IMG TAX EXEMPT LIQUID ASSETS FUND INC, 485BPOS, 1997-02-10

IMG TAX EXEMPT LIQUID ASSETS FUND INC
485BPOS, 1997-02-10

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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. 18 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16 [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, 1996, was
filed on or about July 24, 1996.
<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 FEBRUARY 10, 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% 0.30%
Total Fund Operating Expenses................... 1.20% 1.05%

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 $11 $33 $58 $128

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

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 1987 through 1996 have been examined by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report covering the
year ending June 30, 1996, is included in the Annual Report to shareholders of
each Fund. The information for the period July 1, 1996 through December 31, 1996
is unaudited and is contained in the Funds' Semi-Annual Report. The Annual and
Semi-Annual Reports are 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 charges.
<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1996* 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 1.000

Net Investment Income 0.44 .047 .047 .027 .027 .044 .063 .074 .076 .057 .051

Dividends Distributed (0.44) (.047) (.047) (.027) (.027) (.044) (.063) (.074) (.076) (.057) (.051)
--------------------------------------------------------------------------------------------------------

Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========================================================================================================

Total Return 4.42% 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%

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

Ratio of Net Income to
Average Net Assets 4.42% 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74% 5.13%

Net Assets
End of Period (000 Omitted) $212,696 $176,633 $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $93,335 $73,525 $67,020

</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.

*For the Period 7/1/96 to 12/31/96, unaudited.
<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1996* 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 1.000

Net Investment Income .028 .026 .025 .015 .017 .030 .044 .050 .051 .039 .035

Dividends Distributed (.028) (.026) (.025) (.015) (.017) (.030) (.044) (.050) (.051) (.039) (.035)
--------------------------------------------------------------------------------------------------
Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000

Total Return 2.76% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%
==================================================================================================

Ratio of Expenses to
Average Net Assets 1.14% 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52% 1.46%

Ratio of Net Income to
Average Net Assets 2.76% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94% 3.45%

Net Assets
End of Period (000 Omitted) $12,844 $10,146 $16,130 $21,355 $23,764 $29,670 $26,683 $15,077 $12,619 $14,528 $14,560

*For the Period 7/1/96 to 12/31/96, unaudited
<PAGE>

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 December 31,
1996, for Liquid Assets and Municipal Assets were 4.44 percent and 4.53 percent,
and 3.23 percent and 3.28 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 December 31,
1996, IMG had approximately $1.4 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, 1996, fees paid by Liquid Assets and Municipal Assets to IMG amounted
to approximately 0.25 percent of each Fund's average net assets, or $444,793 and
$43,217, respectively.

From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
For the period September 1, 1996 through January 15, 1997, IMG voluntarily
waived all of its advisory fees on Municipal Assets. Without such waiver, IMG
would have been entitled to receive a fee at the annual rate of 0.25 percent of
the average daily net assets of Municipal Assets. For the semi-annual period
ended December 31, 1996, fees paid by Liquid Assets to IMG amounted to
approximately 0.25 percent of average net assets or $245,802 and fees paid by
Municipal Assets to IMG amounted to approximately 0.08 percent of average net
assets or $3,901.

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, 1996, fees paid under the plan for Liquid Assets and Municipal Assets were
$1,334,402 and $129,650, respectively. The Directors of each Fund review
quarterly a written report of the costs incurred associated with the Plans. The
Directors believe that the Plans are in compliance with Rule 12b-1 and are in
the best interests of the Funds.

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

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 payable Please make your check
to the Fund selected and mail payable to the Fund
to the address indicated on selected, with your account
the application. number on the check and
mail to the address printed
on your account statement.

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

Federal Funds should be wired to: 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 of
DES MOINES, IA 50312-5338 shares to be sold, your name, your account
number, and the additional requirements listed
below that apply to your particular account.

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

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

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

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

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

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

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

BY EXCHANGE-- You must meet the minimum investment
requirement of the other fund. You can only
exchange between accounts with identical names,
addresses, and taxpayer identification numbers.
BY ELECTRONIC FUNDS You must have applied for the Telephone
TRANSFER (ACH) OR WIRE-- Transfer feature on your application. Allow
two days via ACH. Call before 10:00 a.m. for
same day wire. $15.00 fee for bank wires.
<PAGE>

TABLE OF CONTENTS
Expense Summary for 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 Fund........................................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 FEBRUARY 11, 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 "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% 0.30%
Total Fund Operating Expenses................... 1.20% 1.50%

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 $11 $33 $58 $128

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 not offered prior to the date hereof, however, for
comparative purposes 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 and unaudited information for the six month period ending
December 31, 1996 for the Funds' Sweep Shares. For reference Sweep Shares carry
a 0.75% 12b-1 Plan fee and S2 Shares carry a 0.50% 12b-1 Plan fee, otherwise the
fee structure for S2 Shares and Sweep Shares is identical.

<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1996* 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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<S> <C> <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 $ 1.000