LIQUID ASSETS FUND
MUNICIPAL ASSETS FUND
INVESTMENT CHECKING BY IMG
INTERIM FINANCIAL REPORT
DECEMBER 31, 1997
THE BUSINESS ACCOUNT THAT PAYS
<PAGE>
LETTER TO SHAREHOLDERS
- ----------------------
We are pleased to present the semi-annual financial report for your Liquid
Assets Fund ("Liquid Assets") and Municipal Assets Fund ("Municipal Assets"),
for the six months ended December 31, 1997.
As explained more fully in the Management Discussion that follows, short-term
interest rates have changed little over the last six months. While lower
inflation expectations have resulted in a nearly 1 percent drop in long-term
rates, short-term yields have been held up by the Federal Reserve's continued
aggressive stance against overly rapid economic growth. The result has been
another period of very strong returns on your Funds.
Liquid Assets, which ended the period at nearly $113 million, was yielding as
much as 5.41 percent on Institutional Shares in December 1997. Municipal Assets
totaled nearly $32 million at a December yield of 3.51 percent on Institutional
Shares.
As you may be aware, on September 30, 1997, IMG announced a definitive agreement
to merge our investment operations with those of AMCORE Financial, Inc., a
publicly traded financial services holding company based in Rockford, Illinois.
As part of this merger, we have evaluated all of the mutual funds presently
managed by IMG and by AMCORE. By the time this report is printed, a special
shareholder meeting will have been held, at which shareholders will have decided
whether to reorganize Liquid Assets and Municipal Assets into two substantially
equivalent "clone" portfolios of a new family of mutual funds called the Vintage
Funds. If approved, the new portfolios will continue to be called Liquid Assets
and Municipal Assets, and will be managed by IMG in the same manner as the Funds
are now. If all of the recommended reorganizations are approved, the Vintage
Funds will become a family of ten separate mutual funds, including the successor
funds to Liquid Assets and Municipal Assets, that will total more than $1
billion. All ten funds will be managed by IMG.
If current shareholders approve the proposed reorganization of Liquid Assets and
Municipal Assets, this will be the final published financial report for the
Funds. We would like to take this opportunity to thank each of our shareholders
for your investment over the last fifteen plus years. We look forward to
continuing to serve your investment needs with the reorganized Liquid Assets and
Municipal Assets Funds for years to come.
If you wish to contact us, please write or call IMG at (800) 798-1819, or
contact the financial institution through which you made your investment.
DAVID W. MILES, PRESIDENT
Liquid Assets Fund
Municipal Assets Fund
January 30, 1998
<PAGE>
MANAGEMENT DISCUSSION
- ---------------------
Bonds continued to rise in price during the last two quarters as interest rates
continued their secular trend lower. Yields on three-month Treasuries rose
slightly, while yields on thirty-year Treasury bonds declined 85 basis points.
This flattening in the slope of the yield curve was attributable to the
continued strength in the economy, keeping short-term interest rates high, and
declining inflation driving long-term interest rates lower.
Short-term interest rates over the last six months have remained in a holding
pattern as the Fed has evaluated the state of the economy. Three-month Treasury
bills have averaged about 5.20 percent and six-month bills about 5.35 percent,
while federal funds rates have hovered around 5.50 percent.
Economic conditions for the past six months were very similar to the first six
months of 1997, moderate growth and low inflation. Currently, inflation is
averaging about two percent while economic growth remains above the long-term
target rate of three percent. As growth has continued above this long-term
target, pressures have mounted in the labor force. This year, wages have grown
nearly four percent year-over- year, well above the pace of goods inflation.
While these pressures exist in the market, we believe they are primarily offset
by productivity gains achieved through capital expenditures in technological
advancements. Output per hour and wages per hour have grown at similar rates,
acting to minimize any inflationary impact. If we begin to see a decline in
productivity and wages continue to accelerate, we believe bond yields could
begin to rise.
However, while interest rates have fallen and the yield curve has flattened, we
also feel the impact from the Asian crisis has not fully emerged. A rising
dollar and weaker foreign economies will likely cause exports to shrink and
imports to rise, further fueling the decline in inflation. The true impact from
the Asia turmoil has yet to be determined, but all scenarios point toward a
weakening U.S. economy. In light of the recent Asian crisis, growth expectations
have been lowered, helping to keep short-term interest rates steady and the Fed
on hold.
We believe Federal Reserve policy will remain in a holding pattern. While we see
weaker growth in certain segments of the economy, we believe the weakness is not
enough to change the direction of Fed action. We are currently managing the
portfolios to capture yield in an anticipated stable environment, while
remaining flexible to react to emerging market conditions. The Liquid Assets
Fund has maintained shorter average days to maturity recently, with a higher
concentration of variable rate investments. The Municipal Assets Fund has
maintained a longer average days to maturity than most funds as we capture
additional yield. We continue to add municipal notes rated AA or higher. We
believe both funds are well postured for a strong performance into the new year.
Thank you for your continued support! We look forward to sharing a prosperous
1998.
JEFFREY D. LORENZEN
MANAGING DIRECTOR
<PAGE>
LIQUID ASSETS FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<TABLE>
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- ---------------------------------------- --------- ----------- -------------
<S> <C> <C> <C> <C>
DISCOUNTED GOVERNMENT SECURITIES -- .9%
$ 1,000,000 Federal Home Loan Bank Disc Note 5.60% 07-Jan-98 $ 999,088
------------
TOTAL (cost - $999,088) $ 999,088
------------
COUPON SECURITIES -- 7.5%
$ 500,000 Federal Farm Credit Bank, 5.27% 5.63% 20-Jan-98 $ 499,909
275,000 Federal National Mtge Assoc Floater 5.68% 25-Feb-98 274,577
1,000,000 Federal National Mtge Assoc Floater 6.01% 25-Feb-98 998,294
500,000 Federal National Mtge Assoc, 5.25% 5.70% 25-Mar-98 499,493
2,000,000 Federal Home Loan Mtge Corp, 5.84% 5.64% 08-Apr-98 2,000,974
2,575,000 Federal Farm Credit Bank, 5.90% 5.73% 02-Jun-98 2,576,615
500,000 Federal Home Loan Mtge Corp, 6.05% 5.78% 28-Jul-98 500,713
1,000,000 Federal Home Loan Bank, 5.79% 5.84% 23-Oct-98 999,628
200,000 Federal Home Loan Mtge Corp, 5.00% 5.87% 15-Dec-98 198,410
------------
TOTAL (cost - $8,548,613) $ 8,548,613
------------
LOAN CERTIFICATES FmHA GUARANTEED LOAN CERTIFICATES -- 7.4%
$ 76,924 No. 2233 Tradup, Edward 6.25%* 15-Jan-98 $ 76,924
267,915 No. 2003 Ediger & Ediger Farms 6.25%** 20-Jan-99 267,915
37,188 No. 2154 Haak, Larry G 6.25%*** 27-Apr-99 37,188
35,229 No. 2153 Moschell, Rodney 6.25%*** 11-May-99 35,229
63,602 No. 2155 Hoffman, Jim 6.25%** 04-Jun-99 63,602
47,110 No. 2009 Anderson, Larry D 6.25%** 01-Jul-99 47,110
114,934 No. 2176 H & P Cattle 6.25%*** 10-Jul-99 114,934
50,435 No. 2190 Silk, Michael W 6.25%* 15-Mar-00 50,435
132,357 No. 2140 Ischen, William L 6.25%*** 20-May-00 132,357
133,367 No. 2141 Kneen, Arthur E 6.25%*** 18-Jun-00 133,367
185,149 No. 2142 Kothe, Laverne 6.25%*** 29-Jun-00 185,149
75,254 No. 2364 Cole, Robert 6.25%* 25-Mar-01 75,254
133,235 No. 2212 Stone, Ronald 6.25%*** 28-Apr-01 133,235
* Interest rate fluctuates daily, monthly, or quarterly with Prime rate. Put
option subject to no longer than 7-day settlement.
** Interest rate fluctuates monthly with Prime rate. Put option subject to
no longer than 7-day settlement.
*** Interest rate fluctuates January 1st and quarterly with Prime rate. Put
option subject to no longer than 7-day settlement.
See Notes to Financial Statements.
<PAGE>
LIQUID ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- ---------------------------------------- --------- ----------- -------------
$ 52,551 No. 2208 D & J Farming 6.25%* 01-Jun-01 $ 52,551
89,408 No. 2095 Spradlin, Dale 6.25%* 16-Jun-01 89,408
49,260 No. 2089 Macklewicz, James 6.25%* 20-Jun-01 49,260
50,371 No. 2109 Fruit, Gary D 6.25%*** 11-Jul-01 50,371
196,518 No. 2135 Hendrick-Bartell 6.25%* 22-Jul-01 196,518
302,663 No. 2244 Whiteside, T. Dale 6.25%*** 19-Aug-01 302,663
281,112 No. 2120 Golden Acres, Partnership 6.25%** 17-Nov-01 281,112
61,547 No. 2238 Schmidt, Harold F 6.25%* 05-Dec-01 61,547
98,505 No. 2247 Sharkey, Scott 6.25%*** 20-Dec-01 98,505
70,521 No. 2319 Stephens Farms, Inc. 6.25%*** 10-Apr-02 70,521
127,688 No. 2320 Stephens, Charles 6.25%*** 10-Apr-02 127,688
149,526 No. 2321 Stephens General Partnership 6.25%*** 10-Apr-02 149,526
28,721 No. 2137 Hacecky, Daniel K 6.25%** 31-Dec-03 28,721
340,002 No. 2225 Stern Rubber Company 6.25%**** 25-Feb-04 340,002
323,661 No. 2024 Thornwell Warehouse Assn 6.25%*** 23-May-04 323,661
557,157 No. 2371 Shuman, Charles 6.25%* 23-Dec-06 557,157
62,013 No. 2413 Werkmeister, Joe 6.25%** 01-Mar-07 62,013
227,647 No. 2267 Horrell, Donald & Lois 6.25%*** 14-Mar-07 227,647
163,456 No. 2268 Carroll, Jason F 6.25%*** 24-Mar-07 163,456
42,353 No. 2410 Fichtner, Dean 6.25%*** 01-Nov-07 42,353
85,050 No. 2187 Kondo, Ross T 6.25%* 01-Feb-08 85,050
65,564 No. 2405 Hill, Blaine 6.25%** 01-Mar-08 65,564
250,564 No. 2283 Crawford, James H 6.25%*** 19-Apr-09 250,564
129,508 No. 2029 Tallent, Peter David 6.25%** 04-May-09 129,508
66,375 No. 2209 D & J Farming 6.25%* 01-Jun-09 66,375
206,929 No. 2180 Lo, Ying 6.25%** 23-Oct-09 206,929
121,674 No. 2175 Hernandez, Joseph L 6.25%* 17-Nov-09 121,674
37,266 No. 2414 Werkmeister, Joe 6.25%** 01-Mar-11 37,266
142,291 No. 2093 Wedel, Jerry 6.25%* 08-Jul-11 142,291
213,272 No. 2248 Schilling, Ronnie Jr. 6.25%*** 09-Sep-11 213,272
* Interest rate fluctuates daily with Prime rate. Put option subject to no
longer than 7-day settlement.
** Interest rate fluctuates monthly with Prime rate. Put option subject to no
longer than 7-day settlement.
*** Interest rate fluctuates January 1st and quarterly with Prime rate. Put
option subject to no longer than 7-day settlement.
**** Interest rate fluctuates February 25th and quarterly with Prime rate. Put
option subject to no longer than 7-day settlement.
See Notes to Financial Statements.
<PAGE>
LIQUID ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- ---------------------------------------- --------- ----------- -------------
$ 469,992 No. 2375 Freedom Feed Company 6.25%*** 01-Feb-12 $ 469,992
242,767 No. 2068 St. Onge, George 6.25%*** 29-Nov-13 242,767
114,550 No. 2167 Reynolds Brothers 6.25%* 30-Jan-14 114,550
124,549 No. 2034 Higginbotham, S G 6.25%** 15-Jul-14 124,549
149,759 No. 2253 Whiteside, T. Dale 6.25%*** 23-Dec-14 149,759
112,358 No. 2322 Stephens, Charles R 6.25%*** 10-Apr-15 112,358
144,167 No. 2323 Stephens Farms, Inc. 6.25%*** 10-Apr-15 144,167
256,524 No. 2324 Stephens General Partnership 6.25%*** 10-Apr-15 256,524
256,766 No. 2415 Schiefelbein, Harold 6.25%*** 02-Mar-17 256,766
158,692 No. 2255 Schilling, Ronnie Jr. 6.25%*** 20-Dec-23 158,692
180,742 No. 2412 Messersmith, Pat 6.25%** 01-Feb-27 180,742
114,008 No. 2065 Robertson, Wesley J, Jr. 6.25%*** 30-Dec-33 114,008
104,734 No. 2243 Trahan, Dexter J 6.25%* 19-Dec-34 104,734
------------
TOTAL (cost - $8,375,480) $ 8,375,480
------------
TRUST CERTIFICATES***** U.S. GOVT. GUARANTEED STUDENT LOANS-- 38.5%
$ 1,305,000 Certificate #732 6.18% 07-Jan-98 $ 1,305,000
800,000 Certificate #733 6.18% 09-Jan-98 800,000
120,000 Certificate #825 6.18% 30-Jan-98 120,000
1,400,000 Certificate #743 6.18% 20-Feb-98 1,400,000
750,000 Certificate #752 6.18% 20-Mar-98 750,000
500,000 Certificate #775 6.18% 11-Jun-98 500,000
200,000 Certificate #779 6.18% 18-Jun-98 200,000
2,500,000 Certificate #827 6.18% 19-Jun-98 2,500,000
4,185,000 Certificate #783 6.18% 26-Jun-98 4,185,000
1,015,000 Certificate #786 6.18% 09-Jul-98 1,015,000
475,000 Certificate #788 6.18% 10-Jul-98 475,000
3,085,000 Certificate #793 6.18% 28-Jul-98 3,085,000
* Interest rate fluctuates daily with Prime rate. Put option subject to no
longer than 7-day settlement.
** Interest rate fluctuates monthly with Prime rate. Put option subject to no
longer than 7-day settlement.
*** Interest rate fluctuates January 1st and quarterly with Prime rate. Put
option subject to no longer than 7-day settlement.
**** Interest rate fluctuates February 25th and quarterly with Prime rate. Put
option subject to no longer than 7-day settlement.
***** Interest rate fluctuates with 3-month U.S. Treasury Bill rate. Put option
subject to no longer than 7-day settlelment.
See Notes to Financial Statements.
<PAGE>
LIQUID ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- ---------------------------------------- --------- ----------- -------------
$ 2,575,000 Certificate #796 6.18% 11-Aug-98 $ 2,575,000
1,310,000 Certificate #798 6.18% 18-Aug-98 1,310,000
300,000 Certificate #802 6.18% 28-Aug-98 300,000
1,005,000 Certificate #804 6.18% 02-Sep-98 1,005,000
600,000 Certificate #805 6.18% 03-Sep-98 600,000
1,045,000 Certificate #810 6.18% 23-Sep-98 1,045,000
200,000 Certificate #811 6.18% 25-Sep-98 200,000
3,745,000 Certificate #812 6.18% 01-Oct-98 3,745,000
1,040,000 Certificate #823 6.18% 03-Nov-98 1,040,000
750,000 Certificate #712 6.18% 06-Nov-98 750,000
8,380,000 Certificate #826 6.18% 17-Nov-98 8,380,000
200,000 Certificate #824 6.18% 08-Dec-98 200,000
5,000,000 Certificate #841 6.18% 22-Dec-98 5,000,000
1,235,000 Certificate #728 6.18% 29-Dec-98 1,235,000
------------
TOTAL (cost - $43,720,000) $ 43,720,000
------------
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL -- 45.1%
$ 22,793,962 J P Morgan Repurchase Agreement 6.00% 02-Jan-98 $ 22,793,962
28,377,767 Swiss Bank Repurchase Agreement 6.50% 02-Jan-98 28,377,767
------------
TOTAL (cost - $51,171,729) $ 51,171,729
------------
TOTAL INVESTMENTS-- 99.4% $112,814,910
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES-- 0.6% $ 696,159
(Includes $18,252 payable to investment advisor and $351,447 ------------
dividends payable to shareholders)
See Notes to Financial Statements.
<PAGE>
LIQUID ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- ---------------------------------------- --------- ----------- -------------
NET ASSETS -- 100%
Applicable to 113,511,069 outstanding shares of $.001 par value
common stock (5,000,000,000 shares authorized) $113,511,069
============
NET ASSET VALUE:
Offering and redemption price per share ($113,511,069
divided by 113,511,069 shares outstanding) $ 1.00
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
MUNICIPAL ASSETS FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<TABLE>
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- -------------------------------------------- --------- ----------- -------------
<S> <C> <C> <C> <C>
INDUSTRIAL DEVELOPMENT BONDS -- 5.2%
$ 43,507 Iowa HFA (Gayman Project) 5.17%** 15-Aug-99 $ 43,507
355,434 Vinton, IA (Twin City Concrete) 5.33%** 15-Jun-02 355,434
1,022,589 Sioux City, IA (Handy Partnership Proj) 5.17%** 15-Sep-04 1,022,589
203,850 Iowa HFA (Starr-Terry Project) 5.67%** 15-May-05 203,850
------------
TOTAL (cost - $1,625,380) $ 1,625,380
------------
VARIABLE RATE DEMAND OBLIGATIONS -- 56.4%
$ 1,000,000 Colorado Health Fac (Hospital Sisters) 7-Day 4.15%** 20-Feb-98 $ 1,000,000
900,000 Harris Co., TX HFC, Ser 88A 7-Day 3.80%** 01-Jun-05 900,000
500,000 Phoenix, AZ IDR Multi-Family Hsg 7-Day 4.10%** 15-Oct-06 500,000
600,000 St. Charles Co., MO IDA 7-Day 4.10%** 01-Dec-07 600,000
1,340,000 Metro Nashville Airport Auth, TN DTN 5.00%* 01-Oct-12 1,340,000
400,000 Lone Star, TX Airport Ser A2 DTN 5.00%* 01-Dec-14 400,000
200,000 Lone Star, TX Airport Ser A3 DTN 5.00%* 01-Dec-14 200,000
900,000 Illinois Health Fac (Hospital Sisters) 7-Day 3.70%** 01-Dec-14 900,000
300,000 Metro Nashville & Davidson Cos., TN 7-Day 3.70%** 01-Jun-15 300,000
500,000 Illinois Health Fac (Hospital Sisters) 7-Day 3.70%** 01-Dec-15 500,000
500,000 Indianapolis, IN Multi-Family Rev 7-Day 3.70%** 01-Dec-15 500,000
900,000 Kentucky Dev Finance Auth 7-Day 4.15%** 01-Dec-15 900,000
1,500,000 Hampton Roads, VA Jail Auth 7-Day 3.70%** 01-Jul-16 1,500,000
1,100,000 Sullivan Co., TN PCR DTN 5.00%* 01-Oct-16 1,100,000
1,400,000 Michigan HFA Rev. 7-Day 3.70%** 01-Jul-17 1,400,000
200,000 Grand Rapids, MI Water Supply 7-Day 3.55%** 01-Jan-20 200,000
600,000 Illinois Educational Facility Auth 7-Day 4.20%** 01-May-20 600,000
700,000 Apache Co, AZ IDA 7-Day 3.70%** 15-Jun-20 700,000
1,065,000 South Carolina, Economic Dev DTN 5.00%* 01-Jul-22 1,065,000
900,000 Dearborn, MI Economic Dev 7-Day 3.70%** 01-Mar-23 900,000
600,000 Manatee Co., FL PCR DTN 4.40%* 01-Sep-24 600,000
* Variable rate, put option subject to next business day settlement.
** Variable rate, put option subject to no longer than 7-day settlement.
See Notes to Financial Statements.
<PAGE>
MUNICIPAL ASSETS FUND
STATEMENT OF NET ASSETS (C0NTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- -------------------------------------------- --------- ----------- -------------
$ 200,000 Grapevine, TX IDR Ser A1 DTN 5.00%* 01-Dec-24 $ 200,000
1,500,000 Delaware State Econ Dev Auth 7-Day 3.80%** 01-Oct-28 1,500,000
------------
TOTAL (cost - $17,805,000) $ 17,805,000
------------
MUNICIPAL NOTES -- 38.8%
$ 215,000 Noblesville, IN Sewer Rev, 4.00% 3.88% 01-Jan-98 $ 215,001
100,000 Ramsey Co., MN Capital Impr., 5.50% 3.75% 01-Feb-98 100,139
200,000 Washington State, Refunding R-89C, 7.40% 3.98% 01-Feb-98 200,577
350,000 Sangamon Co., IL, School Dist., 8.00% 3.88% 01-Mar-98 352,318
185,000 Northern Illinois Univ CTFS Partn, 4.00% 3.99% 01-Apr-98 185,000
400,000 Winnebago Co., WI Prom Notes, 4.30% 3.93% 01-Apr-98 400,354
85,000 Polk Co., IA Gaming Rev, 7.00% 4.00% 15-Apr-98 85,713
100,000 Waterbury, CT Refunding, 4.40% 4.10% 15-Apr-98 100,081
400,000 Brighton, MI Area School District, 6.90% 3.97% 01-May-98 411,641
250,000 Lenawee Co., MI Sewage Disposal, 8.00% 4.08% 01-May-98 253,135
100,000 Louisiana State, Series A, 8.00% 4.15% 01-May-98 101,229
80,000 Lyons, IL Waterworks & Sewer, 4.50% 4.10% 01-May-98 80,102
160,000 Mayville, WI Sewer System Rev, 4.90% 4.00% 01-May-98 160,459
530,000 Northville, MI, Public Schools, 3.70% 3.95% 01-May-98 529,557
140,000 Pewamo Westphalia, MI CSD, 6.50% 3.85% 01-May-98 141,189
150,000 Rock Co., WI Promissory Notes, 6.00% 4.20% 01-May-98 150,859
100,000 Utah State Board of Regents, 4.95% 4.05% 01-May-98 100,286
500,000 Utah State Board of Regents, 4.30% 4.05% 01-May-98 500,389
200,000 Wyoming, MI Public Schools, 5.50% 3.95% 01-May-98 200,999
160,000 Connecticut, State of, Ser A, 4.00% 3.90% 15-May-98 160,056
100,000 Ellis Co., TX Health Facility, 8.00% 4.00% 15-May-98 103,396
75,000 Ohio State, Highway, Ser S, 4.10% 4.05% 15-May-98 75,011
290,000 Cleveland Co., OK Lease Rev, 3.90% 4.14% 01-Jun-98 289,720
100,000 Coeur D Alene, ID Sewer Rev, 6.70% 4.10% 01-Jun-98 102,024
300,000 Crawford Co., PA Refunding, 5.80% 4.14% 01-Jun-98 301,997
* Variable rate, put option subject to next business day settlement.
** Variable rate, put option subject to no longer than 7-day settlement.
See Notes to Financial Statements.
<PAGE>
MUNICIPAL ASSETS FUND
STATEMENT OF NET ASSETS (C0NTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- -------------------------------------------- --------- ----------- -------------
$ 100,000 Davis Co., UT School District, 6.75% 4.00% 01-Jun-98 $ 101,108
115,000 Harris Co., TX Mun Util Dist, 6.90% 4.10% 01-Jun-98 116,292
315,000 Harvey, IL Adv Refunding, 8.40% 3.95% 01-Jun-98 320,626
250,000 Iowa City, IA, 4.63% 4.08% 01-Jun-98 250,544
95,000 Sidney, IA Community School Dist, 5.20% 4.10% 01-Jun-98 95,418
100,000 Washington Sub Sanitary Dist, MD, 3.75% 4.25% 01-Jun-98 99,800
275,000 Illinois State Sales Tax Rev, 0% 3.98% 15-Jun-98 89,379
100,000 Milwaukee, WI Series BZ, 6.00% 3.90% 15-Jun-98 100,925
100,000 Idaho State, Tax Antic. Notes, 4.63% 3.84% 30-Jun-98 100,352
200,000 DeKalb Co., GA School District, 4.25% 4.05% 01-Jul-98 200,192
145,000 Ellis Co., TX Water Control, 7.40% 4.05% 01-Jul-98 147,340
325,000 Evansville, IN Sewer Rev, 5.00% 4.00% 01-Jul-98 326,562
505,000 Maricopa Co., AZ School Dist #4, 6.00% 3.85% 01-Jul-98 515,202
100,000 Puerto Rico Elec Power Auth, PR 6.30% 4.00% 01-Jul-98 101,106
400,000 Anchorage, AK Series B, 7.40% 3.90% 01-Aug-98 407,926
200,000 Minnesota State, Various Purpose, 6.50% 4.00% 01-Aug-98 202,827
425,000 Reno, NV, Recreational Fac, Ser A, 4.00% 4.05% 01-Aug-98 424,872
240,000 San Antonio, TX, 7.00% 3.90% 01-Aug-98 244,209
405,000 Tulsa, OK Metro Utility Auth, 4.90% 3.90% 01-Aug-98 407,291
150,000 River Road, TX Ind. School District, 6.10% 4.00% 15-Aug-98 151,900
105,000 Austin, TX, 7.75% 4.00% 01-Sep-98 107,546
220,000 Boulder, CO, 9.00% 4.00% 01-Sep-98 227,078
120,000 Cudahy, WI, 3.90% 4.05% 01-Sep-98 119,882
100,000 Fort Bend Co., TX MUD #28, 7.15% 4.05% 01-Sep-98 101,995
200,000 Tyler, TX Waterworks & Sewer, 7.20% 4.00% 01-Sep-98 204,138
150,000 Swarthmore Boro Auth, PA, 7.38% 4.05% 15-Sep-98 155,580
250,000 Dunedin, FL Hospital Rev., 0% 4.00% 01-Oct-98 187,934
175,000 University of Illinois, Auxiliary Fac, 4.00% 4.00% 01-Oct-98 175,000
175,000 Maine Municipal Bond Bank, 7.45% 4.00% 01-Nov-98 182,833
475,000 Nevada State, Mun Project R-5, 4.10% 3.90% 01-Nov-98 475,758
185,000 Homewood Flossmoor, IL Park Dist, 4.60% 4.05% 01-Dec-98 185,903
See Notes to Financial Statements.
<PAGE>
MUNICIPAL ASSETS FUND
STATEMENT OF NET ASSETS (C0NTINUED)
DECEMBER 31, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
- ----------------------------------
<CAPTION>
YIELD AT
PAR TIME OF DUE AMORTIZED
VALUE DESCRIPTION PURCHASE DATE COST
- -------------- -------------------------------------------- --------- ----------- -------------
$ 130,000 Kane Co., IL Public Bldg Comm., 4.20% 4.05% 01-Dec-98 $ 130,169
145,000 Kitsap Co., WA Public Trans., 4.88% 4.05% 01-Dec-98 146,061
135,000 Vilas Co., WI, Promissory Note 4.70% 4.05% 01-Dec-98 135,778
------------
TOTAL (cost - $12,240,758) $ 12,240,758
------------
TOTAL INVESTMENTS -- 100.4% $ 31,671,138
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- (.4%)
(Includes $6,925 payable to investment advisor and
($89,236 dividends payable to shareholders) ($ 112,898)
-------------
NET ASSETS -- 100%
Applicable to 31,558,240 outstanding shares of $.001 par value
common stock (5,000,000,000 shares authorized) $ 31,558,240
============
NET ASSET VALUE:
Offering and redemption price per share ($31,558,240
divided by 31,558,240 shares outstanding) $ 1.00
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JULY 1, 1997 TO DECEMBER 31, 1997
- ------------------------------------------------------
LIQUID ASSETS FUND MUNICIPAL ASSETS FUND
INVESTMENT INCOME:
Interest $ 2,513,105 $ 597,578
-------------- -----------
EXPENSES:
Advisory and service fees (Note 2) 108,434 34,835
Transfer Agent fees 13,012 4,634
Custodian fees and expenses 43,374 15,448
Portfolio accounting fees (Note 2) 15,181 5,407
Distribution fees (Note 3) 227,009 13,486
Shareholder servicing fee 27,190 31,865
Miscellaneous Expenses 19,518 6,179
-------------- -----------
TOTAL EXPENSES 453,718 111,854
-------------- -----------
NET INVESTMENT INCOME $ 2,059,387 $ 485,724
============== ===========
See Notes to Financial Statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JULY 1 TO DECEMBER 31
- -----------------------------------------
<TABLE>
<CAPTION>
LIQUID ASSETS FUND MUNICIPAL ASSETS FUND
1997 1996 1997 1996
------------------------------- -----------------------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income and amounts
distributed to shareholders (Note 1) $ 2,059,387 $ 4,344,378 $ 485,724 $ 136,830
============== ============== ============= =============
FROM SHARE TRANSACTIONS:
(at constant net asset value of $1 per share)
Shares sold $ 388,339,880 $ 521,271,916 $ 64,048,550 $ 25,695,881
Shares issued in reinvestment of
dividends from net investment income 61,607 13,500 26 0
-------------- -------------- ------------- -------------
388,401,487 521,285,416 64,048,576 25,695,881
Shares redeemed 357,541,106 488,209,725 62,197,627 22,996,846
--------------- -------------- ------------- -------------
Net increase (decrease) in net assets
derived from share transactions 30,860,381 33,075,691 1,850,949 2,699,035
NET ASSETS:
Beginning of period 82,650,688 179,632,815 29,707,291 10,145,763
-------------- -------------- ------------- -------------
End of period $ 113,511,069 $ 212,708,506 $ 31,558,240 $ 12,844,798
============== ============== ============= ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
<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
FOR THE PERIOD FROM JULY 1, 1997 TO DECEMBER 31, 1997
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 .046 .044 .049 .042 .025 .028 .050 .069 .075 .070
Dividends Distributed (.046) (.044) (.049) (.042) (.025) (.028) (.050) (.069) (.075) (.070)
---------------------------------------------------------------------------------------------------
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 4.58% 4.42% 4.89% 4.20% 2.50% 2.80% 5.00% 6.90% 7.50% 7.00%
Ratio of Expenses to
Average Net Assets 1.21% 1.20% 1.20% 1.20% 1.20% 1.20% 1.10% 1.10% 1.20% 1.20%
Ratio of Net Income to
Average Net Assets 4.58% 4.42% 4.89% 4.20% 2.50% 2.80% 5.00% 6.90% 7.50% 7.00%
Net Assets
End of Period (000 Omitted) $ 72,884 212,696 196,108 171,595 150,182 115,319 112,628 116,963 101,815 84,206
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
- ----------------------------------------------
LIQUID ASSETS FUND -- S-2 SHARES
FOR THE PERIOD FROM JULY 1, 1997 TO DECEMBER 31, 1997
Net Asset Value Beginning
of Period $ 1.000
Net Investment Income .049
Dividends Distributed (.049)
--------
Net Asset Value
End of Period $ 1.000
========
Total Return 4.93%
Ratio of Expenses to
Average Net Assets 0.86%
Ratio of Net Income to
Average Net Assets 4.93%
Net Assets
End of Period (000 Omitted) $ 2,535
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
- ---------------------------------------------
LIQUID ASSETS FUND -- TRUST SHARES
FOR THE PERIOD FROM JULY 1, 1997 TO DECEMBER 31, 1997
Net Asset Value Beginning
of Period $ 1.000
Net Investment Income .051
Dividends Distributed (.051)
---------
Net Asset Value
End of Period $ 1.000
=========
Total Return 5.08%
Ratio of Expenses to
Average Net Assets 0.71%
Ratio of Net Income to
Average Net Assets 5.08%
Net Assets
End of Period (000 Omitted) $ 34,064
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997 1996*
- -----------------------------------------------------
LIQUID ASSETS FUND -- INSTITUTIONAL SHARES
FOR THE PERIOD FROM JULY 1, 1997 TO DECEMBER 31, 1997
Net Asset Value
Beginning of Period $ 1.000 $ 1.000
Net Investment Income .053 .052
Dividends Distributed (.053) (.052)
Net Asset Value
End of Period $ 1.000 $ 1.000
Total Return 5.33% 5.17%
Ratio of Expenses to
Average Net Assets 0.46% 0.44%
Ratio of Net Income to
Average Net Assets 5.33% 5.17%
Net Assets
End of Period (000 Omitted) $ 4,027 12,058
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------
<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 .028 .028 .022 .015 .019 .036 .049 .050 .046
Dividends Distributed (.029) (.028) (.028) (.022) (.015) (.019) (.036) (.049) (.050) (.046)
---------------------------------------------------------------------------------------------------
Net Asset Value
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
===================================================================================================
Total Return 2.94% 2.76% 2.77% 2.20% 1.50% 1.90% 3.60% 4.90% 5.00% 4.60%
Ratio of Expenses to
Average Net Assets 0.93% 1.14% 1.48% 1.40% 1.30% 1.30% 1.40% 1.40% 1.70% 1.60%
Ratio of Net Income to
Average Net Assets 2.94% 2.76% 2.77% 2.20% 1.50% 1.90% 3.60% 4.90% 5.00% 4.60%
Net Assets
End of Period (000 Omitted) $ 5,956 12,844 21,102 22,528 23,672 26,728 24,415 17,385 14,096 15,871
</TABLE>
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
- --------------------------------------------
MUNICIPAL ASSETS FUND -- INSTITUTIONAL SHARES
FOR THE PERIOD FROM JULY 1, 1997 TO DECEMBER 31, 1997
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 3.44%
Ratio of Expenses to
Average Net Assets 0.43%
Ratio of Net Income to
Average Net Assets 3.44%
Net Assets
End of Period (000 Omitted) $ 8
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------
SELECTED DATA FOR A SHARE OF
EACH FUND OUTSTANDING
THROUGHOUT EACH PERIOD 1997
- ------------------------------------------
MUNICIPAL ASSETS FUND -- TRUST SHARES
FOR THE PERIOD FROM JULY 1, 1997 TO DECEMBER 31, 1997
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 3.19%
Ratio of Expenses to
Average Net Assets 0.68%
Ratio of Net Income to
Average Net Assets 3.19%
Net Assets
End of Period (000 Omitted) $ 25,594
See Notes to Financial Statements.
<PAGE>
LIQUID ASSETS FUND
MUNICIPAL ASSETS FUND
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES.
The Liquid Assets Fund and the Municipal Assets Fund (the Funds) are
registered under the Investment Company Act of 1940 (the Act), as open-end,
diversified investment companies, established as Iowa corporations.
Investors Management Group ("Adviser"), through an affiliated company (IMG
Financial Services, Inc.), acts as the exclusive distributor of the Funds'
shares which are sold to the public without a sales charge.
It is each Fund's policy to maintain a continuous net asset value per share
of $1.00; the Funds have adopted certain investment portfolio valuation and
dividend and distribution policies to enable them to do so.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on a trade date basis. Realized gains or losses, if any, from
securities transactions are recorded on the identified cost basis. Interest
income is recorded on the accrual basis. Cost of investments represents
amortized cost.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. It is the policy of the
Funds to declare and accrue dividends from net investment income on each
business day.
FEDERAL INCOME TAXES. The Funds intend to comply with requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute taxable income to shareholders in amounts which avoid or
minimize federal income or excise taxes for the Funds.
INVESTMENT VALUATION. The investments are valued at amortized cost which
has been determined by the Board of Directors of the Funds to represent the
fair value of the Fund's investments. This involves valuing a portfolio
security at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium.
REPURCHASE AGREEMENTS. The Funds may engage in repurchase agreements with
banks and broker dealers whereby independent custodians receive delivery of
the underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
102% of the resale price, and will not be less than 100% of the resale
price over the term of the agreement. At December 31, 1997, the securities
purchased under overnight agreements to resell were collateralized by
Government Agency mortgage backed securities with a market value of
$52,209,138 for the Liquid Assets Fund and there were no securities
purchased under overnight agreements to resell for the Municipal Assets
Fund.
<PAGE>
LIQUID ASSETS FUND
MUNICIPAL ASSETS FUND
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
- ------------------------------------------
LOAN CERTIFICATES. FmHA Guaranteed Loan Certificates represent interests in
the guaranteed portion of Farmer's Home Administration ("FmHA") loans
issued by one or more guaranteed loan trusts subject to repurchase on no
more than five business days' written notice. The Loan Certificates are
diversified through limitations on certificates sold by any one individual
bank.
TRUST CERTIFICATES. U. S. Government Guaranteed Student Loans (the Trust)
represent interests in student loans sold by certain Iowa banks subject to
repurchase, on no more than seven days written notice. The Trust and,
accordingly, the Trust Certificates are diversified through limitations on
certificates sold by any individual bank. Each individual bank may not sell
more than 5 percent of the outstanding Trust Certificates.
(2) ADVISORY AND SERVICE FEES.
Under its management and investment advisory agreement, the Advisor
provides the Fund with investment supervision, office space, management and
other personnel, and will pay the costs of computing the Fund's net asset
value and related bookkeeping expenses. For these services, the Fund pays a
fee computed daily and payable monthly at an annual rate of 0.25% of
average daily assets up to $200 million and at a sliding rate from 0.24% to
0.20% of average daily net assets exceeding $200 million. For the period
ended December 31, 1997, Liquid Assets Fund and Municipal Assets Fund paid
$108,434 and $34,835, respectively, to the Advisor for advisory and service
fees.
Beginning September 1, 1993, the Funds have also entered into an
administrative services agreement with the Advisor to provide portfolio
fund accounting services to the Funds. For these services, each Fund pays a
fee computed daily and payable monthly at an annual rate of 0.035 percent
of average daily assets.
Certain officers of the Fund are also officers of the Adviser. At December
31, 1997, the Advisor owned $883,104 shares of the Liquid Assets Fund.
IMG also acts as transfer agent and dividend paying agent for the Funds,
and maintains all shareholder records. Fees for such services are based
upon the number of accounts and are reflected as shareholder servicing
costs in the accompanying statement of operations.
(3) DISTRIBUTION EXPENSE PLAN.
Under its distribution expense plans (the "12b-1 Plans") adopted January 1,
1987 pursuant to Rule 12b-1 under the Act, and amended effective August 13,
1996 the Funds may make payments to IMG Financial Services, Inc. ("IFS")
<PAGE>
LIQUID ASSETS FUND
MUNICIPAL ASSETS FUND
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
- ------------------------------------------
for the reimbursement of expenses related to marketing or distribution of
Sweep Shares and S-2 Shares of the Funds. Aggregate payments by each Fund
under the Plans in any month cannot exceed the annual rate of 0.75% of the
Fund's average daily net asset value invested in Sweep Shares and 0.50% of
the Fund's average daily net asset value invested in S-2 shares. For the
period ended December 31, 1997, payments under the 12b-1 Plan used by IFS
to compensate financial institutions for automated processing of Fund
transactions and for other services relating to the distribution of the
Funds' Sweep Shares and S-2 Shares totaled $227,009 and $13,486 for Liquid
Assets Fund, and Municipal Assets Fund, respectively, and Rule 12b-1 fees
payable at December 31, 1997, were $39,525 and $2,694, respectively.
Under its shareholder services plan (the "Services Plan") adopted August
13, 1996 under the Act, the Funds may make payments to IFS for the
reimbursement of expenses related to the servicing of shareholder accounts
of the Fund by financial service firms. Aggregate payments by the Fund
under the Services Plan in any month cannot exceed the annual rate of 0.25%
of the Fund's average daily net asset value invested in Trust Shares. For
the period ended December 31, 1997, payments under the Services Plan used
by IFS to compensate financial service firms for servicing of shareholder
accounts totaled $27,190 and $31,865 for Liquid Assets Fund and Municipal
Assets Fund, respectively, and Shareholder Services fees payable at
December 31, 1997, were $4,010 and $5,576, respectively.
<PAGE>
INVESTMENT ADVISOR, TRANSFER AND UNDERWRITER
DIVIDEND DISBURSING AGENT IMG Financial Services, Inc.
Investors Management Group 2203 Grand Avenue
2203 Grand Avenue Des Moines, IA 50312-5338
Des Moines, Iowa 50312-5338
AUDITORS
CUSTODIAN KPMG Peat Marwick LLP
AMCORE Investment Group, NA 2500 Ruan Center
P.O. Box 4599 Des Moines, Iowa 50309
Rockford, Illinois 61110-4599
COUNSEL
Cline, Williams, Wright, Johnson
& Oldfather
1900 FirsTier Bank Building
Lincoln, Nebraska 68508
Municipal Assets Fund
Liquid Assets Fund
2203 Grand Avenue
Des Moines, Iowa 50312-5338
