<PAGE>
LETTER FROM THE CHAIRMAN ------------------------------------------------------
Dear Shareholder:
Thank you for your continued interest in the FGIC Public Trust Funds. This
Semi-Annual Report is one of two bi-annual shareholder reports we produce to
help you understand how the Funds, of which your assets are a part, are
invested and have performed.
Over the past six months, total assets in the U.S. Treasury Money Market Fund
and the Short-Term U.S. Government Income Fund have increased from $151
million to $245 million. Total accounts held between the Funds have also
increased, from 106 at the end of April to 337 at the end of October.
We attribute this growth to several factors:
1) The level of disclosure required to be included in these reports has
become increasingly valuable to municipal investors as problems relating to
financial mismanagement of municipal investments continue to make headlines.
2) The liquidity provided by cash management vehicles such as these continues
as an important investment consideration for short-term cash management needs.
3) The safety of principal created by investments that are direct obligations
of the U.S. Government or repurchase agreements that are at least 102%
collateralized by direct U.S. Government obligations.
4) The restructuring of the Funds' expenses to make the yield on the
portfolios even more attractive.
We are encouraged by the enthusiastic response these Funds have received in
the municipal investment community, as evidenced by their growth. If there
is any way you feel we can improve upon the Fund offerings or have any
questions, comments, or concerns about your investments, please call us at
1-800-298-3442.
We are committed to helping you manage your assets as safely and efficiently
as possible.
Sincerely,
Ann C. Stern
- ---------------------------------------------------------------------------- 1
<PAGE>
MANAGER'S FUND UPDATE --------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
The U.S. Treasury Money Market Fund seeks current income and stability
of principal by investing in U.S. Treasury bills, notes and other direct
obligations of the U.S. Treasury and repurchase agreements collateralized
102% with direct Treasury obligations. However, the government guarantee
surrounding any of the investments in the Fund applies only to the payment of
principal and interest of the underlying securities. It does not guarantee
Fund shares nor does it guarantee against adverse price movements brought
about by an increase in the prevailing rate of market interest. The Fund
strives to maintain a constant net asset value of $1.00 per share and seeks
to maintain stability of principal and current income.
The Fed initiated a reversal of U.S. TREASURY MONEY MARKET FUND
its less accommodative monetary SECTOR PROFILE
policy by lowering the key Fed Funds AS OF OCTOBER 31, 1995
rate to 5.75% from 6.00% in July. The
current shape of the yield curve,
substantially inverted on the REPURCHASE
shortest end, suggests a market AGREEMENTS
expectation of substantial further 100%
cuts in this key administered rate.
The Manager has adjusted the maturity
range of the Fund to take advantage
of the relatively high short-term
interest rates while maintaining a [GRAPHIC]
high degree of liquidity. We do not
see any short-term rewards in
extending portfolio maturities at
this time, preferring to wait for
more opportune situations for
maturity extensions. Clearly, the
current shape of the yield curve is
providing minimal rewards for such
extensions. The Fund's 7-day
compounded yield as of October 31,
1995 was 5.70%.
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE TRUST. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS ACCOMPANIED OR PRECEDED BY EFFECTIVE PROSPECTUSES FOR EACH PORTFOLIO
OF THE TRUST, WHICH CONTAIN INFORMATION CONCERNING THE INVESTMENT POLICIES
AND EXPENSES OF THE PORTFOLIOS AS WELL AS OTHER PERTINENT INFORMATION.
2 ----------------------------------------------------------------------------
<PAGE>
MANAGER'S FUND UPDATE --------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT INCOME FUND
The Short-Term U.S. Government Income Fund is designed for the
conservative investor seeking current income and relative price stability.
The Fund seeks to provide higher yields than bank CDs and other money market
alternatives while maintaining a relatively high degree of price stability
compared to intermediate or long-term bond funds.
The Fund invests exclusively in
debt obligations of the U.S. Treasury SHORT-TERM U.S. GOVERNMENT INCOME
and repurchase agreements FUND SECTOR PROFILE
collateralized 102% with debt AS OF OCTOBER 31, 1995
obligations of the U.S. Treasury. As
of this report, the Fund's holdings
were 28.13% in U.S. Treasury notes
and bills and 71.87% in Repurchase REPURCHASE
Agreements collateralized to 102% by AGREEMENTS
U.S. Treasury securities. However, 71.87% U.S. TREASURY
the government guarantee surrounding NOTES & BILLS
any of the investments in the Fund 28.13%
applies only to the payment of
principal and interest of the
underlying securities. It does not
guarantee Fund shares nor does it
guarantee against adverse price
movements brought about by an
increase in the prevailing rate of [GRAPHIC]
market interest.
Unlike a money market fund, the
value of the Short-Term U.S.
Government Income Fund fluctuates
with changes in interest rates. The
value of the Fund will generally rise
as interest rates drop and decline as
interest rates increase. To seek a relatively stable value per share, the Fund
primarily invests in securities which have remaining average maturity of
3 years or less.
The Fed commenced its long awaited reversal in monetary policy in July,
dropping the key Fed Funds rate to 5.75% from 6.00%. Clearly a settlement of
the current budget impass and the results of holiday retail sales will
provide the Fed with a much stronger platform on which to contemplate further
easing its monetary policy.
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF
THE TRUST. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS ACCOMPANIED OR PRECEDED BY EFFECTIVE PROSPECTUSES FOR EACH PORTFOLIO
OF THE TRUST, WHICH CONTAIN INFORMATION CONCERNING THE INVESTMENT POLICIES
AND EXPENSES OF THE PORTFOLIOS AS WELL AS OTHER PERTINENT INFORMATION.
- ---------------------------------------------------------------------------- 3
<PAGE>
MANAGEMENT OF THE FUNDS ------------------------------------------------------
The property, affairs and business of the Fund are managed by the Board
of Trustees. The Trustees elect officers who are charged with responsibility
for the day-to-day operations of the Fund and the execution of policies
formulated by the Trustees. The Trustees and their affiliations are as
follows:
ANN C. STERN - Trustee and Chairman. Ms. Stern is Chairman and Chief
Executive Officer of FGIC. Ms. Stern was named CEO of FGIC in January 1992
and was elected to Chairman in October 1993. Prior to her appointment, Ms.
Stern was Managing Director and General Counsel of FGIC. Ms. Stern is also a
member of the Executive Committee and Structured Finance Underwriting
Committee. Prior to joining FGIC, Ms. Stern was an Associate and a Partner
at two New York City law firms specializing in municipal bonds. She is a
member of several organizations including the Board of Advisors of the
Association of Financial Guaranty Insurers, the American Bar Association, the
Arts and Culture Committee of the GE Foundation and a member of the Board of
Advisors of The Public's Capital, a quarterly journal on infrastructure.
Because of her affiliation with FGIC, Ms. Stern is considered an "interested"
Trustee of FGIC Public Trust.
W. ROBERT ALEXANDER - Trustee and President. Mr. Alexander is the Chief
Executive Officer of ALPS Mutual Funds Services, Inc. which provides
administration and distribution services for proprietary mutual fund
complexes. Prior to co-founding ALPS, Mr. Alexander was Vice Chairman of
First Interstate Bank of Denver, responsible for Trust, Private Banking,
Retail Banking, Cash Management Services and Marketing. Mr. Alexander is a
member of the Board of Trustees of the Colorado Trust, Colorado's largest
foundation, as well as a Trustee of the Hunter and Hughs Trusts. Because of
his affiliation with ALPS, Mr. Alexander is considered an "interested"
Trustee of FGIC Public Trust.
BEVERLY S. BUNCH - Trustee. Ms. Bunch is Assistant Professor at the LBJ
School of Public Affairs, University of Texas at Austin. Ms. Bunch teaches
graduate courses in public financial management, economics, and quantitative
methods. Ms. Bunch also conducts research in environmental finance and
municipal debt. Prior to her current position, Ms. Bunch was Assistant to
the Executive Director of the Texas Bond Review Board. In that capacity, Ms.
Bunch analyzed proposed state debt issues, briefed board representatives and
made recommendations to state budget officials on capital planning and
budgeting. Ms. Bunch has held several academic positions and has taught
courses in public finance and related subjects. Ms. Bunch also acted as
Budget Analyst for the City of San Antonio where she analyzed and monitored a
$64 million budget for four city departments.
WILLIAM J. COCHRAN - Trustee. Mr. Cochran served as Director of Finance and
Chief Financial Officer of the City of Hartford, Connecticut from 1987 to
1993. As Director of Finance, Mr. Cochran had full Charter responsibility
for the fiscal affairs of a major urban government comprised of 6,000
employees, assets of over $1 billion and an overall operating budget of $500
million. During Mr. Cochran's tenure with Hartford, the city was awarded the
Certificate of Achievement for Excellence in Financial Reporting and the
Distinguished Budget Presentation Award by the Government Finance Officers
Association ("GFOA") for many years. Prior to his tenure as Director of
Finance and Chief Financial Officer, Mr. Cochran was the Executive Director
of the Hartford Development
4 ----------------------------------------------------------------------------
<PAGE>
Commission from October, 1981. Mr. Cochran has served on the Executive Board
of the GFOA and served on its Debt and Fiscal Policy Committee. Mr. Cochran
is also a member of the Connecticut Government Finance Officers Association
and is a Founder and Trustee of the Hartford Partnership for Scholarships.
MAYNARD H. JACKSON, JR. - Trustee. Mr. Jackson served three terms as the
mayor of Atlanta, completing his last term in January of 1994. During his
tenure as mayor, Rand McNally named Atlanta as the best major city in which
to live and work in the United States. Mr. Jackson recently returned to the
private sector as Chairman of the Board of Jackson Securities. Mr. Jackson
has also held positions on several civic related boards including Chairman of
the U.S. Local Government Energy Policy Advisory Committee, founding Chairman
of the Rebuild America Coalition and founding Chairman of the Atlanta
Economic Development Authority of Atlanta. Mr. Jackson was also a key
component of Atlanta's successful bid for the 1996 Summer Olympics. A member
of Phi Beta Kappa and a trustee of Morehouse College, Mr. Jackson is the
recipient of numerous honorary degrees, citations and awards for civic,
humanitarian, academic and business achievements.
Detailed information about the Trustees and their affiliations may be found
in the Statement of Additional Information under Management of the Fund.
FGIC PUBLIC TRUST OFFICERS AND TRUSTEES
Ann C. Stern,
Trustee and Chairman
W. Robert Alexander,
Trustee and President
Beverly S. Bunch,
Trustee
William J. Cochran,
Trustee
Maynard H. Jackson, Jr.,
Trustee
Stephen Attanasio,
Vice President
Jim McCullough
Vice President
William Paston,
Vice President and Treasurer
Steve Howard,
Secretary
- ---------------------------------------------------------------------------- 5
<PAGE>
U.S. TREASURY MONEY MARKET FUND ---------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at amortized cost (which approximates market value)
- see accompanying statement $216,588,665
Organizational costs, net of accumulated amortization 247,147
Receivable from investment advisor 106,221
Prepaid Registration 71,881
Other 5,951
- -----------------------------------------------------------------------------
Total Assets 217,019,865
- -----------------------------------------------------------------------------
LIABILITIES
Dividends payable 930,096
Accrued expenses 77,385
- -----------------------------------------------------------------------------
Total Liabilities 1,007,481
- -----------------------------------------------------------------------------
NET ASSETS $216,012,384
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $216,050,022
Accumulated net realized loss (37,638)
- -----------------------------------------------------------------------------
NET ASSETS $216,012,384
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING 216,050,022
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION VALUE PER SHARE $1.00
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
6 ---------------------------------------------------------------------------
<PAGE>
U.S. TREASURY MONEY MARKET FUND ---------------------------------------------
STATEMENT OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE MARKET VALUE* COLLATERAL VALUE
- ---------- ------------- ----------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S. GOVERNMENT
OBLIGATIONS 100.27%
- -------------------------------------------------------------------------------------------------
$ 9,200,000 Repurchase agreement with BA Securities Inc.,
5.85%, dated 10/31/95 and maturing 11/01/95,
by U.S. Treasury Note, 7.50%
01/31/97 $ 9,201,495 $ 9,394,769
9,200,000 Repurchase agreement with Barclay's BZW Inc.,
5.85%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bond, 14.00%,
due 11/15/11 9,201,495 9,384,451
9,055,000 Repurchase agreement with Chase Securities Inc.,
5.83%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bill, due
06/27/96 9,056,466 9,237,864
9,200,000 Repurchase agreement with Deutsche Bank,
5.75%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bill, due 02/22/96,
U.S. Treasury Notes, 6.125% due 02/15/98,
7.875% due 04/15/98, 4.75% due 08/31/98 9,201,470 9,384,893
9,200,000 Repurchase agreement with First Chicago Capital
Markets, 5.86%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury Notes,
6.50% due 09/30/96, 6.875% due 10/31/96, 7.50%
due 12/31/96 9,201,498 9,388,055
57,000,000 Repurchase agreement with Fuji Securities Inc.,
5.875%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bills, due 11/30/95,
01/25/96, 03/07/96, U.S. Treasury Notes, 6.125%
due 07/31/96, 4.375% due 08/15/96, 6.75% due
02/28/97, 8.50% due 05/15/97, 6.75% due 05/31/97,
5.50% due 07/31/97, 5.75% due 09/30/97, 7.75%
due 11/30/99, 5.875% due 06/30/00, U.S. Treasury
Bond, 9.125% due 05/15/09 57,009,302 58,140,813
9,200,000 Repurchase agreement with Lehman Brothers Inc.,
5.83%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Note, 6.50% due
05/15/97 9,201,490 9,379,565
</TABLE>
- --------------------------------------------------------------------------- 7
<PAGE>
U.S. TREASURY MONEY MARKET FUND ---------------------------------------------
STATEMENT OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
FACE VALUE MARKET VALUE* COLLATERAL VALUE
- ---------- ------------- ----------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S. GOVERNMENT
OBLIGATIONS (continued)
- -------------------------------------------------------------------------------------------------
$ 9,200,000 Repurchase agreement with Merrill Lynch Inc.,
5.75%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Note, 6.00% due
08/31/97 $ 9,201,469 $ 9,416,799
58,498,502 Repurchase agreement with Morgan Stanley Inc.,
5.85%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bill, due 11/16/95
U.S. Treasury Bond, 8.75% due 05/15/17 58,508,008 59,673,196
9,200,000 Repurchase agreement with Sanwa Securities Inc.,
5.80%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Notes, 7.75% due
12/31/99, 6.375% due 08/15/02 9,201,482 9,384,169
9,200,000 Repurchase agreement with Smith Barney Shearson
Inc., 5.85%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bonds, 10.375% due
11/15/09, 12.00% due 08/15/13 9,201,495 9,384,257
9,200,000 Repurchase agreement with State Street Bank Corp.,
5.85%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bond, 10.375% due
11/15/09 9,201,495 9,403,017
9,200,000 Repurchase agreement with UBS Securities Inc.,
5.87%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Note, 6.875% due
03/31/97 9,201,500 9,388,415
-----------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $216,588,665) 216,588,665 220,960,263
-----------------------------
TOTAL INVESTMENTS
(Cost $216,588,665) 100.27% 216,588,665
Liabilities in Excess of Other Assets (0.27%) (576,281)
-----------------------
NET ASSETS 100.00% $216,012,384
-----------------------
-----------------------
</TABLE>
*See note 1 to financial statements.
8 ---------------------------------------------------------------------------
<PAGE>
U.S. TREASURY MONEY MARKET FUND ----------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended October 31, 1995 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME $5,071,753
- -------------------------------------------------------------------
EXPENSES
Investment advisory fee (Note 3) 257,742
Administration Services * (Note 3) 381,653
Legal 32,200
Audit 7,788
Amortization of organization costs 39,867
Insurance 8,942
Registration 13,125
Other 613
- -------------------------------------------------------------------
Total Expenses 741,930
- -------------------------------------------------------------------
Expenses waived by:
Investment advisor (257,742)
Administrator (120,986)
Expenses reimbursed by Investment advisor (105,460)
- -------------------------------------------------------------------
Net Expenses 257,742
- -------------------------------------------------------------------
NET INVESTMENT INCOME 4,814,011
- -------------------------------------------------------------------
REALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 4,855
- -------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,818,866
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
* Administration services include: fund accounting, daily pricing, custody,
licensing and registration, shareholder servicing, transfer agency, fund
ratings, training, SEC registration fees and printing.
See notes to financial statements.
- ---------------------------------------------------------------------------- 9
<PAGE>
U.S. TREASURY MONEY MARKET FUND ----------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
OCTOBER 31, 1995 PERIOD ENDED
(UNAUDITED) APRIL 30, 1995 (1)
---------------- ------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 4,814,011 $ 4,287,914
Net realized gain (loss) on investments 4,855 (42,493)
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,818,866 4,245,421
Dividends to shareholders from net investment income (4,814,011) (4,287,914)
- ----------------------------------------------------------------------------------------
Change in net assets from operations 4,855 (42,493)
- ----------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 620,076,167 733,139,524
Dividends reinvested 3,449,031 3,414,118
- ----------------------------------------------------------------------------------------
623,525,198 736,553,642
Cost of shares redeemed (516,572,970) (627,505,848)
- ----------------------------------------------------------------------------------------
Change in net assets derived from beneficial interest
transactions 106,952,228 109,047,794
- ----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 106,957,083 109,005,301
NET ASSETS:
Beginning of period 109,055,301 50,000*
- ----------------------------------------------------------------------------------------
End of period $216,012,384 $109,055,301
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
* Initial capitalization
(1) Operations commenced on May 25, 1994.
See notes to financial statements.
10 ---------------------------------------------------------------------------
<PAGE>
U.S. TREASURY MONEY MARKET FUND ----------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial
interest outstanding throughout the period indicated:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
OCTOBER 31, 1995 PERIOD ENDED
(UNAUDITED) APRIL 30, 1995 (1)
-----------------------------------
<S> <C> <C>
Net asset value - beginning of period $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.04
- ------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.03) (0.04)
- ------------------------------------------------------------------------------------
Net asset value - end of period $1.00 $1.00
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Total return (2) 5.61% 4.71%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $216,012 $109,055
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Ratio of expenses to average net assets (2) 0.30% 0.50%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (2) 5.59% 4.87%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Ratio of expenses to average net assets without fee
waivers (2) 0.86% 1.32%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers(2) 5.03% 4.05%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on May 25, 1994.
(2) Annualized
See notes to financial statements.
- --------------------------------------------------------------------------- 11
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND ---------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
ASSETS
Investments, at value (cost $28,411,157)
- see accompanying statement $28,489,708
Organizational costs, net of accumulated amortization 12,623
Interest receivable 41,588
Other 15,072
- -----------------------------------------------------------------------------
Total Assets 28,558,991
- -----------------------------------------------------------------------------
LIABILITIES
Dividends payable 133,913
Advisory fees payable 17,923
Accrued expenses 30,663
- -----------------------------------------------------------------------------
Total Liabilities 182,499
- -----------------------------------------------------------------------------
NET ASSETS $28,376,492
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $28,486,754
Accumulated net realized loss (188,813)
Net unrealized appreciation 78,551
- -----------------------------------------------------------------------------
NET ASSETS $28,376,492
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Shares of beneficial interest outstanding 2,842,471
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net asset value and redemption value per share $9.98
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
See notes to financial statements.
12 ---------------------------------------------------------------------------
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND ---------------------------------------
STATEMENT OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
FACE VALUE MARKET VALUE*
- ---------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT TREASURIES 28.24%
- ----------------------------------------------------------------------------------------------
U.S. Treasury Bills
$4,000,000 02/08/96 $3,942,136
U. S. Treasury Notes
2,000,000 6.50%, 04/30/97 2,026,250
2,000,000 7.50%, 01/31/97 2,045,622
----------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $7,935,457) 8,014,008
----------
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 72.16% COLLATERAL VALUE
- ----------------------------------------------------------------------------------------------
900,000 Repurchase agreement with BA Securities
Inc., 5.85%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury
Note, 7.50% due 01/31/97 900,146 $ 922,290
900,000 Repurchase agreement with Barclay's BZW
Inc., 5.85%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury
Note, 8.875% due 05/15/00, U.S. Treasury
Bond, 14.00% due 11/15/11 900,146 919,125
900,000 Repurchase agreement with Chase Securities
Inc., 5.83%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury Bill,
due 06/27/96 900,146 921,374
900,000 Repurchase agreement with Deutsche Bank,
5.75%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bill, due
09/19/96, U.S. Treasury Bond, 7.125% due
02/15/23 900,144 918,577
900,000 Repurchase agreement with First Chicago
Capital Markets, 5.86%, dated 10/31/95 and
maturing 11/01/95, collateralized by U.S.
Treasury Note, 7.50% due 12/31/96 900,147 920,487
5,100,000 Repurchase agreement with Fuji Securities
Inc., 5.875%, dated 10/31/95 and
maturing 11/01/95, collateralized by U.S.
Treasury Bill, due 02/15/96, U.S. Treasury
Notes, 7.625% due 05/31/96, 4.75% due
08/31/98, U.S. Treasury Bonds, 8.75% due
11/15/08, 13.875% due 05/15/11 5,100,832 5,202,091
</TABLE>
- --------------------------------------------------------------------------- 13
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND ----------------------------------------
STATEMENT OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
FACE VALUE MARKET VALUE* COLLATERAL VALUE
- ---------- -------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (continued)
- ---------------------------------------------------------------------------------------------
$ 900,000 Repurchase agreement with Lehman Brothers
Inc., 5.83%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury Note,
6.50% due 05/15/97 $ 900,146 $ 922,324
900,000 Repurchase agreement with Merrill Lynch Inc.,
5.75%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Note, 6.00% due
08/31/97 900,144 921,271
5,472,377 Repurchase agreement with Morgan Stanley Inc.,
5.85%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Bill, due 11/16/95
U.S. Treasury Bond, 7.25% due 06/15/22 5,473,266 5,587,620
1,000,000 Repurchase agreement with Sanwa Securities
Inc., 5.80%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury Note,
5.125% due 03/31/96 1,000,161 1,020,526
900,000 Repurchase agreement with Smith Barney
Shearson Inc., 5.85%, dated 10/31/95 and
maturing 11/01/95, collateralized by U.S.
Treasury Bond, 8.125% due 08/15/21 900,146 918,613
800,000 Repurchase agreement with State Street Bank
Corp., 5.85%, dated 10/31/95 and maturing
11/01/95, collateralized by U.S. Treasury Bond,
10.375% due 11/15/09 800,130 820,845
900,000 Repurchase agreement with UBS Securities Inc.,
5.87%, dated 10/31/95 and maturing 11/01/95,
collateralized by U.S. Treasury Note, 6.875%
due 03/31/97 900,146 920,433
-----------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $20,475,701) 20,475,700 20,915,576
-----------------------------
TOTAL INVESTMENTS
(Cost $28,411,157) 100.40% 28,489,708
Liabilities in Excess of Other Assets (0.40%) (113,216)
---------------------------
NET ASSETS 100.00% $28,376,492
---------------------------
---------------------------
</TABLE>
*See note 1 to financial statements.
14 ----------------------------------------------------------------------------
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND---------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended October 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME $1,170,627
- --------------------------------------------------------------------------
EXPENSES
Investment advisory fee (Note 3) 76,400
Administration services* (Note 3) 46,000
Legal 20,087
Audit 9,345
Amortization of organization costs 2,055
Insurance 5,581
Registration 12,996
Miscellaneous 613
- --------------------------------------------------------------------------
Total Expenses 173,077
- --------------------------------------------------------------------------
Expenses waived by Investment advisor (58,477)
- --------------------------------------------------------------------------
NET EXPENSES 114,600
- --------------------------------------------------------------------------
NET INVESTMENT INCOME 1,056,027
- --------------------------------------------------------------------------
UNREALIZED GAIN ON INVESTMENTS
Unrealized appreciation on investments:
Beginning of period 35,945
End of period 78,551
- --------------------------------------------------------------------------
Net change in unrealized appreciation 42,606
- --------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,098,633
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
* Administration services include: fund accounting, daily pricing, custody,
licensing and registration, shareholder servicing, transfer agency, fund
ratings, training, SEC registration fees and printing.
See notes to financial statements.
- -------------------------------------------------------------------------- 15
<PAGE>
SHORT-TERM U.S GOVERNMENT INCOME FUND----------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
OCTOBER 31, 1995 PERIOD ENDED
(UNAUDITED) APRIL 30, 1995 (1)
--------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $1,056,027 $2,823,884
Net realized loss on investments 0 (188,813)
Net unrealized appreciation 42,606 35,945
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,098,633 2,671,016
- ------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,056,027) (2,823,884)
- ------------------------------------------------------------------------------------------
Change in net assets from operations 42,606 (152,868)
- ------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 12,984,997 108,454,418
Dividends reinvested 884,134 2,503,280
- ------------------------------------------------------------------------------------------
13,869,131 110,957,698
Cost of Shares redeemed (27,428,331) (68,961,744)
- ------------------------------------------------------------------------------------------
Change in net assets derived from beneficial interest
transactions (13,559,200) 41,995,954
- ------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET ASSETS (13,516,594) 41,843,086
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 41,893,086 50,000*
- ------------------------------------------------------------------------------------------
End of period $28,376,492 $41,893,086
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
* Initial capitalization
(1) Operations commenced on June 7, 1994.
See notes to financial statements.
16 ---------------------------------------------------------------------------
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND----------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the period indicated:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
OCTOBER 31, 1995 PERIOD ENDED
(UNAUDITED) APRIL 30, 1995 (2)
--------------------------------------
<S> <C> <C>
Net asset value - beginning of period $9.97 $10.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.29 0.44
Net realized and unrealized gain (loss) on investments 0.01 (0.03)
- ----------------------------------------------------------------------------------------------
Total income from investment operations 0.30 0.41
- ----------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.29) (0.44)
- ----------------------------------------------------------------------------------------------
Net asset value - end of period $9.98 $9.97
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Total return (3) 3.07% 4.73%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $28,376 $41,893
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (3) 0.60% 0.45%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (3) 5.53% 5.23%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets without fee
waivers (3) 0.91% 0.65%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers (3) 5.22% 5.03%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate (1)(3) 0.00% 827.35%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities (excluding
securities with maturity date of one year or less at the time of
acquisition) for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the six months
ended October 31, 1995 were $1,997,890 and $0, respectively.
(2) Operations commenced on June 7, 1994.
(3) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------- 17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) ------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
FGIC Public Trust, (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company. The U.S. Treasury Money Market Fund and the Short-Term U.S.
Government Income Fund ("Funds"), are represented by separate classes of
shares of beneficial interest of the Trust, which is organized as a Delaware
business trust.
The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of their financial
statements. The policies are in conformity with generally accepted
accounting principles.
INVESTMENT VALUATION: The U.S. Treasury Money Market Fund's securities
are valued on the basis of amortized cost which approximates market value.
Securities of the Short-Term U.S. Government Income Fund are valued at
4:00 p.m. (EST) on each trading day. The Fund's investments are valued at
the last sales price of the day or where market quotations are not readily
available, a fair market value is determined in good faith by or under the
direction of the Board of Trustees. Short-term securities are valued at
amortized cost which approximates market value.
REPURCHASE AGREEMENTS: The Funds' custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that value,
including accrued interest, is at least 102% of the repurchase price. In the
event of default on the obligation to repurchase, the Funds have the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default by or
bankruptcy of the other party to the agreement, realization and/or retention
of the collateral may be subject to legal proceedings.
FEDERAL INCOME TAXES: It is the Funds' policy to continue to comply
with provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
shareholders. Therefore, no Federal Income Tax provisions are required.
ORGANIZATION COSTS: The Funds have deferred certain organization costs.
Such costs are being amortized over a 60 month period from the commencement
of operations. In the event that all, or part of FGIC's initial investment
in shares of the Funds are withdrawn during the amortization period, the
redemption proceeds will be reduced by the proportionate amount of the
unamortized organization costs represented by the ratio that the number of
shares redeemed bears to the number of initial shares outstanding at the time
of each redemption.
OTHER: Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Dividends from net
investment income are declared daily and paid monthly. Distributions of net
realized gains, if any, are declared at least once a year. Realized gains
and losses from investment transactions are reported on an identified cost
basis which is the same basis the Funds use for Federal Income Tax Purposes.
18 ---------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) ------------------------
2. SHARES OF BENEFICIAL INTEREST
On October 31, 1995, there was an unlimited number of no par value
shares of beneficial interest authorized. Transactions in shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND SHORT-TERM U.S. GOVERNMENT INCOME FUND
--------------------------------------------- ----------------------------------------------
FOR THE SIX MONTHS FOR THE PERIOD ENDED FOR THE SIX MONTHS FOR THE PERIOD ENDED
ENDED OCTOBER 31, 1995 APRIL 30, 1995 (1) ENDED OCTOBER 31, 1995 APRIL 30, 1995 (1)
---------------------- -------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Shares Sold 620,076,167 733,139,524 1,300,958 10,861,462
Shares
Reinvested 3,449,031 3,414,118 88,590 251,089
Total 623,525,198 736,553,642 1,389,548 11,112,551
Shares Redeemed 516,572,970 627,505,848 2,748,183 6,916,446
Net Increase
(Decrease) 106,952,228 109,047,794 (1,358,635) 4,196,105
</TABLE>
(1) Operations for the U.S. Treasury Money Market Fund and Short-Term U.S.
Government Income Fund commenced on May 25, 1994 and June 7, 1994,
respectively.
3. INVESTMENT ADVISORY FEES, ADMINISTRATION FEES AND OTHER RELATED
PARTY TRANSACTIONS
The Trust has entered into Investment Advisory Agreements with FGIC
Advisors, Inc. (FGIC). Pursuant to these advisory agreements with the Trust,
the Investment Advisor is entitled to an advisory fee, computed daily and
payable monthly. FGIC receives an annual fee of .35 percent and .45 percent
of the average net assets of the U.S. Treasury Money Market Fund and
Short-Term U.S. Government Income Fund, respectively. In addition, for the
six months ended October 31,1995, FGIC waived all of its advisory fee and
voluntarily assumed some of the expenses of the U.S. Treasury Money Market
Fund and waived a portion of its advisory fee on the Short-Term U.S.
Government Income Fund.
ALPS Mutual Funds Services, Inc. (ALPS) serves as the Fund's administrator.
ALPS is entitled to receive a fee from the Funds for its administrative
services, computed daily and payable monthly, at the annual rate of .18
percent of average daily net assets up to $500 million, .15 percent on the
next $500 million and .12 percent on assets in excess of $1 billion subject
to a minimum monthly fee of $62,500 for the U.S. Treasury Money Market Fund
and $7,500 for the Short-Term U.S. Government Income Fund. In addition, for
the six months ended October 31, 1995, ALPS waived a portion of its
administration fee on the U.S. Treasury Money Market Fund.
Two shareholders of the U.S. Treasury Money Market Fund owned 17.9 percent
and 12.2 percent of the outstanding shares at October 31, 1995. Two
shareholders of the Short-Term U.S. Government Income Fund owned 59.8 percent
and 30.2 percent of the outstanding shares at October 31, 1995.
- --------------------------------------------------------------------------- 19
