IMG TAX EXEMPT LIQUID ASSETS FUND INC, 485BPOS, 1997-09-30

IMG TAX EXEMPT LIQUID ASSETS FUND INC
485BPOS, 1997-09-30

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As filed with the Securities and Exchange Commission
Registration No. 2-81547

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

Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 19 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 17 [X]
(Check appropriate box or boxes.)

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

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

Copies of all Communications to:
JOHN C. MILES, ESQ.
Cline, Williams, Wright, Johnson & Oldfather
1900 First Bank Building
Lincoln, Nebraska 68508

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

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

The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940, and the Rule 24f-2 Notice for the fiscal year ended June 30, 1997, was
filed on or about August 21, 1997.
<PAGE>

MUNICIPAL ASSETS FUNDS, INC.

Cross-Reference Sheet
Required by Rule 404(c)

N-1A Item No. Location in Prospectus

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

PART B

Location in Statement of
Additional Information

10. Cover Page.................................Cover Page
11. Table of Contents..........................Table of Contents
12. General Information and History............General Information and History
13. Investment Objective and Policies..........Investment Objectives, Policies
and Restrictions
14. Management of the Registrant...............Management
15. Control Persons and Principal
Holders of Securities......................Other Information--Principal
Shareholders
16. Investment Advisory and Other Services.....The Investment Management
Agreement
17. Brokerage Allocation.......................Other Information--Portfolio
Transactions
18. Capital Stock and Other Securities.........Other Information--Organization
and Shares of Fund
19. Purchase, Redemption and Pricing
of Securities Being Offered................Purchases of Fund Shares;
Valuing the Fund's Shares
20. Tax Status.................................Taxation
21. Underwriters...............................Purchases of Fund Shares
22. Calculation of Yield Quotations
of Money Market Funds......................Calculation of Yield
23. Financial Statements.......................Cover Page

PART C

Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C to this Registration Statement.
<PAGE>
LIQUID ASSETS FUND AND SWEEP SHARES
MUNICIPAL ASSETS FUND

2203 Grand Avenue, Des Moines, Iowa 50312-5338

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

PROSPECTUS SEPTEMBER 30, 1997
________________________________________________________________________________

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

Liquid Assets Fund offers four classes of shares and Municipal Assets Fund
offers three classes of shares. This Prospectus describes the "Sweep Shares" of
each Fund. Sweep Shares are offered to customers of banks. Sweep Shares are
normally offered through financial institutions providing automatic "sweep"
investment programs to their own customers. The Funds also offer "Trust Shares"
and "Institutional Shares" which accrue daily dividends in the same manner as
Sweep Shares except that each class bears separate distribution and/or
shareholder servicing fees. "S2 Shares" are also offered by Liquid Assets Fund.
(see "Organization and Shares of the Funds").

LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current income consistent
with safety of principal and maintenance of liquidity. MUNICIPAL ASSETS FUND,
("Municipal Assets") seeks maximum current income exempt from federal income
tax, consistent with safety of principal and maintenance of liquidity. Sweep
Shares are offered and redeemed at $1.00 per share under rules which allow the
Funds to use the amortized cost method of valuing the Funds' assets.

AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED
STATES, BY ANY STATE, OR BY THE FDIC, IS NOT A DEPOSIT OR OTHER OBLIGATION OF A
BANK, OR GUARANTEED BY A BANK, AND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.

UNDER EXTRAORDINARY CIRCUMSTANCES THE VALUE OF SHARES MAY VARY FROM $1.00 AND
CONSEQUENTLY, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

This Prospectus sets forth basic information about each Fund that investors
should know before investing and should be retained for future reference.
Statements of Additional Information (as of the date of this Prospectus) which
contain more detailed information about each Fund have been filed with the
Securities and Exchange Commission and are hereby incorporated by reference. The
Statements of Additional Information are available free upon request from IMG
Financial Services, Inc., at the address and telephone number indicated above.

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

EXPENSE SUMMARY

The expense summary table is provided to assist you in understanding the various
costs and expenses that may be incurred directly or indirectly as a shareholder
of either Fund. There are no transaction fees imposed upon the purchase,
redemption, or exchange of shares.

LIQUID MUNICIPAL
ASSETS ASSETS
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees................................. 0.25% 0.25%
12b-1 Distribution Fees......................... 0.75% 0.50%
Other Expenses.................................. 0.20% 0.40%
Total Fund Operating Expenses................... 1.20% 1.15%

For the period from September 1, 1996 through January 15, 1997, the Advisor
waived a portion or all of their fees and reimbursed certain expenses of
Municipal Assets. The waiver was terminated January 15, 1997. Additional
operating expenses information may be found under "Management and Fees".

EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period.
1 Year 3 Years 5 Years 10 Years
Liquid Assets $12 $38 $66 $145
Municipal Assets $12 $37 $63 $140

EXPLANATION OF TABLE

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN. The Expense Summary and Examples do not reflect any
charges that may be imposed by financial institutions on their customers.

The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Sweep Shares. Certain figures contained in the above tables are based on amounts
incurred during each Fund's most recent fiscal year and have been adjusted as
necessary to reflect current services provider fees and/or reimbursements. The
information in the above tables relates only to Sweep Shares. The Funds also
offer Trust Shares and Institutional Shares. S2 Shares are also offered by
Liquid Assets. Long-term shareholders may eventually pay more than the economic
equivalent of the maximum front-end sales charge otherwise permitted by the
National Association of Securities Dealers, Inc. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank. A $15.00 fee
may be charged to an individual shareholder account for redemption by wire.
Please refer to "Management and Fees" for further information.

HIGHLIGHTS

The INVESTMENT OBJECTIVE of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in
short-term debt obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities and repurchase agreements collateralized by such
obligations including, redeemable Certificates backed by Farmers Home
Administration guaranteed loans and primarily, federally insured student loans.

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

The NET ASSET VALUE, that is, the price at which shares of the Funds are sold
and redeemed, will be $1.00 per share, except under extraordinary circumstances.
See "Opening an Account -- Share Price".

SHARES OF EITHER FUND MAY BE PURCHASED at the next determined net asset value
per share, without a sales charge, with an initial investment of at least $250
and subsequent purchases of at least $25 (subject to certain exceptions).
Purchases may be made by check, wire, electronic funds transfer and/or through
Participating Organizations. See "Purchasing Shares".

SHARES MAY BE REDEEMED at their next determined net asset value by exchange,
check, wire, and/or electronic funds transfer. See "Redeeming Shares".

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

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

The Advisor is entitled to an INVESTMENT ADVISORY FEE which is calculated daily
and paid monthly at an annual rate of 0.25 percent of each Fund's net assets up
to $200,000,000, declining to 0.20 percent of average daily net assets in excess
of $600,000,000. For the period from September 1, 1996 through January 15, 1997,
the Advisor voluntarily agreed to waive all of its fee with respect to Municipal
Assets. This waiver was voluntary and was terminated on January 15, 1997. See
"Management and Fees".

DISTRIBUTION FEES are paid by the Funds to the Distributor and by it to certain
Participating Organizations pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), up to a maximum of 0.75 percent of the average daily
net asset value of all Sweep Shares issued and outstanding for Liquid Assets and
0.50 percent of the average daily net assets of all Sweep Shares issued and
outstanding for Municipal Assets.

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

FINANCIAL HIGHLIGHTS

Effective October 29, 1996, the Funds commenced offering three classes of shares
with differing fee structures, designated "Sweep Shares", Trust Shares", and
"Institutional Shares". The shares designated Sweep Shares were offered and sold
with the same fee structure previously offered by the Funds. Financial
Highlights on the following pages gives information about the Fund's financial
history on a per share basis for the past ten fiscal years for the Funds' Sweep
Shares.

The Funds' fiscal year has been July 1 through June 30 since their inception.
The financial information expresses investment and distribution information in
terms of a single share outstanding throughout each period as indicated.

The tables presented for the years 1988 through 1997 have been examined by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report covering the
year ending June 30, 1997, is included in the Annual Report to shareholders of
each Fund. The Annual Report is included in each Fund's Statement of Additional
Information and will be provided upon request to the address and telephone
number on Page 1 of this Prospectus without charge.
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIQUID ASSETS FUND - SWEEP SHARES
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 .045 .047 .047 .027 .027 .044 .063 .074 .076 .057

Dividends Distributed (.045) (.047) (.047) (.027) (.027) (.044) (.063) (.074) (.076) (.057)
----------------------------------------------------------------------------------------
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 4.46% 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74%

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

Ratio of Net Income to
Average Net Assets 4.46% 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74%

Net Assets
End of Period (000 Omitted) $60,663 $179,633 $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $93,335 $73,525
</TABLE>
On September 25, 1996, the Shareholders approved amendments to the Fund's
Articles of Incorporation to reclassify all outstanding shares as Sweep Shares.
This reclassification did not effect the existing fee structure.
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL ASSETS FUND - SWEEP SHARES
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 .029 .026 .025 .015 .017 .030 .044 .050 .051 .039

Dividends Distributed (.029) (.026) (.025) (.015) (.017) (.030) (.044) (.050) (.051) (.039)
----------------------------------------------------------------------------------------
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 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%

Ratio of Expenses to
Average Net Assets* 0.93% 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52%

Ratio of Net Income to
Average Net Assets 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%

Net Assets
End of Period (000 Omitted) $4,664 $10,146 $16,130 $21,355 $23,764 $29,670 $26,683 $15,077 $12,619 $14,528
</TABLE>
On September 25, 1996, the Shareholders approved amendments to the Fund's
Articles of Incorporation to reclassify all outstanding shares as Sweep Shares.
This reclassification did not effect the existing fee structure.

* During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent this waivers, the ratio of expenses to average
net assets would have been 1.15 percent.

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

LIQUID ASSETS

The investment objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in the
following money market instruments maturing in 397 days or less from time of
investment, (with certain exceptions):

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

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

(3) Redeemable interest-bearing trust certificates ("Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund, ("Student Loan Trusts"), created for
the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The
Student Loan Certificates will have original maturities of no more than
397 days but will be redeemable by the Fund at their face amount upon not
more than five days' written notice to the issuing Student Loan Trust.
Further details concerning the Student Loan Trusts and the Fund's
investments in Student Loan Certificates are found in the Statement of
Additional Information.

(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each
created for the purpose of acquiring participation interests in the
guaranteed portion of Farmer's Home Administration ("FmHA") guaranteed
loans. The FmHA Certificates will have original maturities of no more
than 397 days but will be redeemable by the Fund at their face amount
upon not more than five days' written notice to the issuing FmHA Trust.
Further details concerning the FmHA Trusts and the Fund's investment in
FmHA Certificates and FmHA guaranteed loans are found in the Statement of
Additional Information.

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "Opening an Account -- Share Price". Assets of the Fund will
consist of securities with maturities of 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will have variable interest
rates adjustable at least semiannually. In determining whether particular
variable rate investments backed by Liquidity and Servicing Agreements or
Guaranteed Funding Agreements may be made, the period remaining until maturity
will be deemed to be the longer of the demand notice period required before the
Fund is entitled to receive payment of the principal amount or the period
remaining until the next interest adjustment. The dollar-weighted average
maturity of Fund investments will be 90 days or less, determined in the same
manner. While the underlying security in a repurchase agreement may have a
maturity of more than 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA Certificates, except when such investments are either not available
in sufficient quantity or do not carry yields competitive with alternative
investments.

It is the policy of the Fund that any illiquid securities (including repurchase
agreements of more than seven days duration) may not constitute, at the time of
purchase or at any time, more than ten percent of the value of the total net
assets of the Fund.

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

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

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

The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares and include the following:
Without shareholder approval the Fund may not: (1) purchase any securities other
than those described above; (2) invest more than 80 percent of its total assets
in Student Loan Certificates and/or FmHA Certificates; (3) purchase or sell real
estate (other than short-term loans secured by real estate or interests therein
or loans to companies which invest in or engage in other activities related to
real estate), commodities or commodity contracts, interests in oil, gas or other
mineral exploration or development programs; (4) make short sales of securities
or maintain a short position or write, purchase, or sell puts (excluding
repayment and guarantee arrangements on loan participations purchased from
Participating Banks), calls, straddles, spreads or combinations thereof; (5)
make loans to other persons, provided the Fund may invest up to 80 percent of
its total assets in Student Loan Certificates or FmHA Certificates, as described
in (2) above, and may make the investments and enter into repurchase agreements
as described above; (6) invest in securities with legal or contractual
restrictions on resale (except for repurchase agreements, Student Loan
Certificates, and FmHA Certificates) or for which no ready market exists; (7)
enter into repurchase agreements if, as a result thereof, more than five percent
of the Fund's total assets (taken at market value at the time of such
investment) would be subject to repurchase agreements maturing in more than
seven days.

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

MUNICIPAL ASSETS

The investment objective of Municipal Assets is maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests in the following types of money market instruments
maturing in 397 days or less from time of investment (with certain exceptions),
as defined herein:

(1) Tax-exempt debt obligations issued by state and municipal governmental
units and public authorities within the United States and participation
interests therein. With few exceptions such obligations will be nonrated
and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank
letters of credit or guarantees (collectively referred to herein as
"Liquidity Agreements"). The Liquidity Agreements will permit the holder
of the securities to demand payment of the unpaid principal balance plus
accrued interest upon a specified number of days' notice either from the
issuer or by drawing on an irrevocable bank letter of credit or
guarantee. In addition, all obligations with maturities longer than 397
days from date of purchase will, by their terms, bear rates of interest
that are adjusted upward or downward no less frequently than semiannually
by means of a formula intended to reflect market changes in interest
rates. Certain types of industrial development bonds issued by public
bodies to finance the construction of industrial and commercial
facilities and equipment are also purchased. The Statement of Additional
Information contains further details concerning the Fund's policies and
procedures with respect to investments in such tax-exempt obligations and
participation interests.

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

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

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "Opening an Account -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.

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

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

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

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

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

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

PERFORMANCE

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

The current and effective yields for the seven-day period ended June 30, 1997,
for Liquid Assets and Municipal Assets were 4.55 percent and 4.64 percent, and
3.35 percent and 3.41 percent, respectively.

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

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

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

DISTRIBUTIONS AND TAXES

Dividends from the net income of each Fund are declared daily on each business
day and paid monthly to holders of record immediately before 3:00 p.m. Central
Time. Dividends are automatically reinvested in Sweep Shares unless cash payment
has been requested. If a shareholder redeems the entire amount in his account
during the month, dividends credited to the account from the beginning of the
month through the date of redemption are paid with the redemption proceeds.

Dividends on each class of shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder servicing fees (see "Organization and Shares of
the Funds").

Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.

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

Dividends derived from interest on federally tax-exempt debt obligations owned
by Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.

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

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

ORGANIZATION AND SHARES OF THE FUNDS

The Funds are open-end, diversified management investment companies organized as
Iowa corporations. Liquid Assets was incorporated in June 1982 under the name
Iowa Liquid Assets Fund, Inc., and changed its name to IMG Liquid Assets Fund,
Inc., in October 1987. Municipal Assets was incorporated under the name Iowa Tax
Free Liquid Assets Fund, Inc., in January 1983 and changed its name to IMG Tax
Exempt Liquid Assets Fund, Inc., in October 1987. On September 25, 1996, the
Funds each increased authorized capital to five billion shares of Common Stock,
par value $.001 per share, changed the Fund's names to Liquid Assets Fund and
Municipal Assets Fund, respectively, and amended their respective Articles of
Incorporation to authorize the Boards of Directors to issue one or more
additional classes of shares. Simultaneously, the Boards approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares". On February 3, 1997, the Board of
Directors authorized the issuance of "S2 Shares" by Liquid Assets. Management of
the affairs of each Fund is legally vested in its Board of Directors, which
meets periodically to review activities of the Fund and the Advisor and to
consider other policy matters pertaining to the Fund.

Sweep Shares of the Funds are described in this Prospectus. Trust Shares,
Institutional Shares and S2 Shares are offered in separate Prospectuses which
may be obtained by calling IFS at 1-800-798-1819 or writing to IFS at the
address on the cover of this Prospectus. All shares are offered to individual
and institutional investors acting on their own behalf or on behalf of their
customers and bear their pro rata portion of all operating expenses paid by the
Funds, except that Sweep Shares, Trust Shares and S2 Shares bear separate
distribution and/or shareholder servicing fees. Institutional Shares bear no
distribution or shareholder servicing fees.

Each class of shares offers different privileges. Sweep Shares and S2 Shares are
normally offered through financial institutions providing automatic "sweep"
investment programs to their customers, and offer a check writing privilege.
Trust Shares are normally offered through trust organizations or others
providing shareholder services such as establishing and maintaining accounts and
records for their customers who invest in Trust Shares, assisting customers in
processing purchase, exchange and redemption requests, and responding to
customers' inquiries concerning their investments. Institutional Shares are
available directly from the Distributor only and offer only the Exchange and
Telephone Transfer services. Each class of shares is exchangeable only for
shares of the same class. Financial institutions selling or servicing Sweep
Shares, Trust Shares and S2 Shares may receive different compensation with
respect to one class over another.

Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of Sweep Shares and
S2 Shares will vote on matters relating to the Distribution Plan for Sweep
Shares and S2 Shares. Only holders of Trust Shares will vote on matters
pertaining to the Shareholder Services Plan for Trust Shares.

Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this Prospectus, shares
will be fully paid and nonassessable.

MANAGEMENT AND FEES

Investors Management Group, ("IMG") manages the investments and business affairs
of the Funds. IMG is a registered Investment Advisor located at 2203 Grand
Avenue, Des Moines, Iowa 50312-5338. IMG Financial Services, Inc., a wholly
owned subsidiary of IMG, is a registered broker/dealer and serves as the Funds'
Underwriter. Since IMG was founded in 1982, its principal business has been
providing continuous investment management to pension and profit-sharing plans,
insurance companies, public agencies, banks, endowments and charitable
institutions, other mutual funds, individuals and others. As of June 30, 1997,
IMG had approximately $1.6 billion in equity, fixed income and money market
assets under management. David W. Miles and Mark A. McClurg are principal
shareholders of IMG.

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

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

The management fee for each Fund is calculated daily and paid monthly. The
maximum management fee for each Fund is 0.25 percent of each Fund's average
daily net assets up to $200,000,000. The management fee declines to 0.20 percent
of average daily net assets in excess of $600,000,000. For the fiscal year ended
June 30, 1997, fees paid by Liquid Assets and Municipal Assets to IMG amounted
to approximately 0.25 percent of Liquid Assets average net assets, or $428,125
and approximately 0.15 percent of Municipal Assets average net assets, or
$51,871.

For the period September 1, 1996 through January 15, 1997, IMG voluntarily
waived $26,566 of advisory fees on Municipal Assets. Without such waiver, IMG
would have been entitled to receive a fee at the annual rate of 0.25 percent of
the average daily net assets of Municipal Assets.

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

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

Each Fund pays certain distribution fees related to marketing, selling and
distribution of Sweep Shares including, but not limited to, preparation and
distribution of promotional materials, compensation to sales personnel employed
by the Distributor and for payment to institutions, including financial
institutions ("Participating Organizations") who render assistance in
distributing or promoting the sale of each Fund's Sweep Shares under plans
("Plans") adopted pursuant to Rule 12b-1 under the Act. The maximum fees payable
under the Plans are an annual rate of 0.75 percent for Liquid Assets and 0.50
percent for Municipal Assets, computed monthly on the basis of the average net
asset value of the Sweep Shares issued by each Fund. For fiscal year ended June
30, 1997, fees paid under the plan for Liquid Assets and Municipal Assets were
$1,238,752 and $50,758, respectively. The Directors of each Fund review
quarterly a written report of the costs incurred associated with the Plans. The
Directors believe that the Plans are in compliance with Rule 12b-1 and are in
the best interests of the Funds.

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

AMCORE Investment Group, N.A., Rockford, Illinois, acts as custodian for the
Funds' cash and investments.

OPENING AN ACCOUNT

The Funds require a completed and signed application (which is attached) at the
time you open each new account. Additional paperwork may be required from
corporations, associations and certain fiduciaries. IF YOU HAVE QUESTIONS CALL
IFS AT 1-800-798-1819 FROM 8:00 A.M. TO 4:30 P.M. CENTRAL TIME.

SHARE PRICE

The shares of each Fund are sold without a sales charge. The price of one share
is its "net asset value" or NAV (generally $1.00). NAV is computed by adding the
value of each Fund's investments, plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV of each Funds' shares is determined twice each business day, at 11:00
a.m. Central Time and at the close of the New York Stock Exchange (normally 3:00
p.m. Central Time). The Funds are open for business each day the Federal Reserve
is open.

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

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

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

PURCHASING SHARES

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

Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $250. Subsequent investments in each Fund must be made in amounts of not
less than $25, except where purchases are made through financial institutions
providing an automatic "sweep" investment program, in which case there is no
minimum. Participating organizations may aggregate their customers' purchases to
satisfy the required minimums.

Purchases may be effected on business days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.

A purchase order for Sweep Shares received and accepted by the Funds by 10:00
a.m. Central Time on a business day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Sweep Shares received after 10:00 a.m. Central
Time and prior to 3:00 p.m. Central Time on a business day for which such funds
have been received by 3:00 p.m. Central Time will be effected as of 3:00 p.m.
Central Time, and will begin to accrue dividends on the following business day.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.

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

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

Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.

PURCHASE PROCEDURES

METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT

BY MAIL $250 (minimum) $25 (minimum)
Please make your check pay- Please make your check pay-
able to the Fund selected and able to the Fund selected,
mail to the address indicated with your account number on
on the application. the check and mail to the
address printed on your
account statement.

BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.

Federal Funds should be wired to: Federal Reserve Bank of Chicago for AMCORE
Investment Group, N.A., Rockford, Illinois, together with the name of the Fund,
your account number and names.

Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received by
the Fund before any instructions for redemption will be accepted.

BY ELECTRONIC Not available for initial Shareholders who have an
FUNDS TRANSFER purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.

SHAREHOLDER SERVICES

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

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

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

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

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

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

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

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

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

REDEEMING SHARES

Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
and accepted by the Distributor before 10:00 a.m. Central Time on a business day
will be redeemed as of 11:00 a.m. Central Time and will earn dividends through
the previous day; proceeds normally will be sent electronically the same day (or
mailed by check the next business day) to the organization that placed the
redemption order in good form. Redemption orders received after 10:00 a.m.
Central Time or on a non-business day will be redeemed as of 3:00 p.m. Central
Time or at the next determined net asset value and earn dividends through the
date the redemption request was received; proceeds will be sent electronically
on the next business day (or mailed by check on the second business day
thereafter). While the Funds use their best efforts to maintain their net asset
value per share at $1.00, the proceeds paid upon redemption may be more or less
than the amount originally invested.

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

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

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

A shareholder may not reduce the value of their account to less than $100 by
writing checks. The check writing privilege is not available when purchases are
made through a financial institution providing an automatic "sweep" investment
program. The Funds and the Custodian reserve the right to terminate the check
writing service or to institute charges for the service.

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

HOW TO REDEEM SHARES

BY MAIL-- Send a "letter of instruction": a letter
TO: 2203 GRAND AVENUE specifying the name of the Fund, the number
DES MOINES, IA 50312-5338 of shares to be sold, your name, your account
number, and the additional requirements
listed below that apply to your particular
account.

TYPE OF REGISTRATION REQUIREMENTS
_____________________________ _____________________________________________
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, Custodial required sign for the account, exactly as it
(Uniform Gifts to or Transfers is registered, accompanied by signature
To Minors Act), General guarantee(s).
Partners

Corporation, Association Letter of instruction and a corporate
resolutiona signed by person(s) authorized to
act on the account, accompanied by signature
guarantee(s).

Trust A letter of instruction signed by the
Trustee(s) (as Trustee), with a signature
guarantee. (If the Trustee's name is not
registered on your account, also provide a
copy of the trust document, certified within
the last 60 days.)

If you do not fall into any of these registration categories (e.g., Executors,
Administrators, Conservators or Guardians) please call for further
instructions.

A signature guarantee is designed to protect you and the Fund against
fraudulent transactions by unauthorized persons. A signature guarantee is
required for all persons registered on an account. A signature guarantee may be
obtained from an eligible guarantor institution, as defined by the Securities
and Exchange Commission. These institutions include banks, savings and loan
associations, credit unions, brokerage firms, and others. The words, "SIGNATURE
GUARANTEED" must be stamped or typed near each person's signature and appear
with the printed name, title, and signature of an officer and the name of the
guarantor institution. PLEASE NOTE THAT A NOTARY PUBLIC STAMP OR SEAL IS NOT A
SIGNATURE GUARANTEE.

BY CHECK-- You must have applied for the check writing
(minimum $250 feature on your account application. You may
maximum $100,000) redeem provided that the signatures you
designated are on the check. (There is no
charge for this service and you may write an
unlimited number of checks.)
________________________________________________________________________________

FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
________________________________________________________________________________

BY EXCHANGE-- You must meet the minimum investment require-
ment of the other fund. You can only ex-
change between accounts with identical names,
addresses, and taxpayer identification
numbers.

BY ELECTRONIC FUNDS You must have applied for the Telephone
TRANSFER (ACH) OR WIRE-- Transfer feature on your application. Allow
two days via ACH. Call before 10:00 a.m. for
same day wire. $15.00 fee for bank wires.
<PAGE>
TABLE OF CONTENTS
Expense Summary of Sweep Shares..........................................2
Highlights...............................................................3
Financial Highlights.....................................................4
Investment Objectives, Policies and Restrictions.........................7
Liquid Assets........................................................... 7
Municipal Assets.........................................................9
Performance.............................................................12
Distributions and Taxes.................................................13
Organization and Shares of the Funds....................................14
Management and Fees.....................................................15
Opening an Account......................................................16
Share Price.........................................................17
Purchasing Shares...................................................17
Shareholder Services....................................................19
Redeeming Shares........................................................21

NO SALESMAN, OR OTHER PERSON, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS OR BY IMG FINANCIAL SERVICES, INC. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY IMG FINANCIAL SERVICES, INC., IN ANY STATE IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
LIQUID ASSETS FUND S2 SHARES
MUNICIPAL ASSETS FUND SWEEP SHARES

2203 Grand Avenue, Des Moines, Iowa 50312-5338

IMG FINANCIAL SERVICES, INC......................................1-800-798-1819
515-244-5426
________________________________________________________________________________

PROSPECTUS SEPTEMBER 30, 1997
________________________________________________________________________________

Liquid Assets Fund offers four classes of shares and Municipal Assets Fund
offers three classes of shares. This Prospectus describes the "S2 Shares" of
Liquid Assets Fund and "Sweep Shares" of Municipal Assets Fund, (collectively,
the "Shares"). Sweep Shares and S2 are normally offered through financial
institutions providing automatic "sweep" investment programs to their own
customers. The Funds also offer "Trust Shares" and "Institutional Shares" which
accrue daily dividends in the same manner as Sweep Shares and S2 Shares except
that each class bears separate distribution and/or shareholder servicing fees
(see "Organization and Shares of the Funds").

LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current income consistent
with safety of principal and maintenance of liquidity. MUNICIPAL ASSETS FUND,
("Municipal Assets") seeks maximum current income exempt from federal income
tax, consistent with safety of principal and maintenance of liquidity. Shares
are offered and redeemed at $1.00 per share under rules which allow the Funds to
use the amortized cost method of valuing the Funds' assets.

AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED
STATES, BY ANY STATE, OR BY THE FDIC, IS NOT A DEPOSIT OR OTHER OBLIGATION OF
ANY BANK, OR GUARANTEED BY A BANK, AND INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

EXPENSE SUMMARY

LIQUID MUNICIPAL
ASSETS ASSETS
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees................................. 0.25% 0.25%
12b-1 Distribution Fees......................... 0.50% 0.50%
Other Expenses.................................. 0.20% 0.40%
Total Fund Operating Expenses................... 0.95% 1.15%

For the period from September 1, 1996 through January 15, 1997, the Advisor and
Distributor waived a portion or all of their fees and reimbursed certain
expenses of Liquid Assets and Municipal Assets. The waiver was terminated
January 15, 1997. Additional operating expenses information may be found under
"Management and Fees".

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

1 Year 3 Years 5 Years 10 Years
Liquid Assets $10 $30 $53 $117
Municipal Assets $12 $37 $63 $140

EXPLANATION OF TABLE

The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Shares. Certain figures contained in the above tables are based on amounts
incurred during each Fund's most recent fiscal year and have been adjusted as
necessary to reflect current services provider fees and/or reimbursements. The
information in the above tables relates only to Shares. The Funds also offer
Trust Shares and Institutional Shares. Long-term shareholders may eventually pay
more than the economic equivalent of the maximum front-end sales charge
otherwise permitted by the National Association of Securities Dealers, Inc. Wire
transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. A $15.00 fee may be charged to an individual shareholder account
for redemption by wire. Please refer to "Management and Fees" for further
information.

HIGHLIGHTS

The NET ASSET VALUE, that is, the price at which shares of the Funds are sold
and redeemed, will be $1.00 per share, except under extraordinary circumstances.
See "Opening an Account -- Share Price".

SHARES MAY BE REDEEMED at their next determined net asset value by exchange,
check, wire, and/or electronic funds transfer. See "Redeeming Shares".

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

DISTRIBUTION FEES are paid by the Funds to the Distributor and by it to certain
Participating Organizations pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), up to a maximum of 0.50 percent of the average daily
net assets of all Shares issued and outstanding for the Funds.

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

FINANCIAL HIGHLIGHTS

Effective October 29, 1996, the Funds commenced offering three classes of shares
with differing fee structures, designated "Sweep Shares", Trust Shares", and
"Institutional Shares". The shares designated Sweep Shares were offered and sold
with the same fee structure as the single class of shares previously offered by
the Funds. S2 Shares were first issued February 27, 1997. Financial Highlights
on the following pages gives information about the Fund's financial history on a
per share basis for the past ten fiscal years.

SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT THE PERIOD 1997
__________________________________
LIQUID ASSETS FUND-S2 SHARES
Net Asset Value
Beginning of Period $1.000

Net Investment Income .048

Dividends Distributed (.048)
-------
Net Asset Value
End of Period $1.000
======

Total Return 4.79%

Ratio of Expenses to
Average Net Assets* 0.85%

Ratio of Net Income to
Average Net Assets 4.79%

Net Assets
End of Period (000 Omitted) $1,773

* During the year ended June 30, 1997, the distributor voluntarily waived
certain fees. Absent this waiver, the ratio of expenses to average net assets
would have been 0.95 percent.

<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL ASSETS FUND - SWEEP SHARES
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 .029 .026 .025 .015 .017 .030 .044 .050 .051 .039

Total Return 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%

Ratio of Expenses to
Average Net Assets* 0.93% 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52%

Ratio of Net Income to
Average Net Assets 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%

Net Assets
End of Period (000 Omitted) $ 4,664 $10,146 $16,130 $21,355 $23,764 $29,670 $26,683 $15,077 $12,619 $14,528
</TABLE>
* During the year ended June 30, 1997, the advisor and distributor
voluntarily waived certain expenses. Absent these waivers, the ratio of
expenses to average net assets would have been 1.15 percent.

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

LIQUID ASSETS

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

MUNICIPAL ASSETS

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

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "Opening an Account -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.

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

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

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

PERFORMANCE

The current and effective yields for the seven-day period ended June 30, 1997,
for Liquid Assets and Municipal Assets were 4.90 percent and 5.01 percent, and
3.35 percent and 3.41 percent, respectively.

DISTRIBUTIONS AND TAXES

ORGANIZATION AND SHARES OF THE FUNDS

S2 Shares of Liquid Assets and Sweep Shares of Municipal Assets are described in
this Prospectus. Trust Shares and Institutional Shares are offered in separate
Prospectuses which may be obtained by calling IFS at 1-800-798-1819 or writing
to IFS at the address on the cover of this Prospectus. All shares are offered to
individual and institutional investors acting on their own behalf or on behalf
of their customers and bear their pro rata portion of all operating expenses
paid by the Funds, except that Shares and Trust Shares bear separate
distribution and/or shareholder servicing fees. Institutional Shares bear no
distribution or shareholder servicing fees.

Each class of shares offers different privileges. Shares are normally offered
through financial institutions providing automatic "sweep" investment programs
to their customers, and offer a check writing privilege. Trust Shares are
normally offered through trust organizations or others providing shareholder
services such as establishing and maintaining accounts and records for their
customers who invest in Trust Shares, assisting customers in processing
purchase, exchange and redemption requests, and responding to customers'
inquiries concerning their investments. Institutional Shares are available
directly from the Distributor only and offer only the Exchange and Telephone
Transfer services. Each class of shares is exchangeable only for shares of the
same class. Financial institutions selling or servicing Shares and Trust Shares
may receive different compensation with respect to one class over another.

Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of Shares will vote
on matters relating to the Distribution Plan for Shares. Only holders of Trust
Shares will vote on matters pertaining to the Shareholder Services Plan for
Trust Shares.

MANAGEMENT AND FEES

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

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

Each Fund pays certain distribution fees related to marketing, selling and
distribution of Shares including, but not limited to, preparation and
distribution of promotional materials, compensation to sales personnel employed
by the Distributor and for payment to institutions, including financial
institutions ("Participating Organizations") who render assistance in
distributing or promoting the sale of each Fund's Shares under plans ("Plans")
adopted pursuant to Rule 12b-1 under the Act. The fees payable under the Plans
are an annual rate of 0.50 percent for each Fund, computed monthly on the basis
of the average net asset value of the Shares issued by each Fund. For fiscal
year ended June 30, 1997, fees paid under the plan for Liquid Assets and
Municipal Assets were $1,238,752 and $50,758, respectively. The Directors of
each Fund review quarterly a written report of the costs incurred associated
with the Plans. The Directors believe that the Plans are in compliance with Rule
12b-1 and are in the best interests of the Funds.

AMCORE Investment Group, N.A., Rockford, Illinois, acts as custodian for the
Funds' cash and investments.

OPENING AN ACCOUNT

SHARE PRICE

PURCHASING SHARES

A purchase order for Shares received and accepted by the Funds by 10:00 a.m.
Central Time on a business day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Shares received after 10:00 a.m. Central Time and
prior to 3:00 p.m. Central Time on a business day for which such funds have been
received by 3:00 p.m. Central Time will be effected as of 3:00 p.m. Central
Time, and will begin to accrue dividends on the following business day. If
federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.

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

PURCHASE PROCEDURES

METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT

BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.

Federal Funds should be wired to: Federal Reserve Bank of Chicago for AMCORE
Investment Group, N.A., Rockford, Illinois, together with the name of the Fund,
your account number and names.

SHAREHOLDER SERVICES

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

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

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

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

REDEEMING SHARES

HOW TO REDEEM SHARES

BY MAIL-- Send a "letter of instruction": a letter
TO: 2203 GRAND AVENUE specifying the name of the Fund, the
DES MOINES, IA 50312-5338 number of shares to be sold, your name,
your account number, and the additional
requirements listed below that apply to
your particular account.

TYPE OF REGISTRATION REQUIREMENTS
_______________________________ __________________________________________
Individual, Joint Tenants, Sole Letter of instruction signed by all
Proprietorship, Custodial persons required to sign for the account,
(Uniform Gifts or Transfers exactly as it is registered, accompanied
To Minors Act), General Partners by signature guarantee(s).

Corporation, Association Letter of instruction and a corporate
resolution signed by person(s) authorized
to act on the account, accompanied by
signature guarantee(s).

Trust A letter of instruction signed by the
Trustee(s) (as Trustee), with a signature
guarantee. (If the Trustee's name is not
registered on your account, also provide
a copy of the trust document, certified
within the last 60 days.)

If you do not fall into any of these registration categories (e.g., Executors,
Administrators, Conservators or Guardians) please call for further
instructions.

BY CHECK-- You must have applied for the check writing
(minimum $250 feature on your account application. You
maximum $100,000) may redeem provided that the signatures you
designated are on the check. (There is no
charge for this service and you may write
an unlimited number of checks.)
________________________________________________________________________________

FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
________________________________________________________________________________

BY EXCHANGE-- You must meet the minimum investment
requirement of the other fund. You can
only exchange between accounts with
identical names, addresses, and taxpayer
identification numbers.

TABLE OF CONTENTS
Expense Summary of Shares...............................................2
Highlights..............................................................3
Financial Highlights....................................................4
Investment Objectives, Policies and Restrictions........................7
Liquid Assets.......................................................... 7
Municipal Assets........................................................9
Performance............................................................12
Distributions and Taxes................................................13
Organization and Shares of the Funds...................................14
Management and Fees....................................................15
Opening an Account.....................................................16
Share Price........................................................16
Purchasing Shares..................................................16
Shareholder Services...................................................19
Redeeming Shares.......................................................21

2203 Grand Avenue, Des Moines, Iowa 50312-5338

IMG FINANCIAL SERVICES, INC......................................1-800-798-1819
515-244-5426
________________________________________________________________________________

PROSPECTUS SEPTEMBER 30, 1997

________________________________________________________________________________

Liquid Assets Fund offers four classes of shares and Municipal Assets Fund
offers three classes of shares. This Prospectus describes the "Trust Shares" of
each Fund. Trust Shares are offered to customers of banks. Trust Shares are
normally offered through trust organizations or others providing shareholder
services such as establishing and maintaining accounts and records for their
customers who invest in Trust Shares, assisting customers in processing
purchase, exchange and redemption requests, and responding to customers'
inquiries regarding their accounts. The Funds also offer "Sweep Shares" and
"Institutional Shares" which accrue daily dividends in the same manner as Trust
Shares except that each class bears separate distribution and/or shareholder
administrative servicing fees. "S2 Shares" are also offered by Liquid Assets
Fund. (see "Organization and Shares of the Funds").

LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current income consistent
with safety of principal and maintenance of liquidity. MUNICIPAL ASSETS FUND,
("Municipal Assets") seeks maximum current income exempt from federal income
tax, consistent with safety of principal and maintenance of liquidity. Trust
Shares are offered and redeemed at $1.00 per share under rules which allow the
Funds to use the amortized cost method of valuing the Funds' assets.

EXPENSE SUMMARY

LIQUID MUNICIPAL
ASSETS ASSETS
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees................................. 0.25% 0.25%
Shareholder Service Fees........................ 0.25% 0.25%
Other Expenses.................................. 0.20% 0.40%
Total Fund Operating Expenses................... 0.70% 0.90%

For the period September 1, 1996 through January 15, 1997, the Advisor and
Distributor waived a portion or all of its fees and reimbursed certain expenses
of Liquid Assets and Municipal Assets. Additional operating expenses information
may be found under "Management and Fees".

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

1 Year 3 Years 5 Years 10 Years
Liquid Assets $ 7 $22 $39 $87
Municipal Assets $ 9 $29 $50 $111

EXPLANATION OF TABLE

The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Trust Shares. Certain figures contained in the above tables are based on amounts
incurred during each Fund's most recent fiscal year and have been adjusted as
necessary to reflect current services provider fees and/or reimbursements. The
information in the above tables relates only to Trust Shares. The Funds also
offer Sweep Shares and Institutional Shares. S2 Shares are also offered by
Liquid Assets Fund. Long-term shareholders may eventually pay more than the
economic equivalent of the maximum front-end sales charge otherwise permitted by
the National Association of Securities Dealers, Inc. Wire transfers may be used
to transfer federal funds directly to/from the Funds' custodian bank. A $15.00
fee may be charged to an individual shareholder account for redemption by wire.
Please refer to "Management and Fees" for further information.

HIGHLIGHTS

The NET ASSET VALUE, that is, the price at which shares of the Funds are sold
and redeemed, will be $1.00 per share, except under extraordinary circumstances.
See "Opening an Account -- Share Price".

SHARES MAY BE REDEEMED at their next determined net asset value by exchange,
check, wire, and/or electronic funds transfer. See "Redeeming Shares".

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

The Advisor is entitled to an INVESTMENT ADVISORY FEE which is calculated daily
and paid monthly at an annual rate of 0.25 percent of each Fund's net assets up
to $200,000,000, declining to 0.20 percent of average daily net assets in excess
of $600,000,000. For the period from September 1, 1996 to January 15, 1997, the
Advisor voluntarily agreed to waive all of its fee with respect to Municipal
Assets. This waiver was voluntary and was terminated on January 15, 1997. See
"Management and Fees".

SHAREHOLDER SERVICES FEES are paid by the Funds to certain Participating
Organizations up to a maximum of 0.25 percent of the average daily net asset
value of all Trust Shares issued and outstanding for the respective Fund.

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

FINANCIAL HIGHLIGHTS

Effective October 29, 1996, the Funds commenced offering three classes of shares
with differing fee structures, designated "Sweep Shares", Trust Shares", and
"Institutional Shares". The shares designated Sweep Shares were offered and sold
with the same fee structure as the single class of shares previously offered by
the Funds. Trust Shares were first offered January 2, 1997. For comparative
purposes Financial Highlights on the following pages gives information about the
Funds' financial history on a per share basis for the past fiscal year.

The tables presented have been examined by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report covering the year ending June 30, 1997, is
included in the Annual Report to shareholders of each Fund. The Annual Report is
included in each Fund's Statement of Additional Information and will be provided
upon request to the address and telephone number on Page 1 of this Prospectus
without charge.

SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
___________________________________

LIQUID ASSETS FUND - TRUST SHARES
Net Asset Value
Beginning of Period $1.000

Net Investment Income .050

Dividends Distributed (.050)
-------
Net Asset Value
End of Period $1.000
=======

Total Return 4.96%

Ratio of Expenses to
Average Net Assets 0.70%

Ratio of Net Income to
Average Net Assets 4.96%

Net Assets
End of Period (000 Omitted) $17,859

SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
___________________________________

MUNICIPAL ASSETS FUND -TRUST SHARES
Net Asset Value
Beginning of Period $1.000

Net Investment Income .032

Dividends Distributed (.032)
-------
Net Asset Value
End of Period $1.000
=======

Total Return 3.17%

Ratio of Expenses to
Average Net Assets* 0.66%

Ratio of Net Income to
Average Net Assets 3.17%

Net Assets
End of Period (000 Omitted) $25,036

* During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent these waivers, the ratio of expenses to average
net assets would have been 0.90 percent.

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

LIQUID ASSETS

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

MUNICIPAL ASSETS

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

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "Opening an Account -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.

Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. This
fundamental policy may not be changed without the approval of a majority of the
Fund's outstanding voting securities. It is the policy of the Fund that any
illiquid securities may not constitute, at the time of purchase or at anytime,
more than ten percent of the value of the total net assets of the Fund. The Fund
does not intend to concentrate its investments in any one industry and pursuant
to Section 18(f) of the 1940 Act may not issue senior securities.

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

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

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

PERFORMANCE

The current and effective yields for the seven-day period ended June 30, 1997,
for Liquid Assets and Municipal Assets were 5.05 percent and 5.16 percent, and
3.60 percent and 3.66 percent, respectively.

DISTRIBUTIONS AND TAXES

Dividends from the net income of each Fund are declared daily on each business
day and paid monthly to holders of record immediately before 3:00 p.m. Central
Time. Dividends are automatically reinvested in Trust Shares unless cash payment
has been requested. If a shareholder redeems the entire amount in his account
during the month, dividends credited to the account from the beginning of the
month through the date of redemption are paid with the redemption proceeds.

ORGANIZATION AND SHARES OF THE FUNDS

Trust Shares of the Funds are described in this Prospectus. Sweep Shares,
Institutional Shares and S2 Shares are offered in separate Prospectuses which
may be obtained by calling IFS at 1-800-798-1819 or writing to IFS at the
address on the cover of this Prospectus. All shares are offered to individual
and institutional investors acting on their own behalf or on behalf of their
customers and bear their pro rata portion of all operating expenses paid by the
Funds, except that Sweep Shares, Trust Shares and S2 Shares bear separate
distribution and/or shareholder servicing fees. Institutional Shares bear no
distribution and/or shareholder servicing fees.

MANAGEMENT AND FEES

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

For the period September 1, 1996 through January 15, 1997, IMG voluntarily
waived $26,566 of its advisory fees on Municipal Assets. Without such waiver,
IMG would have been entitled to receive a fee at the annual rate of 0.25 percent
of the average daily net assets of Municipal Assets.

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

Effective October 15, 1996, each Fund pays certain shareholder servicing fees to
financial institutions ("Participating Organizations"), who render assistance in
servicing their customers who are direct or beneficial owners of each Fund's
Trust Shares under Shareholder Services Plans (the "Plans") adopted by the
Funds' Boards of Directors. The maximum fees payable under the Plans are an
annual rate of 0.25 percent, computed monthly on the basis of the average daily
net asset value of the Trust Shares issued by each Fund. The directors of each
Fund review quarterly a written report of the costs incurred associated with the
Plans. The directors believe that the Plan are in the best interests of the
Funds.

AMCORE Investment Group, N.A., Rockford, Illinois, acts as custodian for the
Funds' cash and investments.

OPENING AN ACCOUNT

SHARE PRICE

PURCHASING SHARES

Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $250. Subsequent investments in each Fund must be made in amounts of not
less than $25, except where purchases are made through Participating
Organizations in which case there is no minimum. Participating Organizations may
aggregate their customers' purchases to satisfy the required minimums.

A purchase order for Trust Shares received and accepted by the Funds by 10:00
a.m. Central Time on a business day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, if the Custodian has received the purchase price in
federal funds or other immediately available funds by 3:00 p.m. Central Time
that day. A purchase order for Trust Shares received after 10:00 a.m. Central
Time and prior to 3:00 p.m. Central Time on a business day for which such funds
have been received by 3:00 p.m. Central Time will be effected as of 3:00 p.m.
Central Time, and will begin to accrue dividends on the following business day.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.

PURCHASE PROCEDURES

METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT

BY MAIL $250 (minimum) $25 (minimum)
Please make your check pay- Please make your check
able to the Fund selected and payable to the Fund
mail to the address indicated selected, with your
on the application. account number on the
check and mail to the
address printed on your
account statement.

BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.

Federal Funds should be wired to: Federal Reserve Bank of Chicago for AMCORE
Investment Group, N.A., Rockford, Illinois, together with the name of the Fund,
your account number and names.

BY ELECTRONIC Not available for initial Shareholders who have an
FUNDS TRANSFER purchase. account with an
(ACH) institution which is a
member of the Automated
Clearing House, may elect
to purchase Fund shares
via electronic funds
transfer. Select this
service on your
application or call the
Fund.

SHAREHOLDER SERVICES

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

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

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

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

REDEEMING SHARES

Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
and accepted by the Distributor before 10:00 a.m. Central Time on a business day
will be redeemed as of 11:00 a.m. Central Time and will earn dividends through
the previous day; proceeds normally will be sent electronically the same day (or
mailed by check the next business day) to the organization that placed the
redemption order in good form. Redemption orders received after 10:00 a.m.
Central Time or on a non-business Day will be redeemed as of 3:00 p.m. Central
Time or at the next determined net asset value and earn dividends through the
date the redemption request was received; proceeds will be sent electronically
on the next business day (or mailed by check on the second business day
thereafter). While the Funds use their best efforts to maintain their net asset
value per share at $1.00, the proceeds paid upon redemption may be more or less
than the amount originally invested.

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

HOW TO REDEEM SHARES

TYPE OF REGISTRATION REQUIREMENTS
________________________________ __________________________________________
Individual, Joint Tenants, Letter of instruction signed by all
Sole Proprietorship, Custodial persons required to sign for the account,
(Uniform Gifts or Transfers exactly as it is registered, accompanied
To Minors Act), General Partners by signature guarantee(s).

Corporation, Association Letter of instruction and a corporate
resolution signed by person(s) authorized
to act on the account, accompanied by
signature guarantee(s).

Trust A letter of instruction signed by the
Trustee(s) (as Trustee), with a signature
guarantee. (If the Trustee's name is not
registered on your account, also provide
a copy of the trust document, certified
within the last 60 days.)

If you do not fall into any of these registration categories (e.g., Executors,
Administrators, Conservators or Guardians) please call for further
instructions.

FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
________________________________________________________________________________

BY EXCHANGE-- You must meet the minimum investment
requirement of the other fund. You can
only exchange between accounts with
identical names, addresses, and taxpayer
identification numbers.

BY ELECTRONIC FUNDS You must have applied for the Telephone
TRANSFER (ACH) OR WIRE-- Transfer feature on your application.
Allow two days via ACH. Call before
10:00 a.m. for same day wire.
$15.00 fee for bank wires.
<PAGE>
TABLE OF CONTENTS
Expense Summary of Trust Shares.........................................2
Highlights..............................................................3
Financial Highlights....................................................4
Investment Objectives, Policies and Restrictions........................7
Liquid Assets...........................................................7
Municipal Assets........................................................9
Performance............................................................12
Distributions and Taxes................................................13
Organization and Shares of the Funds...................................14
Management and Fees....................................................15
Opening an Account.....................................................17
Share Price........................................................17
Purchasing Shares..................................................17
Shareholder Services...................................................19
Redeeming Shares.......................................................21

2203 Grand Avenue, Des Moines, Iowa 50312-5338

IMG FINANCIAL SERVICES, INC......................................1-800-798-1819
515-244-5426
________________________________________________________________________________

PROSPECTUS SEPTEMBER 30, 1997
________________________________________________________________________________

Liquid Assets Fund offers four classes of shares and Municipal Assets Fund
offers three classes of shares. This Prospectus describes the "Institutional
Shares" of each Fund. Institutional Shares are offered to individual and
institutional customers (acting on their own behalf or on the behalf of
individuals). The Funds also offer "Sweep Shares" and "Trust Shares" which
accrue daily dividends in the same manner as Institutional Shares except that
each class bears separate distribution and/or shareholder administrative
servicing fees. "S2 Shares" are also offered by Liquid Assets Fund. (see
"Organization and Shares of the Funds").

LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current income consistent
with safety of principal and maintenance of liquidity. MUNICIPAL ASSETS FUND,
("Municipal Assets") seeks maximum current income exempt from federal income
tax, consistent with safety of principal and maintenance of liquidity.
Institutional Shares are offered and redeemed at $1.00 per share under rules
which allow the Funds to use the amortized cost method of valuing the Funds'
assets.

EXPENSE SUMMARY

LIQUID MUNICIPAL
ASSETS ASSETS
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees................................. 0.25% 0.25%
Other Expenses.................................. 0.20% 0.40%
Total Fund Operating Expenses................... 0.45% 0.65%

For the period from September 1, 1996 through January 15, 1997, the Advisor
voluntarily waived a portion or all of their fees and reimbursed certain
expenses of Municipal Assets. Additional operating expenses information may be
found under "Management and Fees".

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

1 Year 3 Years 5 Years 10 Years
Liquid Assets $ 5 $14 $25 $57
Municipal Assets $ 7 $21 $36 $81

EXPLANATION OF TABLE

The purpose of the foregoing tables is to assist in understanding the various
costs and expenses that may be directly or indirectly borne by investors in
Institutional Shares. Certain figures contained in the above tables are based on
amounts incurred during each Fund's most recent fiscal year and have been
adjusted as necessary to reflect current services provider fees and/or
reimbursements. The information in the above tables relates only to
Institutional Shares. The Funds also offer Sweep Shares and Trust Shares. S2
Shares are also offered by Liquid Assets. Long-term shareholders may eventually
pay more than the economic equivalent of the maximum front-end sales charge
otherwise permitted by the National Association of Securities Dealers, Inc. Wire
transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. A $15.00 fee may be charged to an individual shareholder account
for redemption by wire. Please refer to "Management and Fees" for further
information.

HIGHLIGHTS

The NET ASSET VALUE, that is, the price at which shares of the Funds are sold
and redeemed, will be $1.00 per share, except under extraordinary circumstances.
See "Opening an Account -- Share Price".

SHARES MAY BE REDEEMED at their next determined net asset value by exchange,
check, wire, and/or electronic funds transfer. See "Redeeming Shares".

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

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

FINANCIAL HIGHLIGHTS

Effective October 29, 1996, the Funds commenced offering three classes of shares
with differing fee structures, designated "Sweep Shares", Trust Shares", and
"Institutional Shares". The shares designated Sweep Shares were offered and sold
with the same fee structure as the single class of shares previously offered by
the Funds. Institutional Shares were first issued by Liquid Assets on October
29, 1996, and by Municipal Assets on March 28, 1997. Financial Highlights on the
following pages gives information about the Fund's financial history on a per
share basis for Institutional Shares for the past fiscal year.

SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
____________________________________________________

LIQUID ASSETS FUND - INSTITUTIONAL SHARES

Net Asset Value
Beginning of Period $ 1.000

Net Investment Income .052

Dividends Distributed (.052)
---------
Net Asset Value
End of Period $ 1.000
=========

Total Return 5.19%

Ratio of Expenses to
Average Net Assets 0.45%

Ratio of Net Income to
Average Net Assets 5.19%

Net Assets
End of Period (000 Omitted) $ 2,356

SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
____________________________________

MUNICIPAL ASSETS FUND - INSTITUTIONAL SHARES

Net Asset Value
Beginning of Period $1.000

Net Investment Income .034

Dividends Distributed (.034)
-------
Net Asset Value
End of Period $1.000
=======

Total Return 3.42%

Ratio of Expenses to
Average Net Assets* 0.41%

Ratio of Net Income to
Average Net Assets 3.42%

Net Assets
End of Period (000 Omitted) $7

* During the year ended June 30, 1997, the Advisor voluntarily waived certain
fees. Absent this waiver, the ratio of expenses to average net assets would
have been 0.65 percent.

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

LIQUID ASSETS

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

MUNICIPAL ASSETS

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

In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "Opening an Account -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.

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

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

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

PERFORMANCE

The current and effective yields for the seven-day period ended June 30, 1997,
for Liquid Assets and Municipal Assets were 5.30 percent and 5.43 percent, and
3.85 percent and 3.92 percent, respectively.

DISTRIBUTIONS AND TAXES

Dividends from the net income of each Fund are declared daily on each business
day and paid monthly to holders of record immediately before 3:00 p.m. Central
Time. Dividends are automatically reinvested in Institutional Shares unless cash
payment has been requested. If a shareholder redeems the entire amount in his
account during the month, dividends credited to the account from the beginning
of the month through the date of redemption are paid with the redemption
proceeds.

ORGANIZATION AND SHARES OF THE FUNDS

Institutional Shares of the Funds are described in this Prospectus. Sweep Shares
and Trust Shares and S2 Shares are offered in separate Prospectuses which may be
obtained by calling IFS at 1-800-798-1819 or writing to IFS at the address on
the cover of this Prospectus. All shares are offered to individual and
institutional investors acting on their own behalf or on behalf of their
customers and bear their pro rata portion of all operating expenses paid by the
Funds, except that Sweep Shares, Trust Shares and S2 Shares bear separate
distribution and/or shareholder servicing fees. Institutional Shares bear no
distribution and/or shareholder servicing fees.

MANAGEMENT AND FEES

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

From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
For the period September 1, 1996 through January 15, 1997, IMG voluntarily
waived $26,566 of its advisory fees on Municipal Assets. Without such waiver,
IMG would have been entitled to receive a fee at the annual rate of 0.25 percent
of the average daily net assets of Municipal Assets.

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

AMCORE Investment Group, N.A., Rockford, Illinois, acts as custodian for the
Funds' cash and investments.

OPENING AN ACCOUNT

SHARE PRICE

PURCHASING SHARES

Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $250. Subsequent investments in each Fund must be made in amounts of not
less than $25, except where purchases are made through Participating
Organizations in which case there is no minimum. Participating Organizations may
aggregate their customers' purchases to satisfy the required minimums.

A purchase order for Institutional Shares received and accepted by the Funds by
10:00 a.m. Central Time on a business day is effected at the net asset value per
share calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Institutional Shares received after 10:00 a.m.
Central Time and prior to 3:00 p.m. Central Time on a business day for which
such funds have been received by 3:00 p.m. Central Time will be effected as of
3:00 p.m. Central Time, and will begin to accrue dividends on the following
business day. If federal funds are not available by 3:00 p.m. Central Time, the
order will be canceled. Payment for orders which are not accepted or are
canceled will be returned after prompt inquiry to the transmitting organization.

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

PURCHASE PROCEDURES

METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT

BY MAIL $250 (minimum) $25 (minimum)
Please make your check pay- Please make your check pay-
able to the Fund selected and able to the Fund selected,
mail to the address indicated with your account number
on the application. on the check and mail to
the address printed on
your account statement.

BY WIRE Please call IMG Financial See instructions below.
Services, Inc., for an account
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.

Federal Funds should be wired to: Federal Reserve Bank of Chicago for AMCORE
Investment Group, N.A., Rockford, Illinois, together with the name of the Fund,
your account number and names.

SHAREHOLDER SERVICES

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

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

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

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

REDEEMING SHARES

Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
and accepted by the Distributor before 10:00 a.m. Central Time on a business day
will be redeemed as of 11:00 a.m. Central Time and will earn dividends through
the previous day; proceeds normally will be sent electronically the same day (or
mailed by check the next business day) to the organization that placed the
redemption order in good form. Redemption orders received after 10:00 a.m.
Central Time or on a non-business Day will be redeemed as of 3:00 p.m. Central
Time or at the next determined net asset value and earn dividends through the
date the redemption request was received; proceeds will be sent electronically
on the next business day (or mailed by check on the second business day
thereafter). While the Funds use their best efforts to maintain their net asset
value per share at $1.00, the proceeds paid upon redemption may be more or less
than the amount originally invested.

HOW TO REDEEM SHARES

TYPE OF REGISTRATION REQUIREMENTS
______________________________ __________________________________________
Individual, Joint Tenants, Letter of instruction signed by all
Sole Proprietorship, Custodial persons required to sign for the account,
(Uniform Gifts or Transfers To exactly as it is registered, accompanied
Minors Act), General Partners by signature guarantee(s).

Corporation, Association Letter of instruction and a corporate
resolution signed by person(s) authorized
to act on the account, accompanied by
signature guarantee(s).

Trust A letter of instruction signed by the
Trustee(s) (as Trustee), with a signature
guarantee. (If the Trustee's name is not
registered on your account, also provide
a copy of the trust document, certified
within the last 60 days.)

If you do not fall into any of these registration categories (e.g., Executors,
Administrators, Conservators or Guardians) please call for further
instructions.

FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
________________________________________________________________________________

BY EXCHANGE-- You must meet the minimum investment
requirement of the other fund. You can
only exchange between accounts with
identical names, addresses, and taxpayer
identification numbers.

BY ELECTRONIC FUNDS You must have applied for the Telephone
TRANSFER (ACH) OR WIRE-- Transfer feature on your application.
Allow two days via ACH. Call before
10:00 a.m. for same day wire.
$15.00 fee for bank wires.
<PAGE>
TABLE OF CONTENTS
Expense Summary of Institutional Shares..............................2
Highlights...........................................................3
Financial Highlights.................................................4
Investment Objectives, Policies and Restrictions.....................7
Liquid Assets....................................................... 7
Municipal Assets.....................................................9
Performance.........................................................12
Distributions and Taxes.............................................13
Organization and Shares of the Funds................................14
Management and Fees.................................................15
Opening an Account..................................................16
Share Price.....................................................16
Purchasing Shares...............................................17
Shareholder Services................................................19
Redeeming Shares....................................................21

NO SALESMAN, OR OTHER PERSON, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS OR BY IMG FINANCIAL SERVICES, INC. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY IMG FINANCIAL SERVICES, INC., IN ANY STATE IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
MUNICIPAL ASSETS FUND 2203 GRAND AVENUE
DES MOINES, IA 50312-5338

________________________________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION SEPTEMBER 30, 1997
________________________________________________________________________________

This statement is not a Prospectus but should be read in conjunction
with the Fund's current Prospectuses (dated September 30, 1997). Please retain
this Statement for future reference. The Annual Report of the Fund for the
fiscal period ended June 30, 1997 is incorporated herewith by reference. To
obtain the Annual Report or any Prospectus please call IMG Financial Services,
Inc.

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

Table of Contents:

General Information and History.............................................2
Investment Objectives, Policies and Restrictions............................2
Purchases of Fund Shares....................................................5
Valuing the Fund's Shares...................................................7
Calculation of Yield........................................................8
Dividends...................................................................9
Taxation ...................................................................9
Management.................................................................11
Compensation Table.........................................................11
The Investment Management Agreement........................................12
Other Information..........................................................13
Federal Holidays..................................................13
Portfolio Transactions............................................13
Organization and Shares of the Fund...............................14
Reports to Shareholders...........................................14
Principal Shareholders and Control Persons........................14
Custodian, Transfer Agent and Dividend Paying Agent...............14
Legal Opinions....................................................15
Independent Auditors..............................................15
Appendix A.................................................................15
Appendix B.................................................................16

<PAGE>

GENERAL INFORMATION AND HISTORY

The Fund is an open-ended diversified management investment company organized as
an Iowa corporation in January 1983 under the name Iowa Tax Free Liquid Assets
Fund, Inc. On October 13, 1987, the Fund changed its name to IMG Tax Exempt
Liquid Assets Fund, Inc. On September 25, 1996, the Fund increased its
authorized capital from 200 million to five billion shares of Common Stock, par
value $.001 per share, changed its name to Municipal Assets Fund, and amended
the Articles of Incorporation to authorize the Board of Directors to issue one
or more additional classes of shares. Simultaneously, the Board approved the
redesignation of the existing shares as "Sweep Shares" and the issuance of
"Trust Shares" and "Institutional Shares".

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Municipal Assets Fund, ("Municipal Assets") seeks to provide maximum current
income, exempt from Federal income taxes, consistent with safety of principal
and maintenance of liquidity. In order to accomplish this goal, assets of the
Fund will be invested in the following types of securities maturing in 397 days
or less from time of investment (with certain exceptions):

(1) Tax-exempt debt obligations issued by state and municipal
governmental units and public authorities within the United States
and participation interests therein. With few exceptions, such
obligations will be non-rated and of limited marketability. However,
they will be backed by demand repurchase commitments of the issuers
thereof and irrevocable bank letters of credit or guarantees
(collectively referred to herein as "Liquidity Agreements"). The
Liquidity Agreements will permit the holder of the securities to
demand payment of the unpaid principal balance plus accrued interest
upon a specified number of days notice either from the issuer or by
drawing on an irrevocable bank letter of credit or guarantee. The
issuer of the security may have a corresponding right to prepay the
principal and accrued interest. In addition, all obligations with
maturities longer than one year from date of purchase will, by their
terms, bear rates of interest that are adjusted upward or downward no
less frequently than semiannually by means of a formula intended to
reflect market changes in interest rates.

The time period covered by Liquidity Agreements may be shorter than
the final maturity of the obligations covered thereby. At or before
the expiration of such Liquidity Agreements, the Fund will seek to
obtain either extensions thereof or replace them with new agreements
and if unable to do so the Fund will exercise its rights under
existing Liquidity Agreements to require that the obligations be
purchased. Thus, at no time will the Fund's investments include
obligations with maturities longer than one year unless the
obligations bear interest rates subject to periodic adjustment at
least semiannually and are subject to sale on seven calendar days
notice under existing Liquidity Agreements.

The only banks (the "Participating Banks") which will be permitted to
sell participations in fixed and variable rate tax-exempt debt
obligations of United States governmental units to the Fund (or to
provide irrevocable letters of credit or guarantees to back the
demand repurchase commitments of the issuers of such obligations)
will be United States banks which have entered into irrevocable
written agreements with respect thereto and have agreed to furnish to
the Fund whatever financial information may be requested for purposes
of evaluating the Participating Banks financial condition and
capacity to fulfill its obligations to the Fund and to perform such
servicing duties as may be mutually agreed to by the parties.

The Fund's investments may include participation interests, purchased
from Participating Banks, in fixed and variable rate tax-exempt debt
obligations (including industrial development bonds hereinafter
described) owned by the banks. A participation interest gives the
Fund an undivided interest in the tax-exempt obligation in the
proportion that the Fund's participation interest bears to the total
principal amount of the obligation and carries a demand repurchase
feature. Each participation is backed by an irrevocable letter of
credit or guarantee of the Participating Bank which issued the
participation. The Fund has the right to liquidate the participation,
in whole or in part, by drawing on the letter of credit or guarantee
of the Participating Bank which issued the participation. The Fund
has the right to liquidate the participation, in whole or in part, by
drawing on the letter of credit on demand, after seven calendar days'
notice, for all or any part of the principal amount of the Fund's
participation, plus accrued interest.

The Fund intends to exercise its rights under Liquidity Agreements
only: (1) upon default in the terms of the tax-exempt debt
obligations covered thereby; (2) to provide the Fund with needed
liquidity to cover redemptions of Fund shares; or (3) to insure that
the value of the Fund's investment portfolio does not vary materially
from the amortized cost thereof. Participating Banks have no
contractual obligation to offer participations to the Fund, and the
Fund is not obligated to purchase or resell any participations
offered or sold by Participating Banks. The Liquidity Agreements
govern the obligations of the parties as to securities or
participations actually purchased by the Fund.

The financial condition and investment and loan loss record of all
banks seeking to sell participations in fixed and variable rate
tax-exempt debt obligations to the Fund (or to provide letters of
credit or guarantees to back the demand repurchase commitments of the
issuers of such obligations) will be carefully evaluated by the
Advisor, based upon guidelines established by the Board of Directors,
prior to the execution of a Liquidity Agreement by a Participating
Bank and periodically thereafter. Purchased obligations will bear
interest at or above current market rates and the rates borne by
obligations with maturities longer than one year will be adjustable
at least semi-annually to reflect changes in market rates subsequent
to issuance of the securities. It is anticipated that the tax-exempt
debt obligations purchased or participated in by the Fund will be
those traditionally acquired by United States banks. These include
both general obligation and revenue bonds issued for a variety of
public purposes such as the construction of a wide range of
facilities including schools, streets, water and sewer works,
highways, bridges, and housing. Also included are bonds issued to
refund outstanding obligations, to obtain funds for general operating
purposes and to lend to other public institutions and facilities.
Certain types of industrial development bonds issued by public bodies
to finance the construction of industrial and commercial facilities
and equipment are also purchased. Revenue generating facilities such
as parking garages, airports, sports and convention complexes and
water supply, gas, electricity, and sewage treatment and disposal
systems are financed through issuance of tax-exempt debt obligations
as well.

Tax-exempt debt obligations are normally categorized as "general
obligation" or "revenue" issues. General obligations are secured by a
pledge of the full taxing power of the issuer while revenue
obligations are payable only from revenues generated by a facility or
facilities, a specified source of tax or other revenues or, in the
case of industrial development bonds, from lease rental or loan
payments made by a commercial or industrial user of the facilities.
Revenue obligations do not generally carry the pledge of the credit
of the issuer.

Short-term tax-exempt debt obligations usually mature in less than
two years, are typically general obligations of the issuer and most
often issued in anticipation of receipts to be realized from tax
collections or the sale of long-term bonds. Project Notes are issued
by local agencies under a program administered by the United States
Department of Housing and Urban Development and are secured by the
full faith and credit of the United States.

From time to time the Fund may invest 25 percent or more of its
assets in tax-exempt debt obligations, or participations therein,
sufficiently similar in character that an economic, business or
political development or change affecting one such security would
also affect the other securities. Examples might be securities whose
principal and interest payments are dependent upon revenues derived
from similar projects or whose issuers are located in the same state.
In addition, investments in tax-exempt debt obligations of issuers
may from time to time become concentrated within a single state, and
the Fund may also invest 25 percent or more of its assets in
industrial development bonds or participations therein.

For entering into a Liquidity Agreement, a Participating Bank will
retain a service and letter of credit fee in an amount equal to the
excess of the interest paid on the tax-exempt obligations above the
negotiated yield at which the instruments were purchased by the Fund.
Such fees may be adjusted if adjustments are made in the interest
rate paid on the tax-exempt obligations. Each Participating Bank
executing a Liquidity Agreement must be approved by the Board of
Directors of the Fund prior to, or at the next quarterly Board
meeting following, such executions. See "The Investment Management
Agreement" on page 10 for a discussion of the criteria to be used in
selecting Participating Banks. The Board of Directors will review all
Participating Banks and Liquidity Agreements quarterly in an effort
to assure continued liquidity and high quality in the Fund's
portfolio.

(2) High quality tax-exempt debt obligations issued by state and
municipal governments and by public authorities, including issues
sold as interim financing in anticipation of tax collections, revenue
receipts or bond sales, and tax-exempt Project Notes secured by the
full faith and credit of the United States. Such obligations will be
purchased only if backed by the full faith and credit of the United
States or rated Aaa, Aa, MIG-1, MIG-2 or Prime-1 by Moody's Investors
Service, Inc. ("Moody's") or AAA, AA, or A-1 by Standard & Poor's
Corporation ("S & P"). See "Appendix A" on page 13. Following
purchase of a rated obligation by the Fund the rating may be
withdrawn or reduced below the Fund's minimum requirement. This will
not require sale of the issue by the Fund but the Advisor will take
such changes into consideration in determining whether the issue
should be retained by the Fund. Non-rated securities may also be
purchased if determined by the Fund's Board of Directors to be of
comparable quality to the rated securities in which the Fund may
invest.

(3) Taxable obligations issued or guaranteed by agencies or
instrumentalities of the United States Government may be acquired
from time to time on a temporary basis for defensive purposes. Such
agencies and instrumentalities include, for example, Federal
Intermediate Credit Banks, Federal Home Loan Banks, Federal National
Mortgage Association and Farmers Home Administration. Such securities
will include those supported by the full faith and credit of the
United States Treasury or the right of the agency or instrumentality
to borrow from the Treasury as well as those supported only by the
credit of the issuing agency or instrumentality.

(4) Repurchase agreements involving securities in the immediately
foregoing category. A repurchase agreement involves the sale of such
securities to the Fund with the concurrent agreement of the seller to
repurchase them at a specified time and price, to yield an agreed
upon rate of interest. The Fund will enter into repurchase agreements
with brokers and banks. Thus, the Fund must initially rely upon the
credit of a particular broker or bank for completion of the
repurchase agreement. Such repurchase agreements are intended to be
fully collateralized, in an amount equal to at least the principal
amount of the transaction plus accrued interest earned thereon, by
the underlying Government or agency securities valued at their fair
market value each day. Although the Fund will normally have legal
title to and constructive possession of the collateral, it cannot
eliminate the risk of a default by a broker or bank which could
result in a loss to the Fund on the sale of the underlying securities
or delays in obtaining the collateral because of bankruptcy or
insolvency proceedings. Repurchase agreements may be deemed to be
loans under the Investment Company Act of 1940.

Assets of the Fund will consist of securities with maturities of 397 days or
less at date of purchase or, if maturing beyond 397 days, securities which are
backed by Liquidity Agreements and which have variable interest rates adjustable
at least semiannually. In determining whether particular variable rate
obligations backed by Liquidity Agreements may be purchased, the period
remaining until maturity will be deemed to be the longer of the demand notice
period required before the Fund is entitled to receive payment of the principal
amount or the period remaining until the next interest adjustment. For purposes
of Rule 2a-7 and the diversification requirements thereunder, the unconditional
commitments are limited in amounts necessary to keep any one bank from being
obligated to purchase more than five percent of the total assets held by the
Fund (determined as of the date of purchase). The dollar weighted average
maturity of Fund investments will be 90 days or less, determined in the same
manner. In attempting to provide its shareholders with the highest income
consistent with preservation of capital, the Fund will not necessarily purchase
investments bearing the highest interest rates available as such investments may
also involve a higher degree of risk.

The Fund does not intend to concentrate its investments in any one industry and
will not issue senior securities.

While investments by the Fund will be confined to high-quality financial
instruments which, in the case of tax-exempt obligations covered by Liquidity
Agreements, will be backed by demand repurchase commitments of the issuers
thereof and by irrevocable bank letters of credit or guarantees, the complete
elimination of risk is not possible. Under certain circumstances (see "Valuing
the Fund's Shares" and "Dividends"), the net asset value of the Fund's shares
could decrease. It is also possible a Participating Bank or an issuer will
default on the provisions of their Liquidity Agreements which could cause the
net asset value per share to decrease. In light of these various contingencies,
there can be no assurance the Fund will achieve its investment objectives.

New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial commitment to purchase. The terms of the commitment
establish the price to be paid and the yield of the securities to be purchased.
Such commitments will only occasionally be entered into by the Fund and only
with the intention of actually acquiring the securities. It is possible that
market yields at time of delivery may exceed the negotiated yield on when-issued
securities. The Fund will maintain a separate account consisting of cash or
liquid securities, valued at market or fair value daily, equal to its
outstanding when-issued commitments. Settlement on when-issued securities may be
made by using available cash, selling securities or, though not expected,
selling the when-issued securities themselves (which may have a value greater or
lesser than the Fund's commitment). Sale of securities to meet such commitments
may result in realization of capital gains or losses which are not exempt from
Federal income tax. When-issued commitments outstanding at any one time will not
exceed ten percent of the Fund's net assets.

Yields on tax-exempt debt obligations are dependent on a variety of factors
including general economic and money market conditions as well as supply and
demand factors within the market for tax-exempt obligations. Yields actually
realized by Fund investors will be reduced by the management fees, operating
expenses and fees received by Participating Banks and Participating
Organizations.

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

Without shareholder approval the Fund may not: (1) purchase any securities other
than those described under "Investment Objectives, Policies and Restrictions";
(2) invest more than 80 percent of its total assets in tax-exempt fixed and
variable rate debt obligations (or participation interests therein) issued by
state and local governmental units within the United States which are backed by
Liquidity Agreements; (3) invest more than five percent of its total assets in
tax-exempt obligations or participation interests therein subject to Liquidity
Agreements issued by any one Participating Bank; (4) invest with a view to
exercising control or influencing management; (5) invest more than ten percent
of the value of its total assets in securities of other investment companies,
except in connection with a merger, acquisition, consolidation or
reorganization, subject to Section 12(d)(1) of the Investment Company Act of
1940; (6) purchase or sell real estate, commodities or commodity contracts,
interests in oil, gas or other mineral exploration or development programs; (7)
purchase any securities on margin, except for the clearing of occasional
purchases or sales of portfolio securities; (8) make short sales of securities
or maintain a short position or write, purchase, or sell puts (excluding
Liquidity Agreements covering certain tax-exempt obligations purchased by the
Fund), calls, straddles, spreads or combinations thereof; (9) make loans to
other persons, provided the Fund may make investments and enter into repurchase
agreements as described under "Investment Objectives, Policies, and
Restrictions"; (10) borrow money, except to meet extraordinary or emergency
needs for funds, and then only from banks in amounts not exceeding ten percent
of its total assets, nor purchase securities at any time borrowings exceed five
percent of its total assets; (11) mortgage, pledge, hypothecate, or in any
manner transfer, as security for indebtedness, any securities owned by the Fund
except as may be necessary in connection with borrowings outlined in (10) above
and then securities mortgaged, hypothecated or pledged may not exceed five
percent of the Fund's total assets taken at market value; (12) invest in
securities with legal or contractual restrictions on resale (except for
tax-exempt debt obligations subject to Liquidity Agreements) or for which no
ready market exists; (13) enter into a Liquidity Agreement with any bank unless
such bank is a United States bank which has a record, together with its
predecessors, of at least five years of continuous operation; (14) act as an
underwriter of securities; (15) enter into repurchase agreements if, as a result
thereof, more than five percent of the Fund's total assets (taken at market
value at the time of such investment) would be subject to repurchase agreements
maturing in more than seven calendar days; and (16) enter into Liquidity
Agreements with any Participating Bank if five percent or more of the securities
of such Bank are owned by the Advisor or by directors and officers of the Fund
or the Advisor, or if any director or officer of the Fund or the Advisor owns
more than 1/2 percent of the voting securities of such Participating Bank.

The Fund intends to invest at least 25 percent of its total assets in tax-exempt
debt obligations or participation interests therein subject to Liquidity
Agreements, except when such investments are either not available in sufficient
quantity or do not carry yields competitive with alternative investments.

PURCHASES OF FUND SHARES

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

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

An investor will become a shareholder when the net asset value applicable to his
order is determined. Net asset value of the Fund's shares is determined twice
each day at 11:00 a.m. Central time and at the close of the New York Stock
Exchange (normally 3:00 p.m. Central Time). If a purchase order is received and
accepted by the fund by 10:00 a.m. Central Time and Federal funds are available
to the Fund before 3:00 p.m. Central Time, an order will be effective the same
day, the investor will become a shareholder of record that day, and shares will
commence earning dividends the day the order becomes effective. If a purchase
order is received and accepted by the Fund after 10:00 a.m. Central Time but
before 3:00 p.m. Central Time and Federal funds are available 3:00 p.m. Central
Time the shares will not commence earning dividends until the day after the
order is received.

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

"Trust Shares" may be purchased only by financial institutions acting on their
own behalf or on behalf of certain customers' accounts. "Institutional Shares"
may be purchased by individual and institutional customers directly from the
Fund's Distributor.

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

No director or officer of the Fund, or the Advisor has any direct or indirect
financial interest in the Plan. The Fund's Plan results in an efficient system
of customer investment in the Fund thereby potentially increasing the Fund's
ability to attract shareholders. The services rendered by the Participating
Organizations with respect to customer transactions (including automatic sweep
investment programs) are more efficient and direct than that which the Fund
might otherwise provide. The Fund believes that the Plan and agreements with the
Participating Organizations actually reduce expenses for shareholder account
reporting thereby reducing costs of the Funds and increasing yields. For the
year ended June 30, 1997, the Fund paid out a total of $50,758 under the Plan
and all payments were made to Participating Organizations. As of August 31,
1997, there were 27 Participating Organizations under the Plan.

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

On August 13, 1996, the Fund adopted a Shareholder Services Plan ("Services
Plan") with respect to Trust Shares. Pursuant to the Plan, the Fund may enter
into Servicing Agreements with Participating Organizations providing that those
Participating Organizations will render certain shareholder support services to
their customers who are record or beneficial owners of Trust Shares. Services
provided pursuant to the Service Plan may include some or all of the following:
(i) processing dividend and distribution payments from the Fund on behalf of
customers; (ii) providing information periodically to customers showing their
position in Trust Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the Participating
Organizations (v) providing sub-accounting with respect to shares owned of
record or beneficially by customers or the information needed for
sub-accounting; (vi) forwarding shareholder communications (such as proxies,
shareholder reports, annual and semi-annual financial reports, and dividend,
distribution and tax notices) to customers; (vii) forwarding to customers proxy
statements and proxies containing any proposals regarding the Services Plan;
(viii) aggregating and processing purchase, redemption, and exchange requests
from customers and placing net purchase and redemption orders with the Fund's
Distributor; (ix) providing customers with a service that invests the assets of
their accounts in Trust Shares pursuant to specific or pre-authorized
instructions; (x) maintaining records relating to each customer's share
transactions; or (xi) other similar services if requested by the Fund and
permitted by law. In addition, Participating Organizations may also provide
dedicated facilities and equipment in various local locations to serve the needs
of investors, including walk-in facilities, 800 numbers, and communication
systems to handle shareholder inquiries, and in connection with such facilities,
provide on-site management personnel and monitoring services for their customers
who have invested in Trust Shares, including the operation of telephone lines
for daily quotations of return information.

The Services Plan is an administrative support services plan. Pursuant to the
Plan, the Fund's arrangement with Participating Organizations must be approved
annually by a majority of the Fund's Directors, including a majority of the
Directors who are not "interested persons" of the Fund as defined in the 1940
Act and have no direct or indirect financial interest in such arrangements.

Under the terms of the Services Plan, the Fund may pay a fee to Participating
Organizations equal to annual rate of 0.25 percent of the average net assets of
Trust Shares.

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

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

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

VALUING THE FUND'S SHARES

The net asset value of the Fund's shares is determined twice each day, at 11:00
a.m. Central Time and at the close of the New York Stock Exchange (normally 3:00
p.m. Central Time). The Fund is required to compute its net asset value on each
day (except days on which no purchase or redemption orders are received) on
which the New York Stock Exchange is open for trading or during which there is a
sufficient degree of trading in its portfolio securities that its net asset
value might be materially affected. Net asset value is computed by adding the
value of all securities and other assets (including accrued interest),
subtracting liabilities (including dividends payable) and dividing by the number
of shares outstanding.

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

Accordingly, the Fund's investments in taxable and tax-exempt debt obligations
rated by a recognized bond rating agency and regularly traded in the secondary
market, and non-rated fixed and variable rate tax-exempt obligations and
participation interests therein, not regularly traded in the secondary market,
but subject to Liquidity Agreements, will be valued at amortized cost. Other
assets are valued at a fair value determined in good faith by the Board of
Directors of the Fund.

CALCULATION OF YIELD

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

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

Current yields and effective yields for the seven-day period ended June 30, 1997
were as follows:

CURRENT SEVEN-DAY
YIELD YIELD
----- -----
Sweep Shares 3.35% 3.41%
Trust Shares 3.60% 3.66%
Institutional Shares 3.85% 3.92%

Weighted Average life to maturity of the portfolio on June 30, 1997 was 52.63
days.

The Prospectus may be in use for several months and accordingly, it can be
expected that yields will fluctuate substantially from the example shown above.

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

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

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

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

DIVIDENDS

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

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

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

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

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

TAXATION

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

Dividends derived from interest on tax-exempt debt obligations owned by the Fund
are intended to constitute "exempt-interest dividends" which are generally not
Federally taxable to Fund shareholders. Dividends derived from other interest
and the realization of capital gains are taxable to shareholders whether or not
reinvested. The Fund will elect to qualify as a "regulated investment company,"
and will distribute annually substantially all of its tax-exempt interest and
other income, including realized capital gains, and will thus not be liable for
Federal income taxes. Fund expenses will be allocated between tax-exempt and
taxable income in the same proportion as the Fund's tax-exempt income bears to
the total of such exempt income and its gross income (excluding from gross
income the excess of capital gains over capital losses).

The Fund has received an opinion from Cline, Williams, Wright, Johnson &
Oldfather to the effect that the Fund will be deemed the "owner", for federal
income tax purposes, of fixed and variable rate tax-exempt obligations purchased
by the Fund which are subject to Liquidity Agreements, provided that such
obligations are purchased in arm's-length transactions, that the Fund is not
obligated in any way to resell such obligations to any party, and that the
Liquidity Agreements are obtained from a party normally in the business of
making such commitments for a separately bargained-for arm's-length
consideration. The Fund has represented that it intends to purchase such fixed
and variable rate obligations in accordance with the criteria described in the
opinion of its counsel.

The Fund has received an additional opinion from Cline, Williams, Wright,
Johnson & Oldfather to the effect that the Fund should be deemed the "owner,"
for federal income tax purposes, of participation interests purchased by the
Fund in fixed and variable rate tax-exempt obligations, which participation
interests are subject to Liquidity Agreements, provided that such participation
interests are purchased in arm's-length transactions, that the Fund is not
obligated in any way to resell such participation interests to the seller to any
third party and that the Liquidity Agreements are obtained from a party normally
in the business of making such commitments for a separately bargained-for
arm's-length consideration. However, counsel has noted that the Internal Revenue
Service has not issued a published or private ruling as to the ownership, for
Federal income tax purposes, of such participation interests, and has further
noted that, under Rev. Proc. 83-55 promulgated in August 1983, the Internal
Revenue Service has indicated that it will no longer issue private rulings as to
the ownership of tax-exempt obligations. Thus, it is possible that the Internal
Revenue Service could reach a conclusion different from that reached by counsel.
In that event, Fund shareholders could be taxed on dividends paid on Fund shares
to the extent such dividends resulted from receipt of income by the Fund on
tax-exempt obligations not deemed to be "owned" by the Fund. The Fund intends to
purchase participation interests in fixed and variable rate tax-exempt
obligations in accordance with the criteria described in the opinion of its
counsel.

In the event that the Internal Revenue Service reached a conclusion different
from that reached by counsel for the Fund, the Fund might need to reevaluate its
investment policies and seek shareholder approval of any necessary changes.

The Fund may realize short-term or long-term capital gains or losses from its
portfolio transactions. In the event the Fund creates additional portfolios in
the future, the income, capital gains and losses of each portfolio will be
treated separately for Federal income tax purposes. Short-term capital gains
will be taxable to shareholders as ordinary income when they are distributed.
Any net capital gains (the excess of its net realized long-term capital gain
over its net realized short-term capital loss) will be distributed annually to
the Fund's shareholders. The net income of a portfolio may not be offset by
losses in other portfolios. Distributions will be designated as a capital gain
dividend in a written notice mailed to the Fund's shareholders after the close
of the taxable year.

Promptly after the end of each year, each shareholder will receive a statement
setting forth the dollar amount of income exempt from Federal tax and the dollar
amount, if any, subject to Federal tax. Daily dividends derived from taxable
interest will be designated as taxable in the same percentage as the actual
taxable income earned bears to total income earned on that day.

In accordance with the Internal Revenue Code, interest on indebtedness incurred,
or continued, to purchase or carry shares of the Fund is not deductible.
Dividends may also be subject to state and local taxation. The Fund may not be a
suitable investment for any person who is a "principal user" or "related
person," as defined in Section 144 of the Internal Revenue Code, of certain
facilities if qualified small issue bonds used to finance such facilities are
owned by the Fund.

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

MANAGEMENT

OFFICERS AND DIRECTORS OF THE FUND. The following table sets forth certain
information with respect to the officers and directors of the Funds:

Robert F. Galligan, age 62 Business Administration Department Chairman,
Director Associate Professor, Grand View College;
Director, Liquid Assets Fund.

Chad L. Hensley, age 73 Retired President and CEO, Preferred Risk
Director Mutual Insurance Company; Director,
Liquid Assets Fund.

Fred Lorber, age 73 Chairman of Board, Lortex Inc., a
Chairman and Director manufacturer of textiles; Chairman and
Director, Liquid Assets Fund.

Darwin T. Lynner, Jr., age 53 President, Darwin T. Lynner, Co., Inc., a
Director property management company; Director,
Liquid Assets Fund.

Mark A. McClurg*, age 44 Vice President, Secretary and Senior Managing
Treasurer and Director Director of Investors Management Group and
IMG Financial Services, Inc.; Treasurer and
Director, Liquid Assets Fund.

David W. Miles*, age 40 President, Treasurer and Senior Managing
President and Director Director of Investors Management Group, and
IMG Financial Services, Inc.; President and
Director, Liquid Assets Fund.

Richard A. Miller, age 57 Vice President & General Counsel, Farmers
Director Casualty Company Mutual, Director,Liquid
Assets Fund.

Ruth L. Prochaska*, age 45 Controller/Compliance Officer of Investors
Secretary Management Group, and IMG Financial
Services, Inc.; Secretary, Liquid Assets Fund.

William E. Timmons, age 73 Partner in Patterson, Lorentzen, Duffield,
Director Timmons, Irish & Becker; Director, Liquid
Assets Fund.

Steven E. Zumbach, age 47 Attorney at Belin, Harris, Lamson, McCormick;
Director Director, Liquid Assets Fund.

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

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

The Fund pays a fee of $250 per Board meeting and $100 per committee meeting to
directors who are not interested persons of the Advisor. The directors waived
their fees for one board meeting during the fiscal year ended June 30, 1997.
Under the Management Agreement other remuneration, if any, of officers and
directors is paid by the Advisor.

COMPENSATION TABLE

Aggregate Total Compensation From
Name of Compensation Fund and Fund
Person, Position From Fund Complex Paid to Director

Robert F. Galligan $ 750 $ 2,950
Director

Chad L. Hensley 750 2,950
Director

Fred Lorber 500 2,150
Director

Darwin T. Lynner, Jr. 750 2,950
Director

Mark A. McClurg 0 0
Treasurer and Director

David W. Miles 0 0
President and Director

Richard A. Miller 750 2,950
Director

William E. Timmons 750 2,950
Director

Steven E. Zumbach 750 2,950
Director

MANAGEMENT OF THE ADVISOR. David W. Miles and Mark A. McClurg, are control
persons of the Advisor and each beneficially own more than ten percent of the
outstanding voting securities of the Advisor. Senior Managing Directors of
Investors Management Group, are David W. Miles and Mark A. McClurg. They intend
to devote substantially all their time to the operation of the Advisor.

THE INVESTMENT MANAGEMENT AGREEMENT

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

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

Net Assets Annual Rate

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

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

From time to time, the Advisor may voluntarily waive all or a portion of the
management fee and/or absorb certain expenses of the Fund without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for
the Fund and increasing the Funds overall yield to investors at the time any
such amounts are waived and/or absorbed.

For the period September 1, 1996 through January 15, 1997, the Advisor
voluntarily waived all of its advisory fees for the Fund and the Distributor
waived 0.25 percent of the 12b-1 fees and reimbursed certain expenses of the
Fund. The Advisor and the Distributor terminated the waiver and reimbursement on
January 15, 1997.

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

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

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

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

The Advisor has also agreed to reimburse the Fund, up to the amount of the
advisory fees paid to the Advisor, to the extent that the total annual expenses
of the Fund, exclusive of all taxes, interest, brokers' commissions and other
related charges, but including fees paid to the Advisor, exceed the most
restrictive limits prescribed by any state in which the Fund's shares may
eventually be offered for sale. The Fund believes that it presently is not
subject to any such restrictions. The Fund paid $52,311, $43,217, and $51,871 in
management fees to the Advisor in fiscal 1995, 1996, and 1997, respectively.

The Management Agreement approved by the sole shareholder of the Fund on July
14, 1983, for an initial term expiring September 30, 1984, will continue in
effect as long as it is approved annually by a majority of those directors who
are not parties to the Management Agreement or "interested persons" of such
parties and by either the board of directors of the Fund or a majority of the
outstanding voting securities of the Fund. The Management Agreement for the Fund
which was last approved by the Fund's directors, as described above, on August
13, 1996, may be terminated by either party without penalty on 60 days' written
notice and will automatically terminate in the event of its assignment.

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

OTHER INFORMATION

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

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

ORGANIZATION AND SHARES OF THE FUND. The Fund is an open-ended diversified
management investment company organized as an Iowa corporation in January 1983,
under the name Iowa Tax Free Liquid Assets Fund, Inc. On October 13, 1987, the
Fund changed its name to IMG Tax Exempt Liquid Assets Fund, Inc. On September
25, 1996, the Fund increased its authorized capital from 200 million to 5
billion shares of Common Stock, par value $.001 per share, changed its name to
Municipal Assets Fund, and amended the Articles of Incorporation to authorize
the Board of Directors to issue one or more additional classes of shares.
Simultaneously, the Board approved the redesignation of the existing shares as
"Sweep Shares" and the issuance of "Trust Shares" and "Institutional Shares".

Sweep Shares of the Fund are offered to individual and institutional investors
(acting on their own behalf or on the behalf of their customers). Sweep Shares
are normally offered through financial institutions providing automatic "sweep"
investment programs to their customers, and bear the costs of the Fund's
Distribution Plan (See "Purchases of Fund Shares" above.)

Trust Shares are offered to individual and institutional investors (acting on
their own behalf or on the behalf of their customers). Trust Shares are normally
offered through trust organizations or others providing shareholder services
such as establishing and maintaining accounts and records for their customers
who invest in such Shares, assisting customers in processing purchase, exchange
and redemption requests, and responding to customers' inquiries concerning their
investments. Trust Shares also bear the costs of the Fund's Administrative
Services Plan (See "Purchases of Fund Shares" above.)

Institutional Shares of the Fund are offered to individual and institutional
investors directly by the Fund's Distributor.

All Shares bear their pro-rata portion of all operating expenses paid by the
Fund, except that Sweep Shares bear the full costs of the Distribution Plan and
Trust Shares bear the full costs of the Administrative Services Plan.
Institutional Shares bear no distribution and/or Administrative Services fees.

Shareholders are entitled to one vote for each full Share held and proportionate
fractional votes for fractional Shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement and
investment objective and fundamental policies. Only holders of Sweep Shares will
vote on matters relating to the Distribution Plan for Sweep Shares and only
holders of Trust Shares will vote on matters pertaining to the Administrative
Services Plan for Trust Shares.

Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of the Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When-issued for payment as described in the Prospectus, Shares will
be fully paid and nonassessable.

REPORTS TO SHAREHOLDERS. Semiannual and annual reports will include financial
statements which, in the case of the annual report, will be reported upon by the
Fund's independent auditors, KPMG Peat Marwick LLP. The Annual Report is
incorporated herein by reference into the Fund's Statement of Additional
Information and is available upon request without charge by calling the number
on the cover page of this Statement of Additional Information.

PRINCIPAL SHAREHOLDERS AND CONTROL PERSONS. As of August 31, 1997, AMCORE Bank,
N.A., Rockford, Illinois, and Microtronics, 8 N. Washington St., Iola, Kansas
66749, directly or indirectly owned approximately 6,784,272 shares (22.22
percent) and 1,758,569 shares (5.74 percent), respectively, of the outstanding
Fund shares. To the knowledge of the Fund, no other shareholders owned
beneficially as of the record date five percent or more of the Fund's
outstanding shares and the Fund's officers and directors as a group owned less
than 1 percent of the Fund's shares.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT. The Fund's Custodian holds
cash for the purchase and redemption of the Fund's shares. The Custodian will
hold the Fund's portfolio investments which may, in part, be deposited in
central depository systems as permitted by Federal law. AMCORE Investment Group,
N.A., Rockford, Illinois, serves as the Fund's custodian. The Fund has also
contracted with IMG to provide certain accounting services including transfer of
shares, disbursement of dividends and the maintenance of shareholder accounting
records.

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

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

<PAGE>

APPENDIX A

DESCRIPTION OF BOND RATINGS. The Fund invests in tax-exempt debt
obligations, including both bonds and notes, rated in the top two grades by
Moody's and S & P. These ratings have to do with the financial strength of the
issuer of the obligations at the time they are first issued. The ratings do not
reflect opinions regarding the market value or the marketability of the
obligations. Both could be affected by a change in rating, however. Moody's four
highest ratings are Aaa, Aa, A and Baa. S & P's are AAA, AA, A and BBB.

Bonds rated Aaa or AAA are judged to be of the best quality. Interest
and principal are secure with market prices responsive to changes in interest
rates.

Bonds rated Aa or AA are also judged to be of high quality although
interest and principal do not enjoy the margin of safety that would be true of
bonds rated Aaa or AAA. Long-term risks would be somewhat greater also, with
price fluctuations primarily the result of interest rate changes.

Bonds rated A by the two rating agencies are considered to be of upper
medium grade. While interest and principal protection is judged to be adequate,
it could be susceptible to future impairment. While the price of such
obligations will be affected principally by interest rate fluctuations, economic
conditions will also have an impact.

Bonds rated Baa or BBB are considered medium grade obligations.
Interest and principal are adequately secure over the short-term but the
obligations may be somewhat speculative. Changing economic conditions may also
impact the security of the indebtedness resulting in market prices being more
affected by changes therein than by interest rate fluctuations.

TAX-EXEMPT NOTE AND COMMERCIAL PAPER RATINGS. Ratings for tax-exempt
notes are designated "MIG" (Moody's Investment Grade) by Moody's. Notes rated
MIG-1 are the highest quality and enjoy excellent protection by virtue of
established cash flows available for debt service or ready access to the market
for refinancing, or both.

Notes rated MIG-2 are high quality with ample cash flow protection
although less than available to obligations bearing the top rating.

Notes rated MIG-3 are of good quality as measured by the relevant
factors associated with credit-worthiness. However, the unquestioned financial
strength ascribed to issues in the two preceding rating categories is lacking
and ready access to the market for refinancing is less well established.

Tax-exempt commercial paper rated Prime-1 (P-1) by Moody's is supported
by the issuer's superior capacity to repay, while commercial paper rated Prime-2
(P-2) is backed by strong repayment capacity.

S & P's commercial rating A-1 indicates the obligations enjoy extremely
strong credit backing in terms of the issuer's capacity to repay, while an A-2
rating indicates strong issuer repayment capacity exists.

<PAGE>
APPENDIX B

TAX-EXEMPT VS. TAXABLE YIELDS. Set forth below is a table which may be used to
compare equivalent taxable yields to tax-exempt rates of return based upon the
investor's level of taxable income. The rates shown are those in effect under
the Internal Revenue Code as of January 1, 1997 through December 31, 1997.
<TABLE>
<CAPTION>

Marginal The following TAX-EXEMPT INTEREST RATES:
TAXABLE INCOME* Single Income 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
Joint Return Return Tax
Bracket Equal the TAXABLE INTEREST RATES shown below:

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,450-$ 45,450 $ 2,650-$ 26,150 15.0% 4.12% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65%
45,450- 92,850 26,150- 55,500 28.0% 4.86% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03%
92,850- 156,000 55,500- 126,150 31.0% 5.07% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42%
156,000- 275,300 126,150- 272,550 36.0% 5.47% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16%
Over 275,300 Over 272,550 39.6% 5.79% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76%
Maximum Corporate Rate 34.0% 5.30% 6.06% 6.82% 7.58% 8.33% 9.09% 9.85%
</TABLE>

*Net amount subject to Federal income tax after deductions and exemptions.
Assumes alternative minimum tax is not applicable and receipt of tax-exempt
interest does not cause any portion of social security benefits received to
become taxable to the taxpayer. State tax considerations are excluded.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Des Moines, State of Iowa, on the 30th day of
September, 1997.

MUNICIPAL ASSETS FUNDS, INC.

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

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

Signature Title

___/s/ David W. Miles__________ President, Principal Executive Officer,
David W. Miles and Director
________________________________________
|
___/s/ Fred Lorber_____________ Chairman and Director |
Fred Lorber |
|
___/s/ Mark A. McClurg_________ Principal Financial and Accounting |
Mark A. McClurg Officer, Treasurer and Director |
|
___/s/ James W. Paulsen________ Vice President and Director |
James W. Paulsen ________________________|
|
___/s/ Robert F. Galligan______ Director | ___/s/ David W. Miles___
Robert F. Galligan > by David W. Miles
| Attorney in Fact
___/s/ Chad L. Hensley_________ Director | September 29, 1997
Chad L. Hensley |
|
___/s/ Darwin T. Lynner, Jr.___ Director |
Darwin T. Lynner, Jr. |
|
___/s/ Richard A. Miller_______ Director |
Richard A. Miller |
|
___/s/ William E. Timmons______ Director |
William E. Timmons |
|
___/s/ Steven E. Zumbach_______ Director |
Steven E. Zumbach |
________________|
<PAGE>

PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

(1) Included in Part A:

Financial Highlights for the Years Ended
June 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990,
1989, and 1988 (audited)

(2) Incorporated by reference in Part B:

Independent Auditors' Report dated July 25, 1997

Statement of Net Assets, June 30, 1997

Statement of Operations for the Year Ended June 30, 1997

Statements of Changes in Net Assets for the Two Years Ended
June 30, 1997 and 1996

(3) Included in Part C:

Consent of KPMG Peat Marwick LLP.

(b) Exhibits

Exhibit No. Description
----------- -----------

*1. (a) Articles of Incorporation, incorporated by
reference to the Fund's Pre-Effective Amendment
No. 2, filed August 31, 1983.

*1. (b) Amendment to the Articles of Incorporation,
incorporated by reference to the Fund's
Post-Effective Amendment No. 6, filed
October 22, 1987.

*1. (c) Amendment to the Articles of Incorporation,
incorporated by reference to the Fund's
Post-Effective Amendment No. 7, filed
October 13, 1988.

*1. (d) Form of Amendment to the Articles of Incorporation,
incorporated by reference to the Fund's
Post-Effective Amendment No. 17, filed
October 15, 1996.

*2. Bylaws, incorporated by reference to the
Fund's Pre-Effective Amendment No. 2,
filed August 31, 1983.

*4. Specimen Common Stock Certificate, incorporated
by reference to the Fund's Pre-Effective
Amendment No. 2, filed August 31, 1983.

*5. Management and Investment Advisory Agreement,
incorporated by reference to the Fund's
Pre-Effective Amendment No. 2, filed
August 31, 1983.

*6. Underwriting Agreement, incorporated by
reference to the Fund's Pre-Effective
Amendment No. 2, filed August 31, 1983.

*8. (a) Custodian Agreement with Mercantile Bank of
Western Iowa, Des Moines, incorporated by
reference to the Fund's Registration Statement,
filed January 28, 1983.

*8. (b) Check Redemption Agreement, incorporated by
reference to the Fund's Pre-Effective Amendment
No. 2, filed August 31, 1983.

*9. (a) Form of Master Liquidity and Servicing Agreement,
incorporated by reference to the Fund's
Pre-Effective Amendment No. 2, filed
August 31, 1983.

*9. (b) Transfer Agent and Administrative Services
Agreement, incorporated by reference to the
Fund's Post-Effective Amendment No. 3, filed
October 1, 1984.

*9. (f) Shareholder Services Plan, incorporated by
reference to the Fund's Post-Effective
Amendment No. 17, filed October 15, 1996.

*9. (g) Shareholder Services Agreement, incorporated by
reference to the Fund's Post-Effective
Amendment No. 17, filed October 15, 1996.

*10. Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather, incorporated by reference to
the Fund's Post-Effective Amendment No. 3,
filed October 1, 1984.

*13. Representations of Initial Shareholder,
incorporated by reference to the Fund's
Registration Statement, filed January 28, 1983.

*15.(a) Form of Rule 12b-1 Plan as amended, incorporated
by reference to the Fund's Post-Effective
Amendment No. 10, filed November 8, 1990.

*15.(b) Form of Agreements, incorporated by reference
to the Fund's Post-Effective Amendment No. 6,
filed October 22, 1987.

*15. (c) Form of Amended Rule 12b-1 Plan, incorporated by
reference to the Fund's Post-Effective
Amendment No. 17, filed October 15, 1996.

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

17. Financial Data Schedule

*18. Rule 18f(3) Plan, incorporated by
reference to the Fund's Post-Effective
Amendment No. 17, filed October 15, 1996.

- -----------------------------------
*All previously filed as indicated.

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None

Item 26. NUMBER OF HOLDERS OF SECURITIES.

Title of Class Number of Record Holders
-------------- ------------------------

Sweep Shares 44 as of August 31, 1997
Trust Shares 2 as of August 31, 1997
Institutional Shares 3 as of August 31, 1997

Item 27. INDEMNIFICATION.

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

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

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.

Principal Occupations
Name Positions with Advisor Present and for Past 2 Years)
---- ---------------------- ----------------------------

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

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

Item 29. PRINCIPAL UNDERWRITERS.

(a) Liquid Assets Funds, Inc.

(b)

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

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

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

Item 30. LOCATION OF ACCOUNTS AND RECORDS.

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

Item 31. MANAGEMENT SERVICES.

Not applicable.

Item 32. UNDERTAKINGS.

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

To the Directors and Shareholders of
Municipal Assets Fund:

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

KPMG Peat Marwick LLP

Des Moines, Iowa
September ___, 1997

<PAGE>

MUNICIPAL ASSETS FUNDS, INC.

EXHIBIT VOLUME

POST-EFFECTIVE AMENDMENT NUMBER 19

FORM N-1A REGISTRATION STATEMENT

<PAGE>
MUNICIPAL ASSETS FUNDS, INC.

EXHIBIT INDEX

Exhibit No. Description Page
- ----------- ----------- ----

*1. (a) Articles of Incorporation, incorporated by reference
to the Fund's Pre-Effective Amendment, filed
August 31, 1983.............................................

*1. (b) Amendment to the Articles of Incorporation, incorporated
by reference to the Fund's Post-Effective Amendment
No. 6, filed October 22, 1987...............................

*1. (c) Amendment to the Articles of Incorporation, incorporated
by reference to the Fund's Post-Effective Amendment
No. 7, filed October 13, 1988...............................

*1. (e) Form of Amendment to Articles of Incorporation,
incorporated by reference to the Fund's Post-Effective
Amendment No. 17, filed October 15, 1996....................

*2. Bylaws, incorporated by reference to the Fund's
Pre-Effective Amendment No. 2, filed August 31, 1983........

*4. Specimen Common Stock Certificate, incorporated by
reference to the Fund's Pre-Effective Amendment No. 2,
filed August 31, 1983.......................................

*5. Management and Investment Advisory Agreement, incorporated
by reference to the Fund's Pre-Effective Amendment
No. 2, filed August 31, 1983................................

*6. Underwriting Agreement, incorporated by reference to the
Fund's Pre-Effective Amendment No. 2, filed
August 31, 1983.............................................

*8. (a) Custodian Agreement with Mercantile Bank of Western Iowa,
Des Moines, incorporated by reference to the Fund's
Registration Statement, filed January 28, 1983..............

*8. (b) Check Redemption Agreement, incorporated by reference to
the Fund's Pre-Effective Amendment No. 2, filed
August 31, 1983.............................................

*9. (a) Form of Master Liquidity and Servicing Agreement,
incorporated by reference to the Fund's Pre-Effective
Amendment No. 2, filed August 31, 1983......................

*9. (b) Transfer Agent and Administrative Services Agreement,
incorporated by reference to the Fund's Post-Effective
Amendment No. 3, filed October 1, 1984......................

*9. (f) Shareholder Services Plan, incorporated by reference to
the Fund's Post-Effective Amendment No. 17, filed
October 15, 1996. ..........................................

*9. (g) Shareholder Services Agreement, incorporated by reference
to the Fund's Post-Effective Amendment No. 17, filed
October 15, 1996. ..........................................

*10. Consent of Messrs. Cline, Williams, Wright, Johnson &
Oldfather, incorporated by reference to the Fund's
Post-Effective Amendment No. 3, filed October 1, 1984.......

*13. Representations of Initial Shareholder, incorporated by
reference to the Fund's Registration Statement, filed
January 28, 1983............................................

*15. (a) Form of Rule 12b-1 Plan as Amended, incorporated by
reference to the Fund's Post-Effective Amendment No. 10,
filed November 8, 1990.....................................

*15. (b) Form of Agreements, incorporated by refernce to the Fund's
Post-Effective Amendment No. 6, filed October 22, 1987......

*15. (c) Form of Amended Rule 12b-1 Plan, incorporated by refernce
to the Fund's Post-Effective Amendment No. 17, filed
October 15, 1996............................................

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

17. Financial Data Schedule.....................................

*18. Rule 18f(3) Plan, incorporated by reference to the Fund's
Post-Effective Amendment No. 17, filed October 15, 1996.....

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

EXHIBIT 16

SCHEDULE OF CALCULATIONS OF YIELD QUOTATIONS
<PAGE>
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
MUNICIPAL ASSETS FUND
SWEEP SHARES

ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE

23-Jun-97 $ 9,341.99 $412.80 4,689,895.68
24-Jun-97 $ 9,743.49 $401.50 4,552,362.36 0.0000881960
25-Jun-97 $10,163.82 $420.33 4,677,300.08 0.0000898659
26-Jun-97 $10,596.40 $432.58 4,674,029.10 0.0000925497
27-Jun-97 $11,038.55 $442.15 4,683,110.98 0.0000944137
28-Jun-97 $11,480.70 $442.15 4,683,110.98 0.0000944137
29-Jun-97 $11,922.85 $442.15 4,683,110.98 0.0000944137
30-Jun-97 $12,339.08 $416.23 4,663,694.11 0.0000892490

INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED JUNE 30 0.0006431018

BASE PERIOD RETURN = 0.000643102
(CHANGE/BEGINNING ACCOUNT VALUE)

CURRENT YIELD = 3.35%
BASE PERIOD RETURN * (365/7) 0.033533166

EFFECTIVE YIELD = 0.034053381
((1+CURRENT YIELD/12)^12)-1 3.41%
<PAGE>
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
MUNICIPAL ASSETS FUND
TRUST SHARES

ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE

23-Jun-97 $54,372.32 $2,521.94 26,583,680.65
24-Jun-97 $56,801.62 $2,429.30 25,559,760.15 0.0000950439
25-Jun-97 $59,336.75 $2,535.13 26,212,141.94 0.0000967159
26-Jun-97 $61,893.19 $2,556.44 25,719,486.60 0.0000993970
27-Jun-97 $64,441.75 $2,548.56 25,167,492.95 0.0001012640
28-Jun-97 $66,990.31 $2,548.56 25,167,492.95 0.0001012640
29-Jun-97 $69,538.87 $2,548.56 25,167,492.95 0.0001012640
30-Jun-97 $71,944.75 $2,405.88 25,036,386.30 0.0000960953

INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED JUNE 30 0.0006910440

BASE PERIOD RETURN = 0.000691044
(CHANGE/BEGINNING ACCOUNT VALUE)

CURRENT YIELD = 3.60%
BASE PERIOD RETURN * (365/7) 0.036033010

EFFECTIVE YIELD = 0.036634096
((1+CURRENT YIELD/12)^12)-1 3.66%
<PAGE>
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
MUNICIPAL ASSETS FUND
INSTITUTIONAL SHARES

ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE

23-Jun-97 $30.02 $0.73 7,210.42
24-Jun-97 $30.75 $0.73 7,210.42 0.0001012424
25-Jun-97 $31.50 $0.75 7,210.42 0.0001040161
26-Jun-97 $32.27 $0.77 7,210.42 0.0001067899
27-Jun-97 $33.05 $0.78 7,210.42 0.0001081768
28-Jun-97 $33.83 $0.78 7,210.42 0.0001081768
29-Jun-97 $34.61 $0.78 7,210.42 0.0001081768
30-Jun-97 $35.35 $0.74 7,210.42 0.0001026293

INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED JUNE 30 0.0007392080

BASE PERIOD RETURN = 0.000739208
(CHANGE/BEGINNING ACCOUNT VALUE)

CURRENT YIELD = 3.85%
BASE PERIOD RETURN * (365/7) 0.038544416

EFFECTIVE YIELD = 0.039232693
((1+CURRENT YIELD/12)^12)-1 3.92%

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT FOR THE PERIOD JULY 1, 1996 TO JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT PREVIOUSLY FILED
WITH THE COMMISSION ON OR ABOUT AUGUST 11, 1997 PURSUANT TO RULE 30B2-1.
</LEGEND>
<CIK> 0000714291
<NAME> MUNICIPAL ASSETS FUND
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 29545943
<INVESTMENTS-AT-VALUE> 29545943
<RECEIVABLES> 255960
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 29801903
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 94612
<TOTAL-LIABILITIES> 94612
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 29707291
<SHARES-COMMON-PRIOR> 10145763
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 29707291
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 795005
<OTHER-INCOME> 0
<EXPENSES-NET> 162262
<NET-INVESTMENT-INCOME> 632743
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 632743
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 112440950
<NUMBER-OF-SHARES-REDEEMED> 92879682
<SHARES-REINVESTED> 260
<NET-CHANGE-IN-ASSETS> 19561528
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25305
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 162262
<AVERAGE-NET-ASSETS> 32845590
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.029
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>