125,000 Michigan Public Pwr Agency Rev, 6.625% 3.90% 01-Jan-96 125,009
120,000 North Carolina Mun Pwr Agency, 8.50% 4.52% 01-Jan-96 122,412
100,000 Seattle, WA Metro Sewer Rev, 4.75% 5.12% 01-Jan-96 99,999
105,000 South Carolina Pub Service Auth, 7.875% 4.69% 01-Jan-96 107,108
100,000 Indianapolis, IN Public Impr Ser B, 4.40% 4.62% 10-Jan-96 99,995
250,000 Chesterfield Co., VA, 7.30% 5.10% 15-Jan-96 250,217
100,000 Cobb Co., GA School District, 6.40% 3.95% 01-Feb-96 102,194
*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)
December 31, 1995
(Showing Percentage of Net Assets)
- - ----------------------------------
Yield at
Par Time of Due Amortized
Value Description Purchase Date Cost
- - ----------- ------------------------------------------- --------- ------------- -------------
$ 100,000 Illinois Dev Financial Authority, 5.10% 3.90% 01-Feb-96 $ 100,094
100,000 Jefferson Parish, LA School Board, 6.60% 3.90% 01-Feb-96 100,219
100,000 Michigan City, IN Sewer Rev, 9.10% 4.00% 01-Feb-96 103,406
225,000 Rock Hill, SC School District #3, 7.75% 3.80% 01-Feb-96 225,712
200,000 Winslow Township, NJ School Dist, 6.05% 3.85% 01-Feb-96 200,355
250,000 Alamo, TX Comm College, 8.625% 3.85% 15-Feb-96 251,401
100,000 Fort Worth, TX Ind School District, 9.00% 3.97% 15-Feb-96 100,601
100,000 Jacksonville, TX Tax & Utility Lien, 6.20% 3.97% 15-Feb-96 100,266
125,000 Philadelphia, PA Refunding, 8.25% 3.95% 15-Feb-96 128,131
150,000 St. Charles Co., MO Comm College, 5.75% 4.00% 15-Feb-96 150,310
130,000 Tarrant Co. TX, Jr College Dist, 6.625% 3.97% 15-Feb-96 130,411
400,000 Fort Worth, TX Refunding, Series A, 4.25% 3.97% 01-Mar-96 400,175
95,000 Massachusetts Bay Transit Auth., 6.90% 3.85% 01-Mar-96 95,463
355,000 Green Bay, WI Pub School Dist, 3.60% 4.70% 01-Apr-96 354,059
215,000 Harris Co., TX MUD No. 183, 4.00% 3.99% 01-Apr-96 215,000
50,000 Michigan State Housing Dev Auth, 3.90% 4.05% 01-Apr-96 49,979
100,000 Chippewa Valley, MI Schools Ref, 3.80% 3.90% 01-May-96 99,965
185,000 Ionia, MI Public Schools, 7.00% 3.95% 01-May-96 186,836
100,000 Las Vegas Valley, NV Water Dist, 6.90% 3.95% 01-May-96 100,949
225,000 Lenawee Co., MI Sewer System, 7.75% 4.00% 01-May-96 227,707
100,000 Michigan Mun Bond Auth Equip, 4.30% 3.90% 01-May-96 100,128
100,000 Oxford, MI Area Comm School, 5.10% 3.95% 01-May-96 100,336
130,000 Anchorage, AK Electric Utility Rev, 7.625% 4.05% 01-Jun-96 134,441
125,000 Columbus, OH Sewer Rev, Series A, 7.80% 4.00% 01-Jun-96 129,389
260,000 Davenport, IA, Series B, 4.50% 4.00% 01-Jun-96 260,520
100,000 District of Columbia, Series A, 7.10% 4.07% 01-Jun-96 101,227
100,000 DuPage Co., IL Forest Reserve, 7.00% 4.10% 01-Jun-96 103,143
100,000 Illinios Health Facilities Auth Rev, 7.50% 3.95% 01-Jun-96 103,416
110,000 Metropolitan Fair & Exposition Auth, 7.80% 4.00% 01-Jun-96 113,860
95,000 Metropolitan Fair & Exposition Auth, 8.00% 4.00% 01-Jun-96 98,415
100,000 Milwaukee, WI Area College Dist, 4.45% 3.90% 01-Jun-96 100,221
500,000 University of Puerto Rico Univ Rev, 7.75% 3.75% 01-Jun-96 518,018
70,000 Grand Co., UT School District, 8.00% 4.10% 01-Jul-96 71,316
See Notes to Financial Statements.
<PAGE>
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS (continued)
December 31, 1995
(Showing Percentage of Net Assets)
- - ----------------------------------
Yield at
Par Time of Due Amortized
Value Description Purchase Date Cost
- - ----------- ------------------------------------------- --------- ------------- -------------
$ 100,000 Iowa City, IA Sewer Rev, 5.80% 3.90% 01-Jul-96 $ 100,924
200,000 Kentucky State Turnpike Auth, 7.875% 3.80% 01-Jul-96 207,898
160,000 LaPorte, IN Elem School Bldg, 7.40% 3.85% 01-Jul-96 162,742
600,000 New Jersey ST Education Fac Auth, 7.25% 3.90% 01-Jul-96 621,470
500,000 Maricopa Co., AZ School Dist No. 6, 7.80% 4.00% 01-Jul-96 509,175
150,000 A & M Cons Ind School Dist, TX, 6.00% 4.00% 15-Aug-96 151,804
100,000 Eanes, TX Ind School District, 4.50% 4.10% 15-Aug-96 100,240
40,000 Millcreek Township, PA School Dist, 7.00% 4.00% 15-Aug-96 40,723
170,000 Kansas City, KS Utility System Rev, 5.80% 3.90% 01-Sep-96 172,092
100,000 Leawood, KS Series A, 4.10% 3.95% 01-Sep-96 100,062
50,000 Lenexa, KS, 6.25% 3.80% 01-Sep-96 50,793
250,000 Metro Topeka Airport Auth, 9.10% 3.85% 01-Sep-96 252,100
105,000 Atlanta, GA IDR Underground Proj, 7.75% 3.80% 01-Oct-96 110,060
95,000 Key West, FL Sewer Rev, 7.125% 3.85% 01-Oct-96 100,033
100,000 Jacksonville, FL Electric Auth Rev, 9.40% 3.90% 01-Oct-96 104,003
100,000 Jacksonville, FL Electric Auth Rev, 9.40% 3.80% 01-Oct-96 104,078
45,000 Sedgwick Co., KS USD #266, 5.80% 4.00% 01-Oct-96 46,026
95,000 Waunakee, WI Refunding. 5.80% 4.00% 01-Oct-96 96,240
250,000 Wisconsin State Refunding, 3.30% 4.00% 01-Nov-96 248,582
120,000 Glencoe, IL Series A, 3.00% 4.10% 01-Dec-96 118,825
100,000 Joliet, IL Park District Ser A, 5.60% 3.80% 01-Dec-96 101,600
300,000 Niles, IL Public Library Dist, 6.125% 3.80% 01-Dec-96 306,196
50,000 Libertyville, IL, 4.60% 3.95% 15-Dec-96 50,300
------------
TOTAL (cost - $10,525,410) $ 10,525,410
------------
TOTAL INVESTMENTS-- 98.7% $ 20,836,929
See Notes to Financial Statements.
<PAGE>
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
STATEMENT OF NET ASSETS (continued)
December 31, 1995
(Showing Percentage of Net Assets)
- - ----------------------------------
Yield at
Par Time of Due Amortized
Value Description Purchase Date Cost
- - ----------- ----------------------------------------- --------- ------------- -------------
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 1.3%
(Includes $4,374 payable to investment advisor and
$49,234 dividends payable to shareholders) $ 264,842
------------
NET ASSETS -- 100%
Applicable to 21,101,771 outstanding shares of $.001 par value
common stock (200,000,000 shares authorized) $ 21,101,771
============
NET ASSET VALUE:
Offering and redemption price per share ($21,101,771
divided by 21,101,771 shares outstanding) $ 1.00
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
For the period ended July 1, 1995 to December 31, 1995
- - ------------------------------------------------------
IMG Liquid IMG Tax Exempt
Assets Fund, Inc. Liquid Assets Fund, Inc.
INVESTMENT INCOME:
Interest $ 5,514,805 $ 403,445
EXPENSES:
Advisory and service fees (Note 2) 225,719 23,702
Shareholder servicing costs 18,792 7,450
Directors' fees 6,361 2,891
Custodian fees and expenses 99,004 20,875
Portfolio accounting fees (Note 2) 31,602 3,318
Distribution fees (Note 3) 677,181 71,105
Legal and auditing fees 9,688 6,926
Printing and postage 8,171 1,635
Registration fees 5,956 883
Miscellaneous Expenses 2,450 1,594
----- -----
TOTAL EXPENSES 1,084,924 140,379
--------- -------
NET INVESTMENT INCOME $ 4,429,881 $ 263,066
=========== ===========
See Notes to Financial Statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period from July 1 to December 31
- - -----------------------------------------
<TABLE>
<CAPTION>
IMG IMG Tax Exempt
Liquid 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) $ 4,429,881 $ 3,140,765 $ 263,066 $ 234,009
============= ============= ============= =============
FROM SHARE TRANSACTIONS:
(at constant net asset value of $1 per share)
Shares sold $ 596,413,643 $ 550,308,377 $ 48,973,509 $ 47,704,193
Shares issued in reinvestment of
dividends from net investment income 100,359 25,485 715 266
------------- ------------- ------------- -------------
596,514,002 550,333,862 48,974,224 47,704,459
Shares redeemed 567,491,318 519,756,138 44,002,343 46,531,730
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
derived from share transactions 29,022,684 30,577,724 4,971,881 1,172,729
NET ASSETS:
Beginning of period 167,084,935 141,017,514 16,129,890 21,354,897
------------- ------------- ------------- -------------
End of period $ 196,107,619 $ 171,595,238 $ 21,101,771 $ 22,527,626
============= ============= ============= =============
</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 .049 .042 .025 .028 .050 .069 .075 .070 .057 .050
Dividends Distributed (.049) (.042) (.025) (.028) (.050) (.069) (.075) (.070) (.057) (.050)
------------------------------------------------------------------------------------------------
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 4.89% 4.20% 2.50% 2.80% 5.00% 6.90% 7.50% 7.00% 5.70% 5.00%
Ratio of Expenses to
Average Net Assets 1.20% 1.20% 1.20% 1.20% 1.10% 1.10% 1.20% 1.20% 1.10% 1.20%
Ratio of Net Income to
Average Net Assets 4.89% 4.20% 2.50% 2.80% 5.00% 6.90% 7.50% 7.00% 5.70% 5.00%
Net Assets
End of Period (000 Omitted) $196,108 171,595 150,182 115,319 112,628 116,963 101,815 84,206 77,886 77,020
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- - --------------------------------
<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 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 .028 .022 .015 .019 .036 .049 .050 .046 .038 .033
Dividends Distributed (.028) (.022) (.015) (.019) (.036) (.049) (.050) (.046) (.038) (.033)
------------------------------------------------------------------------------------------------
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 2.77% 2.20% 1.50% 1.90% 3.60% 4.90% 5.00% 4.60% 3.80% 3.33%
Ratio of Expenses to
Average Net Assets 1.48% 1.40% 1.30% 1.30% 1.40% 1.40% 1.70% 1.60% 1.50% 1.50%
Ratio of Net Income to
Average Net Assets 2.77% 2.20% 1.50% 1.90% 3.60% 4.90% 5.00% 4.60% 3.80% 3.33%
Net Assets
End of Period (000 Omitted) $ 21,102 22,528 23,672 26,728 24,415 17,385 14,096 15,871 13,193 19,787
</TABLE>
See Notes to Financial Statements.
<PAGE>
IMG LIQUID ASSETS FUND, INC.
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
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 ("Adviser"), 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 Funds
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 which
has been determined by the Board of Directors of the Funds to represent
the fair value of the Funds' investments. 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 Fund 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
December 31, 1995, the securities purchased under overnight agreements to
resell were collateralized by Government Agency mortgage-backed securities
with a market value of $22,405,640 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.
<PAGE>
IMG LIQUID ASSETS FUND, INC.
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS, continued
- - -----------------------------------------
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 agreements, the Adviser
provides the Funds with investment supervision, office space, management
and other personnel, and will pay the costs of computing the Funds' net
asset values and related bookkeeping expenses. For these services, the
Funds each pay 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 period ended December 31, 1995, IMG Liquid
Assets Fund and IMG Tax Exempt Liquid Assets Fund paid $225,719 and
$23,702, respectively, to the Adviser for advisory and service fees.
Beginning September 1, 1993, the Fund has also entered into an
administrative services agreement with the Advisor to provide portfolio
accounting services to the Fund. For these services, the Fund pays a fee
computed daily and payable monthly at an annual rate of 0.035 percent of
average daily assets.
Certain officers of the Funds are also officers of the Adviser. At
December 31, 1995, the Adviser owned 269,404 shares of capital stock in
IMG Liquid Assets Fund, and no shares of capital stock in IMG Tax Exempt
Liquid Assets Fund, Inc.
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 Funds 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 period ended December 31, 1995, amounts paid
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 $677,181 and $71,105 for
IMG Liquid Assets Fund, and IMG Tax Exempt Liquid Assets Fund,
respectively; Rule 12b-1 fees payable were $125,307 and $13,122,
respectively.
<PAGE>
IMG LIQUID ASSETS FUND, INC.
IMG TAX EXEMPT LIQUID ASSETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS, continued
- - -----------------------------------------
INVESTMENT ADVISER, TRANSFER AND UNDERWRITER
DIVIDEND DISBURSING AGENT IMG Financial Services, Inc.
Investors Management Group 2203 Grand Avenue
2203 Grand Avenue Des Moines, IA 50312-5338
Des Moines, Iowa 50312-5338
AUDITORS
CUSTODIAN KPMG Peat Marwick LLP
Hawkeye Bank of Des Moines 2500 Ruan Center
East 5th & Locust Streets Des Moines, Iowa 50309
Des Moines, Iowa 50307
COUNSEL
Cline, Williams, Wright, Johnson
& Oldfather
1900 FirsTier Bank Building
Lincoln, Nebraska 68508
IMG Liquid Assets Fund, Inc.
IMG Tax Exempt Liquid Assets Fund, Inc.
2203 Grand Avenue
Des Moines, Iowa 50312-5338
